What is unseen is the alternative valuable goods that would have been produced by the resources that have been drawn into the counterfeiter’s operation. The only way to ensure that the value of goods produced in one line of production exceeds those produced in other lines of production with the same resources is to have the expanding line of production compensate for the value in other lines by paying prices for the resources that are greater than what would have been paid for them in the contracting lines of production.
Because the future is uncertain, capitalist can only predict which investments in the various lines of production by entrepreneurs will pay off. The only way to ensure that the allocation of capital funding is done efficiently is to have entrepreneurs cover the cost of funding their projects by paying back their loans with interest.
Obviously, not everyone who has a project can be funded with newly produced money, whether counterfeited or handed out by the state. There are only so many real resources to go around. Therefore, some process of picking who gets funded, besides the foresight of capitalist who aim to fund projects that will generate a rate of return, would have to be used. Just because a person is good at counterfeiting doesn’t demonstrate the likelihood of their investment project paying off. Likewise, joining the ranks of politicians or bureaucrats doesn’t demonstrate a superior ability to pick successful investment projects. Capitalists, on the other hand, have their own wealth on the line when they fund projects and earn monetary gains for superior foresight and suffer monetary losses for inferior foresight.
Take a look at Mises’s article, “Profit and Loss.”