When dollars are created out of the air, they’re wasted. When dollars are too easy, there’s too much of them. And they’re misallocated. What could possibly go wrong?
The virtue of making money year after year after year, and saving a little bit as you go, is that you don’t need to make monumental decisions about what to do with it. You create a plan. You save on a consistent basis and over time you look back and are pretty amazed at what you’ve amassed. (You can teach a grandchild how to do this here).
The more government injects itself into the money equation, the more the natural law is distorted. All of a sudden, you have another voice in the contract. And you have winners and losers created for no good reason, except that prices or the value of money is mismanaged.
When government tries to prevent suffering, the result is suffering. The saver suffers because what was once a safe investment like a Treasury note isn’t worth the paper it’s printed on. The saver has been penalized—the natural law is broken.
Action Line: We’re in a time where government wants to solve everyone’s problems. As my father-in-law Dick Young explains, it’s the scariest investing environment of his lifetime. “Proceed with caution” is being kind.