Cause and Effects of Money Scarcity

Anthony Migchels — Real Currencies Oct 7, 2013

American Populists always focused on scarcity of money. Expanding the money supply was their main goal, not Usury abolition. But Usury is the fundamental cause of money scarcity.
Money scarcity is the phenomenon of insufficient liquidity in the economy to finance all possible trades. This results in (permanently) depressed economies. Money scarcity always has been the key issue that Populist monetary reformers wanted to solve, ever since the Civil War. They proposed to add Greenback-style debt free United States notes to the money supply. But the call to monetize Silver was even more common. That was the background of Bryan’s famous ‘you shall not crucify Labor on a cross of Gold’ speech, for instance.
Gold as money is always scarce. There is never enough of it. This has been the case throughout US history. The economy grows quicker than Gold supplies and, worse, the Money Power has always controlled Gold (and Silver too, of course) and has routinely withheld massive amounts of specie from circulation.
Austrians deny money scarcity, citing Say’s law, which claims free markets will always clear. Prices will go down and suppliers unable to follow suit will just go out of business. In itself this is not untrue, but the destruction before markets clear is uncanny and leads to the premature death of millions, not to speak of the suffering of millions more who survive. Adding some liquidity to the economy is basically a no-brainer, but then the Austrians scare everybody to death with inflation fearmongering. Interestingly, warnings of inflation have always been the banker line in the past, when resisting adding money to the economy.
Money scarcity is pleasant to the Bankers. They prefer depressed economies, because it prevents the poor from becoming middle class. Bankers like cheap labor and people licking their boots for below sustenance job. The industrial revolution, which caused generation after generation to be destroyed in the sweat shops, is a typical example. Austrians will always hail the industrial revolution as that great era of wealth production, but they like to ignore that the wealth production was done by the laborers, while the wealth itself went to those providing the capital. The industrial revolution was the greatest defeat labor ever suffered against capital.
Furthermore, artificial scarcity of money raises the price of it and this obviously is to the monopolist’s liking. In this way money scarcity is as much a cause of usury as the other way around.

Causes of Money Scarcity

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