Usually, when committed by the government.
Examples:
- Underfunded pension funds,
- bank bailouts with taxpayer money,
- wars with made-up reasons,
The cost of each should be in the trillions but it's not fraud. By the same reasoning, previously one could expect to get a positive real interest rate (= nominal interest rate - inflation), yet that's not the case. Legally fraud? No. Challenging the economics of the last few milleniums? Yes.
No, that's not at all what I mean. What I mean is what I said - inflation isn't just not fraud, the two terms are not even definitionally relevant to one another.
> Usually, when committed by the government.
Examples:
- Underfunded pension funds,
- bank bailouts with taxpayer money,
- wars with made-up reasons,
I'm not going to engage in a discussion about whether or not governments do things which are economically controversial or a net loss for society (nor am I going to agree or disagree that your examples are good examples of that observation in practice).
What I will say is that "bank bailouts with taxpayer money" are not fraud, even if the banks themselves were complicit in fraudulent activity, because the bailouts were a practical matter of economic preservation. The government itself did not defraud the American people in this example, and your framing here is a rearrangement of the actual facts. Using taxpayer funds (which is tantamount to the government doing nearly anything) for something which you disagree with and which is related to a financial system does not constitute fraud.
As for the other two examples: I won't comment on war, but can you clarify what you mean by "underfunded pension funds"? How does this example constitute fraud, and what exactly do you mean by these funds being underfunded? Deliberately so? By whom? To what effect?
> The cost of each should be in the trillions but it's not fraud. By the same reasoning, previously one could expect to get a positive real interest rate (= nominal interest rate - inflation), yet that's not the case. Legally fraud? No. Challenging the economics of the last few milleniums? Yes.
Fraud requires a conscientious, covert decision on the part of one party to cause, and thereby profit from, a loss for another party. You can't feasibly map fraud to inflation. It's not just that it isn't fraud (it isn't!), it's that monetary policy is so complex, and its incumbents' decisions so diverse, that it's conceptually orthogonal to fraud.
Economic control systems and their feedback mechanisms are very complex and influenced by many unrelated parties; you need not ascribe malicious motive or conspiratorial profiteering to the government to end up with characteristics you're unhappy with.
I see where you come from but there are two things you should consider:
1. Intention is really hard to prove. Just as much as you say that there was no intention I can say there was because there can be no proof and the government can (and most probably will) do everything in its power to eliminate the slightest evidence of intention, regardless of intention or not.
2. But more importantly, intention doesn't matter. If a trillion goes missing, it doesn't matter whether it was fraud or lack of oversight, the end result is the same and if the government were your employee, you'd just fire them for incompetence (again, regardless of intention).
In that sense I used fraud and I honestly wasn't aware that it might sound (and even be) hyperbolic.
The above lines should explain better the examples:
- Inflation (induced by printing money): You cannot seriously just increase a number in a computer somewhere or print a few notes and expect the economy or living standard to suddenly improve. Otherwise we could just all stop working and live of printed money.
- Underfunded pension funds: https://www.bloomberg.com/news/articles/2017-12-14/fees-rise... The problem here is not being underfunded but that promises are made to future retirees while it's obvious that these promises cant be kept. There are more examples, just google for some combination of "pension fund shortfall underfunded". Note this problem is the same in Europe.
You sure can. Mild inflation is useful on the macro scale (even though I'm a bit of a skeptic when it comes to a lot of macroeconomics). It increases aggregate demand which increases production, which improves the economy. A simple example is real-estate. There's inflation in the that market which is why it attracts investments, which increases demand with the developers, who then hire more people to build houses, etc etc.
Further more, on a currency level, devaluing your currency makes your exports cheaper. If I was exporting my product for $2 which gave me 10 Franks, and now I get 20 Franks because of my currency being devalued, that's awesome as long as the devaluation happens slower than the inflation.
Anyway, these are well established, and well understood economic concepts. Certainly, there is more nuance to them.
I know this is mainstream economics but if you're an engineer you should ask "What is mild inflation? Where is the limit? What are the forces that equilibrate mild inflation" I know the theory behind it but it just doesn't make sense. Have you ever thought about why tech hardware thrives, yet we have heavy deflation? Should we put price controls there? Do you realize that whenever a big problem is solved (via the wheel, factories, cars, ...) the stuff deflates heavily? There are other theories out there that make much more sense than what is mainstream.
> Further more, on a currency level, devaluing your currency makes your exports cheaper.
Same here, following your advice everyone should devalue his currency, trying to outcompete other devaluing currencies. So how can we explain that Germany with its strong mark was such an economic power given the absence of mild inflation and currency devaluation?
Finally and again, you think that printing a piece of paper (money) solves a problem? So we get "something for nothing"?
If you want to know an alternative (and IMO much more consistent) view, read "Economics in One Lesson" by H. Hazlitt. Yes, the one that is 60 years old.
You do know the banks payed back the bailout money with interest and added fines right? Overall it was a net positive for tax payers. Not sure how that's a fraud... Your other examples are suspect as well...
If in Russian roulette you have a chance of 1 in 6 to win 1 million and 5 in 6 to die, winning the million doesn't mean you made a good decision.
What happens if they cannot sell it? They lose lots of money, equivalent to food and shelter for millions of the poor or maybe ten thousands of chemo-therapies. Government is not good with investment.