The Free Market Economy is the Engine of Civilization: From Barter to Money.
Money
is a crucial feature to any advanced civilization, notwithstanding how
much it is looked at negatively and portrayed as intrinsically a nasty
thing in "progressive" culture. Now before man can attempt to answer
questions, such as, What is money?, Why do we have it?, or How does
money develop in society?, there first must be an understanding of why
there is any trade at all.
Comprehending
that is reasonably straightforward. After that, we all will endeavor to
answer those questions raised in regards to money. In so doing, the
important connection money has to civilization and liberty will be
concretized in the mind. Finally, we will look at the forces that
undermine money, and thereby undermine civilization and liberty.
But
first, imagine, following the lead-----I'm just attempting (please
understand!), as a midget, to stand on the shoulders of giants-----of
Murray N. Rothbard's work, that egalitarianism was not a "revolt against
nature." That is, if all men were exactly alike in every single way
imaginable. That even land was distributed in a homogeneous way in
which every acre of land had an exactly equal proportion of resources.
And, also, imagine that Mother Nature behaved in a way in which her affects were always and everywhere the same across the world in a
homogeneous-collective manner as against one in which her behavior, so
to speak, was different at different locations. And so on. Man in this
world would be little different than a robot produced out of a mass
production factory. Every man, being of identical nature, confined to
his land, being of identical nature as well, would produce and consume
exactly the same thing, in the same proportions as every other man.
Clearly a division of labor qua society would not develop. To
quote Ludwig von Mises (as Rothbard did on this subject): "No social life
could have arisen among men of equal natural capacity in a world which
was geographically uniform."
The real world, in which we live,
is not like this at all. Rothbard is therefore absolutely correct when
he said that egalitarianism is a "revolt against nature." Men, on the
contrary, differ vis-à-vis each other. Land, too, is
heterogeneous. Neither is Mother Nature a fan of egalitarianism. As
Erik von Kuehnelt-Leddihn wrote, "'Nature' (i.e., the absence of human
intervention) is anything but egalitarian; if we want to establish a
complete plain we have to blast the mountains away and fill the
valleys; equality thus presupposes the continuous intervention of
force, which as a principle, is opposed to freedom. Liberty and
equality are in essence contradictory."
Man would obviously not
trade with his neighbor if his neighbor had everything he had. Man
instead trades with his neighbor because his neighbor has something he
does not have. More fundamentally, it is recognizing that trade in the
second of the two cases is better or more profitable than trying to
produce everything in isolation. A world with an extreme household
protectionism would have extremely low standards of living. The
population number would be nowhere near the number it is today.
It
is the fact that engaging in a market economy with others is more
profitable than not to engage that explains why barter developed. Man's
needs and wants can be better fulfilled in the market economy. It is
based on exchange and in production----production to be used in future
exchange. Society is hence not an end to itself; it's a means. Men come together to do things together.
Now explanations of this development, from famous economists like
Adam Smith, according to economist Hans-Hermann Hoppe, that pronounce the
market economy developed for reason that man has an instinct to it and
an inborn like of other men is erroneous. Both of these assumptions are
not needed to explicate the development.
Trade may take place
between two men, who might actually dislike each other, who rationally,
opposed to instinctively, see the advantages of this type of
interaction. If these two men trade with each other, then it is because
the first man has something the second man wants and the second man has
something that the first man wants. (Feelings of friendship, when
voluntary cooperation has been established, can then truly develop!) This is not,
though, the consequence of them viewing what they trade as equal to
each other. No trade would result if that was the case. The trade is
the consequence of them viewing these traded goods as having a
different worth. One man ranks one thing higher and the other man ranks
the other thing higher. Hence both trade because they see themselves as
becoming better off than not trading.
This is the beauty of what
Robert Nozick called "capitalist acts between consenting adults" (whose
line the economist Walter Block often quotes). The mutually beneficial
nature of all capitalist acts inter partes is logically implied when they take place (ex ante).
