authorities will “create more money” to goose the value back up. Always keep in mind, though, that creating more money does not create more resources or more energy. Rather, it signals society to use already -existing resources and energy faster. Creating money alters human behavior, not the physical world. Money amounts to an imperfect signaling system for keeping a large, complex society up and running. In theory, the signals it sends gives people a sense of what’s a good idea, economically speaking, and what’s not. It is somewhat analogous to the chemical signals that regulate your metabolism, telling you whether you are hungry, thirsty or need a nap. Helicopter money dilutes the value of the previously existing money; instead of creating wealth, it redistributes purchasing power. Specifically, it takes purchasing power away from those who have saved up their wealth and gives it to those whose “wealth” came from picking up bits of paper that were blowing around in the streets. This has the effect of burning through existing “real wealth” by taking it away from those who have saved it up and giving to those who squander it in an orgy of spending. Helicopter money does the exact opposite of creating wealth: it makes society as a whole poorer by burning through finite natural capital at an accelerated, and thus more wasteful, rate. This is what happens when helicop ter money works the way it’s supposed to. But if all people come to feel sufficiently pessimistic about the future, impoverished and insecure but short of literally starving, they will increasingly decline to spend their helicopter money. Instead, they wil l stuff it under a mattress and wait for the really bad times. And when the bad times arrive, they will spend it on necessities such as food and energy, bidding up prices and triggering what’s known as hyperinflation. TaaL: Wait, is this a thought experiment or is it what has happened the past 50 years or so? Lots and lots of metaphorical aircraft dropping money (like, Google). Speaking as a system designer (which all my people are by the time they’re eleven), your monetary system strikes me as being nothing but a terrible load- following algorithm. Ideally you’d figure out what you really need and what your world can support without being damaged, and then construct a system which gives you good feedback, so at any given time you gather and expend the proper amount of resources to make it keep working. Instead, you have a system – if one can even call it that – designed to send bad signals to mislead you to burn energy and waste materials at an ever-increasing rate,
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