"Most people are in arrested development and cannot use logic." Jacob.
"Competition and capitalism are hated to-day because of their tendency to destroy poverty and privilege." William Hutt
"America is unique in that our economy is totally dependent on global charity." Peter Schiff

Sunday, August 21, 2011

The Alchemy Solution to our Economic Woes

Gotta hand it to Cracked, and their list of one step solutions to our economic woes. Here is yet another one:

The idea is brilliant in its simplicity. Gold is expensive. Make more of it in every home and we will all be rich.

The flaw is that the Spanish Empire tried that when Columbus discovered America. They didn't create gold out of lead like the alchemists, but what amounts to the same thing economically, they mined it in huge quantities, like a trillion dollars worth, and brought it to Spain. We'll all be rich, they thought.

What happened was they all got poor. Prices went up 600%. It's called inflation, and it comes from printing more money.

The modern proponents of the Alchemy Fallacy control every country in the world. They cannot make more gold out of lead, but they can and do make more money, all the time, whether paper money or digital money.
Make no mistake, the ultimate cause of the housing bubble [= the mess we are in] was all that money being printed. Otherwise, where would the money come from to build so many houses?

To illustrate the law operating here, I'll tell a little story. At a used book store, a proud seller strolled in with mint condition used James Bond novels. The store owner offered ten cents apiece.

"But why?" asked the surprised seller. "These are well written, famous books, in top condition, huge best sellers in their day, and still popular. Why are you only offering a dime per book?"

"There are so many of them around," was the answer.

Which is exactly our problem, only with dollars instead of James Bond novels.

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