Brad DeLong has taken some time out of his busy day to try to explain to the rest of us why Ludwig von Mises, patron saint of goldbugs and PaulBots, got monetary policy so very very wrong:
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The problem, I think Ludwig von Mises would say, is that the wealth of society is the amount of work has gone into creating the commodities in the economy: the food, the clothing, the houses, the little gold disks. The sum of past work crystalized in commodities is society’s wealth. The food is wealth, the housing is wealth, the clothing is wealth, and the little gold disks are wealth. Then add unbacked fiat money and bank credit–either public or private, it doesn’t matter–to the mix. The fiat money and the bank credit are counted as wealth, as if they were claims to little gold disks that took sweat and tears to create, but they are not wealth at all.