It is because it is logically implied----because it must be logically
implied----that such acts take place. Voluntary exchanges all logically
imply it. For this reason, no empirical testing is required (and how
would man go about that testing?) and no empirical testing can show
this to be false. This logical deduction of action is not technically
observed, but is implied even for an observer----who is an actor----who
wishes to observe anything----i.e., it is implied in the way one
observes anything----and for this reason cannot be refuted. It is the
prerequisite (or praxeological precondition) for any voluntary exchange to
take place. It is the foundation of these exchanges.
("Socialist"
acts, contrariwise, we can call "acts between non-consenting adults."
They imply something quite different than capitalist acts. Whereas
capitalist acts take place because they are seen as advantageous for
both parties, socialist, non-consenting acts are acts where one party
aggressively forces his will on another. One party benefits; the other
party has a loss to what was taken away. Furthermore,
institutionalizing socialism above individual acts of random physical invasion is to make matters even worse for a society than "unsystematic
socialism." Since institutionalized socialism is a systematic attack or
redistribution of wealth from those engaging in capitalist acts----who under systematic socialism cannot rightfully defend their property from attacks----to
those engaging in socialist acts, the costs of engaging in capitalist
acts will be higher, and therefore there will be less capitalist acts
in society. Consequently, there will be less wealth and wealth
creation.)
But, from the fact that these initial barter (direct)
exchanges necessitate a situation where there is a double coincidence
of wants (i.e., the first man has something the second man wants and
the second man has something that the first man wants), there is a
major hurdle to which man has to jump through to exchange with another.
It might turn out, for example, that one man sees that another man has
in his ownership something he himself very much wants, but cannot trade
with him because he himself has nothing that this man wants. In each
and every exchange there is this hurdle. The range of man's potential
capitalist exchanges will be limited. Thus, the division of labor
cannot be complex and diverse under barter. Specialization, like we
have today, is not a possibility.
This is why indirect exchange
develops. To fulfill man's desire to trade, as elucidated above, man
must find ways to facilitate it in a way to overcome the difficulties
of barter. Man wanting to expand his trading opportunities, by
overcoming the lack of double coincidence of wants, must find goods
that are greatly marketable. These are goods that are popular; that are
in high demand; that many, many people want and value. By obtaining
these goods a man has therefore opened up his trading opportunities to
a higher degree. And the higher this degree is, the more wealth
creation prospects he has. The value he places on these goods, unlike
other goods, is that they help him in acquiring services and other
goods. He values it for its exchange value as opposed to its potential
use value. It also follows that he will have the incentive to find a
marketable good that has divisibility (without losing value), which
will allow him to divide it up so as to more easily purchase more than
one item and to easily purchase both expensive and inexpensive items.
Uncertainty,
it should be noted, is what pushes man to adopt money. It is the
uncertainty of knowing whether or not one is able to trade. (Only a world of "perfect certainty" would money not be needed.) As long as
at least one entrepreneurial man can perceive all of this, a society
can then start to economically evolve out of the primitive barter
stage. Other men will see this. They will see that he who does such
progresses upward in the hierarchy of wealth. There will therefore be
an increasing demand for goods qua a medium of exchange. The
interconnection of the market will increasingly intensify. It will push
other men, who otherwise might not be bright enough to see the
advantage of doing so, to follow the lead. "The result is a reinforcing
spiral," wrote Murray Rothbard. "[M]ore marketability causes wider use
as a medium which causes more marketability, etc. Eventually, one or
two commodities are used as general media----in almost all exchanges----and these are called money."
This
reinforcing spiral will result in the choice of a commodity that is
demanded (valued), dividable, durable, homogeneous, portable, scarce,
stable in supply, etc. Money is dependent on man's valuing it in terms
of its, to quote Rothbard, "preexisting prices on which to ground demand." It depends on
its barter demand. Unwinding the spiral by a regression, one finds that
the evolution of a good (or two) to the position of money is the result
of it being originally valued by man as a good in itself to be
consumed. Hence, money can only originally develop through the free
market as a commodity. And, hence, the only way government can enter
the picture of money is if it does so on top of the necessary
market development of money. Fiat paper money, by itself (with or
without government force), could never get off the ground; anymore than
if you took a clean sheet of
practically worthless paper, applied some ink to it, and tried to buy
something with it. Money, like language, is a product of freedom. That
is, of free interaction, association, and discrimination. The State did
not create money; anymore than it created language.
