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Comment by m52go | Hacker News Reader

> but the situation is not improved if efforts to reduce debt end up pushing the economy into deflation and depression.

I don't like how mainstream economists tend to portray deflation: that it's a terrible thing that necessarily leads to depression. I mean, is the average man on the street going have more money to spend if the stuff he needs (food, energy, etc) costs 5% more than it did last year? I'm not saying deflation is always a good thing, but particularly in times of declining incomes, I find it hard to believe it's the scary monster mainstream economists make it out to be.

And I particularly don't like how Krugman is always so quick to defend large debt loads. He keeps advocating to borrow borrow borrow, with seemingly no restraint. Is that really sustainable?

> America has actually been borrowing less from abroad since 2008 than it did before

Ya, because we're printing the rest. That is NOT a good thing.

But of course, Krugman won't say that, or consequences that result from such policies.

View on HN

The government isn't "printing money" in the sense that this phrase commonly denotes. The government is selling Treasury securities on the open market. The rate of interest right now is quite low and has been for the past 7 years. Krugman isn't advocating a belief that all debt all the time is a good thing. He's advocating a belief that in the current situation debt is not the primary concern right now.

Deflation is a bad thing for borrowers. It's a good thing for people who have no loans. I think the idea is that deflation is bad for the country because it's bad for banks and large multi-national companies. It would squeeze consumers who have mortgages and credit card debt and student loan debt. Thus this would contract the economy. As I understand these things. I'm not an economist.

You forgot QE1, QE2, twist, and QE3 where the Fed digitally created $4 trillion and bought up assets.

That $4T didn't exist until the Fed conjured it up. Through a middleman, it was handed to the US Treasury.

I don't fully understand QE but I believe there is a balance sheet. It's not like money was created out of thin air as such. It did not increase M1. I'm guessing it did increase MB but I don't know. Of course my perception may be completely wrong.

> It's not like money was created out of thin air as such.

No, it was. Literally. The Fed can and does create money and then buy assets with that new money.

It is the Fed creating money out of thin air buying treasuries and it does increase M1. Here is the fed's own graph of M1.

http://research.stlouisfed.org/fred2/series/M1

You can see where is starts to really skyrocket, which is where 16 trillion was given to the banks in the bailouts (or $53,000 for every person in the USA for scale). This money hasn't even made it into M2 yet.

>until the Fed conjured it up.

So in what way would you have money production occur, if not "out of thin air"?

Historically it has been people digging in the dirt to find precious metals and then coining those metals. Worked pretty well for thousands of years and doesn't allow people to counterfeit.

If you want money to be a store of value there's no replacement to something that can't be faked. Personally I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days.

>Worked pretty well for thousands of years and doesn't allow people to counterfeit.

Did it really? Perhaps you should refer to the original definition of "debasement".

>I like the idea of my money holding value but from what I hear that's somewhere between "old fashioned" and "retardedly luddite" these days.

Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially.

> Did it really? Perhaps you should refer to the original definition of "debasement".

You're right of course. I was speaking in broad generalities rather than specifics. Yes the money was debased. But there was some kind of anchor on value because the dilutions had to be small.

From what I remember in history the government didn't go from 99% silver to 1% silver in a single re-issuance of money, it took many reissues over many generations to go from 99% to 50% (or something like that) which actually shows an incredible amount of restraint. I'd be rather pleased if that was the kind of debasement we were seeing in recent history but sadly it isn't.

The fact that you had to put SOME metal in the coins was what kept debasing "reasonable" but there are no such restrictions on money creation today. Even if you had to literally PRINT the money the Fed can make $100 bills for a few cents. With computers the marginal cost of creation falls further. There is no restraint save but what those in charge put on themselves.

> Hah, I wouldn't define it as such, but I do question: why? We live in a capitalist society that benefits from capital being put to work. There are many places you can put your money that will benefit you and others financially.

