One who intends to leave others better off for his having existed.

12/12/09

Monetary Ethics I

If one family has meat and another grows vegetables, could the meat family accept an I Owe yoU for some present meat in exchange for some future vegetables, plus extra to compensate for waiting?


 


If the Veggie family exchanges future vegetables for present meat, is the IOU money and the extra interest?


Like buying groceries with a credit card?


 


If the Meat family exchanges a Veggie IOU for an axe


is the transaction dependent on the IOU’s perceived worth?


 


Like the trade-in value of a used car?


 


Could widespread consensus of an over-abundantly large crop make the Veggie IOU worth less axe?


Like buying local corn after a bumper crop?


 


What could happen if the Veggie family issues or is thought to have issued


more IOUs than planted seeds?


 


Should an IOU backed by faith and credit remain relatively stable as long as confidence and credibility exist?


 


 


 


If many sovereign governments simultaneously created trillions of IOUs denominated in different currencies to rescue the global economy from short-term financial turmoil, how much is who asking whom to pay the long-term costs, and how many IOUs could an axe cost if there are, or many believe there are,


more IOUs than planted seeds?


 


When national debts have once been accumulated to a certain degree,


[there has never been] a single instance of their having been fairly and completely paid.  The liberation of the public revenue


...has always been brought about by bankruptcy,


 though frequently by a pretended payment [inflation].


 


Adam Smith


Moral philosopher and Father of Modern Economics

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