http://acuf.org/issues/issue150/100216news.aspIn 1966 and 1967 I lived inside the walls of West Berlin, my apartment building scarred by the Russian guns of 1945, and now rattled by the guns of East German guards. Every time I walked to the grocery store, I passed a fascinating shoemaker's shop—his front window was piled with money. The bills looked very much like the marks in my pocket.
Finally, I asked about the unusual “window display.” He explained it was the now worthless currency from the early 1920s hyper-inflation that brought Hitler to power. Having had a New York State public school education, it was news to me.
That day I started learning history. It is also when I started thinking about the function of money in a civilization. Not "money the root of all evil," but money the tool.
Money, the tool enabling people to trade skills and assets peacefully with other like-minded people.
Money, the tool facilitating the critical calculations in a society as to the price and value of a thing—so scarce resources can be allocated to their most productive uses.
Money, the protected stored value of your time and effort.
Money, the source of your security, your rainy day ace in the hole, your independence and dignity in old-age.
Thinking about money this way evolved into new perspective on theft. I started to see that theft is really like a mini-murder. But instead of stealing a victim's future— “real” murder, it kills his past. It takes his stored-up effort and ingenuity, it negates all the pleasures foregone, the hours of work and training that produced what was stolen.
This line of thought gave me new perspective on the power of the printing press in the hands of governments today. Inflation is a form of theft. It is subtle. No gun, no mask. It is slow, you hardly notice a nibble here, a nibble there. It does not remove the money from your hands. It removes the value of the money.
I began to understand the shoemaker’s reason for keeping the money in his window. It was his way of hoping to save a future civilization: The German hyper-inflation had wiped out his country's stable middle class, made frugal moral behavior a bad deal, and made the citizens ripe for Nazi promises, ripe for a savior, ripe for a scapegoat.
America is on the verge of a similar fate. Government is spending money it can not repay, hobbling the productive individuals in our society by making them responsible for the mistakes of the foolish. It is making the productive person look like the fool for paying his bills, for working hard, for saving money. The government tells you, if you are not a victim, you are a greedy parasite living off the body of the nation. Our scapegoats have become the banks, the wealthy, the productive—but never the true villains, the over-spending politicians.
When you read what media and government spokesmen are saying about the necessity of government intervention in the free market, remember, government can produce no new wealth. Government can not make a single productive job, or hire one productive person. Productive means adding to the gross amount of real goods and real services available in the economy. Government can only take from someone productive and redistribute the “take” to non-productive people or projects.
But, you say, what if government borrows the money instead of printing it? Government borrowing drives up the cost of money—the interest rate. It makes money more expensive and therefore less available for those who want to start or expand businesses. Government spending hurts an economy, and if it ever seems to help, you can bet it will be close to an election.
Only a free market that allows the prices to determine value of resources (land, labor, capital, brains) can allocate those resources to their most productive use. If any government were truly productive, it would not need to tax or print money. It would earn it.
Governments use their power to (temporarily) distort the laws of economics because it wants power to do things the citizens would not willingly pay for or necessarily authorize it to do. For instance, Congress passed laws to ensure every American (read potential voter) could have a house (and for those same politicians to get every potential voter’s support). But, because government could not legislate houses into existence, it had to use use the power of law-making to manipulate banks into doing the next best thing. It passed legislation making home-ownership possible regardless of someone's ability to repay the mortgages. Fannie May and the bank and insurance bail-outs are a few of the pitiful results of that effort. Like all natural laws, economic reality eventually strikes back. Once that happens, governments resort to more and more control (Stimulus?), often ending in a flood of currency. Short run always extends into long run and unintended consequences always rain on political parades.
Unfortunately, civilizations are often washed away in the money floods politicians create.
Topic: Money Counts (Read 347 times)