Most of my writing about the gold standard is about how it works, and how the paper dollar standard doesn’t. A casual conversation I had with someone recently underscored that there is an even stronger argument.
Our opponents, those who support central banking and irredeemable paper money, have to make two cases. One is to defend the theory and practice of central banking, that central bankers are wise and honest and that their debt-based paper money works. They have to argue that the dollar does everything you want money to do, such as hold its value, enable proper accounting, encourage savings, support a stable economy, etc. Well, they can go through the motions and fool the ignorant.
The other is that they have to defend the use of force against innocent people.
Central planners constantly run into the problem that people are not willing cogs. We don’t want to be jammed into the machine where directed. The central planners never have our best interest at heart. Quite the contrary, they seek to sacrifice our property, liberty, goals, and well-being. Supposedly it serves some sort of public good, though it’s never the good of any particular member of the public.
Anyways, no one ever goes along voluntarily. Central planners have to pass laws, in order to do whatever good to us that they feel needs doing. Safely backed by the law, they need not worry about our petty little concerns. They can force the unwilling to obey, under threat of loss of property, liberty, and ultimately life.
If you don’t agree with this, think about what will happen if you refuse to pay your taxes. It may take a few years, but sooner or later, armed agents of the government will come to arrest you. If you don’t want to be arrested, they will force you into handcuffs. If you are able to fight that off, at some point they will shoot you dead.
In the case of irredeemable paper money, there are several ways that the government forces people to use it. One is the capital gains tax on gold. Another is the legal tender law. There are others.
The economic arguments for irredeemable paper and central banking are fallacious and often frivolous. We can and should confront every falsehood, every logical error, every misrepresentation of the gold standard and its defenders. We must also make the affirmative case for the benefits of the unadulterated gold standard.
However, we have one more weapon. It demands to be used, when the context is appropriate. Our adversaries are confessing to the very failures of their system. If paper scrip were truly superior to gold, people wouldn’t need to be forced to use it. When a bully can’t prevail in an argument using reason, he becomes violent. Our monetary opponents are bullies. They resort to force, which is their moral failing.
This is their Achilles heel, and it’s even more important than their economic errors.
At best, central bank advocates are Machiavellians, seeking to use people as a means to their own ends. At worst, they are little Hitlers and Stalins, rationalizing their actions with the tired cliché “you have to break a few eggs to make an omelet.”
We need to strip their veneer of respectability. Many people will get that, even if they don’t understand monetary economics.
You are cordially invited to The Gold Standard: Both Good and Necessary, in New York on Nov 1. There hasn’t been a real recovery from the crisis of 2008, and there won’t be until we return to the use of gold as money. At this event, you will hear Andy Bernstein present the moral case for capitalism, and Keith Weiner present the case for the gold standard as the monetary system of capitalism.
