by Steve Forbes
The global economy is a mess today because most economists, bankers and political leaders don’t understand that most basic of subjects: money. When it comes to monetary policy, they have it backwards, thanks to the misbegotten ideas of John Maynard Keynes.
Before Keynes and like-minded peers, economists understood that the real economy was the creation of products and services. Money was the symbol economy. It represented what people had produced. It was a facilitator of commerce.
The ability of people to trade with one another is how we achieve a higher standard of living. Money measures wealth; it is not wealth itself. It is a claim on products and services that people have created. That’s why counterfeiting is illegal; it’s thievery. But when government does this, it’s called quantitative easing, or stimulus.
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