Originally posted by: Dissipate
No duh, they are being paid less as they mine and mint more money, it is called the Law of Diminishing Returns, it applies to any other business. This gives them a DISINCENTIVE to open up 5 billion mines all over the world and mine millions of tons of gold causing rampant inflation. Imagine that! A DISINCENTIVE to inflate the currency. When labor is involved there is a disincentive to inflate, when no labor is involved there is virtually no disincentive to inflate, because there is no cost to do so.
Uh... What I described is not related to the Law of Diminishing Returns. That Law is used to show decreased gains for increased investment, which is a somewhat different aspect of economics.
What I described is called inflation. It results from an increase in money supply without an equivalent increase in economic growth.
That is just like saying that you were suddenly bestowed incrased spending power after you went to work and got paid. The miners provide something that is in demand, just like any other worker in society.
Your own
link.
In the long run, nothing changes in the economy except for a larger gold supply and inflation.
In the short term, miners (or their employers) suddenly get larger purchasing power.
That quote is NO WHERE to be found in the link you posted, I would like to requote the ORIGINAL link that I posted:
"[10] Gold mining is, of course, no more profitable than any other business; in the long-run, its rate of return will be equal to the net rate of return in any other industry."
ROFLMAO. That quote is from your post, not your link. I think you're starting to get confused and losing track of this discussion thread.
I copied your link to illustrate the increased spending power of the miners in the California Gold Rush. The quoted line is your own words saying those miners did not have increased spending power due to the gold they mined.
Furthermore, the vast majority of miners during the gold rush were for the most part totally impoverished, so much for your increased spending power argument.[/b]
The vast majority of miners during the gold rushed arrived in California as the poorest of the poor. A small percentage who struck it rich became part of the nouveau riche. Their stories led to the influx of more miners. Thanks for strengthening my argument.
Your argument is baseless. Only a small percentage of entreupreneurs strike it rich, the rest fail. It is the nature of business. This has absolutely nothing to do with "seignioriage" related to gold mining.
My original argument is that the miners who mined gold became rich due to increased spending power. Please try to at least keep up with the original context as I have have done.
As for seigniorage, that is nowhere in the picture unless the gold mines are run by the government itself with the ultimate goal of coining currency. As the money supply increases, the value of gold currency drops. However, because the government is the entity introducing the new coins, it reaps the immediate benefit of increased spending using the current value of the gold. Over time, inflation spreads throughout the economy and the ones that lose are the last ones who feel the effects of the increased supply. Their gold is now worth less even though the increased supply exists elsewhere. That is seigniorage in an indirect form.
You really should start reading your own links and understanding them instead of quoting lines of which you have little understanding.
Ok, so you disagree on monetary systems, just don't try to make this a gold standard issue, because it isn't.
The original issure of this post is the alleged deception on the part of the US government. I have not forgotten that and I have been using data of known systems to disprove your assertions. The one who has forgotten the original issue is not me.
Your insistence on honest labor is understandable. Such a condition insures that the growth is entirely due to increased labor output. However, this assertion completely ignores the fact that the value of the economy as a whole is related to both labor and goods. Your assertion effectively implies that increases in efficiency lead to zero economic growth.
HuH? Stop babbling, I did not imply any such thing.
From your own mouth (figuratively) :
No, I clearly stated that expense is measured by man hours and the level of expertise of those man hours. This is true no matter what is being used as the medium of exchange.
"AND THE LEVEL OF EXPERTISE OF THOSE MAN HOURS..." productivity is tied to expertise, a man who is not an expert will be less productive than a man who isn't. An expert 100 years ago in any given field was probably much less of an expert today.[/quote]
Your response has only repeated my statement of efficiency and sidestepped the issue at hand. The issue is whether economic growth and the value of an economic system is dependent on labor only.
This will answer all of the "problems" you have posed about using gold as money, shak.
*sigh* Nobody seems to be able to spell my nick correctly.
Also, you really should read your links a bit better. That article essentially sums up some of the finer points of my arguments. Remember any of my previous posts on consistency?
Please be so kind as to point those points out. From where I am standing the chapter eradicates your idea of gold mining being "seigniorage".
Here are a few to chew on :
Currency systems based on precious metals experience the same inflation issues as fiat currencies.
Nothing has inherent properties as money.
Money is arbitrary. It's value is arbitrarily assigned by those who use it.
The value of money is dependent on supply and demand like any other good.
The value of an economic system with zero growth is constant.
The immediate effect of an increase in money supply is an increase in buying power followed by steady dillution of each unit of currency until the value of the totall money supply is restored.
If you want to try to apply seigniorage, it's quite simple. The entity coining the money is extracting a small tax on each new coin produced with new gold.
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