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.
Interpretation
Gold's value comes from its scarcity and the difficulty of obtaining it, which prevents it from being artificially produced.
In this quote, Henry Hazlitt emphasizes that the worth of gold lies in its limited availability and the labor-intensive process required to extract and refine it. Unlike currency that can be easily printed or manipulated by governments, gold's intrinsic value is derived from its scarcity and the natural limitations of its supply, which contributes to its status as a stable form of wealth.
In practice
In a financial seminar discussing the importance of investing in precious metals.
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.
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.
Economics is haunted by more fallacies than any other study known to man
The accepted ideas of any period are singularly those that serve the dominant economic interest...What economists believe and teach, whether in the United States or in the Soviet Union, is rarely hostile to the institutions - the private business enterprise, the Communist Party - that reflect the dominant economic power. Not to notice this takes effort, although many succeed.
Thus, our national circulating medium is now at the mercy of loan transactions of banks, which lend, not money, but promises to supply money they do not possess
The problem is this. The spread of markets outpaces the ability of societies and their political systems to adjust to them, let alone to guide the course they take
There is no western, capitalistic country in which the conditions of the masses have not improved in an unprecedented way.
The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available,with a view to mitigating the predominance of speculation in the United States.
We will not have any more crashes in our time.
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