I agree and I do make efforts to put my money to work for exactly the reasons you've mentioned. I guess it boils down to my idealistic nature; I don't think there should be a "stupidity" tax whereby if you're not savvy enough to understand how finance and compound interest works, your life savings can slowly evaporate.

The reason for this in my mind is that everyone has expertise and it's a huge drain on the workings of the world that everyone has to spend who knows how much time every year trying to make sure that their savings don't slowly vanish. I think we would all be better off if people could focus on their field fully rather than having to try and be an expert in both their field and finance.

Without slavery how will we ever pick cotton? Well I don't know but I do know slavery is wrong and so it should stop regardless of whether there's an alternative.

Same goes for money printing. How will we ever have money if not printing it out of thin air? Well I don't know but I do know the sentence "print money out of thin air" sounds like a very bad idea from the start. No wonder we've pressed the reset button every 40 years. With all debasement problems at least the precious metals system lasted thousands of years.

>Without slavery how will we ever pick cotton?

It's pretty evident how we can pick cotton without slavery. We do it every day.

On the other hand, you want to expend resources digging a heavy, precious metal out of the ground to use as a glorified record-keeper of transactions. Seems like a huge waste.

Why not create it "out of thin air" as it is needed, and use the metals (and resources required to dig them up) on something else?

The error comes from thinking that money = wealth.

>With all debasement problems at least the precious metals system lasted thousands of years.

I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone.

>No wonder we've pressed the reset button every 40 years.

Pretty sure if you're anywhere in the First World you're part of the wealthiest, healthiest society that there ever has been.

> Your argument doesn't even make sense. It's pretty evident how we can pick cotton without slavery. We do it every day.

We haven't eliminated slavery from cotton farming so I'm not sure we can claim to pick cotton without slavery. We pick some cotton without slavery.

http://www.theguardian.com/environment/2013/oct/27/cotton-pr...

> It's pretty evident how we can pick cotton without slavery. We do it every day.

The morality of it wasn't evident to slave owners in the past, it seems. Like the morality of printing money isn't evident to most nowadays.

I'm not going to defend gold specifically here because what matters is that there not be a group of people that can issue money. The problem with creating it out of thin air is precisely that some people will be in control of printing it, and will get corrupted by it, endangering the health of that system and of its participants.

I'm also not going to defend gold because someone that is against slavery need not defend and explain ad nauseam how machines will eventually take on agricultural work and blah blah blah. Slavery is immoral because it impinges on people's freedoms. Same goes for printing money.

> I don't think there's a country on the planet that will accept gold for financial transactions without converting to currency. So, no, it hasn't "lasted thousands of years"; it's gone.

You're being intellectually dishonest. The world cared about gold until 1971. It seems to me the world still does care about gold, or central banks wouldn't hoard it like there's no tomorrow, and keep transporting it back and forth. Why do they not keep diamonds? Why not keep Platinum? Why not keep famous artwork? Somehow they seem to love that gold. But you say it's "gone".

Mathematically, printing money is the same as taxation, but it is a flat tax on money instead of on income or property or whatever.

It's no more or less moral than any tax that the Fed could levy.

Money (currency) is a shared delusion. Gold is not worth its price as a store of real value. Something like oil is.

I agree with those statements.

> The government is selling Treasury securities on the open market...

And the Federal Reserve is buying a lot of those treasury securities with printed money.

From the FED:

" The term "printing money" often refers to a situation in which the central bank is effectively financing the deficit of the federal government on a permanent basis by issuing large amounts of currency. This situation does not exist in the United States."

http://www.federalreserve.gov/faqs/money_12853.htm

Perhaps they are lying about what is really going on but I think transparency is of primary importance for the functioning of the bond market and I'm assuming they aren't lying.

The term "permanent basis" is the only part of the statement that prevents it from being a lie.

The Federal Reserve does not want to do QE forever. But they have been doing that almost nonstop since 2008.

That's what the balance sheet aspect is. There is a due date on the securities purchased by the Fed. Thus there is a time a limit.

