moneyFYI
Financial Freedom Is Merely Organized Common Sense
How Money And Interest Should Work
What happens when people lose track of the meaning of money? One of the choices is what Jeff Deist at Mises Institute calls Monetary Hedonism. He explains it in an article recently available on the internet.
In the introduction, we find this thought
“Millions of people across the West increasingly recognize the limits of monetary policy, understanding that more money and credit in society do not magically create more goods and services. Production precedes consumption. Capital accumulation is made possible only through profit, which is generated by higher productivity, thanks to earlier capital investment. At the heart of all of it is hard work and human ingenuity. We don’t get rich by legislative edict.”
I hope we have all learned that legislative edict is invariably wrong, and we should not accept it as anything that adds to our lives.
Insight
The article provides insight into interest rates and how, in a philosophical sense, they should work. The article points out that people under 40, and I expect some others, have no sound foundation on that subject.
Money is a commodity, and interest is the price to use it. Not what the news tells us.
You cannot understand the merit of capitalism until you understand money, capital, and interest in tandem.
Think about the quote above.
- Money and credit in society do not magically create more goods and services.
- Capital accumulation is made possible only through profit, which is generated by higher productivity, thanks to earlier capital investment.
- At the heart of all of it is hard work and human ingenuity.
- We don’t get rich by legislative edict.
Are any of those consistent with what government policy consists of?
The closing idea
It will be interesting to see how Japan plays out. They have had low inflation and low rates for decades. Will it change?
“It is past time for all of us to demand better money, not better monetary “policy.” It is time for money to comport with human nature and reward the saving impulse. It is time for us to reconsider our bequest to future generations and make their lives better and more prosperous than ours.”
The article is worth the time to read and think about.
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I build strategic, fact-based estate and income plans. The plans identify alternate and effective ways to achieve spending and estate distribution goals.
Be in touch at 705-927-4770 or by email at don.shaughnessy@gmail.com.
moneyFYI 