Mises Wire

free-market money cranks

free-market money cranks

I recently stumbled on an old article in The Village Voice called ‘The Goldbug Variations’ by Julian Dibbell .

Written in early 2002, it is a review of sorts, both of the book Cra$hmaker and of the sound-money movement in general.

Dibbell describes Cra$hmaker as ‘a book for sound-money cranks.’

He continues:

An ultra-wonky libertarian sub-subculture, the sound-money crowd stakes its ideological identity on the proposition that today’s paper currencies, backed only by government debt and the laws that make them legal tender, are the fraudulent cornerstone of the welfare state. By printing money at will, goes the logic, the government raises revenues that citizens would never pay knowingly, through the hidden tax of inflation. The full argument is complicated, but the proposed solution isn’t: Also known as goldbugs, sound-money cranks demand a return to the days when money had to be mined before it was minted.

So far his facts are accurate, even if I disagree with his judgments. Smug and condescending, yes. But not ignorant. Somehow he’s both knowing and naive.

He makes a grave error however when he says this:

Where your average libertarian fetishizes the Bill of Rights as the only part of the Constitution that really matters, goldbugs cling to an even smaller patch of text: Article I, sections 8 and 10, enshrining gold and silver as the exclusive coin of the realm.

Nope. Sorry. First of all, libertarianism is what produced the Bill of Rights. It is not a product of those ten amendments. Secondly, however much overlap there is between American libertarianism and the strict constructionism of constitutional conservatives, the two are not the same. Some of us are fans of the Articles of Confederation, and see 1787 as a nationalist coup against the then-dominant belief in a near-anarchistic decentralism. (And some of us don’t give a hoot for American history at all, and base our libertarianism entirely on the Non-Aggression Principle.) But third and most important, neither the ethics nor economics of the free market depend in any way on a mere document. And as Austrians are increasingly inclined to emphasize, advocacy for a gold standard is the combination of (1) advocacy for free-market money, and (2) a prediction about what commodity money the free market will choose. I know at least one prominent Misesian who thinks the market would choose silver. Personally, I think it’s more than mere coincidence that history keeps producing bimetallism or its equivalent -- two moneys for smaller and larger purchases or investment.

The last paragraph of Dibbell’s review begins with this:

In the end, then, the readers likely to get the most out of this long, strange trip may well be those of us who, unlike the average sound-money nut, have never come so close to the edge of consensus reality that we fell off.

I’m not even going to bother with the frightening implications of an appeal to ‘consensus reality’ on a political question that has been constantly and very expensively propagandized for more than a century. Even on less manipulated issues, I’ve never been very impressed by What Everyone Knows or How Everyone Thinks. I prefer appeals to facts and reason, which you’ll notice are far more abundant outside the mainstream.

Our enemies like to paint us as paranoids and fetishists. But isn’t it puzzling that however much they may disagree with free-market arguments on other issues, they rarely sink to calling us bugs and nuts and cranks on those issues?

I’m not denying that there are paranoids and conspiracy nuts in the sound money movement. All movements outside or against the mainstream attract more than the average portion of head cases. But the argument for sound and depoliticized money is just a special case of the argument for free markets in general. Nothing nutty about it.

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