-Henry Hazlitt, Economics in One Lesson (Westport, CT: Arlington House Publishers, 1979), p. 28.
- “The effect of keeping interest rates artificially low, in fact, is eventually the same as that of keeping any other price below the natural market. It increases demand and reduces supply. It increases the demand for capital and reduces the supply of real capital. It creates economic distortions. It is true, no doubt, that an artificial reduction in the interest rate encourages increased borrowing. It tends, in fact, to encourage highly speculative ventures that cannot continue except under the artificial conditions that gave birth to them. On the supply side, the artificial reduction of interest rates discourages normal thrift, saving, and investment. It reduces the accumulation of capital. It slows down that increase in productivity, that ‘economic growth,’ that ‘progressives’ profess to be so eager to promote.”
- “It should be obvious that real buying power is wiped out to the same extent as productive power is wiped out. We should not let ourselves be deceived or confused on this point by the effects of monetary inflation in raising prices or ‘national income’ in monetary terms.”
- “The most obvious and yet the oldest and most stubborn error on which the appeal of inflation rests is that of confusing ‘money’ with ‘wealth’…Real wealth, of course, consists in what is produced and consumed: the food we eat, the clothes we wear, the houses we live in. It is railways and roads and motor cars; ships and planes and factories; schools and churches and theaters; pianos, paintings and books. Yet so powerful is the verbal ambiguity that confuses money with wealth, that even those who at times recognize the confusion will slide back into it in the course of their reasoning.”
- “In a free economy, in which wages, costs and prices are left to the free play of the competitive market, the prospect of profits decides what articles will be made, and in what quantities—and what articles will not be made at all. If there is no profit in making an article, it is a sign that the labor and capital devoted to its production are misdirected: the value of the resources that must be used up in making the article is greater than the value of the article itself.”
- “Economics…is the science of tracing the effects of some proposed or existing policy not only on some special interest in the short run, but on the general interest in the long run…To see the problem as a whole, and not in fragments: that is the goal of economic science.”