http://forum.onlineopinion.com.au/thread.asp?article=12490#215956

Peter Hume, i disagree, are you not old enough to remember how much more stable our economy was with regulation? between 1945 & 1965? When i bought my first house in 1980 the banks would not even talk to you until you had saved a deposit of 1/4 to 1/3. A higher hurdle to get over but made for more a responsible attitude to life, budgeting, saving, etc.

Arjay & imajulianutter are quite correct, remember when Krudd & Swannie "guaranteed the bank's deposits" despite telling us it was not neccessary? Westpac & Commonwealth went straight out, with cheap government money & swallowed up their competitors Bankwest & St George, economic treason in anyones language?

Arjay, i hear what you are saying about the differences between Chinese & Western banks, where they get their funds from, but they have been equally profligate with their lending for cities that stand empty, etc. As long as we & the rest of the world is buying less of their consumer goods, their own ponzi schemes look more UN stable.

The real problem for us still lies with out total relliance on quarrying though. We are heading for a double whammy there, with the probability of a slow down in China & India, plus the start of coal mining in new competitor nations like Mongolia. With commodity prices being so high, new mines are opening up all over the place.

Formersnag,you are right about the Chinese Banking system being equally flamboyant in regards to money creation,but they are not borrowing like us from OS banks to enable growth.They don't have that giant sucking sound of foreign debt starving their real economy of liquidity and thus must have inflation to keep enough money in their economy to make it functional.

Our system must have inflation since the Global Central Banks are milking us dry by expressing our productivity as debt.The more growth we have,the more debt we incur.

Formersnag, unfortunately the reality of the situation is, it doesn't matter whether you disagree or not, any more than if you disagree about the law of gravity. Only if government can create benefits out of thin air by printing paper - which it can't - would it matter if you disagree. It's still causing our economic problems whether or not you understand or agree with it.

""Peter Hume, i disagree, are you not old enough to remember how much more stable our economy was with regulation?"

"Our economy" is "with regulation" now, so I don't see what point you're trying to make. So far as the benefits you enjoyed were at someone else's expense by virtue of government policy, they were not ethically justified.

And a license for government to print money and lower interest rates does NOT make "our economy" more stable, it what's caused the current economic crises.

Arjay
I have already challenged and disproved your claim that there is anything necessary or desirable about increasing the money supply in line with increases in productivity. You have been completely at a loss to defend your reasoning or critique mine. You just went silent. And yet here you pop up again, re-running the same refuted belief system.

Why? Why won't you defend your argument and answer my question that proves you wrong? At here:
http://forum.onlineopinion.com.au/thread.asp?discussion=4643&page=0

You have NOT justified why government should have a power to increase the money supply.

Hi Saul,

Nothing much here to disagree with. The US will become Japan unless they spend some money. Europe will go into recession if they keep tightening. China is struggling with inflation atm and that could go either way for Australia. I don't suspect much damage if any unless it is a by-product of the pursuit of a budget surplus. Just my opinion of course.

On previous discussion http://bit.ly/pNM7cb I'm consistent with my pseudonym everywhere and am absolutely no one of note (probably never will be) and I believe what is said is more important than who says it. If it has merit, it has merit, if it doesn't it doesn't; Also a bit fearful of 'Skeptics' of the world when I change my mind.

My political bias is towards the country Independents, particularly the late Peter Andren. I hope this assuages some of your concerns.

Thank you for your continuing engagement across the Internet and thank you for your time.

Peter Hume if you increase the money supply beyond increases in productivity,then you have inflation or a depreciation of your currency.The true reason for increases in the money supply should only be productivity improvements or population increases.

I don't accept that you have proven otherwise.

Arjay
"I don't accept that you have proven otherwise."

Why not? I have shown why there is no reason for the money supply to be increased in line with productivity, by my example of a farmer who increases his productivity, and sells his increased product on the market: http://forum.onlineopinion.com.au/thread.asp?discussion=4643&page=0

You haven't answered. Would you please join issue, and explain why "The true reason for increases in the money supply should only be productivity improvements or population increases."? So far you have only repeated that belief. You have not given any reason why. And you have agreed that money is medium of exchange, so therefore it's the *relative*, not the *absolute* amount of money that's important, so please don't answer "because there wouldn't be enough money".

This point is important because if there is no justification for an increase in the money supply commensurate with productivity or population growth, there would be no justification government having a monopoly power over the money supply, and no reason for you to support it. This would solve all of the theoretical problems inherent in your policy proposal.

You also have not explained how a government power to print money or lower interest rates could ever be limited from abuse. It's no use saying proper Constitutions would do it. They obviously don't. *How* is the power to be limited to increasing the money supply in line with productivity increases, and not in line with politicians' ego increases please? Okay we put it in the Constitution. What if the government ignores it, which is what has happened in the US. What remedy has the ordinary subject got? Can he sue the central bank for fraud? Which court? The government-supplied court, right?

Thus I have proved your argument wrong thrice over:
a) no justification for money supply to increase in line with productivity or population increase
b) no justification for government monopoly power over money supply
c) no way to limit the power from abuse

I think you should either concede the points or join issue and provide a rational defence of your argument.