Posted Responses to My Substack Newsletter:

JL: Let’s see if I got this right: you’re proposing to subsidize the purchase of any good or service by having the central bank pay half the purchase price. Ever think about what happens to all these additional new dollars once received by the seller? May they be used to bid for other goods and services? And may such bidding again be amplified 2x by the central bank? What starts as a 50% discount is a virtual guarantee to hyperinflation in week.

Me: You’re not seeing it correctly. The consumer pays half of the price and the monetary authority pays the second half. The retailer receives no more money than they normally do per purchase. The consumer does save 50% of whatever the total cost is so their purchasing power is doubled, and the retailer is happy because now there is twice as much potential demand for their products and services. The retailer agrees not to increase their prices in order to opt into the discount/rebate policy. It’s wildly beneficial for the retailer and consumer so why wouldn’t the retailer want to opt in. And if they have some idiotic “principled” objection to such beneficial policy they can just opt out and then they will have to get 100% of their price from the consumer while the consumer can walk down the street and only pay 50% from their competitor. So its “an offer they cannot (and rationally should not) refuse.

JL: The money supply would grow quickly (essentially each year 50% of GDP would be added) due to the continued injections by the monetary authority. This would lead to hyper-inflation. Or in your scheme with fixed prices extreme shortages.

Me: Sorry, you’re stuck in Freidmanism and in the largely falacious orthodoxy of supply and demand both of which the policy program of the new monetary paradigm overturn. The new rules and regulatory framework of the new paradigm that enables high percentage cuts in corporate, personal and payroll taxes (and that will be replaced by very high taxation if they break the rules) will force enterprise to compete on price instead of allowing them to wallow in the current chaotically unstable system by committing the economic vice of price inflation. Money itself is at best a tertiary factor in inflation. Lack of a universally beneficial and well thought out policy and regulatory program and the clear identification of obvious and criminally insensitive attempts to cheat on it is the real reason it continues to be a problem.

Hyperinflations are very rare and generally require 4 things to occur before they take place: 1) Go to war, 2) Lose the war, 3) The winning side imposes onerous war debts upon the losing side which makes it politically palatable to attempt to inflate away such debt and 4) The private banks leverage up currency speculators who short the currency…and that is what actually initiates the hyperinflation. In the new paradigm both being the bank who leverages up speculators and the speculators themselves will be immediately arrested for such a blatantly anti-social act and not see the light of day for at least a couple of decades….and the general populace will be cheering the authorities along because they liked having the new paradigm double their purchasing power and they will not look kindly on those who would greedily try to eliminate it.

Scarcities will not be a significant factor because intelligent entreprenuers seeing the potentials of doubled purchasing power will prepare by upping production and productive capabilities. Secondly a doubling of purchasing power does not ipso facto translate into a doubling of consumption and economic throughput. Yes, the poor and unemployed will have a substantial uptick in consumption, but not everyone is going to eat twice as much as they do now and buy twice as many pairs of underwear as they have now. The likely long term effect will be a huge increase in savings and investment which will be an additional beneficial effect of the new paradigm.

We need to free our minds from orthodoxies. They are the end of actual thinking and the beginning of curmudgeonly mental unhappiness.