The Fed does not consider quantitative easing as just printing money. I think if it were just printing money then people would not have faith in Treasury securities and thus the interest rate would be a lot, lot higher than it is now.

EDIT: From the link supplied above:

"Global demand for Treasury securities has remained strong, and the Treasury has been able to finance large deficits without difficulty. In addition, U.S. currency has expanded at only a moderate pace in recent years, and the Federal Reserve has indicated that it will return its securities holdings to a more normal level over time, as the economy recovers and the current monetary accommodation is unwound."

QE finished last October.

Wait - but quantitative easing usually involves buying back government bonds (in recent times it has also involved buying riskier instruments like collateralized debt obligations (eg. bundled mortages from freddy mac/fannie mae))

But government bonds are issued by the government as a form of govt debt to finance the federal government deficit.

So doesn't that mean that money IS being printed to finance government deficit? It's just that it goes through a slightly convoluted path to get there?

> The government is selling Treasury securities on the open market.

Right, which the Fed is then buying with the money being printed. Government debt is being monetized by the Fed however you slice it.

> Deflation is a bad thing for borrowers.

I understand what you're saying, and in theory, it's true. Practically, it's flawed. Why? Because when I'm on a fixed income, I don't care about the value of my money that's going toward paying down debts. I care about the value of the money I have left over.

Say I earn $1000 a month. $600 goes to loans. $400 is left over to spend on food. With deflation, sure, that $600 is really worth more than otherwise. But it's a sunk cost to me. That $400 is what matters to me, as a consumer, and with deflation, it buys me more food!

You assume those other numbers a constant with deflation, but they aren't. Because deflation means that $1,000 buts your employer more hours of your labor just as much as it means $400 buys you more food. Double the value of money and, sure, $400 would buy you what used to be $800 of food. But $500 will buy your employer w the equivalent of what used to be $1,000 of your labor (from someone, if not from you), so instead of $400 left after the fixed cost of financing those loans, you'll have a $100 shortfall.

Are you assuming wage decreases?

That's a longer-term trend that I don't think we'd see with a shorter-term 3-5 year deflation.

And this is why currency Economics is so hard. deflation/inflation don't happen uniformly to all dollars and sectors of the economy.

Deflation according to mainstream economists is undesirable because of a bug in labor markets - "downward nominal wage rigidity".

Since businesses cannot cut salaries (wrecks productivity, due to the morale hit), they hire less or lay off people. And in a depression many enterprises must to one of these things to remain profitable (they cannot increase prices, obviously). This right now has a bigger effect on family incomes than the small gain from lower prices on goods. If productivity is rising rapidly and there is more or less full employment, the opposite case would be true. Inflation is good in such cases, because if wages don't change in dollar terms, whey will be cut in real terms, allowing for more employment.

Debt is part of capitalism, just like steel is used as building material. Talking about debt in moral terms as good, bad or whether there is a right amount (for whom?) isn't productive. Speaking about government debt, right now Eurozone countries have to pay very low interest rates; once they rise too much or full employment is reached, Krugman has said many times that he will advocate restraint.

When conducting monetary policy the Fed buys government securities from the public, not from the Treasury; it pays market prices for it. There is still huge demand for US government bonds (mostly in the USA, thats why "money we owe ourselves". It does remit its profits to the Treasury, but that is a very small percent of the government budget. When the expansion of the Fed balance sheet is so big that it becomes a price setter for government bonds (in dollar terms of course!), then you could say it is printing money to cover deficits. It did that from 1945 to 1951 to pay for WWII and inflation did rise to 25%. So everyone will notice if when the Fed starts "printing money to cover deficits".

> Debt is part of capitalism, just like steel is used as building material. Talking about debt in moral terms as good, bad or whether there is a right amount (for whom?) isn't productive.

Of course. If I spoke of debt in absolute terms, I didn't mean to.

> Speaking about government debt, right now Eurozone countries have to pay very low interest rates; once they rise too much or full employment is reached, Krugman has said many times that he will advocate restraint.

