"The Hidden Engine of Booms and Busts"
by Joel Bowman
“Commercial banks - that is, fractional reserve banks - create money
out of thin air. Essentially they do it in the same way as counterfeiters.”
– Murry Rothbard, "The Mystery of Banking" (1983)
Buenos Aires, Argentina - Excerpt: "Wrote Aristotle in his seminal work, The Nicomachean Ethics (Book I, Part V): “The life of money-making is one undertaken under compulsion, and wealth is evidently not the good we are seeking; for it is merely useful for the sake of something else.”
Twenty-three centuries after the Father of Logic articulated the basic function of money to his fellow man, another Aristotle simplified the concept into terms even the crudest among us could comprehend. Said the dashing Greek shipping magnate, Aristotle Onassis: “If women didn’t exist, all the money in the world would have no meaning.”
There you have it, dear reader. Money is not an end in itself, but the lowly means to a higher end. It is a tool, in other words, useful for attaining that which man truly desires. And this insight from someone who built fortune enough to append his surname to none other than that of Mrs. Jacqueline Kennedy Onassis. Clearly, the fellow knew a thing or two about the game of life. (His middle name also happened to be Socrates, which can’t have hurt matters.)
Of course, given the opportunity, we’d all prefer to be pondering the works of Aristotle under olive trees on dramatic Greek islands, or navel-gazing with the blissed-out, lotus-eating omphaloskeptics on the path to spiritual nirvana. Alas, our basic needs – food, water, clothing... the reciprocal love of a fair lady otherwise well out of our league – compel us to get off our culos and earn our keep.
But what about the ends to the means, the “good we are seeking,” as the Aristotles might say? What if, for example, we’ve been conditioned to spend our lives earning, compounding and protecting our money... just so we can continuously consume junk we don’t need?
Moreover, what if the money itself, the foundational, transactional unit of a society’s stored wealth, is not really money at all... but just the opposite: debt? And what if the banks that supposedly safeguard our money are really just frittering it away, destroying the value of it one multiplied currency unit at a time, by creating money ex nihilo, out of nothing but thin air?
In today’s guest column, author MN Gordon takes us back through the history of German banking and explains the difference between receipt money and fractional money. The difference, as you’ll see, is well worth understanding… Oh, and by the way, if you’d like to see more of Gordon’s fine work, do be sure to check out his Economic Prism website, right here. We have no financial arrangement with our long-time contributor and do not benefit from featuring his writing... other than that we simply enjoy what he has to say and hope you do, too."
Full, most highly recommended article is here:
"The Hidden Engine of Booms and Busts"
by MN Gordon, founder of Economic Prism
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Freely download "The Mystery of Banking",
by Murry Rothbard, here:
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