With
the development of money, to iterate, the severe limitations of barter
go away. The market economy becomes integrated. "Capitalist acts
between consenting adults" can happen right away with money. Practically everything can be bought and sold in terms of money, without the problem of double coincidence of wants. There will
thus be more exchanges and productions of goods and services. The standard
of living will thus rise.
Money, moreover, allows man to easily
calculate. Cardinal calculations are possible. (But the development of
this, which man has to place value on, is itself an ordinal choice or
ordinal value. Further, it is the feature of a market money's
homogeneity that makes these cardinal calculations possible.) Exchange
ratios arise. The question of how to direct scarce resources to fulfill
the most wanted desires of man becomes possible to answer with a
common, universal medium of exchange. The entrepreneur can now more
easily see what lines of production are (relatively) more profitable
than others. He can compare them. Of course this, too, raises the
standard of living exponentially. The businessman can see his profits
and losses. He can calculate his capital and income. Money thus
develops the pricing system, which helps direct the traffic of the
market. Any complex society needs the pricing system to direct scarce
resources which have alternative uses. The only alternative is chaos.
The Transformation of Capitalistic Money to Socialistic Money.
Increases
in the supply of money, once money has been established in society, is
of no particular importance in terms of net living standards. Unlike
other goods and services, an increase does nothing to make society
wealthier. Only insofar as an increase of the particular money confers
a non-monetary benefit to be consumed (either directly or, as a capital
good, in the production of a future consumer good), can such an
increase be said to raise living standards. A greater supply of money, ceteris paribus, just means a smaller purchasing power. A lesser supply of money, ceteris paribus, just means a larger purchasing power.
Assuming that the
money chosen was gold, as it has been in modern times, in a free
"society, one can acquire money in only three ways," said Rothbard:
(a)
by mining more gold [which, by the way, is an expensive and slow process that will generally not lead to "price inflation"---my note]; (b)
by selling a good or service in exchange for gold owned by someone
else; or (c) by receiving the gold as a voluntary gift or bequest from
some other owner of gold. Each of these methods operates within a
principle of strict defense of everyone's right to his private property.
In
the world in which we live this might look a little foreign, no doubt.
So obviously something happened to the development of capitalistic
money to turn it into the socialistic money we have today. This is an
involved subject, but economically speaking the transition follows a
precise pattern.
Before this blog entry briefly gets into that,
however, it is very important to understand that one can try to acquire
wealth by counterfeiting money. This activity of fraud is in direct
violation of private property rights. As such, it is not part of the
three acceptable ways to obtain money, which Rothbard described above.
The
societal development of money brings the formation of banks. Their job
is the storage of money and to provide for increased transactions
between savers and entrepreneurs. Banks can either obtain income
legitimately, as covered above, or illegitimately. They can facilitate
transactions between savers and entrepreneurs legitimately or
illegitimately, as well. Fractional reserve banking is an example of
illegitimacy. All banks might have the desire to engage in this
activity, but their desire will be limited indeed as long as there is
open entry into competition (with no government central bank regulating
this away in which this limit or check is eliminated [see below]). In
addition, with a free market it will be limited because of the
possibility of bankruptcy. (Profit and loss is both salubrious
and necessary for an economy. [Bank runs are beautiful.]) Only the
government can change matters. It and only it can take away competition
by force or can attempt to prevent bankruptcy when bankruptcy occurs.
Either of the two interventions will create moral hazard (i.e., there will be more financially risky behavior) and encourage the
practice of fractional reserve banking.
