Friday, June 5, 2009

Tom Woods on Money

From his best-seller, Meltdown:
Money . . . comes about spontaneously as a useful commodity on the market. It is not arbitrarily introduced by government decree. Nor could it be. [111]
A money economy means that goods are exchanged indirectly for each other. [111]
Read that last statement again and never forget it. Money enables people to exchange goods for goods (services included).

Fiat money changes this relationship. It amounts to an exchange of something for nothing for those privileged to be the first users.

Through so-called open-market operations, the Fed usually purchases government bonds with money it created from nothing. Firms feeding at the federal trough that get this money first
are in effect taking goods out of the economy without providing anything themselves. . . The money they pay for their goods didn't originate in a good or service that they themselves had previously provided; it came from nowhere. The analogous case under a system of barter would be one in which, instead of trading my bread for your orange juice, I just take your orange juice. [123]

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