1) Production is the source of all consumption. No good or service can be consumed
without first being produced. Society’s wealth can only grow by adding more workers
and/or increasing their productivity.
2) Money is only a mechanism through which society’s producers exchange their productions.
Any large, sudden increase or decrease in the volume of money inevitably creates adverse
consequences for the volume of real production.
3) Capitalism operates on principles of freedom and mutual edification for producers,
consumers, capital, and labor alike. Ergo, it is a fundamentally moral system of production
4) The primary role for governments is to ensure the protection of private property for
5) Productivity enhancements result from individuals’ willingness to defer consumption
and invest their savings into reproductive investments. The role of the financier is to
facilitate and direct these transfers of capital. Capital should only be entrusted to
persons of sound character.
6) Because the vast majority of the money supply is supported by the assets of commercial
banks, bankers have a sacred responsibility to ensure that their capital is loaned prudently.
7) Bankers will be tempted to make riskier loans and employ more financial leverage when
asset prices are rising. The worse the loan underwriting and the greater the leverage employed,
the more profound the economic fallout when the credit cycle turns.
8) Recessions and unemployment result from changes in the structure of production as it
shifts to meet changes in the structure of demand. The key to maintaining output and
employment at high levels is to produce goods and services in correct proportions to each other.
9) When financial intermediaries like banks misallocate capital using an excessive volume
of leverage, the miscalculation imposes costs upon third parties without their consent.
It is the proper province of government to prevent this imposition from occurring by regulating