Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.
Interpretation
Government intervention can devalue currency, despite its intrinsic worth.
Milton Friedman's quote illustrates how government actions can erode the value of money. By creating currency through excessive printing or poor fiscal policies, the government can transform seemingly valuable resources like paper and ink into something that lacks real purchasing power, thus highlighting the risks of inflation and mismanagement in economic policy.
In practice
This quote can be used in a discussion about modern economic policies during a public debate.
The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.
Universities exist to transmit knowledge and understanding of ideas and values to students not to provide entertainment for spectators or employment for athletes.
There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.
There is one and only one social responsibility of business - to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
The great danger to the consumer is the monopoly -whether private or governmental. His most effective protection is free competition at home and free trade throughout the world. The consumer is protected from being exploited by one seller by the existence of another seller from whom he can buy and who is eager to sell to him. Alternative sources of supply protect the consumer far more effectively than all the Ralph Naders of the world.
The strongest argument for free enterprise is that it prevents anybody from having too much power. Whether that person is a government official, a trade union official, or a business executive. If forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, are willing to buy, or else they have to go into a different business.
Economy consists in a due and proper application of the means afforded according to the ability of the employer and the situation chosen; care being taken that the expenditure is prudently conducted.
Unless we understand what it is that leads to economic and financial instability, we cannot prescribe -- make policy -- to modify or eliminate it. Identifying a phenomenon is not enough; we need a theory that makes instability a normal result in our economy and gives us handles to control it.
Let me put it very forcefully: No large economy has ever recovered from an economic downturn through austerity. It's not going to happen in the United States, and it's not going to happen in Europe.
The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.
I went to the bank and proposed that they lend money to the poor people. The bankers almost fell over.
Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the rick as what they are -- a simple upward redistribution of income, rather than a way to make all of us richer, as we were told.
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