Blagnet.net

Free markets would have no “gold standard”

The Mises Institute recently published a speech by Mark Thornton called “Monetary Freedom and Its Opposite”. It was about how monetary freedom could be established, how it would benefit everyone except the “power elite,” and how the Federal Reserve, with its monetary monopoly and inflationary fiat currency, destroy an economy’s well-being.

Thornton said,

There are some reforms that we obviously do not want and that will not work. For example, we don’t want the supply-sider solution of the Federal Reserve targeting the price of gold—that would be very dangerous. We clearly do not want a “new Bretton Woods System,” whatever that would amount to….

We also do not want to return to a gold-exchange standard where governments are in charge of most of the gold and emit paper notes for people to use. This approach is unnecessary and inevitably harmful when too many notes are issued not matched with a corresponding amount of gold.

We actually do not even want to return to a gold standard system which still leaves government too much room for manipulation. In fact, we want no standard at all. “Standards” in money imply government regulation. Such a regulatory role resulted in the problems of bimetallism where government establishes a fixed ratio of gold to silver. As soon as reality deviates from the plans of government bureaucrats, either gold or silver money virtually disappears from circulation.

That’s the problem with libertarianish political campaigns like Ron Paul’s: as pro-liberty and anti-State as they were, his solutions had to be framed mostly within the context of the State, its Constitution, and what (some) people find acceptable. (Obviously most people in the world found Ron Paul’s ideas not merely unacceptable but downright horrific.) But his solutions were still somewhat Statist and too often based on “Constitutionality.” Ron Paul proposed, and has long advocated, abolishing the Federal Reserve and replacing it with nothing. This is good; it is very pro-liberty and pro–free market. However, he promoted, and has long advocated, returning the U.S. dollar to the gold standard. A truly free society has no currency/commodity “standard,” at least not one imposed by a monopolistic authority; any such standard would be mandated by the matrix of billions of free-market decisions that occur every day.

I think Ron Paul knows that true individual liberty, true free markets, and true Austrian economics demand that no gold standard or silver standard or any other standard be applied to our currency from on high. But he can’t propose that because it is too anarchist for mainstream tastes. Again, he isn’t mainstream, but there is a limit to the extremity of libertarianism that he can propose, framed by our Constitutionalist/democratic-Statist mindset.

Posted in Economics, Political correctness, Ron Paul