Fractional reserve
banking occurs when a bank issues more paper receipts (titles) than
actual commodity money they possess. A one-to-one ratio (one hundred
percent reserve banking) does not exist. From this it should be
straightforward to see that if a bank engages in
the handing out of more paper receipts (called "fiduciary media") than
gold it holds in storage,
it is no different ethically than a garage storage place taking one's
items away from their customers while they promise to guard them. This
is a violation of private property and makes the given bank financially
bankrupt. That is to say, if each and every customer would come to the
bank to
demand their money, the bank would not be able to fulfill its contracts.
Those interested in a just and free society, then, must want the
law-contract enforcement agents that be to prevent these kinds of
practices.
Put in another way, there will be more titles representing money property than actual money property. It tries to make two equal to one. It is an attempt to create physical property from nothingness. Because these titles have no value except insofar as they serve as a function to represent what they are titles to, the notion of free and contractual fractional reserve banking seems to make little sense. When man A deposits x amount of money, it cannot be said that x amount of money is also owned by man B at the same time. Only if it was contractually loaned (or voluntarily given) to B can it be his, but it cannot be exclusively owned both by A and B at the same time.
But, as
stated, it is free banking, with no central bank, that has a build-in
major economic limitation to fractional reserve banking activity, even
if the enforcers of law do nothing about it. Interactions do not just
occur with one customer and his respected bank or two customers of the
same respected bank. Interactions can happen between one customer of
one bank and another customer of another bank. That is, one man of Bank
A can write a check to a man of Bank B. The second bank, with the new
check, will demand the money (all of it) from the first bank. If Bank A
has been reckless in engaging in fractional reserve banking, it will
not be able to fulfill Bank B's request. To cut to the chase, this
associational environment will thus put a major constraint on this
fraud. The more banks there are, the more this constraint will increase. (Another limitation is a public that is aware of
fractional reserve banking and is very untrusting of any bank that
engages in it.)
What is more, artificially increasing the supply of money (via, e.g., bank notes, bank deposits, or "checkbook money" that people can use in their daily affairs)----which, unhappily, costs virtually nothing----will lead to a host of unintended consequences. (More
will be written on this a little later. The unintended
consequences will be far
more pronounced when this artificial increasing of the money supply is
systematically implemented via government.) There will be a redistribution of wealth, as already indicated. The greater the supply of money, ceteris paribus,
the less purchasing power it will have relative to all goods and
services. However, the result of inflation (i.e., the increase of the
money supply without "specie" or commodity backing) is a result that
comes to pass in a way that trickles through the economy. It is not an
instantaneous event. Those accordingly getting the fake new "money" get
it at the parasitic expense of those who get it later or not at all. After this inflationary process has trickled its way through the economy, prices will have risen (ceteris paribus) to reflect the new condition of the larger money supply. It is this uneven process that results in what are called "Cantillon effects." Effects of which have the result of redistributing real wealth.
Government,
wanting to expand its revenues, can see all of this. This is why
governments have sought control over the supply of money and the making
of an alliance with the banking industry. Such an alliance would be
beneficial to both, if only they can ideologically corrupt the public
to thinking that it is beneficial to them as well. That, sadly, is not
too difficult taking into consideration that the public's knowledge of
economics is abysmal. Both the government and the banking industry can
then engage in robbing the wealth of the public by controlling the
money supply. Government can then tax in a new way, an indirect and
unseen way.
The monopolization of minting by
government, in a nutshell, first occurs and then the debasement
(coin-clipping) of money, which is enforced on the public by means of
legal tender laws. This debasement it pockets to itself at the
parasitic expense of everyone else. More coins are created by the
debasement and then the public is forced to act like nothing has
happened. Now given that government outlaws all competition, the
government has no competition to keep it in check. Government can thus
keep on providing a inferior money without worry of a
competitor offering consumers a superior money. Moreover, any remaining
superior money will be driven off the market, since government will be
forcefully overvaluing inferior money and undervaluing any superior
money.
