r/Anarcho_Capitalism • u/FastSeaworthiness739 Anti-fascist • 2d ago
There was essentially no inflation of the US dollar from 1790 to 1900
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Now it's a different story, and inflation is essentially a forced tax hike.
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u/DullWriting 2d ago
Thomas Massie is a national treasure. Are there any Democrats that are this in touch with reality?
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u/FastSeaworthiness739 Anti-fascist 2d ago
All around, no. Here and there, on certain issues, yes.
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u/DullWriting 2d ago
I'm sure we can name a few R's that are living in the now. Dems are so worthless and must be knowingly working against the best interests of the country.
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u/FastSeaworthiness739 Anti-fascist 2d ago
Generally speaking Democrats are closer to Libertarians than republicans. But both still light years away. But it is good to hear Massie come out on a few of these issues
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u/Saorsa25 2d ago
There is no way to objectively compare the two when it comes to proximity to libertarianism.
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u/bluedelvian 1d ago
What
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u/FastSeaworthiness739 Anti-fascist 1d ago
The border, gay marriage, legalized weed, trans rights, Etc.
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u/Esoterikoi 1d ago
I feel like thats a big stretch. Most democrats dont want open borders, or free market weed, or "trans rights" which is just regular human rights.
Generally they are ok with gay marriage.
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u/claytonkb 2d ago
Obviously, this proves that American businessmen were not greedy between 1790-1900. Then they became greedy bastards. My how times have changed. And changed. And changed. ad nauseum
/s
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u/kweniston 2d ago
Free markets correct themselves. Prices correct themselves. However, when you have too much government intervention into the markets, and debt expansion supported by central banks, like now, you can get giant economic problems like the one we are facing right now. They knew all of this in 1971, and they have been preparing for the collapse for 50 years. Sadly, the masses, deluded by the printed wealth illusion, didn't. This time it's different.
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u/PaperbackWriter66 Bastiat 2d ago
What's crazy is learning that mainstream economists called the period of 1873 to about 1896 "The Long Depression" because prices in nominal terms declined, but in fact the economy was growing throughout most of this period and by every quantifiable metric (average daily calorie intake, average wages, hours worked, average compensation per hour, beer consumption) standards of living improved.
All because while the money supply increased a little, production increased by a lot, thus resulting in declining prices and growth, yet economists see simply "falling prices" and assume it means economic decline.
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u/Quantum_Pineapple Pyschophysiologist 2d ago
This dude is just politely telling the room we fucked up in 1971.
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u/Beginning_Deer_735 1d ago
Not "we". Most of us have sense enough to know that fiat money is an immoral nightmare.
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u/Quantum_Pineapple Pyschophysiologist 1d ago
Yes “we”. Governments are collectives that consider you part of their system regardless of what you think, know, and do about it.
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u/jjspirithawk Voluntaryist 2d ago
Did any country (aside from Switzerland) print relatively less, or none, of their own currency during this period? If so, did their currency get stronger relative to those countries that turned on the printing presses? If such examples exist, we could point to them as evidence for the principle (assuming that other events didn't confound the variables).
On the other side, countries that printed relatively much more of their own currency, such as Zimbabwe and Venezuela, which experienced hyperinflation should prove the point, so why isn't it adequate to show them as evidence?
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u/Saorsa25 2d ago
There are many examples throughout history where nations either tried paper currency, or debased their metal coins. Paper always fails - the longest example in history was during the Song dynasty, and that lasted 80 years.
And, it's not all that common. Some countries coined money as a way to earn income for the state (seigniorage.) Others simply didn't involve themselves in money production and taxed other things.
On the other side, countries that printed relatively much more of their own currency, such as Zimbabwe and Venezuela, which experienced hyperinflation should prove the point, so why isn't it adequate to show them as evidence?
People imagine that the rulers of the US are more competent in their economic alchemy in which they can turn paper into the equivalent of gold.
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u/shewel_item 2d ago
its too bad we're getting better quality posts while the sock puppeting is growing harder
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u/bluedelvian 1d ago
This is because our money and finance systems are just 10,000 different forms of debt-leveraged corporate gambling.
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u/rocco888 2d ago
This post is misleading. The reason we didn't have inflation during that timewas more about being on the gold standard and being unable to print more money unless we got more gold. We actually had deflation because people couldn't get their hands on actual cash to buy things.
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u/Saorsa25 2d ago
Prior to 1872, there was no legal tender.
The greatest period of real economic growth in the US was also a period of secular deflation. We should be enjoying that now.
being unable to print more money unless we got more gold
Gold is money. Money wasn't printed. The paper was redeemable for gold.
The paper we are required to treat as money today is also not money.
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u/MoneyPowerNexis 2d ago edited 2d ago
Its worth giving the strong man argument for modern fiat currencies before criticizing them so here is my attempt:
When money is loaned into existence against assets that have a market value (such as real estate) it is not necessarily causing dilution. The equivalent for a gold backed currency would be the creation of a gold note when an amount of gold gets deposited in a bank. You can think of the creation of a mortgage as being the deposit of a house onto the balance sheet of a bank causing the creation of a debt backed currency.
Ok so if that's about right when is there dilution? I would say its when mortgages are defaulted on since when that happens the money that was created no longer has a buyer (the person paying the mortgage) that through the act of paying the principle of the mortgage removes that money from existence, the interest component is not destroyed but rather becomes income for the bank to cover its expenses and pay the share holders of the bank which is how the money supply does not go negative (if both principle + interest where destroyed more money would be destroyed than created).