The problem is Krugman tries to have it both ways. Back in 2012 when borrowing rates were MUCH higher, he STILL criticized austerity.

http://www.nytimes.com/2012/09/28/opinion/krugman-europes-au...

When economies are good, governments should spend more, because, why not? And when economies are bad, governments should spend more, because, it's the only way out. I've never seen him advocate restraint on government spending.

If you can recall evidence to prove that wrong, I'd genuinely love to see it.

> There is still huge demand for US government bonds (mostly in the USA, thats why "money we owe ourselves".

Agreed. But this won't last forever. Let's take China for example, one of the largest foreign buyers of our debt. They have to buy large quantities of it because they're pegged to the USD. What happens when they decide to remove that peg? I doubt they'll warn us.

Remember what happened with the Swiss Franc?

The euro economy wasnte good in 2012.

I don't think people agree that stealth wage cuts are good during full employment. Good for the owners of capital, maybe.

Consider how traumatic the recent housing crash was for the man on the street.

The payment was unchanged, but there was a massive loss of flexibility as people could not sell under water houses.

Now expand that to the rest of the economy while lot's of leveraged companies and investments fail.

Isn't it because the prices of the houses were highly inflated, due to very easy credit?

Do you think that the rest of the economy is a bubble like the 2008 housing bubble?

I don't think it matters why an asset deprecates. For a local example a mine/plant/army base closes and suddenly lots of houses are worth far less money.

Hypothetically, if a disease kills off 25% of the population housing prices nationally are going to fall like a rock. They might not have been overvalued, but there suddenly worth less money. Deflation is less gruesome, but you still end up with house value < outstanding loan.

The important thing from an economic perspective is simply value of asset vs debt.

I've been trying to wrap my head around this myself as it does seem pretty counter intuitive (based on personal experience - 5% change in prices over the course of a year in either direction has no impact on my purchasing decisions).

I think the key issue is that deflation makes borrowing a really bad idea (as each year you effectively owe 5% more) and much of our economy depends on consumer debt (cars, housing, college degrees) but I'm willing to accept that a programmer's mind isn't well suited for grokking economics.

>I find it hard to believe it's the scary monster mainstream economists make it out to be.

It isn't really complicated. First, when the value of holding cash gives a positive return, then it changes investment allocations. People often argue that "I won't change my spending habits!" Well, if you were economically rational, you would. But let's be realistic, no one cares about you putting off buying a TV. The concern is for the global financial system as a whole, who suddenly have incentive to hold money rather than circulate it.

Second, incomes are part of the deflation equation. It's one thing when technological progress allows for manufacturing processes to make items cheaper and we get cheaper computers. It's another when massive price deflation (ie oil) causes a sharp decrease in wages and mass unemployment.

Third, debtors are harmed during deflation, as the absolute value of their debts increases. That means your average household gets into trouble.

>That is NOT a good thing.

Prove it. Seriously. If you can, I'm sure you've got a Nobel in your future. I'm not being facetious. Nobody really knows how this ends, good or bad.

Unfortunately, Economics can't run experiments. You apply theory, make a best guess, implement the policy, and hope for the best.

Everything you said is true, but I don't find the points terribly practical.

1) I seriously doubt investors will prefer to hold US dollars for meager deflation gains instead of investing in other financial assets projecting far greater return (stocks, bonds, real estate, etc).

2) Wages are sticky. Yes, 20 years of deflation would send wages down. I don't think a short period of deflation would do too much.

3) See my comment below. I printed an abridged version of it here:

When I'm on a fixed income, I don't care much about the value of my money that's going toward paying down debts. I care about the value of the money I have left over.

I appreciate your points, but I still think deflation fears are overblown.

------------------

EDIT: to comment on your last remark about proving the unfavorable effects of money-printing...I don't need to run tests. I have history. Money printing is the genesis of hyperinflation, a well-documented historical phenomenon.

http://en.wikipedia.org/wiki/Hyperinflation

Printing paper money to monetize debts NEVER ends well. Show me a case in which it does, and I'll award you a paper Nobel Prize.