Then
the government has monopolized money paper titles (bank notes) and
creates a central bank (à la the Federal Reserve System). Counterfeiting can
then occur uniformly vis-à-vis the banks. The central bank
becomes the "bankers' bank" and the "lender of last resort." Gold, as the commodity money, becomes nationalized. It starts to lose its role, in the minds of the public, as money. And banks can inflate, with the
government's blessing, off of government's inflation through fractional
reserve banking with bank deposits. They can no longer issue bank notes, since the central bank has monopolized their issue, but can still issue bank deposits as a way to inflate. In this monetary socialism, they
can do this without too much worry, as long as the public does not wake
up to what is happening (or hyperinflation occurs). The previous free banking constraints largely
disappear. At this time the government will also have the desire to get
off the gold standard completely, and thus allowing this check to go
the way of the dinosaurs for it to fill its power and greed ambitions.
Soon all that is left is a fiat paper money system----a system very easy
to counterfeit with.
The government can inflate at will with the
counterfeiting apparatus. All that is done, essentially, is that the
central bank buys some, say, government bonds. This money is produced
literally out of nothingness. The bond dealer takes it to deposit at a
bank and the bank then deposits it at the central bank. This deposit is
the bank's reserves. The bank can then make deposits, through
fractional reserve banking, on top of these reserves, in the amount the
government allows by law----i.e., the reserve ratio. A reserve ratio
that is 10:1, for example, means that the bank can increase deposits by
tenfold out of nothingness on top of that original money that, too,
came from nothingness.
Additionally, in the U.S., there has been
the further creation of other programs that give the false impression
to the public that the banking system is a sound system; instead of it
being seen as a house of cards. The making of the Federal Deposit
Insurance Corporation (FDIC), for instance, is an example. However,
wrote Rothbard, "the FDIC itself has less than one percent of the huge
number of deposits it 'insures.'" He went on: "The very idea of
'deposit insurance' is a swindle; how does one insure an institution
... that is inherently insolvent, and which will fall apart whenever
the public finally understands the swindle?" And the very existence of the FDIC makes the banking system more unstable by creating moral hazard and by relieving customers their responsibility to take good care of where they put their money.
Not only will this
fascistic-statist system perpetually promote inflation, it will
perpetually promote business cycles leading to recessions and
depressions. By perpetually declining the purchasing power of money,
this system will discourage savers and encourage non-savers and
debtors. Consumption, leisure, short-term thinking and planning will be
relatively encouraged. The cultural characteristics and work ethics
that make a healthy economy are thus punished with this system; whereas
the opposite is rewarded.* Many businesses will also be thrown off
course because business calculations will be distorted as a result of
inflation. There will be an overestimation of profits, during the
initial effective stages of inflation, and this will misdirect many
businesses, and might even lead them to use up their capital on these
false signals. Just as the effects of inflation will reward bad
financial behavior for the individual and for the family unit, it will
do ditto for private enterprise.
It is the facilitating of
transactions between savers and entrepreneurs by the artificial
expansion of credit (via fiat money) that sets into motion mass business cycles. The
initial "boom," in the higher-order capital goods industries----which basically operate on man's ability to develop roundabout methods of production, and willingness to hold off instant gratification so as to invest present goods in such capitalistic production, that aims at an output with a higher net total of goods (than not doing so) in the temporal future----that
received the credit, is artificial and the resulting bust phase is
simply the market trying to correct the distortions that the government
and the banking system created. Simply put, the ratio of consumption to saving (qua investment**) in society will not be reflected. With an artificially greater supply of
credit, the interest rate (i.e., the cost of the procurement of money
or capital in the present) is lower than it otherwise would be on the
market. Instead of it reflecting the actual time preference levels
(i.e., the rate in which man prefers present consumption over the
future) and, on the other side of the same coin, saving levels (vis-à-vis spending-consumption levels) that men have in society, the market is
misdirected to act like the time preferences are lower than what they
actually are and to act like savings are higher than what they actually
are. That is, instead of the boom being created out of actual savings
with a low time preference that is temporally sustainable, the "boom" is based on hot air. And,
remember, an increase of fiat money most certainly does not increase
wealth for society. It does not and cannot increase (real) savings or lower
time preferences.
