circa 1969: Still-life of bundles of American paper currency. The bundles include five, ten, twenty, and fifty dollar bills. (Photo by Lambert/Getty Images)

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“You can keep that crap for yourself.” That’s how a beggar in 1920s Germany reacted after a passerby handed him several 100-mark notes.

The beggar’s response a little over 100 years ago makes evident two truths that still elude economists. For one, there’s nothing “stealth” about inflation. Since we all pursue not money, but what money can be exchanged for, we know intimately when currencies are being devalued.

The obvious corollary to the above is that opposite the popular belief among economists, central banks can’t “gun” so-called “money supply,” or increase “the money stock." Production is the only source of increases in exchange media, and central banks produce nothing.

For evidence of the folly of governments trying to plan money, or expand money in circulation, see Weimar Germany once again. No doubt governments can print money with abandon as happened in Germany, but as the beggar’s response reminds us, doing so hardly increases usage and circulation of the printed media. Quite the opposite.

Employed Germans were no different from the beggar. They rapidly switched to other currencies. Markets, as opposed to central planners, at work.

In concert with the mark’s descent into nothingness, “dollar booths” proliferated in Germany. With devaluation having rendered the mark less than worthless, Germans began circulating dollars among other currencies. Which was and is a statement of the obvious.

Far away from economic theory is the simple truth that production buys production. Money is but the accepted measure of value among producers that producers utilize to facilitate exchange.

When we put money in our pockets, or bring it into any store, we’re bringing production into the store with an aim to exchange it for that of others. From this simple truth, hopefully readers can see why the mark ceased circulating in post-WWI Germany, only to be replaced by credible exchange media.

Crucial about the change was that it wasn’t overseen by economists, or Fed officials. They didn’t place so-called “money supply” in Berlin, Frankfurt, Munich, and countless other German cities. There was no need to. Production is money, and it implies circulating exchange media, always and everywhere.

While economists will say otherwise, and will literally claim that if they controlled the Fed that they could expertly plan prices, “NGDP,” “national income,” and countless other aggregates popular with PhDs, the reality is that money is wherever production is. It’s not placed there, or printed, or doled out to hit specific “M” targets that will allegedly coincide with soaring, non-inflationary growth, rather money is a certain effect of production.

That money in circulation mirrors production reveals the folly of economists who claim an ability to plan so-called “money supply.” Implied in this sad conceit is that all-too-many economists believe they can plan production.

No they can’t, but it’s also no big deal. Just as markets are increasingly too fast for politicians (see economic growth under Donald Trump), so are they too fast for economists. That’s why the dollar, British pound, Swiss franc, and euro referee payments in so many cities, states and countries where they’re not legal tender. While governments devalue and destroy all sorts of legal tender with sad frequency, real markets mitigate their errors. Translated, producers, not central bankers, decide what money circulates and in what quantity.

Production is always, always, always matched with credible exchange media. One presumes the other. Which means that on the subject of money, economists are profound excess.