Wealth isn’t something that can simply be conjured from thin air, yet the illusion persists among central banks that it can.  These so-called economic authorities present themselves as masters of monetary theory, equipped with technical jargon and mathematical models.  Their grasp on the true nature of economics is superficial at best.  If you’ve been led to believe otherwise, it’s time to reconsider.  Wealth can’t be printed—period.

Understanding the business cycle isn’t a mystery shrouded in elite circles.  Central banks create the false pretense of generating wealth through money printing, but this practice only inflates prices.  It provides an illusory boost in financial terms but at the cost of eroding real value.  When money supply surges, so does the demand to hold cash—not because people want more of it, but because inflation devalues their purchasing power.  Real wealth is not represented by paper money but by goods, services, and productive assets that enhance our standard of living.

In a true free market, booms and busts as orchestrated by monetary intervention don’t exist.  Individuals make errors, but large-scale economic misalignments are rare.  The natural rate of interest reflects society’s collective time preference—the balance between savings and consumption.  A low rate suggests widespread saving; a high rate indicates prevailing consumption.  The distortions occur when interest rates are manipulated to misalign with genuine time preferences.  This artificial interference fuels an unsustainable boom, leading to a painful bust when reality sets in.

A common move by governments is to artificially suppress interest rates.  This misleads people, signaling that borrowing is more attractive than reality justifies.  Resources are funneled into projects that, under true market conditions, wouldn’t find backing.  These ventures often have long timelines, but once completed, they may lack consumer support due to initial false signals.  The result?  Economic-wide failure and waves of bankruptcies.  The cycle of overextension followed by painful corrections plays out time and again, each time eroding trust in the economy’s underlying stability.

Increasing the supply of fiat currency won’t enrich society.  The real beneficiaries are always those closest to the source: the state and its favored debtors.  These early recipients gain from inflated purchasing power before prices adjust.  Meanwhile, the public endures propaganda that tries to sell these maneuvers as beneficial.  Any short-term uplift masks the impending downfall.  Eventually, the misallocations become evident, and the economy must confront the inevitable reckoning: liquidation of malinvestment.

Ultimately, this cycle of false prosperity reveals a profound truth: paper money, however abundant, is not synonymous with wealth.  True economic prosperity stems from production, innovation, and voluntary exchange.  To believe otherwise is to be caught in a dangerous illusion, one that history has shown ends not in prosperity, but in widespread economic hardship.

Reference

Murray Rothbard; Austrian School Business Cycle Theory