Be Careful with your Words. You Might Just End Up Saying the Opposite of What You Mean.

It’s amazing how the insertion or replacement of one word can make a sentence have a drastically different meaning than what it would have had otherwise. I’m not talking about inserting words such as “not” into a sentence. That’d make for the bestest blog post ever, but it’ll have to wait =/.

Stefan Molyneux in this interview (at about 10:11) says the following:

“Okay, what about, you know, the praxeological argument that if you increase the money supply without a concurrent increase in goods and services or other nonmonetary phenomenon, you will NOT add to the general wealth of society, you will only increase prices.” [emphasis original]

Molyneux here is trying to explain an example of a praxeological statement. When I first heard it, I interpreted it (the way I believe Stefan Molyneux meant it) to mean “if there is an increase in the money supply, ceteris paribus, general wealth will not increase.” That is why Molyneux included the phrase “without a concurrent increase in goods and services or other nonmonetary phenomenon”; because there very well could be an increase in general wealth if there were more goods and services.

However, after watching this clip, Robert Wenzel of EPJ criticized Molyneux for implying that he (Molyneux) thought that increases in the money supply are called for when goods and services increase. At first, I thought “Wait what? There’s no way he said that” but after further explanation I became convinced Wenzel was correct.

So to explain, let me restate Molyneux’s quote with my emphasis in bold:

“Okay, what about, you know, the praxeological argument that if you increase the money supply without a concurrent increase in goods and services or other nonmonetary phenomenon, you will NOT add to the general wealth of society, you will only increase prices.”

So here, if we take literally what Molyneux says, Wenzel is clearly correct. By saying “if you” increase the money supply without a concurrent increase in goods and services, “you” will not add to the general wealth, Molyneux is setting up a cause-effect relationship between the person increasing the money supply and that same person not adding to the general wealth. However, the implication of this is that if the person increased the money supply in the opposite circumstance, i.e., when goods and services did increase, that person would have increased the general wealth!

So if we change the quote slightly, it makes sense in the way I believe Molyneux intended it to:

“If there is an increase in the money supply without a concurrent increase in goods and services, the general wealth will not increase.”

In this case, there is no forced connection between the money supply and the general wealth. In other words, there is no implied belief that if there was an increase in the money supply with a concurrent increase in goods and services, it would be the increase in the money supply that caused the increase in general wealth.

Now, I have no reason to believe Molyneux believes what was implied by his statement. In fact, I have every reason to believe the opposite. He constantly critiques the Federal Reserve’s expansion of the money supply, and so I doubt he holds the position that comes across in his words. But what this shows me is that slight variations in language can have drastic effects on what you actually say versus what you really mean.

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Posted on October 10, 2012, in Economics and tagged , , , , . Bookmark the permalink. Leave a comment.

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