What Is Money?

August 30, 2011 07:22

We will make fictitious money, nothing is more easy, and then every citizen will have his pocketbook full of it, and they will all be rich!

By Frederic Bastiat at Capitalism Magazine

Do you believe that if it were merely needful to print bank notes in order to satisfy all our wants, our tastes, and desires, that mankind would have been contented to go on till now without having recourse to this plan?

Coins or notes are issued bearing the name of five dollars, and which will bear that name through every subsequent depreciation. The value will be reduced a quarter, a half, but they will still be called coins or notes of five dollars.

Under the influence of ignorance and custom, the day’s pay of a country laborer will remain for a long time at a dollar while the salable price of all the articles of consumption around him will be rising. He will sink into destitution without being able to discover the cause.  …..

Once false money (under whatever form it may take) is put into circulation, depreciation will ensue, and manifest itself by the universal rise of everything that is capable of being sold. But this rise in prices is not instantaneous and equal for all things. Sharp men, brokers, and men of business, will not suffer by it; for it is their trade to watch the fluctuations of prices, to observe the cause, and even to speculate upon it. But little tradesmen, farm workers, and workmen will bear the whole weight of it. The rich man is not any the richer for it, but the poor man becomes poorer by it. Therefore, expedients of this kind have the effect of increasing the distance that separates wealth from poverty, of paralyzing the social tendencies that are incessantly bringing men to the same level, and it will require centuries for the suffering classes to regain the ground they have lost in their advance toward equality of condition.

First published in 1849.

Frédéric Bastiat (1801-1850) was the editor of “Le Journal des Economistes.” He writings are compiled into many books including “The Law”, “The State”, “Economic Sophisms”, “What Is Seen And What Is Not Seen”, “Economic Harmonies”.

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