by the most acquisitive consumers (that would be American consumers) in the world. Tick tock, tick tock. Something else that is crucial for the purposes of this essay is that Russia has the Russia Central Bank (“RCB”), a fiat-money- producing central bank, but that doesn’t enable government “without commercial limitation or technological limitation” as imagined by Hülsmann. What’s a creation of government if you can’t prop up government? Translated for those who need it, government can’t enable more government via the printing press. Only markets can enable more government borrowing, and presently there’s little market appetite for future Russian government income streams. At which point it’s useful to further explain to readers why Hülsmann’s allegedly free- market views don’t stand up to the most basic of scrutiny. They don’t, simply because no one earns money, pays out money, borrows money, or lends it. If the previous assertion is hard to countenance at first glance, please stop and think about it. Though “money” factors into all of our economic activity, it’s important to stress that we earn, pay, lend, and borrow what money can be exchanged for. Money is merely an agreement about value among producers that facilitates the exchange of actual market goods. Fairly explicit in Hülsmann’s theorizing is that money creation is the same as resource creation... that wealth can be printed. Except that it can’t be, which means central banks armed with printing presses can in no
THE TRUE MEANING OF MONEY The problem yet again is that whether Left or Right, conservative or liberal, free-market or interventionist... neither side understands the why behind deficits – or the meaning of money for that matter. To see why, it’s useful to tack back to the free-market Right, and prominent Austrian School thinker Guido Hülsmann. While Lefties naively assert that deficit spending is the source of prosperity, their free-market counterparts believe – if possible – in something that is perhaps even more absurd: that deficits have an unlimited quality to them... like central banks armed with printing presses. According to Hülsmann, “... fiat money allows the government to take out loans to an unlimited extent because fiat money by definition can be produced without limitation, without commercial limitation or technological limitation, and can be produced in whatever amount is desired.” If Hülsmann is to be believed, central banks enable unlimited borrowing and spending. Government forever, or something like that. Not really... Implicit there is that the total Russian country debt that amounts to a U.S. Treasury rounding error is small due to parsimony on the part of Putin et al. Try not to laugh. In truth, Russia has very little debt because even before U.S. sanctions, there wasn’t much of a market for it, nor is there now. Investors aren’t exactly frothing at the mouth to own the future tax revenue streams of a country that’s not terribly innovative. Quick, name one Russian-made product that is well-regarded
American Consequences
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