Free Money! Then Free The Rest Of The Economy
My previous column, “ In Praise Of Gold,” was not meant as an advocacy of a gold standard–not if that means giving government the power to dictate what is and isn’t money.
The right of free trade means that the government may not impose a gold standard. Every trade is an exchange of values, and what is exchanged for what is to be determined by the buyer and seller. No third party may intervene.
Whether you decide to accept payment in gold, silver, warehouse receipts, stock ownership, IOUs or chicken wings is up to you. The government has no role to play in setting the terms of the exchange. There is no justification for a policeman to be looking over your shoulder, fingering the trigger of his gun, while you are deciding what you want to accept in payment for what you are offering.
But, you may ask, where is that happening? Where is physical force being used to dictate payment? The answer is: in every single nation on the planet. It’s not done by the crude means of dispatching troops or police. It’s done indirectly, by threats. And the threats are backed up by the police.
Here are some of laws that interfere with monetary freedom. Legal tender laws nullifying “gold clauses” in contracts, laws requiring banks to be chartered by states or the federal government, thousands upon thousands of regulations foisted upon banks, the FDIC, which uses money seized by force (government funds) to insulate banks from market risk, laws taxing mythical “capital gains” in gold sales. (And in 1933 FDR simply confiscated all privately held gold coins.)
Remember: no government policy regarding money is a recommendation. All of it is backed up by the police power of the state. Violate the government’s interventions, and you will be fined and/or jailed. That’s force. That’s what keeps the fiat money system going. That’s what has caused the dollar to lose over 98% of its value, in terms of gold, over the last 100 years. It was almost exactly 100 years ago, December 23, 1913, that the (coercive) Federal Reserve System was established.
In December 1913, the dollar was worth slightly more than 1/20th of an ounce of gold. Twenty government dollars and change would buy an ounce of gold. As of this writing, it takes 1,225 government dollars to buy that same ounce of gold. Do the math. The government dollar has dropped by 98.38 percent during the Fed’s reign.
The government paper dollar of today is worth less than two cents, compared to the government paper dollar when the Fed began. That’s the legacy of government control–political control–over money.
There is no justification for the Federal Reserve System or for any government intervention regarding money. The government should neither impose gold nor forbid it.
How far would I take this line of thought? All the way.
A case in point. I agree with Jean Baptiste Say, the great 19th century economist, that we should not use national currencies, or even introduce words to canonize them. There is no rational need for the terms “dollar”–or “franc” or “peso” or “shekel.
We call a bushel of wheat a bushel of wheat. We call a pound of butter a pound of butter. We can call an ounce of gold an ounce of gold. A car’s price could be 10.30 gold ounces. Or, because gold has such a high unit value, we could use the gold gram, and quote the price as 315 gold grams.
A gold gram is a gold gram whether it’s used in America, France, Mexico, or Israel. Nor does an ounce of silver vary with lines drawn on the map. And when people are free to choose their money, gold and silver win the market competition. (If, in the future, something else wins, so be it.)
So one reason why the government should not “define the dollar as a certain weight of gold” is that we should jettison the term “dollar.” It’s an obfuscatory term. “Dollar,” “franc” and the like inject into men’s thinking an intermediary between money and the money commodity. That paves the way for government debasement of money.
Let Washington try to declare that an ounce is now four-fifths of an ounce.
Monetary freedom is the only sure means of protecting the integrity of our medium of exchange and store of value. Freedom in general is the only sure means of protecting the integrity of our lives–our ability to act on our own best judgment.
As government coercion has devalued our money, so it has devalued our minds. The same statist mentality that impedes or outlaws using gold forbids you to use the cancer drugs it hasn’t approved, won’t let you put up a house without dozens or hundreds of permits, tells you how much margin you need on stock purchases, won’t let you eat foods it considers unhealthy for you, stops you from buying a gene-testing kit, and generally declares war on your ability to take independent action.
But the Founding Fathers knew government exists to protect rights not to violate them: “. . . to secure these rights, governments are instituted among men.”
The right to freedom in money is a straightforward application of the right of free trade. Government exists to protect the terms of contract, not to dictate them.
A free economy requires monetary freedom as part of “the separation of State and Economics, in the same way and for the same reasons as the separation of Church and State.”
forbes.com |
