I backed up my statements with detailed analysis and arguments. Can you likewise back up your assertions above, or refute anything I said? “Everyone knows” is not a logical argument, and certainly not an Objectivist one.

Printing "fiat money" backed by nothing for spending instead of borrowing is monetary inflation. It is counterfeiting to avoid debt and leads, as always, to price inflation. Everyone knows that and no one will take such a recommendations seriously. There are no shortcuts.

“You wrote that the money supply needs to increase . . . “
True

“ . . . and you are advocating inflation to avoid debt.”
Not true. Nowhere in my posts do I advocate inflation, I simply propose that if the government runs an excessive deficit (as it is doing now), “printed” money is less harmful to the economy and to individual rights than “borrowed” money. (Of course, hard money is superior to any form of fiat money, and in an Objectivist society money would be issued privately.)

Here’s why “printing” money does not necessarily produce inflation, why a budget deficit is necessary in a fiat economy, and why debt-free fiat money is superior to debt-based fiat money:

Imagine for a moment that you live in a country on a gold standard. One day the government decrees that henceforth it will no longer issue any new gold coins, and further decrees that its existing gold coins are the only forms of legal tender that will be officially sanctioned. The country’s money supply is now “stable”, but its value is not. As the economy continues to grow and the demand for money increases, existing gold coins quickly acquire a premium over other forms of gold, because of their value as that country’s units of account and media of exchange. If the “no new coinage” policy continues for long, this premium will continue to increase, and distortions such as trade and credit imbalances will begin to appear. By freezing the money supply, the government undercuts the ability of gold to effectively perform its vital role as a stable unit of account and medium of exchange. Eventually such a country must either resume gold coinage or consider itself, for all practical purposes, to be off the gold standard.

The above exercise demonstrates that an increase in the money supply is not bad in itself. Within a productive economy, it is a natural and necessary means of providing a reasonably stable unit of account and medium of exchange. This is true whether a country’s monetary system is fiat or gold-based.

Under a gold standard, the government provides a mechanism for this necessary increase in the money supply: turning gold bullion into coins. Each gold coin minted increases the amount of money in circulation, even though the existing amount of gold in the country and the world remains the same. And the government can transform any amount of gold into coins and release them into circulation without creating an imbalance in its budget. Under a gold standard, both a balanced federal budget and a continuing increase in the money supply can easily coexist, because neither policy creates a problem for the other one.

The exact opposite is true in a fiat money system. A balanced federal budget and an increase in the money supply cannot coexist at all, because the amount of money in circulation at any time is tied to the government’s accumulated budget deficit.

If the U.S. government begins balancing its budget, it will issue no new money. Therefore the money supply will remain constant while the amount of goods and services increases. This will lead to the same distortions that would be encountered in a hard-money economy if the mintage of gold coins were suspended: the value of each dollar will increase relative to the amount of goods and services it can buy. This may appear to be a good thing compared to the opposite situation we face today, but it isn’t. At present, excess money creation favors debtors over creditors, allowing them to discharge their debts in ever-cheaper dollars while their nominal wages are rising. Freezing the currency in place would favor creditors over debtors, who would be forced to pay back their debts in appreciating dollars as their nominal wages were being forced down. Neither of these outcomes is desirable. Either too much or too little money creation leads to imbalances within the economy. If the goal is a stable unit of account and medium of exchange, one which neither appreciates nor depreciates, the growth rate of the money supply must approximate the growth rate of goods and services in the economy.

To create the additional money needed to keep the dollar’s value stable in a fiat economy, the federal government must spend more money than it receives in taxes. There is no way around it. But the consequences of this deficit spending are very different for debt-based money and debt-free money. Under a debt-based monetary regime, the national debt (and its taxpayer-funded interest payments) must increase in lockstep with the increase in the money supply. Under a debt-free system this money supply increase can be accommodated even as the national debt is being slowly paid off. Clearly debt-free fiat money is the better alternative in this regard.

Agreed, it would be nice to just stop both things and just live in your means. Too bad Congress cant figure that out.

You wrote that the money supply needs to increase and you are advocating inflation to avoid debt. None of the very serious problems of the current system are solved by overt printing of money, which is much worse faster. For all all the inflation now implicit in the Federal Reserve System, borrowing from bond holders does not inflate the currency supply; it takes it from those investing in exchange for interest.

