Heretical Thoughts Of The Day

cRUSADE

What is money? To most people money is wealth, it is what they think of as the end result of time, labor and ingenuity.  In the view of conventional wisdom money is to the economy as steel ingots are to a steel mill; the result and end purpose of the institution.

Conventional wisdom, the public and virtually every "economist" making their livings by distorting reality to conform to political visions are wrong. Money is none of that. Wealth consists of the things we produce that last and can be traded amongst ourselves or that enhance the ease of trading or the quality of life for all (ie. roads, bridges, parks, hospitals, schools, etc.).

While services are a vital component of a truly modern economy (see CIA World Factbook for percentages of GDP invested in services in 1st, 2nd and third world countries.), it is only those parts of the economy that *create* lasting goods or universal public services (ie. not ones used only by certain segments of the population and no others.) that truly add to the wealth of a nation.

Yes Virginia, money is not wealth, wealth is only some of what money can buy.  But then what is money?  Money is the set of tokens we use to keep track of who owes what to who. It is also can be seen as a token set for power, but that is secondary and dependent in the long term on how much real wealth is behind a particular collection of tokens.  Money is not wealth, wealth is wealth and forgetting the difference is the only real reason the economists cannot ever seem to agree on what works and what does not.

How does a country raise its wealth without major inflation? Not by simply running the printing presses; wealth must be created to back those new tokens or the "value" of the all of the tokens diminishes.  What needs to be done is to simply decide what things we want to raise our national wealth with, then do it.

I hear gasps of outrage from all sides already, but I stand behind my statement.  If you build it, they will come. 

The bottom line is that if you want to help the economy you need to spend money on things that are still there next year, and the year after that, and the decade after that.  The more spent on paper shuffling zeros and administrative overhead, or services that vanish as soon as they are provided the less wealth and the more inflation we will have.

It is that simple people, go get on your pols about it!