“Por su propia naturaleza como un estudio del uso de recursos escasos que tienen usos alternativos, la economía se trata de compensaciones incrementales, no de “necesidades” o “soluciones”. Quizás por eso los economistas nunca han sido tan populares como los políticos que prometen resolver nuestros problemas y satisfacer nuestras necesidades”.
— Economía básica de #ThomasSowell
“By its very nature as a study of the use of scarce resources which have alternative uses, economics is about incremental trade-offs—not about “needs” or “solutions.” That may be why economists have never been as popular as politicians who promise to solve our problems and meet our needs.”
— Basic Economics by #ThomasSowell
“Fractional Reserve Banking:
Goldsmiths have for centuries had to have some safe place to store the precious metal that they use to make jewelry and other items. Once they had established a vault or other secure storage place, other people often stored their own gold with the goldsmith, rather than take on the cost of creating their own secure storage facilities. In other words, there were economies of scale in storing gold in a vault or other stronghold, so goldsmiths ended up storing other people’s gold, as well as their own. Naturally, the goldsmiths gave out receipts entitling the owners to reclaim their gold whenever they wished to. Since these receipts were redeemable in gold, they were in effect “as good as gold” and circulated as if they were money, buying goods and services as they were passed on from one person to another. From experience, goldsmiths learned that they seldom had to redeem all the gold that was stored with them at any given time. If a goldsmith felt confident that he would never have to redeem more than one-third of the gold that he held for other people at any given time, then he could lend out the other two-thirds and earn interest on it. Since the receipts for gold and two-thirds of the gold itself were both in circulation at the same time, the goldsmith was, in effect, adding to the total money supply.”
— Basic Economics by #ThomasSowell
“The banking system is thus a major part of an elaborate system of financial intermediaries which enables millions of people to spend money that belongs to millions of strangers, not only for investments in businesses but also for consumer purchases.”
— Basic Economics by #ThomasSowell
“Banks not only have their own economies of scale, they are one of a number of financial institutions which enable individual businesses to achieve economies of scale—and thereby raise the general public’s standard of living through lower production costs that translate into lower prices.”
— Basic Economics by #ThomasSowell
“Why are there banks in the first place? One reason is that there are economies of scale in guarding money. If restaurants or hardware stores kept all the money they received from their customers in a back room somewhere, criminals would hold up far more restaurants, hardware stores, and other businesses and homes than they do. By transferring their money to a bank, individuals and enterprises are able to have their money guarded by others at lower costs than guarding it themselves. Banks can invest in vaults and guards, or pay to have armored cars come around regularly to pick up money from businesses and take it to some other heavily guarded place for storage. In the United States, Federal Reserve Banks store money from private banks and money and gold owned by the U.S. government. The security systems there are so effective that, although private banks get robbed from time to time, no Federal Reserve Bank has ever been robbed. Nearly half of all the gold owned by the German government was at one time stored in the Federal Reserve Bank of New York.{ 599} In short, economies of scale enable banks to guard wealth at lower costs per unit of wealth than either private businesses or homes, and enable the Federal Reserve Banks to guard wealth at lower costs per unit of wealth than private banks.”
— Basic Economics by #ThomasSowell
“However, the gold standard does not prevent either inflation or deflation, though it restricts the ability of politicians to manipulate the money supply, and thereby keeps both inflation and deflation within narrower limits.”
— Basic Economics by #ThomasSowell
“Not all inflation is caused by war, though inflation has often accompanied military conflicts. Even in peacetime, governments have found many things to spend money on, including luxurious living by kings or dictators and numerous showy projects that have been common under both democratic and undemocratic governments. To pay for such things, using the government’s power to create more money has often been considered easier and politically safer than raising tax rates. Put differently, inflation is in effect a hidden tax. The money that people have saved is robbed of part of its purchasing power, which is quietly transferred to the government that issues new money.”
— Basic Economics by #ThomasSowell
“When people have more money, they tend to spend more. Without a corresponding increase in the volume of output, the prices of existing goods and services simply rise because the quantity demanded exceeds the quantity supplied at current prices and either people bid against each other during the shortage or sellers realize the increased demand for their products at existing prices and raise their prices accordingly.”
— Basic Economics by #ThomasSowell
“The American dollar was once redeemable in gold on demand, but that was ended back in 1933. Since then, the United States has simply had paper money, limited in supply only by what officials thought they could or could not get away with politically. Many economists have pointed out what a dangerous power this gives to government officials. John Maynard Keynes, for example, wrote: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
John Maynard Keynes, The Economic Consequences of the Peace (New York: Harcourt, Brace and Howe, 1920), p. 235.
— Basic Economics by #ThomasSowell
“…from the standpoint of the national economy as a whole, money is not wealth. It is just an artifact used to transfer wealth or to give people incentives to produce wealth.”
— Basic Economics by #ThomasSowell
“Money is of interest to most people but why should banking be of interest to anyone who is not a banker? Both money and banking play crucial roles in promoting the production of goods and services, on which everyone’s standard of living depends, and they are crucial factors in the ability of the economy as a whole to maintain full employment of its people and resources.”
— Basic Economics by #ThomasSowell
“Like most people I have never seen a pollster”
-Thomas Sowell
“What things cost under earlier conditions is history; what the supply and demand are today is economics.”
— Basic Economics by #ThomasSowell
Yesterday’s price is not today’s price!
Anyone at any given moment could be one step from being “canceled”. This says a lot about the fragility of the ones doing the canceling.
Choose your words wisely. Choose when to use your words wiser still.
“Remembering that time is money is, among other things, a defense against political rhetoric, as well as an important economic principle in itself.”
— Basic Economics by #ThomasSowell
“A firm’s profits may soar, or huge losses pile up, within a few years of each other—or sometimes even within the same year. Both profits and losses serve a key economic function, moving resources from where they are less in demand to where they are more in demand. If the government steps in to reduce profits when they are soaring or to subsidize large losses, then it defeats the whole purpose of market prices in allocating scarce resources which have alternative uses.”
— Basic Economics by #ThomasSowell
I’m done with Zoom. If it’s hybrid, I’ll be in person. Strictly Zoom…I politely decline.
“Although the reserves of natural resources in a nation are often discussed in terms of physical quantities, economic concepts of cost, prices, and present values must be considered if practical conclusions are to be reached. In addition to needless alarms about natural resources running out, there have also been, conversely, unjustifiably optimistic statements that some poor country has so many billions of dollars’ worth of “natural wealth” in the form of iron ore or bauxite deposits or some other natural resource. Such statements mean very little without considering how much it would cost to extract and process those resources—and this varies greatly from place to place.”
— Basic Economics by #ThomasSowell