I can't make any sense of the second paragraph of this passage:
"Inflationists presuppose – in the teeth of all history and logic – that they can increase wealth by increasing the money supply. True, if there were more money there would be more wealth, but only if the money itself is wealth. Money created out of thin air – fiat money, whether bank credit created by bookkeeping magic or by crude printing – has no value in itself. It is not wealth, only an alleged representative of wealth.
On the other hand, gold and silver inflations do contribute new wealth, and hence do boost prosperity long term (after initial dislocations). After 1492 new gold and silver pouring into Europe from the Americas laid the foundation for growth lasting centuries. Huge discoveries of gold and silver in the mid-1800s – in the Carolinas, California, Australia, Nevada, and South Africa -- all contributed to the world’s wealth and later prosperity. However, all this new money was itself valuable. Every new ounce mined contributed to the sum total of wealth. Conversely, every new unit of fiat money divides the sum total of wealth, impoverishing many to benefit a few."
Huh? So if Mars is discovered to be half made of gold, can we all retire?
Reminds me of the scene from Hitchhiker's Guide to the Galaxy when on landing on a new planet, they make leaves the legal tender "to make us all wealthy" and later start burning down the forests "to combat inflation". |