A shaky imbalance in investments is created
between consumers' goods (of the lower-order) and capital goods (of the
higher-order). A mass of malinvestments becomes inescapable. When the
rate of interest lowers, there is a shift from lower-order to
higher-order industries. There will thus be an artificially greater
investment in higher-order capital goods and correspondingly less
investment in lower-order consumer goods. If private property and the
market was respected, then it would be just the opposite given the
current time preference and saving levels. However they are not
respected. Even moreover, men will be saving less as lenders (and, hence, consuming more) because the return will be artificially lower than it otherwise would be. Thomas E. Woods, Jr., an historian and economist, has pointed out that,
in effect, the anti-market intervention is in a tug-of-war match in
which the economy is being pushed in two opposite directions at the
same time. But, in the long-run, the market will win because real resources
are not there to keep the "boom" going. These resources are consumed. (Insufficient resources have been freed up for the future. Instead of saving, men have been consuming. And instead of entrepreneurs producing for such present oriented things, they were being pushed into future oriented things.) The prices of these capital goods at first go up. These investments are made to seem profitable. A bubble develops. But as the effects of inflation
trickles through the economy and the bank credit expansion ends, these
investments will be seen for what they are, viz., hot air investments.
Now they are seen (correctly) as not profitable. The prices of consumer goods will go up (with the given ratio of consumption to saving), with a shortage of resources,
relative to the capital goods and there will be a redirection, in which
a recession or depression occurs, of investments back to where they
would have gone (in terms of production order), and the higher-order investments dry up. Hence, this process will produce another inescapable result: wealth destruction. "In sum,"
wrote Rothbard,
businessmen were misled by bank
credit inflation to invest too much in higher-order capital goods,
which could only be prosperously sustained through lower time
preferences and greater savings and investment; as soon as the
inflation permeates to the mass of the people, the old
consumption-investment proportion is reestablished, and business
investments in the higher orders are seen to have been wasteful.
*(To note, the more wealth, the lower the time preference tends to be.
That is because it is less difficult to save with more wealth than
less. One would hence expect that, because there is more wealth, real
interest rates would be lower than the last generation. As Hoppe notes
in his must read Democracy - The God That Failed
book, they are higher with today's generation.
This can only be the result of a systematic increase in time
preferences. That
is, society is more "child-like" today. ...... Mises himself recognized
that the particular statist intervention of inflation is a direct
attack on what we can call "conservative" values: The cultural damage
of inflation is "epically strong among the youth. They learn to live in
the present and scorn those who try to teach them 'old-fashioned'
morality and thrift.")
**(The issue of "hording" has no direct influence on this discussion and thus will be ignored. But understand that all this would do is increase the purchasing power of the "remaining" money in circulation. For a very quick look into the un-evilness, in both an ethical and economic sense, of misers see Walter Block's Defending the Undefendable.)
Transforming Socialistic Money Back to Capitalistic Money.
Money
is an important cornerstone to civilization. It is, as Murray Rothbard
said, the "lifeblood" of the economy. Because of this, when men look at
the evil affect the State and their banking allies have on money (and
all the side effects that are produced), this should be all we need to
know about the State and how regulations are designed not to protect
consumers but to protect special interests.
Apologists for the status quo,
especially mainstream conservatives (who are not at all friends or
allies of liberty----who would be aptly described as largely fascists),
fail to recognize that much of big business and big media are
intermingled with the government. These businesses get granted special
privileges and benefits that mom-and-pop shops do not. On the other
hand, mainstream liberals that respond that money is therefore to blame
for this is equivalent to saying that water is to blame for the coerced
drowning of a person, instead of the criminal that murdered the person
with the employment of water.
In itself money, like water, is
neutral. Usage can be for good and evil. As long as there is this
central machine of democratic power it is only natural that those with
more influence will direct its usage to their own benefit and at the
expense of others. It is therefore nonsensical to think anything but
rich people will have the most direct influence on government. These
particular rich people want to go to the government because it has
power and they do not. For this reason, the problem is not
wealth or money. The problem is power. They do not go to the government
because they have power but because they don't.
