Articles

by Michael Nystrom
September 26, 2007

Have you noticed? Chairman Ben (not to be confused with that all-powerful chairman from another time and place, Chairman Mao) has recently acquired a new nickname. No longer is he referred to merely as "Printing Press" or "Helicopter" Ben, those playful nicknames of yore which poked fun at his threats to stave off deflation via massive inflation. Those silly nicknames no longer accurately depict the amount of inflation he is prepared to produce, nor the destruction that such inflation will inevitably cause. Ben won't merely be tossing money from helicopters, content to let it flutter to the ground. His new nickname signals that he's deadly serious about his mission and he's pulling out the heavy artillery to prove it. The new nickname references the destruction the Fed's policies will inflict. Say hello to B52 Ben, who stands on the ready to carpet-bomb the world with the catastrophic effects of the inflation bomb.

Excerpted from Gold, The Once and Future Money, pp. 13-17
© Nathan Lewis
Reproduced with permission

Because money is information, and the messages sent by the monetary economy dictate in hard, clear terms the actions of billions of people, naturally humans have taken great pains to develop means to keep this information as pure and uncorrupted as possible. If an engineer orders a mechanical shaft of "500 millimeters," and the shop produces one of 500 millimeters, but due to fluctuation in
the meaning of millimeter it is 10 percent shorter than the engineer desired, both the engineer and the machine shop have unable to cooperate productively. The information contained in the phrase "500 millimeters" has become corrupted, meaning different things at different times. The engineer may decide to machine the parts himself, the machinist to take up engineering. The circle of exchange is broken, and the productivity of both decline.

Throughout history, humans have sought the most stable money attainable, because stable money, or uncorrupted information, allows greater productivity and prosperity, while unstable money, or corrupted information, cripples productivity and prosperity. It is impossible to improve the system's productivity by corrupting the information that enables it to function. Such a corruption may result
in more production -- a greater volume of goods and services, a greater number of hours worked or employees hired, a blip in statisticians charts -- but much of the increased production will be wasted, or the greater effort will produce less results, and thus true productivity declines.