Sunday, April 26, 2015
WHERE MONEY COMES FROM
Blue Skies and Yellow Rose Bouquet
Printing of money is a service that governments render to make it easier for people to exchange goods and services of value.
Until somebody makes or does something of value, nobody exchanges anything. No money changes hands.
Once you have people starting to produce chairs and newspapers and bratwurst and beautiful songs, other people will find a way to buy those things. Thats when they use the money that the government has printed.
Sometimes, however, governments go crazy and start printing tons of money, and the amount of new money being turned out far exceeds the quantity of new goods and services being produced. This is the galloping inflation we've all heard about. Its just a massive overprinting of currency.
During huge inflation, theres lots of currency, but paradoxically, theres less and less wealth.
So the only real wealth is the ability to produce value. If you can turn out goods or services that other people want, youll be wealthy. If you cant, it doesn't matter how much money there is, youll be broke.