The Federal Reserve and central banks worldwide should not adopt a gold standard? Doesn’t that diverge from the libertarian creed, the teachings of Austrian economics for decades now? Aren’t gold bugs everywhere demanding a gold standard? Well, not exactly.
Bloomberg News ran an article Tuesday entitled “Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back.”
The author looked at the various personalities and pundits who are calling for the United States to return to a gold standard, or who are at least bashing the Federal Reserve System. Of course, the article also cited some economists who call the gold standard “the fringe” that’s a bad idea.
Thanks to former Texas Republican Congressman and three-time presidential candidate Ron Paul, the number of people, though not enough to revolt against the system, to support a return to the gold standard has gone up. If you ask any libertarian what monetary system they prefer, they’ll usually refer to the gold standard (a small portion of libertarians will say bitcoin).
Debate over the gold standard is a contentious one. Ever since Texas Senator and former presidential candidate Ted Cruz simply alluded to the idea, he garnered a lot of criticism and pushback by the academic community and mainstream media. It was sad to see because it’s quite likely the gold standard will never come back to U.S. monetary policy. (It shouldn’t come as a surprise because the statists hate gold.)
It’s true that the gold standard did have some very minor issues. For the most part, however, it was a vastly superior system to the current one we have today: fiat hegemony.
The central bank prints money without any accountability or care about the value. The U.S. dollar has lost 90 percent of its value since the inception of the Fed. Other central banks are raining euros and yen on the streets without a grain of concern for the retirees and savers who wish to build a nest egg or rely on one.
So, should the Federal Reserve and other central banks institute a gold standard? Nope.
Suffice to say, the Fed and other central banks should be shut down, closed up and ended. There shouldn’t be any central body that determines what type of money is used or what system is adopted by the general public. The free market should make that distinction not a handful of central planners.
Nobody really invented money. Akin to science or language, there was no one person who established a single monetary system. Throughout history, the people have used everything from bread to cigarettes, from whales’ teeth to shells as forms of money. Even in a barter system, Austrian School co-founder Carl Menger says, some items were more valuable and marketable than others.
Money emerges on the marketplace spontaneously. The kinds of money that were used in the past were valuable commodities tied to their own intrinsic possibilities. There wasn’t a king, there wasn’t a pharaoh, there wasn’t a central banker that invented money and granted consumers the right to use.
The only thing government has created today is paper, and that concept is a failed experiment.
Instead of a monolothic entity instituting anything, the economy should have competing currencies. The idea behind competing currencies has been debated vehemently for years, particularly between the legendary economists Friedrich Hayek and Milton Friedman. Hayek was for it, while Friedman opposed it – though he gradually changed his minds as the years went by.
Hayek presented the case that issuers of a currency would provide the marketplace with constant and valuable money because if it were anything but then it would fail in the free market. Friedman disagreed, arguing that it would lead to fluctuation and constant changes in monetary purchasing power – he often pointed to the Swiss Franc as an example of a dependable currency.
Allowing currencies to compete would benefit the consumer. In all likelihood, consumers would select gold and silver as money. But whether it’s a precious metal, bitcoin, cigars, Federal Reserve Notes or Donald Trump’s hair clippings, consumers should have the right to choose what currency they wish to use when they make transactions.
In the end, a central bank should not have the power to implement a monetary system, even if it’s a gold standard. The free market should make that determination. And that’s what free market capitalism is all about: choice.
–AM
“Money emerges on the marketplace spontaneously.” That statement is untrue. Money exists because the King can’t levy his tax without inventing money. So, he invented money. Money started as, and continues to be, a tax credit that you MUST have to avoid incarceration for not paying taxes.
kings coined and standardized money the people were already using , but no king ever had the power to make people value anything so that they would voluntarily use it as a medium of exchange. Kings don’t need money to collect taxes they used to send out tax collectors to takes goods such as cattle, tools, sons and daughters, etc .
Coined and standardized money is used ONLY after it is coined and standardized – by the King. Why would the King want to store and feed cattle or collect more tools than he needs? We subjects “voluntarily” began to use it as a medium of exchange because we already needed to get those shiny gold coins to pay compulsory taxes. Otherwise, the King might take my son or daughter, or my head.