Which Comes First, The Cart or The Horse? The Horse

From: R
Sent: Monday, March 07, 2016 1:44 PM
To: Walter Block
Subject: Re: Austrian Economics

Hi, I have a doubt in economics which I got after reading the Atlas shrugged by Ayn Rand. I would be highly obliged if you could help me with this query:-Causality is an irreversible absolute. One cannot eat a cake before he bakes it. Therefore production is the cause and consumption is the effect. In any Credit transaction we consume before we produce which is a reversal of causality. Therefore any form of credit should not exist. Where am I going wrong in my thinking? R

Dear R: You say this: “In any Credit transaction we consume before we produce which is a reversal of causality.” This is false. A correct statement would be, “When we borrow, we consume before we produce which is a reversal of causality.” But in a credit transaction, there are TWO sides. The borrower and the lender. Before the borrower can consumer, the lender had to produce. So, production always comes before consumption. No exceptions.

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10:14 pm on September 12, 2017