Quote from: Razick on March 23, 2015, 09:34:25 PM

I've heard the claim that infinite demand for money allows increased supply without triggering inflation, but it's usually used to justify money printing, so that's an interesting idea. However, both sides miss something important when using this argument: The supply of goods and services doesn't change as a result of a higher money supply (although a higher money supply can temporarily drive increased production). The more dollars there are chasing limited goods, the less it is worth.

It doesn't matter if society realizes this is happening, they do understand on some level or another that buying power is falling when prices rise.

You can't really blame banks here though. Fractional reserve banking is, as you say, a natural phenomenon, but, at least so long as there are reserve requirements (either by fiat or necessity--to maintain solvency), private banks can only *multiply* real currency, not mint infinite new currency. The amount of real currency created by central banks directly controls the money supply, therefore, central banks *over the long term* are always to blame for inflation.

In today's world, production capacity is just like the demand for money, is almost infinite. With more money invested, there will be more goods and services produced, to make inflation in check, or even trigger deflation, due to more products and non-changing demand

As soon as there is some profitable goods, money will flow in like flood and mass produce those goods immediately. We have seen such kind of dramatic change in industry landscape of bitcoin ASIC miner. It is jaw dropping that during a very short time of 2 years, all the last several generations of semiconductor processing node has been passed and now we are tapping the newest processing nodes which are still in laboratory phase

So it seems no matter how much money is printed, there will be corresponding goods/services generated quickly. But the problem is on the ownership: All those newly created money belongs to some private banks, they give nothing in exchange for those money. That created a loophole in the financial system, so that banks will eventually claim everything's ownership by just printing money