{"id":14162,"date":"2015-11-05T07:10:32","date_gmt":"2015-11-05T12:10:32","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14162"},"modified":"2015-11-05T07:10:32","modified_gmt":"2015-11-05T12:10:32","slug":"whats-different-about-monetary-policy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14162","title":{"rendered":"What’s Different About Monetary Policy?"},"content":{"rendered":"

What’s Different About Monetary Policy?<\/a><\/h3>\n

Many people agree that it\u2019s important to move to a free market in money (i.e. the gold standard). They also say that it\u2019s just as important to fight bad taxes and regulation. In their view, government interference in the economy is like friction in a car. The more friction you add, the slower the car goes. One source of friction is much the same as any other.<\/p>\n

Let me explain why it doesn\u2019t quite work that way, using a few examples.<\/p>\n

Suppose the government imposes an expensive tax on employers based on the number of full-time employees. Full time is defined as working at least 30 hours per week. Employers respond to this tax by reducing the hours of as many employees as possible below the threshold. The law still harms employers, but less than intended. If the law were a bullet aimed at the chest of the employer, it ends up causing a flesh wound.<\/p>\n

Another example is a law that makes it illegal for startup companies to pitch their deals to non-accredited investors. Accredited investors form organized groups that entrepreneurs can safely go to and raise capital. It\u2019s cumbersome, and it leaves some entrepreneurs out in the cold, but as with the employer tax, everyone works to minimize the damage.<\/p>\n

Both the employer tax and the investment regulation fit the analogy of friction that slows down the economy. However, our monetary system causes a different kind of effect.<\/p>\n

For over three decades, the interest rate has been falling. This causes all asset prices to rise. Rising asset prices incentivize people to consume their capital (as I\u2019ve\u00a0written<\/a>\u00a0in<\/a>\u00a0many<\/a>\u00a0articles<\/a>). In short, it\u2019s a process of converting someone\u2019s wealth into someone else\u2019s income. The owner of the wealth would never consume it, but the recipient of income is happy to consume most of it.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

What’s Different About Monetary Policy? Many people agree that it\u2019s important to move to a free market in money (i.e. the gold standard). They also say that it\u2019s just as important to fight bad taxes and regulation. In their view, government interference in the economy is like friction in a car. The more friction you […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7380,1183,379,534,3610,783],"class_list":["post-14162","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cobden-centre","tag-gold-standard","tag-government","tag-monetary-policy","tag-regulation","tag-taxes"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14162"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14162\/revisions"}],"predecessor-version":[{"id":14163,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14162\/revisions\/14163"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}