But my question is why should the expansion of money need to take place before the expansion of production. In my example, it either took place afterwards, or not at all (with a deflation that increased the value of existing money). Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
As far as I can see, this would be - conventionally - deflationary, since there is, all else being equal, now relatively less (albeit infinitesimally so) money than money's worth available to buy.
Provided you can "afford" to provide these goods and services (ie it's in your "spare time", and your cost of living is met from other sources), then money is not needed.
But normally you will need money (or rather, money's worth purchased with money..!) to survive in the period before people pay you. ie the period in which you are giving your employer credit. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
If its part of an expansion of production, that requires either an increase in the velocity of circulation of money or an increase in the money supply ... and while the velocity of circulation can increase, it cannot increase without limit, therefore the ability to sustainably increase production requires the ability to expand the money supply in advance of production.
It is misleading to refer to money as "debt" or "credit" and especially to refer to money under one set of institutions as "debt" and under a different set of institutions as "credit", because a financial debt is also a credit and a financial credit is also a debt ... a financial asset is a commitment, with someone obligated to perform some activity on one side of the relationship and someone who is the beneficiary of that activity on the other side. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
If I buy equipment, that equipment had to be produced. If it wasn't produced before, it is an increase in production, even though it may come a year or more before the finished good that I have in mind is on the market. Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
The workers that produce the equipment need to be paid, after all, and even for lengthy production projects requiring payment for work in progress ... the payment is for meeting benchmarks, so its payment for the work that has been finished. The materials and other costs of production and the wage bill must still be financed. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
