Sunday, 18 March 2012

Sanitizing the monetary system

Here's George Reisman, eminent economist - not least because he studied under Ludwig von Mises, speaking in 2009 on the subject of "A Pro-Free-Market Program for Economic Recovery". For the first twenty minutes he discusses what the US government and the Fed have been up to with their printing presses, namely putting in place the potential for an enormous credit expansion.

Reisman then plots a path back toward sound money, i.e., a 100% reserve, gold-backed currency. The first stage of this would be to move to a 100% paper currency. This seems like the most plausible way of sanitizing the dollar, although another way forward would be to move towards private gold-backed currencies, which is discussed by Henry Hazlitt in the final part of 'The Inflation Crisis and How to Resolve it'. This would be preferable, due to it being a free market solution, but it does have one significant drawback; the high likelihood of bringing the full force of government aggression down on your head.

With thanks to Mises Institute Media


farmland investment in Australia said...

You are right about what would happen in a private gold-backed system. Governments will see it as a direct threat to their control of fiat currencies. I think in the States you can even be arrested for something like this.

Trooper Thompson said...

You're no doubt thinking of the Liberty Dollar and its owner Bernard von NotHaus, who was taken down in a most criminal way. He was called a terrorist for supplying an alternative gold- and silver-backed currency.

It doesn't work out too well, even if you're the head of state of a country. Take Gadaffi for a prime example. As soon as he started moving towards a gold-backed currency, the countdown began. And for a little more historical speculation, Charles De Gaulle's attempts to bring the world back to the Gold Standard got kiboshed with an early version of the 'Arab Spring', and that after he'd survived numerous assassination plots. Whether or not there was high-level backing for such things, his early death would not have been universally mourned.

James Higham said...

The "goldbacked" or not goldbacked is a raging controversy. Non means the govt has way too much power, as do the cabals but it also puts a premium on gold and to return to it when the gansters have already made their mint is to play into their hands.

Trooper Thompson said...

I see no big controversy. The chief benefit of a 100% gold currency is that the governments can't inflate. Gold always was scarce. It still is. It's true a lot of it is in the hands of the banksters, but if they want to use it, they'll need to get it out of their vaults and do so.

Getting governments out of the business of making money would be the best. This can be done now, if the capital can be found, although there is still the problem of getting taken out by a malicious prosecution, or getting mysteriously assassinated.