Student Of Liberty

9. CREDIT.

For when a ploughman borrows fifty francs to buy a plough, he is not really being lent fifty francs but a plough.

Frédéric Bastiat
What Is Seen and What Is Not Seen

Today’s quote represents another way to note what I had quoted after reading the first pamphlet of the first series of the Economic Sophisms, namely that “Mankind’s wealth lies in the abundance of things.” In only three pages, Frédéric Bastiat shows us what is money and credit – instruments that help to measure wealth, not wealth itself.

At that time, metallic money helped to keep in check the passions of the advocates of the money printing press (they were content with offering State guarantees on loans). Unfortunately, this constraint does not exist anymore and there is not a day under the sun when I do not hear or read some advocate of MMT (Magic Money Theory) or a scheme to cancel governments debts by the European Central Bank to solve their solvency issue. However, I am sad to report to those who explain to us that a central bank cannot go bankrupt that the credit that had been extended to governments may now be sitting electronically on the debit side of the books of the central bank but the plough, even if it has been destroyed by the government, is still due to his rightful owner…

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