November 30, 2014 at 5:42 am #18527danthrash08Member
I’m not sure if it is something you even agree with, but many libertarians and Austrians make the claim that inflation is theft and i’m having trouble understanding how it is theft. This is something I’ve been thinking about for a on and off for quite a while now. I got the chance to ask Walter Block in an AMA on reddit, and it only made it more difficult for me to understand. I’ll copy that discussion here, please tell me where i’m going wrong and connect the dots for me…
I asked Walter Block this question:
“As a libertarian, I am wondering how inflation is theft if nobody has a property right in the value of a resource or good. If you get $100, and it loses 25% of it’s value, what has been stolen if you still have your $100. How is a decrease in currency value ‘theft’? Why is a decrease in value only theft when it’s currency, but not theft for any other good or resource? Is there a universalizable right to the value of a good or resource?”
He responded with:
“I agree. We can only own things themselves, not their value.”
I agree with this.
But he continues,
“And, if inflation (rising prices) comes about because new gold discoveries outstrip increasing productivity elsewhere in the economy, then fine. But when people counterfeit money (e.g., the fed, fractional reserve banking), that amounts to theft. But, not because the value of money owned by the rest of us decreases”
Why is a currency limited to gold? Can people not use anything they chose to as a medium of exchange?
He says it is theft because it is counterfeiting, but how is the Fed ‘counterfeiting’? We all know what the currency is, no one is being misled, there’s no fraud. Is it even possible for someone to counterfeit their own product? For example, could Nike make counterfeit Nikes? I don’t see how they could. So how then is it counterfeiting when the Federal Reserve prints Federal Reserve Notes?
Further, how does counterfeiting a good even amount to theft?
I can counterfeit a pair of Nikes for personal use without ever stealing anything from anyone, no theft has occurred from my counterfeiting. It’s only theft if I attempt to trade them with someone else while misleading them which is just fraud. But even that isn’t happening by the Fed, we know exactly what the currency is and aren’t led to believe it is something other than what it actually is, a currency losing value.
Counterfeit is just a term for IP. Everyone has the right to counterfeit, or copy goods of any kind, they just don’t have the right to use fraud while trading those goods.
So, why did he use the word counterfeit when there’s no property rights being infringed on and counterfeiting itself is never the crime, it is the fraud that is the crime.
I still have my $100 no matter how many more $100 bills are printed, it is only the value that is changed, but value isn’t property that i own and have a right to so how can the value of those dollars be ‘stolen’?
I don’t see how inflation is counterfeit, fraud, theft, or even that it’s a tax.
Please make sense of this for me, I feel like i’m losing my mind thinking about these things…December 1, 2014 at 3:51 pm #18528jmherbenerParticipant
In a libertarian society, private property rights are given the sanction of law. As a crime against private property rights, theft can occur as either the use or threat of violence or as fraud. Fraud occurs when a person substitutes something in the place of what he has agreed to exchange with another person. A counterfeit good is used to commit fraud. So, counterfeiting is illegal because it is implicit theft. Fraud, and thus implicit theft, would also occur if a person produced a counterfeit title of ownership to property and then traded it to someone else as genuine.
As you say, in a libertarian society people will choose what good they prefer as money. Whatever they choose, however, the production of that good will be regulated by profit, which in turn is generated by voluntary exchange of private property, just like that of any other good. Furthermore, money can be counterfeited in the same manner as any other good., The classic case is debasement of precious-metal coins passed off as full-valued. People could also choose to use titles of ownership to money as a medium of exchange. Bank notes or checking account deposits, for example. If these money substitutes are legally titles of ownership to money itself, then, they could be counterfeited by producing bank notes or checking account balances for which the issuer holds no corresponding money (i.e., fiduciary media).
In a libertarian society, entrepreneurs are free to try issuing fiat money in competition with other entrepreneurs producing commodity money and short-term loans as money substitutes in competition with other entrepreneurs producing money certificates. Success in the first case seems hopeless and in the second case extremely problematic. But those are questions of economic analysis and not private property rights.
To the extent that fiat money and fiduciary media are sustained in the market by legal privileges (i.e., legalized aggression against private property rights), then their issue entails unjust income and wealth redistribution. The legal privileges are the source of the theft.
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