The claims of some about gold as money come off as quite ridiculous. It’s amazing how they spread like intellectual typhoid when all it takes is some consideration of common sense to find the absurdity of them.
Gold as money is somehow going transform government and society in general into fiscal conservatives. When we don’t have excess funny money floating around, people will be more conservative with their consumption and investment.
I rather doubt it. Gold never stopped a war – think War of 1812, the Mexican-American War, the Civil War, the Spanish-American War, and the Great War. Gold never stopped corruption, scandals, markets or bank panics, or mass economic busts. The first ~150 years of American history, most of it bi-metallic, is pretty much demonstrative proof that because we have a metallic monetary standard we don’t all of a sudden become conservative with money.
Don’t take my word for it or for anything else for that matter. There are quite a few books available, some for free if you have a Kindle or Kindle reader software, in which you can find analysis of the economic history of the US. The older ones are better, less ability to be revisionist to fit modern agendas, but there is at least one newer one in which I have found most of the proof I need. I’ve posted information about it here. I’d also recommend reading Expansion and Conflict, by William E. Dodd published in 1919. I pulled some statistics out of this book here. I’ve mentioned two here, and I know you want to figure it out for yourself and you’ll find others that I haven’t yet stumbled upon.
[Update] I forgot to mention this newer book that explains what really happened to cause the Great recession – Market Monetarism and the Roadmap to Economic Prosperity, by Nunes and Cole. (Shame on me)
All libertarians prefer gold to any other form of money – and you surely can’t be a libertarian if you want the funny money.
Libertarians reject government intervention and involvement in money. But that doesn’t mean that to be classically liberal, one has to reject bank credit or bank notes – private monetary systems. In fact, if you understand the history of bi-metallic and gold standards in the US, you understand that they required enormous amounts of government intervention to keep them stable, and even then it didn’t work very well. In fact, one of the scandals that rocked the Grant Administration was over that very thing. I borrowed a biography of President Grant from the library and the entire story about J. Gould is there in vivid detail. Look for one and read it (or you can read the wiki entry here). If you need a more modern example of the governmental interventions required with the gold standard, read Chapter 4 of Capitalism and Freedom, by Milton Friedman. When you are done with those, not taking my word for it, find more history books about gold standard scandals and stories about people being fleeced by the government on the gold standard. There is plenty more where I found these.
Oh, but DJ, you’re just a Keynesian fool. You’re no classical liberal because you don’t want to can the Fed, you want fiat money, and you want them to print away our wealth.
I’ve heard plenty of that crap. The truth is no, I’m not Keynesian. I’m a Market Monetarist, a branch off of the monetarist school that was championed by Milton Friedman among others. I am a classical liberal, although I prefer the term neo-liberal. My line of reasoning for keeping the Fed and fiat money – at least for now – is that our problems do not stem from the type of money we have, but rather the governance of it; and the practical reality of my position is that canning the Fed will make things much worse than they currently are, partly because of the dependencies that have developed around the central bank over time. We don’t know what all those dependencies might be, which laws would have to change, or how life would change. Changes such as the ones being pushed in all the anti-Fed propaganda are very dramatic, and would need to be executed carefully and very thoughtfully over time. Rome wasn’t built over night, nor should we try to do it that way now.
But the bottom line is that neo-liberals have much bigger and more worthy problems to solve. And we should choose which problems to solve by how each one we take on adds real value to most peoples’ lives once we are done instead of subtracting from it. If we don’t do that, we will hurt our cause to the point of becoming irreparable. Want to kill the libertarian movement politically for the foreseeable future – go for the Fed, go for the gold standard – you will solve zero real problems and create tons more. I have more worthy targets in mind, like restoring free markets in energy. The lack thereof is more responsible for the mess we are now in than fiat money.
And to the point of printing our wealth away, how rich do you feel right now compared to six years ago? There is such a thing as monetarily contracting our way to poverty – and it’s been happening since 2007. How many opportunities have you had over the last five years to make back all you lost? How many do you have today? Those should be real easy questions to answer. How rich are the Europeans right now? They have the same monetary problem that keeps getting exponentially larger – and they haven’t been easing. Have a clue yet that maybe it really isn’t such a bad idea to not be like Europe?
There’s more. And it isn’t about what the gold pushers say – but what they don’t say. They talk about how bad government is. And I’ve already touched on the point that going to gold will only trade one form of big government for another. But they don’t say what it will mean for your life, or how your expectations of economic life will change if we have a gold peg. Many of the books previously mentioned discuss what the circumstances of the gold standard meant for peoples’ lives with sudden shifts in value causing panics and years long depressions. One of the most prominent gold standard proponents in history, Andrew Jackson, said “What do farmers need with bank notes?” What does average Joe need with Federal Reserve notes? Go dig some gold out of the ground – and if you can’t find any I guess you get to scratch a living off rocks. You don’t really think we’d continue to be the land of opportunity, do you?
The last time the US had a real gold standard was in the 1930’s and quite of bit of the nation consisted of subsistence farming, large areas were without power, running water, or natural gas. Life would change, almost certainly – to somewhere between here and there. Just ask southern Europeans the choices they’re making about heat in the winter, how they’re feeding themselves, or what opportunities they have to earn enough to do so. Venture onto youtube and explore some Nigel Farage videos. He talks about the human tragedy in the south of Europe in some of them. That is only one source, but there are plenty more to be found if you look. It’s true that they are on the Euro, but they have monetary policy that is managed more like a gold standard would be. We can’t possibly be so arrogant to think that we wouldn’t suffer the same fate.
Another annoying thing they say without saying it is that economic freedom is a really bad thing. Isn’t that where bubbles supposedly come from when the Fed “inflates”? People just go crazy off free money and we overproduce ourselves into poverty by consuming all the available resources until there’s nothing left. Does that premise sound a little too familiar after reading FDR’s fireside chats (these are also free on Kindle)? I don’t know about others, but I’m a bit skeptical of theories FDR pushed on people to justify things like NIRA, taking over what was left of banking freedom, and all of the rest of the regulatory bodies he created – when we know what really happened to cause and prolong the Great Depression (Friedman and Schwartz, Monetary History of the United States). The only difference is that there is a little twist to blame it on the Fed spurring on the hapless capitalists.
In fact they say, without saying it, that the only way to curb the hapless and moronic capitalists is to limit the supply of money by pegging to gold. Without so much money flying around they can’t hurt anyone. But they don’t explain what really happens when the money supply is constrained. I’ve told you. We make what the modern liberals and socialist say about capitalism true because the only thing supply shocks can create is a reallocation of resources. That means that when Nigerian rebels take over an oil rig, you or someone else loses their job. But I suppose it doesn’t really matter as long as it is someone else and not you.
I could go on, but since my word processor is telling me that I’ve come to the middle of page three, I should wrap it up.
I’d promise to never say anything more about the subject, but is probably a promise I’d eventually have to break. So I’ll say that it is the last of it for now.