Rejecting inflation as a substitute for debt is not an endorsement of the current system, which is doomed to eventual failure. If they continue, which it appear they are, to accumulate borrowing they will reach a point in which all the borrowing goes to nothing but paying interest. That is a major reason why they are artificially depressing interest rates now -- it manipulates how much the government has to spend on interest payments. And that is only one element of the many current machinations. Another form of borrowing is the government borrowing from itself as it spends taxes collected for Social Security and Medicare that the government will eventually be unable to pay. out of the alleged trust fund that does not exist.

Re: “Every government intervention in currency inevitably screws the people using it.” True, but with “borrowed” debt-based money you get screwed over twice, first by inflation and second by being forced to pay interest on the national debt. With debt-free “printed” money you avoid the second outcome.

Who said anything about anyone’s “needs”, or inflation in the name of avoiding debt? The current setup is going to produce price inflation with or without debt. Inflation without debt is clearly less destructive of our economic well-being and our liberty than inflation plus debt. Most of the well-known hyperinflations during the past century resulted from attempts to deal with massive national debts, such as the one imposed on Germany after World War I.

ewv: +1!!!!! You are 110% correct!

How about reducing spending and eliminating all the BS stuff and corruption? That would cut the budget needs significantly. Not that that would ever happen, but makes the whole concern on currency manipulation (of any form) seem rather inane, as it is only to cover up their real problem.

Manipulation of currency is almost a big a crime as murder, simply because it arttificially changes the value equation. If you are paid 10.00 and the money supply increases so your 10 is now worth 9, your value for value equation has been changed. It is like watering down chocolate milk to make it go further, petty soon it isn't chocolate milk. Every government intervention in currency inevitably screws the people using it.

There are no excuses for government inflation for anyone's "needs". Inflation in the name of avoiding debt is a disastrous sham. We have seen the results of that here and historically worldwide.

Increasing the money supply with “printed” dollars is no more “disastrous” than increasing the money supply by the same amount with “borrowed” dollars. And taxpayers are not forced to pay interest (currently over $2000 per year for every adult American!) on dollars that are not “borrowed”.

And the money supply actually needs to increase a certain amount each year to keep the value of the dollar stable. Under a gold standard, the government provides a mechanism for this necessary increase in the money supply: turning gold bullion into coins. Each gold coin minted increases the amount of money in circulation without impacting the federal budget.

In a fiat money system, however, the amount of money in circulation at any time is tied to the government’s accumulated budget deficit. If the goal is a stable unit of account and medium of exchange, one which neither appreciates nor depreciates, the growth rate of the money supply must approximate the growth rate of goods and services in the economy. In a fiat economy, this means that the federal government must spend more money than it receives in taxes. But the government does not have to go further into debt to do so, it can simply “print” enough money to cover the deficit. The inflationary effect, if any, will be the same in either case. If the deficit is too large, price inflation will result regardless of whether the money is “printed” or “borrowed”.

None of that addresses the disastrous effects of massive price inflation from deliberate, direct inflation of the money supply. It is even worse than the 1970s.

Re: “deliberately directly inflating the money supply would be disastrous.” Actually it would be much less “disastrous” than adding to the already sky-high national debt. See www.fixourmoney.com .

Fiat money is inferior to money backed by hard assets. But some forms of fiat money are superior to others. Here are just a few of the advantages of issuing “debt-free” instead of “debt-based” fiat money:

Issuing pure fiat money freezes the national debt at its current level. This gives the economy “breathing room” to begin paying down the debt. It prevents the national debt from growing to the point of triggering an economic collapse.

It allows us to slowly pay down the national debt, without massive tax increases and politically unacceptable cuts to “entitlements”. A large majority of the federal budget, including Social Security and Medicare, requires increased spending each year but is politically “untouchable”. Under these circumstances, the continued use of debt-based money will require a substantial increase in the national debt, while debt-free money will permit us to begin retiring it.

It steadily reduces the amount of taxpayer funds diverted to pay interest on the debt. Most people are unaware that annual interest on the national debt is currently approaching $500 billion dollars, an amount equal to $2,000 annually per adult American! Decoupling the deficit from the debt allows these funds to be invested in more productive enterprises.

