Mike Norman blogger Tom Hickey has inadvertently a) admitted to
understanding economic calculation; b) admitted that everyone engages in it and c) admitted that the process is distorted by emissions of funny money. I had pointed out:
The funny money 1971 "dollar" was
worth 32% of the 1933 "dollar". The 2013 "dollar" was worth
6% of the 1933 "dollar". And with every funny money emission, someone
was able to rob others of their purchasing power, which is the whole point of
the emission process.
Hickey responded to this irrefutable observation with this:
Looking at the relative value of a currency
relative to the amount of gold it will purchase is irrelevant to most people,
who are concerned instead with living standard, which is a function of
productivity and income, for instance.
Yes, anyone who hoarded money under the
mattress lost purchasing power. How many people would have been that
stupid.
This is after all a market economy and
people are presumed to be intelligent enough to make reasonable investment
decisions, which involves inflationary expectations [emphasis added].
See, everyone DOES engage in economic
calculation and such activity is distorted by emissions of funny money. You
just said so.
I'm bookmarking this one for posterity.
Hickey tried to take it all back, but it was now too late:
Let's
put it differently. No one stashes money under the mattress for long periods
other than crazy people.
I pound this point over and over: EVERYBODY actually understands economic calculation to some degree in their real lives. Keynesianism finds it necessary to expunge it from existing categories of thought. Every day, all the time.
Hickey's statement is also an admission of his contempt for the unsophisticated. As I constantly explain, the purpose of funny money emissions is the theft of purchasing power BY THE ELITE from average people. In Hickey's world, STUPID (his word) AVERAGE PEOPLE are going to be robbed blind by the process. Cantillon Effects are real. Who knew?
The Cantillion Effects are critical. Focusing on simply inflation expectations is an example of missing That Which Is Unseen. Even if everyone had perfect expectations about inflation, the first transmission of the new money into the economy (ie, the "new money nothing for real goods something") would create a distortion that would ripple throughout the economy.
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