>I seriously doubt investors will prefer to hold US dollars

Well, with all due respect, what you doubt doesn't really matter. We're watching it happen. Why would I buy bonds with a negative real yield when I can hold appreciating dollars risk free? Again, this concerns the system as a whole. Don't underestimate how important the V in MV = PT is.

>Wages are sticky.

Right. So people get fired to bring costs down, instead of everyone taking a little less.

>When I'm on a fixed income,

If you're on a fixed income with no debt, then you love deflation. Your dollars buy more goods.

>Money printing is the genesis of hyperinflation

Excess money printing is the genesis of hyperinflation. So, again, the problem is determining where that "excess" line is. One indicator of that is rising prices, which we don't see.

Are you calling for hyperinflation? If so, when?

> Why would I buy bonds with a negative real yield when I can hold appreciating dollars risk free?

You're right, so let me back up my position from a market-based perspective: security. That's why negative yields can exist in the first place.

An appreciating dollar doesn't matter if the dollar can't be trusted.

> So people get fired to bring costs down, instead of everyone taking a little less.

Fair point. Like I said, this is a longer-term issue with deflation. Remember, the economy moves in 3-5 year cycles. Nothing lasts forever, neither inflation nor deflation.

> If you're on a fixed income with no debt, then you love deflation.

Even if you have debt, I argue you'd still love deflation, as illustrated in my last comment.

> One indicator of that is rising prices, which we don't see.

O RLY? Do you pay for food, energy, and...stuff, in general? Are prices going up, or are they going down? Gas is down for now, but it'll be right back up in no time.

Don't look at the official numbers. They changed the method of calculating inflation to make it seem lower. Look at reality.

And remember, this increase in prices is happening IN SPITE of gains in productivity (which is deflationary).

Look, I agree "excessive" isn't easy to define on the topic of money-printing. As you said, there's no model to tell us what's right or wrong.

But I don't know how it can be considered appropriate to create money out of thin air to fund the vast majority of your obligations (well over 50% of US debt is monetized). The economic benefits that have been proposed as a result of this policy haven't appeared. Yet they keep pushing forward with more and more.

It just isn't right. That might sound like a weak statement, but take it as a statement grounded in the unflappable strength of morality.

>Don't look at the official numbers. They changed the method of calculating inflation to make it seem lower. Look at reality

They change the method, then retroactively recalculate the values, because our basket of consumed goods changes over time.

The way the CPI numbers are calculated are free for anyone to look at, and they closely match the Billion Price Project. There is no conspiracy.

>The economic benefits that have been proposed as a result of this policy haven't appeared

I'm not sure how you can say that. If you ask me, the policy has been successful, despite massive political pushback. Again, that's the tough part of economics; it's very hard to separate all the conflating effects of a specific policy.

Deflation seem good (stuff I buy is cheaper!) but the problem is psychological. Say deflation is 10% one year. Everything you buy goes down in cost which is good. However, if you're on salary, then from your employers perspective you are now 10% overpaid (assuming you were previously paid the market wage). In years with inflation, businesses can give raises across the board, but rarely would a business cut all their employees pay by 10%. It would be bad for morale. Instead they lay off 10% of the workforce. People aren't willing to accept pay cuts in times of deflation as easily as a yearly pay increase.

> It would be bad for morale [for a] business [to] cut all their employees pay by 10%.

Pff, is that the issue? That's easy peasy, price people's salaries in terms of purchasing power. Or in terms of baskets of goods. Wow this is such an easy problem to solve. I could go on and on. I'm not even joking. Just use an indirection. Isn't that how we solve all problems in programming? It's certainly my favorite tool.

