The Little Book of the Shrinking Dollar: What You Can Do to Protect Your Money Now

What Occupy Wall Street Is Missing

My colleague, Jeffrey Tucker over at Laissez Faire Books, recently reminded me of this simple quote: “You can obey balance sheets or bullies.”

What he means is that we can have one of two things. We can have a price system, or we get top-down folks who try to control everything. The two approaches don’t combine well, as we’ve been finding out over the last few decades.

We prefer the bottoms-up method. Price signals come from voluntary exchanges between individuals and businesses, between businesses and banks, between banks and individuals. That’s the best system: the free market laissez-faire price system. It works best without constant false signals or outright market manipulations.

Price is simple. Say you want to buy a loaf of bread. You as consumer would like to pay as little as possible for it. Heck, you’d like a free loaf of bread like the manna in the Bible. The baker, however, would like to charge more. Yet, he’ll settle for as much as bread buyers seem willing to pay. The price you pay is the result of this agreement.

This exchange is practically as old as barter. It’s arrived at without speaking a word, yet it reflects the sum total of many pieces of information: the availability of flour, salt, water, human taste and preference, alternative products being offered, and so on.

And it all happens without a central planner. No central board of experts tells us what the prices should be.

You don’t need to rely on genius in this system, and ...