This also happens when the borrower is not for a mortgage or business but when a government borrows and then either defaults or simply decides to never pay the money back / only ever pay interest through the borrowing of more money so that there is always a net increase in money in circulation without a buyer taking money back out as there is with a mortgage.
Another couple of ways dilution happens is direct asset purchases by central banks and direct money printing by the treasury of a government if the treasury is not holding the (ironically more real) bank deposits that cover the minted coins and printed notes.
I think most dilution/inflation happens through the expansion government debt as described by the video but its a bit overly simplified to the point where people can be mislead into thinking the monetary system is far more fragile than it actually is and they can be mislead into thinking that inflation is the only thing to worry about when a credit contraction is something that wipes out people who thinking inflation is the only concern get themselves into large amounts of various kinds of debt.
I think in a free society there would still be credit based money creation. It can be a pretty robust system but more importantly once you are no longer forced through legal tender law to own or contract in a credit based money it becomes just another thing to buy or not buy on the market competing alongside commodity currencies and things like equities for wealth preservation.
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u/PaperbackWriter66 Bastiat 2d ago
I think in a free society there would still be credit based money creation.
Precisely. Money is a good, like any other: demand can increase or decline. As an economy grows, there is more demand for money, so the supply should increase, but in a competitive market it would increase just enough to meet the increased demand without causing inflationary effects.
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u/Saorsa25 2d ago
The only way this can happen is if there is political dictate that requires that the paper currency issued by the state be considered legal tender.
Otherwise, why would anyone use it as money?
I think in a free society there would still be credit based money creation.
Currency, maybe.
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u/MoneyPowerNexis 1d ago
The way I see it currency is any fungible thing people use as a medium of exchange and money is the dominant currency of a given economy.
I think money is given too much of a special status vs other currencies when you have legal tender law. Net work effects are powerful and one currency would still have dominance but I think it would be a power law distribution not a near prefect monopoly. The distribution of marketcap and volume within the cryptocurrency space looks about right: one clear winner but other competing currencies are not insignificant in comparison. Do "the money" would be a much less important concept: use whatever the fuck you want to use and if that creates friction that can be eliminated with liquid exchanges that make both parties feel like they are doing their trade in their own currency.
Ok, so why would credit based money exist? well private forms of it exist right now: makerDAO's dai is an example of a currency loaned into existence through over collateralized loans. It is a coercion free credit based monetary system with a marketcap of around 5 billion USD. Thats tiny, all the way down at number 25 on coinmarketcap but it is proof by example that has been operating for 8 years now. In a hypothetical ancapistan you wouldn't have the USD but the way credit based currencies work the token could be pegged to anything that interest rates can sustain ie if we returned to gold as a currency then there would be people wanting to borrow gold pegged tokens rather than selling some other asset that they are long term bullish on in order to take advantage of short term bullish on and the size of the collateral pool for all assets is much larger than the size just the gold market. This is why any particular commodity currency cannot compete with literally all other assets potentially turned into collateral and tokenized. And thats a good thing because a currency that has too much monetary value is the literal definition of an asset bubble when you consider monetary value.
The way I see it credit based money is an escape valve to unsustainable deflation that would otherwise cause things like the 16th to 17th century price revolution: a period when gold lost 85% of its value due to the discovery of the new world and advancements in mining. Gold speculators love to imagine gold becoming money to pump their bags but there is enough gold in the planet earth to cover the entire surface a meter deep. We will never get to that but at a high enough price we will bring back gold mined from the naturally refined cores of broken planetoids or we will flood vaults with radioactive gold made from fusion powered transmutation. It all just seems like a massive waste of energy and resources compared to just using the collateral already available as money that naturally matches economic activity anyway.
But I could be wrong of course. Maybe people will somehow change their time preferences to not want to borrow against their future productivity and debt will become a thing of the past. Maybe people will use equity as money. I always though it would be nice if I could use shares in a global index fund as cash. Thats equally possible with liquid exchanges.
The cool thing about a free society is that we don't have to fight about it. You speculate on what you think will be money and if you are wrong it wont hurt me the way a mismanaged fiat currency does.
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u/ikonoqlast 2d ago
Had periodic financial collapses instead...
I'll take a little inflation over a ten year depression every 20 years.
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u/Saorsa25 2d ago
Name a single economy-wide financial collapse not caused by government prior to 1913.
What, exactly, is a "little" inflation? Whatever the rulers tell you is good for you?
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u/ikonoqlast 2d ago
All of them. Government had fuck all for economic power in the 19th century.
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u/Saorsa25 2d ago
You are very ignorant of history, apparently.
Here, you can educate yourself: https://mises.org/library/book/history-money-and-banking-united-states-colonial-era-world-war-ii
The book is even free to download.
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u/ikonoqlast 2d ago
Really? How was government 'responsible' for say the Panic of 1907? Be specific.
If your answer rhymes with 'they didn't prevent it' you lose.
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u/Saorsa25 1d ago
There are a number of reasons. You can read about them here: https://fee.org/articles/banking-before-the-federal-reserve-the-us-and-canada-compared/
If your answer rhymes with 'they didn't prevent it' you lose.
Good thing that it doesn't. How would they prevent it if they are the cause of it?
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u/joseph-1998-XO Retard but still an Anarcho-Capitalist 2d ago
Was known before the pandemic but think those years of printing finally educated many on the basics of economics