wealth

[rcgreen]

Why couldn't the gov't print enough money to
make us all rich?

Most of us instinctively see the fallacy when stated
that way, but many don't see it when they ask
gov't to reduce interest rates, or outlaw "foreign
competition"

Where does real economic prosperity come from?
What is the proper role of national governments
and International treaties in fostering real prosperity?

Lastly, what are the pitfalls and obstacles, technical,
moral, and political, preventing greater and wider
prosperity?

[ac1dsp3ctrum]

When the government prints moremoney the value of a dollar get less.... So if I had say 500$ right now and the gov't prints 200 billion dollars more.... My 500$ will only be able to bye 450$ worth of stuff.... So if the gov't made us all rich, in a sense we would still be poor

[gold eagle]

rcgreen this is a monster size topic. Master economists have been arguing about it for ever.


Ok so here goes a real short attempt.

real prosperity does not come from govt leaders. It IS developed by proper adherance to basic founding principles of exchange, though that is not its source.

The proper role of govt is to :

1. Set the right examples of fairness, justice and moral integrity

2. Encourage personal wealth, the basis of all state wealth.

3. Punish corruption and reward right doing.

4. Deal fairly with own people and carefully with other govts

Lastly there are no pitfalls to this other than temporary unpopularity while fixing the problems. Once that is done all things will work and the people will praise the leaders.

I postulate this last pitfall as the most important stumbling block to all you suggest because of the leader's desire for immediate gratification, ambition and need for quick praise due to their lack of strength of character to follow through the hard stuff.

[VictorKaum]

About printing dollars: it doesn't work that way, like stated by ac1dsp3ctrum.
It's all about purchasing / buying / spending power. The real value of money has to be stated in relative amount not in absolute amount. So you have to compare your dollar with other values, like Euro or gold,...
If you printed more dollars everyone would gain more money but things would be expensive so your wealth expressed in purchasing power would stay exactly the same. It's all about relative numbers.

I postulate this last pitfall as the most important stumbling block to all you suggest because of the leader's desire for immediate gratification, ambition and need for quick praise due to their lack of strength of character to follow through the hard stuff.

To avoid that pitfall, leaders could create path dependencies, using the locking-in strategy. This means that you create a path to follow for the next leaders. In Europe they decided back in 1992 to use the Euro currency in 2002 !!! So this means that the leaders from 1992 created some path dependencies, the new leaders were locked-in, they could not do anything against that... the costs for a disengagement would be to high. This is a common used trick. Look at the NAFTA, the Mexican president Solana created a path for his followers.

[rcgreen]

Originally posted by VictorKaum
About printing dollars: it doesn't work that way, like stated by ac1dsp3ctrum.
It's all about purchasing / buying / spending power. The real value of money has to be stated in relative amount not in absolute amount. So you have to compare your dollar with other values, like Euro or gold,...
If you printed more dollars everyone would gain more money but things would be expensive so your wealth expressed in purchasing power would stay exactly the same. It's all about relative numbers.

And yet, governments have often resorted to the creation
of more money, as a way to solve domestic or international
political crises.

The short term advantage of inflation is that it increases
their purchasing power, but at someone else's expense.
One of the purposes of the Euro is to remove this power,
and the temptation, from national governments.

Too often, governments have used a policy of inflation/devaluation
to gain an advantage over neighbors. When some local
industry is unable to compete in the global
market, they can be "protected" by reducing the value of
the national currency. It makes your exports cheaper to
foreign buyers.

[gold eagle]

Path dependencies are only one of the means of accomplishing this. Even then there are challenges to the lock step march of intertwined monetary policies. Certainly a basis for expansion has been put into place by leading euro, na and asia countries. However, there is the noncompliance issue of certain countries to complete their responsibilities.


In short, what VictorKaum and I are in part, referring to, is co joining currency and political policy to lessen the amplitudes of growth and retraction shifts of trade output and balances.

[rcgreen]

Originally posted by gold eagle
In short, what VictorKaum and I are in part, referring to, is co joining currency and political policy to lessen the amplitudes of growth and retraction shifts of trade output and balances.

I am ordinarily an advocate of individual liberties, and fear
gov't power and elitism, but it seems that the "common man's"
instincts are all wrong on this. There are so many conspiracy
theories about WTO and World Bank.

Free trade and stable money are necessary elements
contributing to our high standard of living,
but many people believe that the rules are biased,
leading only to the enrichment of a few.

In some places, these suspicions dovetail with zenophobia,
nationalism and racism. It is hard for leaders to defy an
angry mob. Argentina is currently experiencing such a crisis.

[gold eagle]

That's exactly right rcgreen. Argentina is a fine example of what goes wrong when, as my other post in this thread alludes to, leaders fail to lead.

It ill behooves a society to put in weak leaders (though it is not always immediately apparent at the beginning) that then mishandle the government.