book summary of “ The Ethics of Money Production ” by Jorg Guido Hulsamann
There is a large distance between the economy that now exists in the world and the ideal one. The Ethics of Money Production is a story that is consciously ignored in today’s economy. As a result, economies are sick and unable to show their true potential.
In this article, we will review this fruitful book written by “Jorg Guido Hulsamann” and turn the pages of this interesting book with you. If you also feel that government interference in the economy is to the detriment of this sector, and sometimes you have thought in your mind about the dream of a free economy, be sure to join us until the end of this book summary.
Look at the reason for the birth of money, Purity and its pains
Firstly, the root of the need for money is discussed in this money. Prior to the advent of money, people met their needs purely by exchanging goods for goods; but this method of trading had many shortcomings. For instance, people cannot get the product they want through purity just because they have one type of product.
This led to complex purifications so that eventually, after much hardship, the person in question could obtain the desired product. In this sense, money could solve some of the problems. In this case, it does not matter what product you want. Since if, you could pay as much as the value of that money, that commodity would belong to you.
What is money?
To understand the ethics of making money, we must have a deeper understanding of what money is. We said that people resorted to indirect means to meet their needs. When an option – gold, silver, a gem, nails, cows and sheep – etc. is accepted in a society as an intermediate commodity of a certain value, then we can call it “money”.
In addition to real money, there is a concept called “credit money”. Although money is not physically available, its promised value is circulating in the hands of people and even nations.
Liberalization of money production by members of society; one of the few ways to maintain a moneymaking ethic
Normally – which is what is common in the world today – only governments are allowed to print money and mint coins. Governments believe that corruption, fraud, and the like do not happen when the power to control and even value money is in the hands of one front. However, we all know that despite the absolute power of governments to print money and mint coins, corruption, money laundering, rent seeking, and the like are still happening.
Therefore, if a platform is provided so that people and people interested in the financial field can also enter the business of coinage and printing money, after a short time that passes through the difficulties and people can be acquainted with this process, the value will improve. We will be money. Of course, there will be problems then, but they will not catch up with the current conspiracies of the powerful governors of our time!
Value for money and the story of scarcity
One of the most famous theories in the world, which was mentioned in the book “Ethics of money production” and its relationship with money, was the “theory of scarcity”. According to this theory, all the resources of the world, including ourselves, are very limited. Because of this, we are always paying the “opportunity fee”.
Simply put, when we choose to have something, we inadvertently choose not to have other things. The theory of scarcity is not limited to the world of economics. If you look through the history, biology, geography, etc. books, you can get acquainted with different examples.
Now let us talk about the relationship between the value of money and the theory of scarcity. Normally, for ordinary people who are waiting for their salary or pay once every 30 days, each banknote is something valuable that can help them provide some of the things they need. So far, so good. Imagine when a person earns more money for what he does. In this case, the rules of the game change.
What is the correlation between liquidity and prices?
When people have more money, a different level of demands arises. If before that they were willing to live in a 60-meter house with a monthly rent, they would prefer to mortgage at least a 250-meter house in their new circumstances or purchase an apartment for themselves.
In parallel with this story and increasing the purchasing power of the people, the people of every industry are working to increase their share from the pockets of the people, as they say. At the head of this group are governments.
You may have noticed that at the same time as the approved salaries increase, water, electricity, gas and telephone bills suddenly increase in cost, with operators offering their services at a higher cost under various names and customs – such as a sudden increase in taxes. In short, everything relevant and irrelevant that you can think of will increase in price.
Ethics of making money; Sick economy and tired people
Instead of finding the root of the problem, some economists and members of parliament point their fingers at people and tell them that the reason for the increase in prices and the increase in the cost of services is the existence of cash in their hands. Simply put, they tell their people that if you want prices to stay the same – which they never will – you have to spend less money.
This means reducing prosperity, increasing problems and chaos! An advanced society, on the other hand, welcomes an increase in the income of its people and collects even less taxes from them. Since it knows that increasing the wealth of the people, not only increases economic growth, but also moves the country towards higher and more meaningful goals.
Therefore, with a simple calculation, we can understand that the main problem in such an affair is the existence of a sick economy that no one cares about treating! The ethics of making money is relatively respected in a society when the economy’s progress is in motion.
Learn about seven ethical deviations in making money
In a part of the book “Ethics of money production”, a passage to the history of money production and supply was made. Although various people, economists, and the wealthy who were interested in economic games made many statements and theories about making money, one thing they all had in common.
They all knew that by liberalizing the production of money, society would be saved from many troubles, but on the contrary, it was the illegitimate powerful, the kings, and the rich who were fundamentally losing. For this reason, they did their best to make this story credible. They tried their best so that no one would talk about liberalizing the production of money! Here are some samples:
- The more money you make, the more your economy grows
According to this attitude, when an economy grows by, say, 10 percent, we must also produce as much as 10 percent of new money. Because the amount of money in the country to buy goods produced as a result of this economic growth will not be enough. On the other hand, the sources of gold and silver production are very limited. So we cannot bring new gold into the market after every economic growth. The bottom line is: “Turn on paper money printing machines!”
