One of the deepest errors in modern economic thinking is the false belief that demand, by itself, creates wealth. This is the core illusion behind Keynesianism, monetarism, and every other form of violent intervention in money and credit.
Evil planners pretend they can inject demand by force, and that production will simply follow. But demand isn’t a magic force that can be conjured at will by a handful of sorcerers in tailored cloth. If it isn’t backed by real sacrifice and prior production, it’s counterfeit.
Real wealth is always the result of trade-offs within a world of scarcity. Every economic action entails a forgone opportunity. Sound money doesn’t generate demand out of thin air; it pulls it. It pulls labor, capital, and time from one use to another, according to real preferences and real sacrifice. It reflects what individuals are willing to forgo elsewhere. In that very process, wealth is created.
It is true: statist money can stimulate the economy. It can build houses, fund factories, and fuel a stock boom. Individuals see new projects, new jobs, and say, “Look—this ‘money’ created wealth! This is a miracle!” But here’s what they’re missing: the state cannot create wealth; it can only redirect it—fraudulently, temporarily, and destructively.
What must be understood is simple: when someone refrains from spending, they free up real resources for others to use. That act of saving is abstention from consumption, and that abstention makes real goods—of which money is merely an abstraction—available for others to claim.
This is more than an observation; it is the foundation of all human action. Scarcity makes choice necessary. Choice means trade-offs. Trade-offs imply cost. You act because you cannot do everything—you must choose and forgo. To deny this is to deny that action exists. Such is the praxeological heresy.
The state tries to defy the immutable laws of human action: creating claims without sacrifice, consumption without production, wealth out of nothing.
Yet it cannot summon steel, wood, labor, or machines into existence. It can only divert real resources from where they would have gone, had savers and consumers been free to guide the market—without any immediate signal that such a diversion occurred—or rather, by masking the market’s feedback mechanism through the use of fiat, statist money.
The baker sees rising demand for bread and hires more workers. The builder sees rising demand for houses and expands his crew. But no one gave up anything to make those resources available. The demand they respond to isn’t backed by abstention; it’s manufactured by coercion. The economy only appears capital-rich temporarily.
Eventually, both baker and builder discover their demand was never real. It wasn’t grounded in consumer preference. It was conjured up by violence: the statist monetary system.
The baker bought more ovens. The builder laid foundations, believing buyers were waiting. But the “money” that made it all seem possible lost its punch. Inflation ran its course. Purchasing power decayed. Property was quietly redistributed. The mirage vanished. The market returned to its true state—only with broken plans and less capital.
This is the bust. Not a mystery, but a reckoning: not of the free market, but of the statism that warped it. There is nothing free about coercion and counterfeit credit. It is a necessary correction, a painful recognition that the economy has been operating on lies and violence.
The structure of production must be rebuilt—not around another round of printed promises, but around what individuals actually want, and are willing to sacrifice for. Saving is not an antiquated fetish. It is a precondition for prosperity.
