Saturday, 2 February 2013

Inelastic money

You will know if you have read the relevant posts that I take the view that the only reason there should be  more money in existence is if there is genuine growth. I don't mean growth in GDP,  because growth GDP can include things which are bad in themselves, or from putting right things that are wrong.

I concluded that only things that are good for humanity should count as growth. The thought process follows through that what is good for humanity is indicated by increased population. This is because increased health and happiness will lead to longer lives and therefore increased population, but also simply because twice as many equally healthy-happy people equals twice as much health-happiness.

But I have been itrigued by the idea in the essay linked to above - inelastic money. This is a money supply that never grows or shrinks and only varies in velocity. If the value (utility) of goods and services increases, then there is deflation as each unit of money represents more goods and services.

I am finding this intrigung and shaall certainly give it more thought, some of which I shall undoubtedly expatiate here.

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