Mundell on Gold
The 1999 Nobel Laureate in economics on the origins of gold as a monetary instrument, and why it is so reviled by backers of political intervention.
The 1999 Nobel Laureate in economics on the origins of gold as a monetary instrument, and why it is so reviled by backers of political intervention.
What happened to the gold standard? As Greenspan put it, "following World War I such tight restraints on economies were seen as too inflexible to meet the economic policy goals of the twentieth century." What those policy goals were, Greenspan did not spell out. Let's fill in the blanks.
Yet the biggest obstacle to a gold standard, as always, is intellectual. What these Congressmen need is a good monetary education. Four objections invariably crop up when the subject of gold is raised. Here they are, with some short answers.
The Gold Standard Act of 1890, which officially established the gold standard in America, was the culmination of a twenty-year battle between inflationists, who favored unlimited government purchase of silver (the "Free Silver" movement), and the advocates of sound money based on the gold standard. The inflationists were led by Senator John Sherman, author of the 1890 Sherman Silver Purchase Act (as well as the monopolistic Sherman Antitrust Act), brother of Gen. William Tecumseh Sherman.
Mises demonstrated, as early as 1912, that no good can become a medium of exchange, much less a money, unless it has a previous non-monetary usefulness on the market. In short, money can only emerge as a commodity on the market, and cannot be imposed by the government, by social contract, or by various schemes of economists or other observers. Such plans have elsewhere been labeled correctly by Hayek himself as "constructivist." In short, media of exchange and therefore money can only arise "organically" out of market processes and cannot be imposed by outside schemers.
September 1986 is an historic month in the history of United States monetary policy. For it is the first month in over fifty years—thanks to the heroic leadership of Ron Paul during his four terms in Congress—that the United States Treasury has minted a genuine gold coin.
The Ludwig von Mises Institute's premier conference was held in Washington, D.C., on November 16–17, 1983. "The Gold Standard: An Austrian Perspective" was the first event of its kind. Not only was it the first academic conference ever held in the United States on the gold standard, but it took place on Capitol Hill.
Recordings of the lectures and seminars presented at Mises University: 15–21 July 2018.