Liberty Maven

In John Stossel’s latest column he echoes the free market principles that Ron Paul has been advocating all along. This is not new for Stossel and I find it refreshing to see his continued ability to reach the mainstream mind with these non-mainstream ideas. I dream of the day when these principles take hold again in America. Hopefully I’ll still be alive to witness it.

When we hear that the U.S. Treasury is doing this or the Federal Reserve is doing that, we should remember that these agencies are run by mere mortals, and as such, they cannot know how to “fix” something as complex as an economy. But they certainly are capable of wrecking one.

That’s what their inflationary policies will do.

In a free market, prices do more than tell us what we have to pay for things. They are messages emitted by an intricate communications system that inform us of the relative scarcity of resources, labor and consumer goods, and the relative intensity of consumer demand. Thanks to prices, we can tell producers how we rank our preferences, and they in turn can arrange production according to our priorities. Without prices, economic coordination is impossible, which is why attempts at state planning produce, in Ludwig von Mises’s words, “planned chaos.”

We associate inflation with a rising price level, but equally important, relative prices change when new money is created. That garbles the messages. As Mises writes, “The additional quantity of money does not find its way at first into the pockets of all individuals; … [P]rice changes which are the result of inflation start with some commodities and services only. … [T]here is a shift of wealth and income between different social groups.”

On Capitol Hill we find Ron Paul grilling Bernanke every chance he gets with pointed questions about the deliberate inflation of our money supply. In Stossel’s columns we read reinforcements to these free market principles.

Meanwhile, the average disinterested American wallows along questioning how the government should step in and help rather than rejecting the very idea of government assistance in the first place.