The banking
industry got tied into the governmental system because that system has
power. And government is all too happy to get more power and control.
The control over money allows the State to implement an "inflation
tax." The president of the Mises Institute, Llewellyn H. Rockwell, Jr., has as a
result said that the central bank is "[t]he heart of the modern state."
If you understand the economics of money and the outcome of statist
intervention on money, then you understand the modern state.
The
justifications for the existence of the U.S. Fed can only be described as
hilarious: for example, the idea that the Fed "fights" inflation. But
its very nature is inflation. Since the creation of the Fed, over 95
percent of the value of the dollar has been lost. Not exactly a
"fighter!" "Not worth a Continental," comes to mind. Then there is the claim that the Fed stops business cycles. Again, its very nature is business cycles. We have business cycles all the time. Right now we are in one.
Perhaps it
should be also quickly noted that the Fed, as many suggest, is not a
"private" bank. What is needed is a private free market in the banking
industry, not more of the same. The Fed was created and established by
the government, it is maintained by government, the officials in the
Fed are largely appointed by the government, etc. A "Fed" could not exist if it
were truly private. Competition would drive it out of business in a blink of
an eye by hyperinflation over the production of worthless pieces of
paper, which cannot be money without monopolistic government aggression
and force.
Those that favor either no government or a very
small, decentralized government must then work for the separation of
State and money. This means an end to central banking and an end to
fractional reserve banking. It means a return to a free market
commodity money. It means an end to the house of cards we have now. It means an end to artificial bubbles generating booms-and-busts in the economy. No
central plan is needed to move back to a free market of money and
banking. A free market is the lack of a central plan. Accordingly, what needs to be done is the elimination of legal tender laws, the allowance
of man to be free to choose his money, deregulation, and, ultimately, the abolition
of the Federal Reserve. (In a manner of speaking, the inverse of "Gresham's Law" would occur.) For a guide to follow, we can turn to the
recommendations of Rep. Ron Paul, a scholar in the economics of monetary issues and
author of Gold, Peace, and Prosperity and The Case for Gold. In times like ours, seeking fiscal sanity is more important than ever.
"Man
cannot turn back the clock" might be the reply some men have to the
idea of returning to a money of free market capitalism. But, to quote
the great Richard M. Weaver, "I'm not turning it back; I'm setting
it right."
References: I'm
just striving to stand on the shoulders of giants. Hopefully I balanced
the content in this blog entry successfully. Any shortcomings are my own. Above quotes of Rothbard's
comes from, respectively, What Has Government Done to Our Money?, The Case Against the Fed, "Taking Money Back," and America's Great Depression. On egalitarianism, see his Egalitarianism As a Revolt Against Nature.
A
number of essays and books have shaped by understanding of monetary
issues (and my understanding is still being shaped). For those new to this
subject, the first and best book to read is What Has Government Done to Our Money?. It is beautifully and clearly written. See the layman populist essay "Taking Money Back." Listen to this mp3 Rothbard lecture. And be sure to read his "Economic Depressions: Their Cause and Cure." Besides Rothbard, Bob Murphy provides a reading list here. Read "What You Should Know About Inflation" by Henry Hazlitt. Take a look at "The Business Cycle" in Jim Cox's The Concise Guide to Economics. See Hans Hoppe's "Banking, Nation States, and International Politics" and "How is Fiat Money Possible?." For something light and entertaining (although, slightly off topic), see "The Economics of Star Trek or What is Good for Business?" by Dmitry Chernikov.
If you just stumbled into The Paleo Blog and know little to nothing about economics, then the best book to read is Economics in One Lesson by Henry Hazlitt and then, if you are still interested, read Economics for Real People by Gene Callahan. Thomas DiLorenzo provides a more historical perspective on the importance of economic freedom in his great How Capitalism Saved America. I highly recommend it. For something a bit more advanced, but still short in size, see An Introduction to Austrian Economics by Thomas Taylor.
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