Where Is the Deflationary Crash?
"The most obvious and yet the oldest and most stubborn error on which the appeal of inflation rests is that of confusing 'money' with 'wealth'...So powerful is the verbal ambiguity that confuses money with wealth, that even those who at times recognize the confusion will slide back into it in the course of their reasoning..."Yet the ardor for inflation never dies. It would almost seem as if no country is capable of profiting from the experience of another and no generation of learning from the sufferings of its forebears. Each generation and country follows the same mirage. Each grasps for the same Dead Sea fruit that turns to dust and ashes in its mouth. For it is the nature of inflation to give birth to a thousand illusions."
"What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor and capital. Multiplying coin will not whisk these resources into being."We may feel twice as rich for the moment, but clearly all we are doing is diluting the money supply. As the public rushes out to spend its newfound wealth, prices will, very roughly, double – or at least rise until the demand is satisfied, and money no longer bids against itself for the existing goods."
"As the operation of the market tends to determine the final state of money's purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or deficiency of money. Each individual and all individuals together always enjoy fully the advantages which they can derive from...the use of money, no matter whether the total quantity of money is great or small..."The services which money renders can be neither improved nor repaired by changing the supply of money...The quantity of money available in the whole economy is always sufficient to secure for everybody all that money does and can do."
"We come to the startling truth that it doesn't matter what the supply of money is. Any supply will do as well as any other supply. The free market will simply adjust by changing the purchasing power, or effectiveness of [money]. There is no need to tamper with the market in order to alter the money supply that it determines."