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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GST who wrote (241128)3/16/2010 5:17:43 PM
From: ChanceIsRead Replies (2) of 306849
 
RE: Say what you will about MISH, I learned this new tidbit today from his Blog - per Rothbard of the Austrian School:


But money differs from other commodities in one essential fact. And grasping this difference furnishes a key to understanding monetary matters.

When the supply of any other good increases, this increase confers a social benefit; it is a matter for general rejoicing. More consumer goods mean a higher standard of living for the public; more capital goods mean sustained and increased living standards in the future.

[Yet] an increase in money supply, unlike other goods, [does not] confer a social benefit. The public at large is not made richer. Whereas new consumer or capital goods add to standards of living, new money only raises prices—i.e., dilutes its own purchasing power. The reason for this puzzle is that money is only useful for its exchange value.

[Thus] we come to the startling truth that it doesn’t matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of the [monetary-unit] gold-unit.

I have to agree with Rothbard here. An apple is of use to you to aswage hunger and to provide fuel to run a mile or so. That is its worth. It doesn't matter how many units of currency are required to purchase it. Its value relative to say - an orange - won't change. Mr. Bernanke has no say over the caloric content of an apple. Unfortunately the ba&^tard is in there artificially changing the exchange rate of apples relative to houses.
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