Guest Post – Infinite Money

16 Sep

Submitted by reader JMD*.

The central tenet of the Gold Standard Institute is that money is what extinguishes all debt. That is its nature, its function. If you have enough money, you can extinguish any debt you might incur and since there is no limit to human wants and desires, money is the one thing you cannot possibly have enough of. Thus the demand for money is infinite. When debt masquerades as money by government decree, that being the irredeemable obligations of central banks, the infinite demand for money can, at least for a time, be met by infinite supply.

Infinite demand met by infinite supply leads to credit or debt bubbles as the inexhaustible demand for money is met by the infinite supply of central bank obligations, or more accurately, the infinite supply of commercial bank obligations ‘backstopped’ by central bank obligations. The bubbles grow and grow, despite the obvious distortions, becoming ever more fragile as they expand, until the day they burst.

This leads to a sobering conclusion. If you have the ability to issue, without limit, debt that trades as money and the demand for your ‘money’ being infinite, you have the ability to extinguish all possible debt, you can have everything you desire and more, you have ultimate power. It is not a stretch to say you are akin to a God. Government has usurped this power, yet government is composed of humans and humans being humans, not Gods, there is zero chance this power will be given up voluntarily, would you….? Rather, it will be lost through a total collapse in the ‘moneyness’ of government debt. The government will take everyone down with them, as the ‘moneyness’ of their obligations ebb due to their declining quality, rather than admit they have been perpetuating outrageous fraud for decades and cease to enforce their ‘legal tender’. As Melchior Palyi wrote back in 1958;

There can be little doubt of the final outcome, unless the process is brought to a halt.

Alas, it won’t be.

With thanks to Doug Noland and his Credit Bubble Bulletin.

[This article was originally published by the Gold Standard Institute]

Disclaimer: The views expressed in the above article are the author’s own. They should not be interpreted as reflecting any views held by Senator Barnaby Joyce, The Nationals, or by the blog author.

* Please see also JMD’s previous Guest Posts –

The ‘Moneyness’ Of Debt

Why The RBA Sold Our Gold

Our Government Debt Crisis Is Already Here

3 Responses to “Guest Post – Infinite Money”

  1. Ted O'Brien September 16, 2011 at 10:24 pm #

    It isn’t really so complicated that you have to get into theology.

    The KISS principle says money is worth what you can buy with it. No amount of money in your pocket has any value when you are dying of thirst in the desert.

    There is no such thing as infinite supply. This renders your concept of infinite money irrelevant.

    The Rudd/Gillard government will indeed take everyone down with them. That was always their intention, and has been ALP policy for thirty years or more.

    Did you notice that the government’s “stimulation package” studiously spent the money where it wouldn’t generate new production? Indeed it directed our construction industry to building school halls we didn’t know we needed when what was badly needed was new housing and transport infrastructure.

    Those people who can’t remember the Hawke government’s promotion of Alan Bond should research it thoroughly, noting that this came in tandem with the deregulation of the banks. That promotion of abuse of the deregulation was quite bizarre, continued even as Bond was committing the crimes that landed him later in gaol, and extended to public personal abuse of critics.

    Just as a developer buys an old house and knocks it down to build a new one, the Hawke government planned to destroy our economic system so that they could install their own model.

    What they were promoting had to lead to a bust, and in 1987 it did. But when the bust came they were outsmarted, as the people on top of the pile, remembering the 1930s, knew that there is no fun in being on top of a pile that is flat. So, instead of extracting every pound of flesh as expected, they took losses sufficient to ensure that the pile did not collapse, leaving them still on top and the Hawkes still on the outer.

    The Gillard government is still operating to the same plan. The carbon tax will enable them to demolish our economic system. Kristina Keneally lately told us what their preferred model is, when she called on them to ditch their commitment to the socialisation of the means of production. Marxism.

    It isn’t really complicated.

    • JMD September 17, 2011 at 9:38 am #

      “There is no such thing as infinite supply”

      You completely missed the point of my argument, possibly because you don’t understand that the dollar is the financial obligation of its issuer, but thanks for taking the time to read it.


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