The Investment Scientist

Money Neutrality is the economic concept that printing money only raises prices without raising wealth and overall economic well-being.

To explain this to my 14-year-old, I told a story about the Spanish colonization of South America. The colonizers found a lot of silver, which was a hard currency in medieval Europe. When they took a large amount of it back to Spain, the amount of silver in the country quadrupled. In terms of silver, Spain was four times wealthier, but were they four times better off?