Hey Dryki,

I'm not sure if you're specifically responding to my posts. That said, I'll try to address your points as if you were responding specifically to me. ;)

If a market basket that costs $100 today costs $50 in ten years, that would be deflation. Not so good for those with long term contracts unless they are written with some sort of adjustment clause.

Under the different financial/monetary system that I've previously described, the money supply is matched with the goods available for sale. If there isn't enough money in the system, government spending can infuse the economy with additional money. If there's too much money, taxes, or interest paid on government loans can reduce the money supply. By having the money supply matched to the available goods, the system will neither be deflationary nor inflationary. Certain care must be made to monitor perishable items and make sure that the available pool of goods doesn't shrink drastically in relation to the money supply. At any rate, this system of currency was used by Abraham Lincoln to completely fund the Civil War.....WITHOUT income taxes. After the North won, Lincoln was preparing to unite the Northern and Southern financial system under his "greenback" style currency. He never accomplished this because he was assassinated. Hitler also used this same monetary system when he rose to power. When you look at the history of just how potent a debt-free monetary system can be, it's staggering. The one thing it does is take power away from the figureheads of the Central Banking/fractional reserve model. The real challenge in implementing this change is to overcome their resistance.

Thinking back to the Greenback movement, wasn't it all about expansion and breaking free of the trusts and banking system of the time? So if we DO NOT want the economy to expand, then locking down the money supply could help. It seems a very blunt instrument, but if the goal is to produce LESS and to keep it LOCAL [scrip], then deflation and some high level of taxation on wealth would seem appropriate. Even some sort of built-in depreciation on the currency. The aim is to encourage people NOT to shop, but to build the commonwealth and minimize private wealth.
Can one get from money supply to something that regulates the scale of the economy? Each unit of currency would then represent that share of economic activity. It doesn't seem to me it would have to be linked to a particular tangible asset.

The way I see it, the goal for any new monetary system is to have the flexibility to grow and/or shrink (or to remain constant for that matter) your economy while still retaining a "healthy" economy. Under our present debt based/fractional reserve economy, it's never "healthy" unless it's perpetually growing. I'm not saying that all growth is bad, but to have that be the overpowering motivation is just not wise. It paints ourselves into a corner...Reduces our options. If our economy deflates to the point where people can't buy food, then government spending needs to fill that hole in the money supply. Conversely, if prices are rising because there's too much money in the system, then money taken out through taxes or as interest payments to the government will shrink the money supply. Our economy at our peak was definately too large and in need of shrinking. The ultimate size of a future "healthy" economy must be veiwed in terms of natural resources and how many non-renewables are consumed versus renewables. A stable sustainable economy that doesn't blow through renewables faster than they're renewed, and severly limits the depletion of non-renewables, would be the upper limit, IMHO. The managing of the money supply would be the tool to control the scope/size of the economy in relation to our resources.

Hope this helps explain my position more clearly.

TS