fis200_week1_reading1 (1)

Ment of trucks and ships to move the materials around

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ment of trucks and ships to move the materials around, coordinating the efforts of millions of people in vast networks of exchange to pro- duce a cup of morning coffee—at a paltry price, a sign of the sys- tem’s extraordinary efficiency and productiveness. There is no alternative to the money economy. The only choice is to make it work poorly or to make it work well. Though there have been enduring regimes in the past that were centrally managed with little monetary organization (e.g., ancient Egypt and the empire of the Incas), organizing a complex industrial economy by such means would be impossible. 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 machine shop produces one of 500 millimeters, but due to fluctua- tion in the meaning of millimeter it is 10 percent shorter than the engineer desired, both the engineer and the machine shop have become unable to cooperate productively. The information con- tained in the phrase “500 millimeters” has become corrupted, mean- ing different things at different times. The engineer may decide to Good Money Is Stable Money 6
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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 cor- rupted information, cripples productivity and prosperity. It is im- possible 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 statis- ticians’ charts—but much of the increased production will be wasted, or the greater effort will produce less results, and thus true productiv- ity declines. There have always been those who have sought to twist and manipulate the monetary system, because any change, though it hob- bles the smooth operation of the overall extended order, provides a benefit for one group or another. War enriches weapons makers. Crime provides a livelihood for police officers, lawyers, and prison keepers, and disease is the bread and butter of doctors and under- takers, and there are those who can benefit from monetary instability and devaluation. Debtors benefit at the expense of creditors. Export- ers benefit at the expense of importers. The unemployed benefit at the expense of the employed.
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