Stimulus Plan: Make The Baby Pay!

By Market Militia | Market Militia | 16 Apr 2020


Make The Baby Pay!

 

We all want societal progress such as medical for everyone that needs it, no homeless people, no poverty, equal opportunity, high quality education and many similar concerns. We all want these things to happen! The disagreement between people is simply about the various approaches to achieving these goals. 

Let's talk about value and where it comes from. Value comes from production. When people transform natural materials into cozy homes with beautiful stone or wood floors we feel that we now own something valuable because it makes our life more enjoyable. 

When bamboo is used to make one of the most comfortable t-shirts you'll ever wear, you feel good about this new possession in your life. When an inventor discovers a solution to a constant problem you face, it saves you time and effort. Things like these are valuable, and they make us feel rich. 

Can printing more currency make us all feel rich? Sure, it can, initially. However, printing money does not make the human population more wealthy. Let's wrap our minds around this concept with an illustration. 

Imagine a friend starts a company and offers you a job, but he can't afford to pay you a salary right now, so you and the other workers all agree to receive company shares as compensation. The company begins with 100 shares and 100 employees, and gives the shares out to the works at one share per worker. 

Eventually the workers want more than they are getting, because one share is not covering their life expenses. The company is still not profitable, so it can't provide a salary. The company then creates 100 more shares and issues them to all one hundred employees. Each employee now owns twice as many shares as they original did. But are the employees any better off? 

The corporation had 100 shares each worth 1% of future profits, but now there are 200 shares each worth 0.5% of future profits. The employees have the same amount of wealth as they did before, only with more digits on their share certificate. One corporation can have 100 shares, another 1,000,000 shares, but what matters is the percentage of future profits you are owed. 

Currency works just like shares in a corporation. Instead of the percentage of future profits your shares entitle you to receive, a currency's value is based on buying power. It does not matter if a currency's supply is 1 billion units or 10 trillion units, what matters is the percentage of the total supply you own. 

Let's go back to that illustration of the company with 200 shares. In the first example everyone received the new shares evenly. Would you be fine with only 10% of the employees receiving the new 100 shares? Sadly, when a government begins printing currency that is exactly what happens. Select parties receive the inflation, increasing their share of the total supply while eroding the percentage of the supply for those not getting the inflation. 

This is why cryptocurrencies were invented. People are sick and tired of central banks using inflation to erode their hard earned income. They are simply bailing out their wealthy friends with a socialist system available exclusively to the elites. 

Why will it not solve our problem to just redirect the inflation to the common people rather than the elites? Remember, we can issue any number of units we want, but its the percentage of the supply you own that matters. On top of that, currency is merely a tool to keep track of value, it is not the value itself. The value comes from productivity by people such as farmers, entrepreneurs, inventors, scientists, writers, musicians, artists, architects, engineers, plumbers, electricians, developers, strippers, researchers, therapists, factory workers, bartenders, comedians, chefs, webmasters, pilots, drivers and more.

Wealth is created from intelligent and diligent effort that provides something useful to someone, not from increasing the amount of digits on a computer. Cryptocurrencies, gold, silver and everything else is not valuable all by themselves, they are the method of measuring real value, which is created by people. 

Central banks know that currency is not valuable and that it is people that create the value. That is why when the printing begins they back this newly minted currency by future value created by people. It feels like you're getting a free lunch, but really, you're just pushing off the cost to the next generation. Do you really want to make your children pay for your free stuff? 

I want a future world where everyone gets the medical assistance they need. I want that world to provide equal opportunity to people of all backgrounds. I want everyone to have a home in that future world and I want quality education to be abundant. Its not that some people don't care about those things. We want to figure out how to achieve those goals without making our children and grandchildren pay for them. 

 

Did you like this article? Check out another below:

 

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Can A Cryptocurrency Truly Replace Gold?

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Market Militia
Market Militia

The Market Militia blog discusses decentralized and open finance being built on blockchains such as Ethereum as well as the benefits to human liberty that can be achieved through concepts such as "digital constitutions" through distributed systems.

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