Show me the strictly paper money system which has lived 1000 years (or even 100!) and I'll stop believing that having the ability to debase a currency isn't a train wreck in slow motion. And when I say "strict" I mean it, so paper currencies which used to be convertable to gold or silver or whatever only start counting once convertability stopped.

Nothing in economics short of trivial tautologies can be proved or else economics would be just like physics and we'd understand it all already.

> Show me the strictly paper money system which has lived 1000 years (or even 100!)

http://en.wikipedia.org/wiki/Fiat_money

"The first use of fiat money was recorded in China around 1000 AD. Since then, it has been used continuously by various countries, concurrently with commodity currencies."

> ...or else economics would be just like physics and we'd understand it all already.

So you think physicists understand all about physics? I've got a bridge to sell you...

> "The first use of fiat money was recorded in China around 1000 AD. Since then, it has been used continuously by various countries, concurrently with commodity currencies."

Okay, so which country is that and from/to which dates? I see a generalized statement that it's been done but no specifics. You'll forgive me I hope if I'd like a little more information than "well this wikipedia article says..."

Let me clarify further that I'm not talking about paper money in general, but a particular paper money system. In other words, just because people have been trading paper for a thousand years doesn't mean it's been the same paper and that you could have successfully stored that value all the way from "back then" up until the current day, strictly in paper. Gold does that to some degree, though the exchange rate of gold to goods has varied pretty substantially historically. To my knowledge there's no paper which has held value for anywhere near as long.

Does my question make sense? Maybe the UK unhinged the Pound from silver in 1205 AD and it's been non-convertible since but it's held value so that would qualify (I know it's not true but it's an example).

> So you think physicists understand all about physics? I've got a bridge to sell you...

We understand physics well enough that we can build GPS which necessitates and understanding of relativity or else airplanes would be miles off of their autopilot at the end of a trans-oceanic flight.

But I'd love to be wrong, it'd be great if we knew things about economics to that level of precision. Life would be so much easier because then we could just DO THE RIGHT THING instead of arguing about it ENDLESSLY. As an engineer that holds tremendous appeal since the majority of the stuff I do has a spectrum of right answers and perhaps a few optimal answers and a spectrum of wrong answers.

I feel the level of maturity of economics is late stone age or early bronze age re: engineering. We've got some ideas about how things work and can even bend a few to our will but there's no precision calculation, just experts making gut calls.

>Life would be so much easier because then we could just DO THE RIGHT THING instead of arguing about it ENDLESSLY

Don't you think economists wish the same? It just isn't the way it works.

>We've got some ideas about how things work and can even bend a few to our will but there's no precision calculation, just experts making gut calls.

Absolutely true. Should we give up? Of course not.

> Absolutely true. Should we give up? Of course not.

It seems rather backwards to me to have historically well tested methods of storing value and to throw those at the wayside because we "know better" now. If you can't prove it's better, don't change it.

I realize that it's incredibly unlikely that we'd ever go back to a gold (or silver) standard but in my personal opinion the positive value that such a standard has far outweighs the negative. You may well disagree with me on the relative values of the benefits and downsides and that's OK. But it doesn't make me wrong either.

When so much of society values things differently (some people find Audi to be worth the money, others BMW, others Ford or Jag or whatever!) it's kind of crazy to assume that one person KNOWS that paper money is better.

Maybe a bunch of people would choose to transact in other currencies given the choice. A recent attempt was made to do so; the Federal government did not welcome the competition: http://en.wikipedia.org/wiki/Liberty_Dollar

>Show me the strictly paper money system which has lived 1000 years

So nothing can ever exist going forward that hasn't existed already in history?

>just like physics and we'd understand it all already.

You think we understand "all of physics"?

> So nothing can ever exist going forward that hasn't existed already in history?

Not at all. Just that new solutions to old problems probably aren't much better than the old solutions, and perhaps worse.

How much have forks evolved, or chairs? Money is an old problem and has very old and well worn solutions. Modernity has made fantastic technologies, I'm not sure that the money we have is a breakthrough.

> Nobody really knows how this ends, good or bad.

