It’s hard to believe that in the 21st century, educated people believe the government can produce real wealth by creating money. It’s especially ironic that the main preachers of this superstition fancy themselves progressives and are the first to accuse their opponents of being against science. What could be more antiscience than the alchemic proposal to create wealth by having the Federal Reserve make entries in a digital ledger? It’s more absurd than alchemy: Alchemists claimed they could turn base metals into gold. Inflationists require only thin air.The commonsense reaction is: “Balderdash!” So it takes real devotion to the power of government to embrace such a ridiculous idea.
Disbelief in economic laws that operate independently of human will is the sign of a primitive mind. No one has a good excuse for believing that government can create real wealth simply by creating money. The value of money is not determined by social convention. It is determined by supply and demand. When the central bank creates money, it doesn’t create useful goods. It may merely shift purchasing power from the people to the Treasury or to special interests. That is, inflation is a form of theft.