By subjecting all production, including that of money and banking, to the test of profit and loss, the market renders an integrated system of production that economizes the use of all resources for society at large.
Advocates of an elastic currency realize that its production cannot even be subjected to, let alone pass, the profit-and-loss test. As F.A. Hayek wrote,
There is no justification in history for the existing position of a government monopoly of issuing money. It has never been proposed on the ground that government will give us better money than anybody else could.
Advocates of an elastic currency merely assert that it can achieve a desirable outcome that a system of commodity money and money certificates cannot. There are three such claims for an elastic currency. First that it can keep the price level stable. Second, that it can prevent price deflation. And third, that it can accelerate economic growth.
Maintaining Price Stability
There is no social benefit from keeping the price level stable. The alleged benefit is that price stability prevents wealth transfers between creditors and debtors and between workers and capitalists. But such transfers assume that entrepreneurs fail to anticipate changes in money’s purchasing power.
… Moreover, in practice the advocates of price stability aim at price inflation of around 2 percent per year. But, if entrepreneurs can adjust their expectation to cope with a 2 percent per year price inflation in an elastic currency system, then certainly they can properly anticipate and deal with a 2 percent per year price deflation under a commodity money system.[8]
Preventing Price Deflation
There is no social benefit from preventing price deflation.
Stimulating Economic Growth
There is no social benefit from attempting to accelerate economic growth. The alleged benefit is that monetary inflation through credit expansion builds up the capital structure of the economy more fully than otherwise. Monetary inflation and credit expansion generate the boom-bust cycle, however, not economic growth.[14]
Monetary Reform
The goal of monetary reform is to make money production subject to the profit-and-loss test of socially beneficial production. Money production must become an integral part of the market economy.
Conclusion
No one can describe today the configuration of commodity money and money certificates that entrepreneurs would bring about if permitted to operate private enterprises in their production any more than one could have predicted in 1900 the development of the 21st-century automobile industry or predicted in 1950 the 21st-century consumer-electronics industry. What we do know is that their production would be regulated by profit and loss and therefore would result in the satisfaction of people’s preferences. The monetary inflation and credit expansion of our elastic currency system would be eliminated and with it the booms and busts that have plagued our history.
kazdopadne jsem precet aspon tu citaci a posledni veta me docela pobavila. samozrejme, neni mozny to zmenit (zrusit) ze dne na den, je potreba nejprve zmenit mysleni a chovani uzivatel penez. kdyz se budu porad spolihat na to, ze mi nekdo kdykoliv pujci na jakoukoliv hovadinu a budu na to zvykly, tak pokud o tuhle moznost potom prijdu, tak si hodim smycku. a na urovni celeho sveta to imho plati taky tak.