Kava wrote:
Not really. Money's true value is nothing, so inflation is just a convoluted explanation for people waking up and realizing it.
Okay, so it might seem a little funny/ignorant to suggest infinite dollars, but that's what's available to a government. There is no limit.
In strictly hypothetical terms, you are correct, there is no real 'limit' to how much money the government can print.
In practical terms though, you're completely wrong on all accounts. Fiat currency does have backing in the form of trust. Trust that loans will be repaid, trust that the money will have value, trust that the economy will remain stable and that a dollar today is dollar tomorrow, even if it may not necessarily be exactly a dollar next week.
In general, the money supply is finite and limited. That, in addition to trust, is what gives money its value. There are only so many dollars out there. You get a piece of that by doing valuable work, which in turn is valued based on how important it is in terms of supply and demand. Work that is high in demand commands higher pay than work that is in low demand. Externally, other economies also factor into this. There is only so much yen. There are only so many euros. Economies and loans take place, currency exchanges can be taken advantage of in market speculation.
If you decide to print infinite money, you begin to do damage to the system that exists. Firstly is that you begin to devalue your currency relative to others. If you triple the number of dollars in the economy, your purchasing power drops by a third. This impacts your ability to import goods from foreign economies, since now you need to pay much more. It also damages your people's savings pensions and anyone living on a fixed income, making it impossible for them to really survive. Suddenly printing all that money out of nowhere damages the stability of the economy, which weakens trust, which further devalues your dollars. In practical terms, people shift their investments into more stable economies and charge you higher interest on your loans, which means you've actually worsened your position simply by printing off an unsustainable amount of cash all at once.
You can treble the amount of dollars in an economy by doing it over a few decades. This makes the shifts in the economy sustainable over the long term, since fixed incomes can be gradually adjusted, inflation can be taken into account by the market, which will find a new equilibrium over time. Printing infinite money over a short period of time allows none of these factors to take place, which makes you a destabilising force and more likely to crash and burn rather than solving the problem.
You get paid, you get taxed. You get paid more, you get taxed more. If the government forgets to raise taxes, the money's fake value is eroded by inflation. End result is the same. Everyone works hard on war machines but get poorer because war machines have no value and money has no value. But, if you aren't working on war machines, you're even poorer because the government can print that extra money to be a more competitive employer.
I've had to read this several times and I cannot understand precisely what your logic here is. You seem to be labouring under the point that money is worthless (trust and confidence are not worthless in a modern economy) and that taxation somehow removes money from the economy (it doesn't) and that people profit from the results of their work instead of because of their work (they don't).
Workers in factories don't get paid by commission on every warbot they make. They get paid by the hour (or a fixed salary with adjustments) regardless of how many warbots they make. If the government wants to incentivise warbot production, they generally do this via tax breaks for the corporations producing the warbots. If we're assuming a nationalised program, the formula changes, but workers still get paid, and usually get paid better than private sector workers.
It's actually more practical for the government to issue war bonds rather than to print money. In fact, the standard practice is to issue war bonds and then only print more money if you're completely desperate. War bonds are better than printing money, since they allow for government expenditure without increasing the money supply and in fact remove money from the economy. They allow people to invest in the war effort on their own accord and reap the repayments, and the profits, after the war is over without screwing the economy. A government not in a position to pay its war bonds down the road is likely to be a conquered nation, making both its economy and currency moot.
So, the only thing that really matters are finite resources in an advanced war. How quickly factories can be built, how much iron can be processed, what humans are available to replace robots that can't be built in time, and so on.
Interesting to think about, anyway. I don't know everything there is to know about economics, but I can't think of a reason why money would be a limiting factor in a war.
No nation is fully self sufficient, even in a war. You still need to trade with your partners for necessary supply and material that you can't get yourself in order to keep your war machine going. Your war machine is fueled by your economy. If you're busy putting sugar in the gas tank by printing infinite money, your war machine will stall, crash, and burn in quick succession, leading to you becoming a conquered nation in short order.
Money is finite because the economy is finite. It's a tool we use to place an arbitrary value on a good or service in order to ease methods of exchange. In olden times, it was backed by gold or silver on the basis that it was shiny, didn't tarnish, and wasn't much useful for anything else. We abandoned the gold standard because there is a finite amount of gold we can extract and the growth of the economy was outpacing the growth of gold, which lead to a shortage of money supply and a major lack of fluidity in markets as a result. The primary backing today is consumer confidence and trust that the money is worth what we say it is.
Trust and confidence drive the economy; where it is strong you can borrow obscene amounts of money and still come out on top. Case in point, the US debt is trillions of dollars. Other countries loaned that money to the United States... and pay
them for the privilege of loaning them that money. To clarify this point, there is effectively a negative interest rate on loans to the United States because people are THAT confident they will be repaid. To put it even more clearly; for every dollar the US borrows, it only has to pay back fifty cents down the road. Because there is confidence and trust that the US will always be able to pay its debts with dividends down the road, it can get away with this. Actions that damage that confidence, such as political maneuvers that threaten the budgetary stability of the US, raise this interest rate and cost the US treasury more by dint of increased interest payments than it would if it were to borrow yet more money on top of its trillions in debt.
The global financial crisis of 2008 and was precipitated by a destruction of trust, albeit a misplaced one due to slackened legislation on issuing loans, in consumers of the housing market to repay their debts. This had immense knock on consequences that has damaged the economy to this day. Trust is the value of modern currency, not a shiny piece of metal, and actions that damage the trust placed into it was what truly
makes fiat currency worthless. If you feel that trust is a bit of a nebulous thing to back a currency with, consider this next time you get behind the wheel. You trust that the people that made the car didn't skimp on the safety features, you trust that the people on the other side of the road won't decide to swerve and try to kill you, you trust that the road is well maintained, you trust that the gas station isn't watering down its fuel, you trust that your employer will pay you on time and you trust that the bank will not run away with your hard earned money.
If your life, everything you do and everything you own can be backed by trust, so can your money.
So... getting back to the main topic **cough** the economy is essentially a massive system for managing resources on the basis of supply and demand. Money oils that system up so it functions smoothly. Too little oil, the gears stick, the whole thing grinds to a halt. Too much and the gears slip, spinning endlessly and doing no work. You need to carefully manage the money supply to keep things ticking over just right. Any government will have the necessary tools to ensure that the economy functions smoothly in a war footing, from issuing war bonds, borrowing money from their allied partners, and in the worst case scenario, yes, printing more as necessary. Time, precious resources, skilled personnel, are all things that get managed by the economy. A high demand for mechanical engineers will lead to more people applying for the necessary educational course to become them, as the pay rises due to limited supply and finds equilibrium as demands are met.
If you want to replace humans with robots on the battlefield, the demand for such robots must exceed the demand for humans. Cost is a factor that affects demand. If the robots cost less, the demand will be that much greater. If human lives are valued higher than a robots chassis, then that too will drive demand for robots on the battlefield. We can see this calculus at work with the deployment of drones as opposed to jet fighters in strike operations for modern warfare. Bipedal infantry style robots are likely still a few decades off, but once they can match humans on the battlefield, or at the very least come close with attendant cost factors in both terms of money and human resources, then you'll see them replacing human personnel en masse and the age of the professional soldier will be long gone. The most you'd have afterwards would be the officer corps, and by this point, you'd be gearing up to replacing them too unless there was a massive social pressure to keep humans in the loop
for some reason.