Free Money!

[tcpip]

Disturbing the tumble weeds and in this community, I'm at askance at whether anyone here fancies themselves a bit of an expert on Free Money, as a means to reduce the negative effects of Liquidity Preference?

It intrigues me as a concept and even more so because of its apparent (limited testing) success.

Comments

[laudre]

In what way would this be distinguishable from modern fiat currency, at least in theory?

Beyond that, the function of money as a store of value that this seems to be aimed against is a feature, not a bug. Same thing with interest rates.

[tcpip]

My limited understanding (which is why I pitched to the community) is that it would be that money supply would be stable.

[lesslucid]

What benefits would come from a stable money supply that we don't already get from a low, reasonably predictable level of inflation?

The money supply is strongly affected by the amount of borrowing and lending that banks do. Wouldn't this "free money" involve a great deal of large and dramatic shifts in the availability of cash, with accompanying disruptive effects on the real economy?

[tcpip]

What benefits would come from a stable money supply that we don't already get from a low, reasonably predictable level of inflation?

I think the removal of liquidity preference would be a feature that would be superior to low levels of inflation.

Wouldn't this "free money" involve a great deal of large and dramatic shifts in the availability of cash, with accompanying disruptive effects on the real economy?No, quite the opposite. My understanding is that one of the arguments is that without constant input of extra money in the economy, the demand for money would fall in proportion to reductions in circulation (due to liquidity preference). As demand falls, unsurprisingly, producers lower prices to compensate. However when this is witnessed by consumers, they withhold purchases (relative to elasticity and necessity of demand) in order to acquire the lowest possible price. This leads to even less circulation.... eventually leading to recession and depression

[mcfnord]

"In 2006 milestones were placed, beginning from the railroad station through the downtown, to show this history, on top of questioning the authenticity of never-ending exponential growth triggered by the compound interest."

not sure i understand but the success story is interesting

[ragnarok20]

In what ways would this be superior to the use of a gold standard?

[tcpip]

Almost anything is superior to the gold standard.