Creature From Jekyll Island by G. Edward полностью

The money supply has now been doubled. We all have twice as much money as we did a moment before. But would we be any better off? There is no corresponding increase in the quantity 0f property, so everyone would bid up the prices of existing pieces until they became twice as expensive. In other words, the law of supply and demand would rapidly seek exactly the same equilibrium as existed with the more limited money supply. When the quantity of money expands without a corresponding increase in goods, the effect is a reduction in the purchasing power of each monetary unit. In other words, nothing really changes except that the quoted price of everything goes up. But that is merely the quoted price, the price as expressed in terms of the monetary unit. In truth, the real price, in terms of its relationship to all other prices, remains the same. It's merely that the relative value of the money supply has gone down. This, of course, is the classic mechanism of inflation. Prices do not go up. The value of the money goes down.

If Santa Claus were to visit everyone on Earth next Christmas and leave in our stockings an amount of money exactly equal to the amount we already had, there is no doubt that many would rejoice over the sudden increase in wealth. By New Year's day, however, prices would have doubled for everything, and the net result on the world's standard of living would be exactly zero.1

The reason so many people fall for the appealing argument that the economy needs a larger money supply is that they zero in only on the need to increase their supply. If they paused for a moment to reflect on the consequences of the total supply increasing, the nonsense of the proposal becomes immediately apparent.

Murray Rothbard, professor of economics at the University of Nevada at Las Vegas, says:

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 f ree market will simply adjust by changing the purchasing power, ot effectiveness, of its gold-unit. There is no need whatever for any planned increase in the money supply, for the supply to rise to offset 1. Those who rushed to market first, however, would benefit temporarily from old prices. Under inflation, those who save are punished.

THE BARBARIC METAL

143

any condition, or to follow any artificial criteria. More money does not supply more capital, is not more productive, does not permit

"economic growth."

GOLD GUARANTEES PRICE STABILITY

The Federal Reserve claims that one of its primary objectives isto stabilize prices. In this, of course, it has failed miserably. Theirony, however, is that maintaining stable prices is the easiest thingin the world. All we have to do is stop tinkering with the moneysupply and let the free market do its job. Prices become automatically stable under a commodity money system, and this is particularly true under a gold standard.

Economists like to illustrate the workings of the marketplace bycreating hypothetical micro and macro economies in which everything is reduced to only a few factors and a few people. In thatspirit, therefore, let us create a hypothetical economy consisting ofonly two classes of people: gold miners and tailors. Let us supposethat the law of supply and demand has settled on the value of oneounce of gold to be equal to a fine, custom-tailored suit of clothes.