Wealth Not Money

Money is continually mistaken for wealth. Because we value everything in terms of money, we believe that wealth must mean money. We think that having a lot of money means that we are wealthy. But real wealth consists of what is produced: the food we eat, the clothes we wear, the houses we live in. It is railways, roads, cars, ships, planes, factories, schools, churches, theatres, pianos, paintings, books, toys, music … The list goes on. The deception caused by confusing money with wealth is so powerful that it is hard to get out of this rut. Everyone knows that if you had twice as much money, you could buy twice as many things and so would be twice as "wealthy". But this is only true if you are the only one getting twice as much money. If everyone was getting twice as much, then the things would be twice as expensive to buy and you would be in exactly the same position. Money is an IOU printed by governments which is guaranteed by the amount of real wealth of that country. If a government prints twice as many IOUs (money) without doubling the amount of real wealth, each IOU is worth less because it is guaranteed by less real wealth. This reduction in the value of money will be demonstrated by an increase in prices for goods. This is inflation. The rate of inflation shows the difference between the amount of money printed and the amount of real wealth to back it up. You can imagine what impact a 5% rate of inflation is really having on your wages! It is believed that the road to riches for everyone is to print more and more money. But nobody can get something for nothing and the price to be paid for believing this lie is inflation. And inflation is the hardest type of taxation. It cannot be controlled or even predicted by governments. It strikes everything and everybody without discrimination and so hits the poor the hardest because they have the least means (real wealth) to protect themselves. And in the end, everyone but the very richest becomes a victim on the day of reckoning: the Depression.

HENRY HAZLITT: Inflation is the opium of the people... It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse.

The ease with which more paper money can be printed has been, and will continue to be, a terrible temptation for governments to give the appearance of making people richer for the sake of continued popularity. This is the cause of inflation which sows the seeds of the next depression.

More by this Author


Comments

No comments yet.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working