Efficient market theory is based on the fact that when you leave people to their own devices, they tend to do a far better job and be better off than if you try to help them. Basically everyone agrees on that.

So why do we accept efficient market theory for basically everything, yet when it comes to currency someone has decided that we need elaborate schemes of variable government decreed micromanagement in order for things to work?

In terms of keeping things simple and letting the market decide, the perfect currency would be global, unable to be printed or manipulated, of a fixed amount, so that external interference is impossible, and people knew exactly what they were dealing with at all times. The closest we have is gold (and maybe bitcoin).

>yet when it comes to currency someone has decided that we need elaborate schemes

Money is a commodity, and the demand for it changes over time. Do you really believe that we should have the same "amount" in circulation as we did 200 years ago?

>unable to be printed or manipulated

Think of money as a concept. It's a means to perform financial transactions, nothing more. My ability to perform such transactions shouldn't be constrained because we haven't "cut down enough trees make paper", or "dug enough metal out of the ground" or "solved enough mathematical puzzles".

Take land - demand for it changes over time, the exact same amount is in circulation as there was 200 years ago, the value goes up as population increases and it becomes more scarce, why can't money be the same?

>Take land - demand for it changes over time, the exact same amount is in circulation as there was 200 years ago, the value goes up as population increases and it becomes more scarce

Why is that a good system? Why should people who happened to be here before our time have an inherent economic advantage by owning land? Wouldn't the world be a better place if we could cheaply create all the land we wanted?

The world is not fair, period. You can't expect individuals to work their asses off to strive for something better for themselves and their children, only to turn around and complain that their children suddenly have "inherent economic advantage"... followed by a swift call to somehow "fix" that so that everyone is equal all over again.

Oh yes, of course. Some individuals did some rather bad, questionable things to get an advantage in this world. But until you can prove that all "well-off" individuals did that, you have no moral ground to stand on.

>But until you can prove that all "well-off" individuals did that, you have no moral ground to stand on.

I have no idea what you're talking about.

Are you telling me that if we had the technological wherewithal to "create land" at will, you wouldn't use it? That you'd recommend we continue to deal with land scarcity? If not, why would you recommend those same actions when it comes to money?

>"I have no idea what you're talking about."

Ask me which parts you're confused about.

>"Are you telling me that if we had the technological wherewithal to "create land" at will, you wouldn't use it?"

See, land is not the same as money when discussing inflation. But most of my comment was directly discussing plain money-printing or inflation, not land-creation. And if you really must know: if we had some magical-fairy-powers to create a physical resource out of thin nothing (with no cost/effort), then I think land ownership would be the last thing we'd have to worry about. You've effectively created a post-scarcity economy.

>"If not, why would you recommend those same actions when it comes to money?"

Please re-read my initial comment. Your entire argument rested on individuals having an unfair advantage simply because they were "be there before" us. And I basically told you that you'd be stealing from honest, hard-working peoples' children by devaluing the value of their possessions.

>"My ability to perform such transactions shouldn't be constrained because we haven't "cut down enough trees make paper", or "dug enough metal out of the ground" or "solved enough mathematical puzzles"."

Why would it? You simple sub-divide each unit until you have the necessary precision (this works for physical currency, too). I'm really curious why you think a lack of growth in the money supply would hinder you from making a transaction?

Really, government-mandated inflation is nothing more than obfuscated stealing (or wealth transfer). Think about it: If it were simply a matter of "we need more physical(or virtual) money in circulation so that the transactions will flow" then the logical (and fair) solution to that would be to simply apportion some sort of "income" to each individual based on their current capital. But that's not how they designed it, and based on that, it shouldn't surprise anyone that there are many out there who feel that inflation is unfair to a large majority of people.

> And I particularly don't like how Krugman is always so quick to defend large debt loads. He keeps advocating to borrow borrow borrow, with seemingly no restraint. Is that really sustainable?

As long as the interest remains smaller than inflation, yes.

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