It removes a major impediment to implementing deep, across-the-board tax cuts. We no longer have to “pay for” tax relief by taking on more debt.

It eases debt-related pressure on the federal budget. Instead of increasing each year and “crowding out” funding for necessary government services, interest on the national debt decreases each year and frees additional funds for other priorities.

It shifts some of the Federal Reserve’s power back to Congress. While transitioning away from debt-based money does not “end the Fed”, it does limit the power of the Federal Reserve to control U.S. monetary policy, restoring much of this authority to Congress as originally specified in the Constitution.

It ends our financial dependence on our international creditors. Debt-free money removes any influence on U.S. policy that foreign governments might enjoy by virtue of their ownership of U.S. government bonds.

It removes a major cause of government “shutdowns”. Ending the debt “backing” of our currency puts an end to the periodic political crises brought on by the continuous need to raise the national debt ceiling. It thus reduces uncertainty about the ability of the government to perform its responsibilities without interruption.

And it halts the practice of “kicking the can down the road”. Any adverse consequences of overspending will be felt in the near term, with no additional mess left for our “grandchildren” to clean up at a later date.

Much of what they are doing doesn't even pretend to "simplify", which is now only a euphemism for raising taxes by eliminating deductions. There is a lot more complexity in the tax code to go after than a simple deduction of state and local income taxes and property taxes, which calculation is subtraction of a couple of numbers and isn't complex at all. It's a deliberate double tax intended to punish people more in some states.

But deliberately directly inflating the money supply would be disastrous. They also won't do it because the effects are too immediately and starkly obvious as visible prices are seen increasing. They will continue to devalue the money in more hidden manipulation while lying about the real price inflation rate.

It still goes back to the fact they do not cut spending, yet want to cut taxes. That means either more borrowing to fuel their habit, or manipulating the tax system to generate the money, and not let anyone see what they are doing. It appears that that is their plan.

I agree. #1 and #3 are much more important than #2. The lower the tax rate, the less important it is to get rid of tax breaks and loopholes.

"you could simply adjust the current percentage rates of existing taxes downward"
I agree completely. That's cutting taxes- easy. I'm saying it's hard to do three things at once: 1) cut taxes, 2) simply taxes, and 3) have no one's taxes increase. The reason is simplifying means getting rid of tax breaks and loopholes. If the attacks that someone's taxes went up are politically effective, they should pick #1 and #3 and put off #2.

Re: “saying all taxes must go down makes the job harder.” I think it would actually make the job easier. Instead of trying to perform a balancing act, offsetting some tax cuts with tax increases somewhere else, you could simply adjust the current percentage rates of existing taxes downward (or eliminate some of them altogether, like the Obamacare mandate for instance). I don’t think it would be too difficult to craft a package of tax cuts that would be popular enough to make it politically risky for Democrats to oppose.

I actually think our justice system is pretty good and usually catches politicians' crimes. Their investigating things makes me more confident, not less.

But when it comes to lies and looking like asses, it's totally bipartisan.

" “Obama deficit reduction” is completely bogus"
I didn't call it that, and I don't care what they call it, if they actually reduce the deficit. (I agree completely it's the normal economic cycle that reduced the deficit.) They're masters of telling you who's to blame for something and how someone else shouldn't get credit. That's fine. Just get us the results, and they can pass a resolution along with it blaming President Obama for things and stroking rednecks' fragile egos. None of that matters to me.

"it is certainly possible to simplify the tax code without raising anyone’s taxes. "
This is the line that critics of a tax cut are using. It's technically true, but saying all taxes must go down makes the job harder.

"the best short-run solution would be to begin issuing pure “unbacked” fiat money to fund the deficit"
I'm intrigued by this idea. I wonder how the financial markets would respond to the bonds being just bought back with unbacked money rather than held on the Fed's balance sheet. I don't understand the monetary system enough to know.

Wanted: A discrete independent driver with flatbed rig and canvas capable of hauling and covering a 28 foot long load weighing deuce and a half tons. Destination Washington DC.

Feeding Frenzy!

Paleontologists have found allosaur bite marks in stegosaur fossilized bones. Food for thought.

Nope, Dino, it is pretty much like a herd of stegosauruses, they all look and act the same, just some different spots here and there....