40

Gold vs. Fluctuating Fiat Exchange Rates

Scarcely more than a year since it was signed, the Smithsonian Agreement, the “greatest monetary agreement in the history of the world” (in the words of President Nixon) lay in shambles. And so the world vibrates, with increasing intensity, between fixed and fluctuating exchange rates, with each system providing only a different set of ills. We apparently live in a world of perpetual international monetary crises.

41

The Case for a Genuine Gold Dollar

INFLATIONARY FIAT PAPER

For nearly a half-century the United States and the rest of the world have experienced an unprecedented continuous and severe inflation. It has dawned on an increasing number of economists that the fact that over the same half-century the world has been on an equally unprecedented fiat paper standard is no mere coincidence. Never have the world’s moneys been so long cut off from their metallic roots.

42

Inflation and the Business Cycle: The Collapse of the Keynesian Paradigm

Until the years 1973–1974, the Keynesians who had formed the ruling economic orthodoxy since the late 1930s had been riding high, wide, and handsome.1 Virtually everyone had accepted the Keynesian view that there is something in the free-market economy that makes it subject to swings of under- and overspending (in practice, the Keynesian concern is almost exclusively with alleged underspending), and that hence it is the function of the government to compensate for this m

43

Lange, Mises, and Praxeology: The Retreat from Marxism

Most economists are familiar with the controversy on the possibility of economic calculation under socialism and with the fact that Ludwig von Mises and Oskar Lange were the two major protagonists of that debate.1 Many are also familiar with Lange’s ironic gibe that, for having posed the problem which Lange believed that socialism could readily solve, “a statue of Professor Mises ought to occupy an honorable place in the great hall of the Ministry of Socialization or of the Central Planning Board

44

Ludwig von Mises and Economic Calculation Under Socialism

What might be called the “orthodox,” or textbook, version of the famous economic calculation debate under socialism goes somewhat as follows:

45

The End of Socialism and the Calculation Debate Revisited

At the root of the dazzling revolutionary implosion and collapse of socialism and central planning in the “socialist bloc” is what everyone concedes to be a disastrous economic failure. The peoples and the intellectuals of Eastern Europe and the Soviet Union are crying out not only for free speech, democratic assembly, and glasnost, but also for private property and free markets.

46

The Myth of Free Banking in Scotland

“FREE BANKING” IN SCOTLAND

Professor White’s Free Banking in Britain has already had a substantial impact on the economics profession. The main influence has been exerted by one of the book’s major themes: the “wonderful” results of the system of free banking in Scotland, a system that allegedly prevailed from 1716 (or 1727) until suppressed by the Peel Act in 1845.1 White’s Scottish free-banking thesis consists of two crucial propositions.

47

Aurophobia: Or, Free Banking on What Standard?

In recent years, disillusionment with the record of central banking has led a number of economists to return to the nineteenth-century concept of “free banking”: that is, free and unregulated banking without a central bank. Unfortunately, this return has not been toward the Currency Principle/Mises tradition of free banking within a firm matrix of demand liabilities (notes or deposits) grounded in 100 percent reserves in specie (gold or silver).

Section Seven

Criticism

48

Milton Friedman Unraveled

Mention “free-market economics” to a member of the lay public and chances are that if he has heard the term at all, he identifies it completely with the name Milton Friedman. For several years, Professor Friedman has won continuing honors from the press and the profession alike, and a school of Friedmanites and “monetarists” has arisen in seeming challenge to the Keynesian orthodoxy.