The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians.
Interpretation
A strong monetary system should minimize political control over money to ensure its integrity and stability.
Henry Hazlitt emphasizes the importance of limiting political influence in the management of money to maintain a sound monetary system. By reducing the discretion politicians have over the quantity and quality of money, he argues that economic stability can be achieved, as this reduces the risk of mismanagement and manipulation, which can lead to inflation or other economic issues.
In practice
In a financial seminar discussing the importance of a stable currency.
A man with a scant vocabulary will almost certainly be a weak thinker. The richer and more copious one's vocabulary and the greater one's awareness of fine distinctions and subtle nuances of meaning, the more fertile and precise is likely to be one's thinking. Knowledge of things and knowledge of the words for them grow together. If you do not know the words, you can hardly know the thing.
Mere inflation-that is, the mere issuance of more money, with the consequence of higher wages and prices-may look like the creation of more demand. But in terms of the actual production and exchange of real things it is not.
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine - the special pleading of selfish interests.
The only way we could remember would be by constant re-reading, for knowledge unused tends to drop out of mind. Knowledge used does not need to be remembered; practice forms habits and habits make memory unnecessary. The rule is nothing; the application is everything.
The great merit of gold is precisely that it is scarce; that its quantity is limited by nature; that it is costly to discover, to mine, and to process; and that it cannot be created by political fiat or caprice.
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
No complaint... is more common than that of a scarcity of money.
People who live in poor countries have to be entrepreneurial even just to survive.
The perennial conviction that those who work hard and play by the rules will be rewarded with a more comfortable present and a stronger future for their children faces assault from just about every direction. That great enemy of democratic capitalism, economic inequality, is real and growing.
Today, if you look at financial systems around the globe, more than half the population of the world - out of six billion people, more than three billion - do not qualify to take out a loan from a bank. This is a shame.
If low taxes were the way that people like me created wealth, then we'd be starting our companies in the Congo or Somalia or Afghanistan, but we're not. We come to places where there are lots and lots of customers.
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
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