Comment: Where's part 2?Anyway, on a

(See in situ)


Where's part 2?Anyway, on a

Where's part 2?

Anyway, on a side note, I had sort of a half baked thought related to the 500Eu Baby checks in spain.

I do believe that a fluctuating interest rate has the power to offset inflation and deflation together, and that must be achieved through a fixed monetary aggregate.

But there is one other factor, namely, population increases. Essentially, you cant assume the average family income would flatline under fixed money because eventually there will be less money in the system per person.

Of course, people are always discovering new gold and that may or may not be at the same rate as population increase. So perhaps that might balance price deflation due to population increase, or perhaps the rate would be higher (causing a rise in the price level) or lower (causing a fall in the price level). I don't know.

So here is where my half baked idea comes in. Suppose we live in the world where the monetary aggregate was exactly equal to one monetary unit per person. If we gave each person one unit when they were born, that ought to perfectly balance the equation. I say you give it to the person being born because it seems most equitable, compared to giving it to a bank or the government. Of course there is going to be the unintended consequence of people just coming along and popping out more babies, not to mention the tourist babies.

So maybe it would be more equitable to give that new monetary unit to the government. Im not saying I like it, but in terms of fairness and a desire to avoid unintended babies, it might be best under my half baked scheme.

But there is one other idea I had. What if that one monetary unit was put into a general fund that could not be accessed until you reach a certain age. Perhaps 18, 21, or ...65? Then the parents dont really have the incentive, you balance the population factor of decreasing prices, and the new units dont get given to the people with all of the power.

One thing I do know is that the self balancing interest rate mechanism of stable prices would not cover population increase deflation with a fixed monetary aggregate.

23