Source: David Friedman’s Substack
by David Friedman
“One of the difficulties in teaching economics is that the students believe they already understand it. They are frequently wrong, not in the sense of missing the fine points but of believing plausible sounding nonsense. That post illustrates one version. If you imagine wealth as money, stacks of hundred dollar bills, the logic is clear. Given a fixed number of hundred dollar bills, if one person gains, gets more, another person must lose. If someone, the Treasury or a counterfeiter, prints more hundred dollar bills, more money is now chasing the same amount of goods, pushing prices up: inflation. But wealth is not always, not even usually, money.” (12/28/24)