Thread: Honest Question to Austrian's: Why can't Govt money lead to an Increase in wealth?

Yeah, what I should have said is why print money when you can achieve the same thing without printing money?

This scenario is pretty unrealistic when you're talking about economies with hundreds of millions of people in a global market.

As soon the scenario is replicated a few times, you risk inflation if you have printed money.

And what's to say the guy buys the canoe from his neighbour instead of getting a cheaper one from China?

Originally Posted by Zosiasmom

What's stopping you from getting everyone together and doing a barter-trade swap or you working for the guy with the canoe? Happens all the time in local farmer's markets. I don't mean to be coy, but people think that money is the only currency and that problems can't be solved by individuals bringing people together. Since time began sex has been a currency.

Last fall our law firm took 5 boxes of caviar for representing someone. He needed our help. Our staff likes caviar. Win-win.

This isn't a riddle. It's a simple example to explain the logic behind how Government spending CAN lead to more wealth. Your way of group trade would be very difficult and inefficient. Which is why we evolved to the system we have today which allows for very easy transactions.

Originally Posted by Ziggy Stardust

Yeah, what I should have said is why print money when you can achieve the same thing without printing money?

This scenario is pretty unrealistic when you're talking about economies with hundreds of millions of people in a global market.

As soon the scenario is replicated a few times, you risk inflation if you have printed money.

And what's to say the guy buys the canoe from his neighbour instead of getting a cheaper one from China?

How is it unrealistic when you extrapolate it? It's the exact same thing that actually happens in the real world regardless of the size.

And yes, we do eventually risk inflation IF we print too much money. But what in this example showed you that we printed too much money?

You are talking about things that do not exist in this example. I'm simply showing the most basic way that Government CAN increase the wealth and utility in this country simply by printing money.

Originally Posted by akphidelt2007

How is it unrealistic when you extrapolate it? It's the exact same thing that actually happens in the real world regardless of the size.

And yes, we do eventually risk inflation IF we print too much money. But what in this example showed you that we printed too much money?

You are talking about things that do not exist in this example. I'm simply showing the most basic way that Government CAN increase the wealth and utility in this country simply by printing money.

It's unrealistic before you extrapolate it. If an employer really needs an employee, they will invest in them and sort the issue themselves. They won't wait for potential employees to randomly be handed money by the government.

When does this happen in the real world?

I'm talking about things that exist in the real world.

I don't think it's very helpful to use these kind of scenarios. Why not just point to a real world example of this actually working?

Originally Posted by akphidelt2007

Alright, I promise to refrain from insults or non-productive remarks in this thread. I get a little annoyed when people do not even attempt to understand other peoples opinions and have already come to the conclusion that they are right no matter what. But I realize I'm doing the same thing, so I'm in this thread to actually understand the Libertarian's point of view on why Government spending is so bad.

Alright, let's first make a hypothetical example. Suppose there are 3 guys...

Person 1 is me
Person 2 is you
Person 3 is our neighbor

I'm poor but want a canoe so I can get a job across the lake and get back and forth
You are a canoe maker who wants a watch
Person 3 is a watch maker

So you chop down a tree in your back yard build a canoe and store it in your garage putting up for sale
The watch maker makes a watch and puts it up for sale
I don't have a job and could get one if I could get across the lake

So year 1 goes buy and no one has bought your canoe and you still couldn't get your watch and I still couldn't get across the lake

Year 2 comes and I get a knock on my door. It's the Govt! They say "Hey, you are the lucky winner of a fresh, new, $100 bill"!! I say "Yay, I can get my canoe"!!

So I go to you, give you $100 for the canoe. You are incredibly happy and go to the neighbor and give him $100 for a watch. The neighbor is now $100 richer, you can now tell time, and I can now commute back and forth across the lake to work... and the employer across the lake now has a laborer (me) to help him build his products.

So now, explain to me how this simple example of Government printing money did not lead to an increase in net wealth and an increase in net utility?

