Wealth and Money, Not Necessarily Peas of the Same Pod

It is quite amazing to hear economists now adays truly speak as if the government can simply create wealth at the push of a button. As if the Federal Reserve had the ability to create capital and allocated it throughout the economy. Wealth is not found in dollars, though it can be converted into dollars which are liquid capital, but is found in cars, houses, consumption goods, higher and lower order goods, etc. What the nation produces is the wealth the nation creates. Unless the Federal Reserve has the ability to produce goods out of thin air, it is harming our economy by engaging in unsound monetary policy. Few understand the implications of inflation and the detrimental effects modern monetary policy has on the economy. When the Federal Reserve prints up new bank notes or issues credit through banks, it is not creating new capital but simply allocating current capital. The Federal Reserve robs a section of the populace from the wealth and allocates it to a select amount of businessmen that often work closely with the government. Inflation, as has been endlessly written about, creates business cycles through the introduction of new money which has the tendency of creating a snowball affect of increased inflation. In addition, malinvestment persists under inflation as businesses and consumers mistake the rise in prices for rightward shifts, increases, in demand.

As inflation occurs, it becomes harder for the poor of the country to keep up with their salaries and maintain a living. It is the fault of inflation that citizens have to resort to calling for the welfare state to take action. In essence, government creates the problem through inflation, creates business cycles, makes life much more difficult for the working class, and then oppresses the working class through welfare programs that simply sap from the capital-well of society. It is understandable, yet flawed in all senses of the word, that individuals seek government help due to rising prices. The working class often can not deal with inflation and in recent years real wages have been steadily decreasing. With it, a rise in the welfare state has been evident. It is important to state that until the government halts it inflationary activity, little economic and social change will come about. What is direly needed is the desocialization of the mint and a resurgence of hard money doctrine. Not until that occurs will the United States see an end to the perpetual boom and bust, expansion and contraction cycles we are so familiar with. It is important for all citizens to gain the sufficient knowledge needed to understand that, as I was often falsely told in my college macroeconomics class, Capitalism does not naturally tend to rise in production and then experience a sudden a fall in production. Such phenomena are the workings of the central planners and not of the free and open market.