Capitalism : the way of creating wealth OUT OF THIN AIR
There are two ways of cheapening money: mechanically, by printing it,
and emoltionally, by making it more easily available
(less desirable) by lowering the interest rates.
There is also a way of enriching money, and that is by NOT doing either of the
by not interfering with the market.
Here is why.
If somebody came along and told you that you can make gasoline out of water,
you'd call him a
con man. Can't be done. But I am here to tell you that you can create money out
of thin air.
The govt creates it by printing it, which is bad, for it cheapens money and
thus creates no real wealth.
This is the mechanical creation of wealth. But wealth can also be achieved by
that it can be done (by naturally rising prices in hopes of future gain).
Profit, the magic ingredient of capitalism, is the creation of wealth OUT OF
THIN AIR, where nobody loses,
if they both choose wisely enough. Both parties can profit-- the seller by
receiving a higher price and
the buyer by paying a higher price in the hope that he can resell it at an even
higher price or make use of
it in some other profitable way, such as buying in bulk. So the hope of the
seller-- for a brighter day tomorrow--
is what creates wealth in the economy.
Before the bubble burst, the housing market was an example of this, except that
there was a third party-- the govt--
who made cheap money available by lowering the interest rate. That screwed
things up by luring the buyer
into thinking that the housing price would rise, but it didn't. That's not a
free market, and that's why
the bubble burst, because it was an unrealistic hope.
Dr. Roger B Clough NIST (ret.) [1/1/2000]
See my Leibniz site at
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