Unintended consequences.

the total value of our countries money in circulation is based on our status as the worlds reserve currency, and shares bought by others and of course our exchange of goods and services.

In other words when you print more money, it takes value from the money already in circulation by further dividing the total value of our currency.

So you get your fresh 100 dollars and buy your boat, then the boat maker goes to buy his watch, but now the exchange rate has hit dropping the value of the 100 dollar bill by 25%(you didn't think they were just going to print one did you?) So the watchmaker now wants 125$ for his watch so he can get the goods and services he wants and the boat maker doesn't get his watch.

So you get your canoe to where you before had a job to find that they are no longer hiring, they cant afford to because they still need to update equipment which now cost's more.

You could have always chopped down a tree and made your own boat, or perhaps a table to sell or trade with the watchmaker.

Originally Posted by Ziggy Stardust

It's unrealistic before you extrapolate it. If an employer really needs an employee, they will invest in them and sort the issue themselves. They won't wait for potential employees to randomly be handed money by the government.

When does this happen in the real world?

I'm talking about things that exist in the real world.

I don't think it's very helpful to use these kind of scenarios. Why not just point to a real world example of this actually working?

This is what you are picking out of the example? Lol! That was probably the most insignificant inference of this entire example. Now tell me how or why the Government spending can not create wealth.

Originally Posted by Lockhart89

Unintended consequences.

the total value of our countries money in circulation is based on our status as the worlds reserve currency, and shares bought by others and of course our exchange of goods and services.

No it isn't at all. That's ridiculous

In other words when you print more money, it takes value from the money already in circulation by further dividing the total value of our currency.

Who cares, there is more money, which means people can pay higher prices. What if more money leads to more output?

So you get your fresh 100 dollars and buy your boat, then the boat maker goes to buy his watch, but now the exchange rate has hit dropping the value of the 100 dollar bill by 25%(you didn't think they were just going to print one did you?) So the watchmaker now wants 125$ for his watch so he can get the goods and services he wants and the boat maker doesn't get his watch.

What??? Lol. It's a simple example, you can make the claim that they are just going to print more. You guys have yet to make a single coherent argument against Government spending not being able to create wealth.

So you get your canoe to where you before had a job to find that they are no longer hiring, they cant afford to because they still need to update equipment which now cost's more.

You could have always chopped down a tree and made your own boat, or perhaps a table to sell or trade with the watchmaker.

Ok, so I guess we can just make anything up and not focus on the underlying point. You guys are funny.

Originally Posted by akphidelt2007

No it isn't at all. That's ridiculous


Who cares, there is more money, which means people can pay higher prices. What if more money leads to more output?


What??? Lol. It's a simple example, you can make the claim that they are just going to print more. You guys have yet to make a single coherent argument against Government spending not being able to create wealth.


Ok, so I guess we can just make anything up and not focus on the underlying point. You guys are funny.

Ok, so what is the value of our money based on?

I care, people can't pay higher prices if they don't have more value.

The government started excessively spending and printing significantly more during Bushes term, look at our economy now. Honestly, why would the govt print 1 100 dollar bill when it costs more than that to run the presses. Government spending doesn't create wealth it distributes it, you cant get value without taking it from somewhere. The point is we have been doing it for the past 12 years and its making people scream i want the 90's back. Not all government spending is bad, however most of it is, and it doesn't create wealth. This is what an Austrian economist would tell you, its unfortunate that most people would rather be blissfully ignorant.

Originally Posted by akphidelt2007

This is what you are picking out of the example? Lol! That was probably the most insignificant inference of this entire example. Now tell me how or why the Government spending can not create wealth.

Why do you think it's insignificant? If your scenario would never exist in reality then the thread is pretty pointless, please provide a real world example.

There certainly is a sort of Black Hole theory on the right that allows them to believe that every dollar the govt collects is a dollar never to be seen again. I don't subscribe to that theory.