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Note on the Fly

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With this note I do not mean to be mean or intend to be rude. I intend only to announce that I will no longer respond to anyone who sends to me his or her endorsement of a heretofore overlooked alleged source of free goods and services.

Nothing done on the monetary or financial side of an economy makes the use of real goods and services free. Zero interest rates do and cannot make the use of real goods and services free (or less costly). Money creation does not and cannot make the use of real goods and services free (or less costly). Debt financing does not and cannot make the use of real goods and services free (or less costly).

Indeed, the belief in the possibility of miraculously eliminating or reducing costs merely by manipulating the monetary or financial side of the ledger typically causes costs to unnecessarily increase. The belief that this or that financing scheme makes resource use free causes people to divert too many resources to whatever projects are funded through such schemes. Such careless uses of resources are wasteful, no matter how well these wastes are hidden by manipulations on the financial side of the ledger.

Sound monetary and fiscal policies are, of course, to be applauded. Loudly. Such policies enable economic actors to get the most value out of any given amount of real goods and services. Ditto for sound financial practices and well-functioning financial markets. But there is no possible way to use the monetary side of the ledger, or any financial hocus-pocus, to make costs on the real side of the ledger disappear.

And so just as a physicist would wisely refuse to waste her time reading the latest scheme for creating a perpetual-motion machine, I refuse to waste my time reading about the latest ‘get-stuff-free’ gimmick. The gimmick is just that; it ain’t credible.

Again, for emphasis: when the real side of the ledger is examined – when the use of human labor, magnesium, steel, construction cranes, paper clips, computer chips, potato chips, and other scarce goods and services is examined – the examiner who isn’t completely blind will see that devoting some goods and services to use X means that those same goods and services, which could have been used in W, Y, or Z, are in fact not used in those alternative ways. The production or subjective consumption values that are thereby not produced – not produced because real goods and services are used in X – are costs, wholly unavoidable this side of Shangri-la.

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