Over the long term, ALL the central banks do is dramatically increase the money supply. And an increase in the money supply provides NO general social benefit.
Think about it. How could increasing the amount of money in circulation do any good?
By making society directly wealthier? That's ridiculous, because money has no direct use-value, and it does not produce anything with direct use-value. It is a nothing but a medium of exchange. ANY amount of money is just as good as ANY OTHER amount of money to serve its role as a medium of exchange.
How about by allocating resources more efficaciously? Also ridiculous, only less self-evidently so. Increasing the money supply creates distortions in the price structure, because the money doesn't instantly manifest in everybody's pockets at the same time. Prices are the FUNDAMENTAL DATA of economic calculation and efficacious resource allocation. So how can a DISTORTION in the price structure lead to anything else but MISALLOCATION of resources?
1 comment:
Good stuff. I'm looking forward to more of these.
It'd be nice to see ones on:
the public option in health care
public schools
public utilities (sewage, water, etc)
roads
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