Gold is the best money, because for centuries, as a result of countless individual choices, it has evolved as such. It was not imposed on the market by force, but was cultivated in the soil of the market itself. Christopher Mayer explains.
Since the early 17th century, American governments (colonial, state, and federal) have tried and failed to restart business expansions by reflation, writes Scott Trask. But new money in the system is no substitute for genuine production. It is too early to see the long-run consequences of the Bush-Greenspan reflation, but if the past is any guide we can expect the next decade to more resemble the 1970s than the 1990s.
The disappearance of gold from the monetary scene is perhaps the most tragic economic calamity to befall the world of money in the twentieth century, writes Christopher Mayer. Views on gold in the first two decades of the twentieth century compared to those held today could scarcely be more different.
H. Scott Trask sums it up: on the one hand, they believed in fractional-reserve banking, generally following Adam Smith's currency and banking theories. On the other hand, they were resolutely opposed to government-issued paper money, fiat money, legal tender laws, inconvertible paper currency, and land banks. On the question of a national bank, they were divided.
How are fiat money and the business cycle related? Without sound money, calculation is less efficient and the economy will be prone to business cycles. With sound money policy, no boom-bust cycle will emerge and monetary calculation and planning will be as efficient as possible in an uncertain world. John Cochran explains.
No other currency, national or international, can conceivably take the place of the American dollar. They all suffer seriously from the same ideological malady: they are the creation of political concern and authority. Whatever we may think of gold, it always looms in the background, beckoning to be used as money, as it has been since the dawn of civilization.
With the dollar down and gold up, both trends obviously related to growing fear of economic troubles ahead, the question again arises: why shouldn't the dollar itself be good as gold? It would be if the views of the classical-liberal tradition held sway. This tradition stands solidly behind a commodity money standard, like silver or gold, as the very definition of sound money.
What is essential for us today is to continue the research, the writing, the advocacy for sound money, for a dollar that is as good as gold, for a monetary system that is separate from the state. It is a beautiful vision indeed, writes Lew Rockwell, one in which the people and not the government and its connected interest groups maintain control of their money and its safe keeping.
The present unstable financial system cannot be fixed by means of a monetary policy that targets the price of gold, argues Frank Shostak. This framework, favored by supply-siders, is likely to further destabilize the economy. What is needed is not a reversion to the bankrupt Bretton Woods system, but a genuine gold standard, where gold is money.
What set in motion the explosive technological advance of the last 250 years was the world of ideas. Great thinkers began to understand the internal logic of the market economy and its potential for liberating mankind from poverty, dependency, and despotic rule.
