Quote:
Originally Posted by MH
So how economy with relatively fixed amount of gold can deal with growing wealth.?
...after all people create wealth as well.
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It is totally unimportant how much quantity of a currency is in circulation. The Central banks' self-legitimation in parts is that "somebody must control the amount of money in circulation".
Nonsense.
If you increase the number of currency units in the system by - for the easiness of calculation in this example - by a factor of ten, then you see that prices adapt by moving the decimal one digit to the right. What costed you 1 thaler before, now will cost you ten thalers. If you reduce the number of currency units in circulation by let's say one half, you will sooner or later see that prices half as well.
If there are many gold coins in circulation, their price will drop on the market. When there are fewer gold coins in circulation, their value rises. But if you have some criminal mind called "politician" giving it a fixed value that the market is not to negotiate freely, then you are in a nightmare of deep troubles. Such a currency no longer represents and reflects true market events. And that is what politicians want with their control of the currency - to hide how they are abusing and ruining the system.
Wealth cannot be produced on the basis of fictional value (=credit). Already von Mises showed in all stunning logic, that wealth can only be founded (if you want it to last) on the basis of real value that you have saved before - and then investing this saved value. There are no shortcuts. You need to go the longer and more difficult way. You must save a little bit, and then invest that. Using credits for your investments only founds or increases the snowball system and its longterm devastating effects.
There is no way to generate value out of nothing. It's an illusion, and it destroys us like the happy dreams of constant heavy drug abuse destroys the consumer.
But he grins until the bitter end.