The classical economists had rejected the notion that overall monetary
spending — in current jargon: aggregate demand — is a driving force of
economic growth. The true causes of the wealth of nations are
non-monetary factors such as the division of labor and the accumulation
of capital through savings. Money comes into play as an intermediary of
exchange and as a store of value. Money prices are also fundamental for
business accounting and economic calculation. But money delivers all
these benefits irrespective of its quantity. A small money stock
provides them just as well as a bigger one. It is therefore not possible
to pull a society out of poverty, or to make it more affluent, by
increasing the money stock. By contrast, such objectives can be achieved
through technological progress, through increased frugality, and
through a greater division of labor. They can be achieved through the
liberalization of trade and the encouragement of savings.
~ Jörg Guido Hülsmann, "Why the Austrian Understanding of Money and Banks Is So Important," Mises.org, February 18, 2015
Showing posts with label classical economics. Show all posts
Showing posts with label classical economics. Show all posts
Subscribe to:
Posts (Atom)