This excuse is fundamentally wrong. We can even say that it is a kind of manipulation to create inflation in the market. If an economy is growing, and again if the amount of money in circulation is low, the result will be that prices will go down and adjust to current inventory. This incident, which most of the current governments of the world are preventing from happening with all their might, will lead to more economic growth and increase of welfare in the society!
- When people save their money or keep it in cash, they are fighting the economy of their country!
The next excuse that, in addition to the ethics of money production, interferes with private property and the ownership of individuals over them is that if people keep their wealth in cash, they will do a kind of hoarding. They have blocked the cycles of the economy, emptied investment funds and charities, and prevented others from benefiting from their wealth. That is why they have hoarded money and they should be disciplined by methods such as confiscating property or devaluing money!
If we do not take into account all the legal debates about the full ownership of individuals over their assets and their control, this excuse is still completely wrong. As the rotation of a country’s macroeconomic cycles is not depend on some people’s money. Even the money of the richest person in a country is not a special thing compared to national wealth.
After all, economics can adapt to any amount of money. Even if it is impossible to imagine that all the nation would keep their money in cash and the market would face a shortage of common currency, then very soon another currency would replace it or side by side with the previous currency. There will be a circulation. Even in this situation, there is no need for governments to print money and manipulate the market!
- We must constantly generate money to cope with the recession
The word “recession” is one of those words that everyone derives from that meaning for their own benefit and according to their purpose! For instance, the term was once used to refer to the concept of “lowering prices in the market” and now economic writers in the modern world use it to convey the concept of “reducing inflation”.
In any case, no matter where we use the word, the meaning of “increasing money production” does not come out of it! But the powerful and statesmen of different countries, with the help of their magic wands, have extracted this meaning from it and put it into practice. In their opinion, when inflation is low, it should be increased by producing money, and when prices are low, they should still be raised by producing money!
- Surprising the trade unions and the market!
The fourth excuse mentioned in the book is “price stickiness.” The explanation for this story is to assume that the unions have won their struggles to raise workers ‘wages and have brought the work to a point where factory owners and employers can no longer afford workers’ wages.
In this situation, governments must raise the cost of market goods by printing money and devaluing the money that flows in the market. In this case, employers can still hire workers at the same winning price as the unions.
Here is a hidden point. When the government devalues money, it then reduces the purchasing power of the people. Put simply, the government wastes all efforts by trade unions to improve workers’ lives by printing unreliable money and raising prices. It is understood that this game continues like a cycle for an indefinite period because the unions are still waging a newer struggle to increase workers’ wages!
- Injecting cheap money into the market reduces interest rates and increases economic growth
The fifth issue that calls into question the ethics of money production is the printing of money under the pretext of lowering interest rates in the market. Various governments around the world believe that when credit is added to the market and people have access to many credits, the interest on these credits automatically decreases. As a result, investors will be more willing to invest as they see higher nominal returns. Eventually the economy will grow.
It is clear that this excuse is a hollow bubble. This is because the main criterion for investors is not the increase in nominal returns. They are looking for real returns and profits that they can see in their account! As a result, governments not only do not help the economy by printing money, but also reduce production and cause serious damage to the market.
However, if governments stop manipulating the market and allow it to follow its normal course, after a while, interest rates and credit levels in the market will reach a relative balance. As a result, the economy becomes healthier and grows faster.
- Paper money costs less to produce, so it’s better
Part of the story of money printing ethics goes back to the costs of it. Those who hold the keys to money printing presses – governments – claim that the production of natural money – gold, silver or even copper coins – is expensive; yet instead, making paper money is much easier and cheaper. Perhaps when we look at this from one angle, we can give a little right to governments. Very soon, however, other points open up in this field. For example:
- The low cost of producing natural money will ultimately preserve or counteract the current purchasing power of the people. Since it does not allow prices to rise uncontrollably due to the increasing presence of money in the market.
- Inflation is controlled and even reduced.
Of course, there are other aspects to this story; For example, the hands of the people of power and governments are shorter than the market and the economy, and as a result, their power to control the people and use force economically or even politically is minimized. If you are a government official, hearing this news will surely scare you!
What was the main message of the book “Ethics of making money”?
The Ethics of Money Production by Jorg Guido Hulsamann sought to increase public awareness of the issue of excessive money printing by governments and the consequences of this wrong decision. He wanted to show the people and even the people of the world of economics what positive results there are in the market when a free economy moves towards the production of natural money, and how much the lives and well-being of the people increase as a result. Although these stories are still the size of a few sentences in books around the world, being aware of another form and image that can sit in the face of the economy and the market will open the door to this great change.
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