money printing vs savings

Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
  • #18532

    I want to shore up my debate skills around the subject of fed money printing and, really, wealth creation in general. Specifically how do you approach someone who says that fed money is the same as general savings? Yes, the savings represents “real wealth” that someone created, but it’s hard to see how it’s physically much different than fed money. I can see an argument that says savings will be directed more carefully perhaps due to the incentives of the owner. But if fed money ends up as loans used by entrepreneurs, it’s hard to see much difference.

    Need some ammo here.


    People strive to economize their resources. Since the division of labor is more productive than self-sufficiency, everyone produces to satisfy the consumptive ends of others and has his consumptive ends met by the production of others. Voluntary (monetary) exchange among person is necessary to economize the use of resources for society-at-large. Within the market economy each person earns income by producing to satisfy the preferences of others and disburses his income to have his preferences satisfied by the production of others. As with any other disbursement of income, a person saves to satisfy his preferences, specifically, his time preferences. Savers lend to investors who borrow the saving to make economizing investments in producer goods. Saving, therefore, is part of the economizing character of the market economy.

    Unlike saving, Fed money printing is not endogenous to the market economy. Instead, it is a condition produced externally to the economizing character of the market and impose upon it. Monetary inflation and credit creation, therefore, inhibit the economizing of saving-investing. For this reason, people will struggle against them to re-establish their time preferences both in the rate of interest and in the proportion of income they desire to save and invest. The details of this process are spelled out in Austrian Business Cycle Theory.


    That’s good information, but I’d like to bring it down to a level that you could use to convince an average friend or relative. Some arguments I can think of:

    1) there is not as much assurance the printed money will end up in the hands of those who have proven themselves as efficient users of resources in the past. Maybe mentioning ACORN, Haliburton, 2000’s mortgage debacles, roads built to nowhere in Alaska, etc.

    2) your savings are destroyed even by the fed’s (likely underestimated) 2% inflation target. I like to use the rule of 72 here and get people thinking about savings and retirement. You are also literally forced into riskier investments, which is an argument those nearing retirement certainly understand.

    3) comparing fed printing to counterfeiting works for some people.

    4) of course Austrian Business Cycle Theory just got a lot more convincing after 2008. Many people can relate to this story.

    5) a quick story of socialism in general and it’s affect on economies can be convincing. Fed money printing certainly aids in pushing toward a more socialist economy.

    6) For anyone who’s antiwar, money printing aids and abets that cause.

    I still wish I had a better way to more directly attack the statement “You don’t need savings. The printing takes it’s place and the benefit of it outweighs the costs!”.

    Thanks Jeff.


    You might try metaphors,

    Mises referred to monetary inflation as the miracle of turning stones into bread.

    Mises also used the metaphor of the master builder to explain why the build up of the economy’s capital structure set in motion by monetary inflation and credit expansion during the boom must end in liquidation of the malinvestments made in the boom and reallocation of resources back to a realizable capital structure during the bust.

Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.