This article first appeared in The Gold Standard – Issue #49
Articles on the unadulterated Gold standard tend toward the technical, as in how it would work and why that would better serve the purpose of stability and widespread prosperity.
Though these are vital to the broadening of general understanding, there is more to the story than that, far more. One of these ‘far more’ needs to be highlighted.
The rise and fall of civilizations has been the subject of vast tomes. The rise is generally attributed to the reliable flooding of the Nile, the innovative military tactics of the Roman Legions, the geographical centrality of the Habsburgs and the ruling of the waves by the English navy. The causes of the fall range from moral turpitude, the loss of a ‘sense of duty’ and military overreach. All are wrong.
The great civilizations have but one founding and one ending factor. It is the introduction of circulating Gold that forms civilizations, and its removal (or extreme debasement, which is the same thing) that ends them. The collapse of the Indus Valley (A.K.A. Harappa/Mohenjo Daro) may be the exception. While that society was built on Gold, the cause of the collapse cannot be stated with certainty.
The Gold standard is a naturally occurring phenomenon that arises spontaneously amongst free people who trade and want to store value. It should no more be described as a monetary system than laughing between a people who are free to share a joke should be described as a mirth system. All schools of economics hold erroneous views on the origins of money – even what it is and what it does.
In the same manner that humour would not long survive coming under the supervision of a government regulatory agency, so thousands of years of monetary debasement have proved conclusively that the Gold standard cannot long last monopolisation by governments. For the Gold standard to produce its miracles, all stages of the monetary process must be free of regulation and taxation.
In the 21st century this seems slightly surreal, but only because we have forgotten the almost two-thousand-year intellectual struggle of our forebears. From Aristotle in the 4th century BC, to Nicola d’Oresme in the 14th century AD, it was argued that money belonged to the people, not to the State. State monopolies became accepted as a fait accompli only because governments began to punish private minting by the separation of head from torso.
Governments have dependably removed Gold and silver from circulation and by doing so destroyed the productive endeavours of their people. Just as a free people naturally and easily create prosperity, so just as automatically does government monopolisation of money destroy it.
Thus it has been since Croesus of Lydia and Cyrus the Persian in the 6th century BC, right up to Obama the American in the present day. In our own time, the creation of new wealth is all but finished and we are witnessing the central planners of the debt notes that are circulated in lieu of money performing the coup de grâce to existing wealth.
We really do live in ‘interesting times’. Civilizations don’t collapse every day, especially those that span almost the entire world.
Who knows the heights that humanity could have reached without the pernicious monopolisation of money by governments? Who can say or describe with certainty the extraordinary achievements that we could be witnessing and enjoying today?
History’s lesson is quite clear; no governing body of any political persuasion can long keep from debasing the coin (adulterating Gold or silver with base metals), or even more cynically, replacing it with pieces of paper. Money is far too important to be left in the hands of governments.
As it is undeniable to those that understand the virtues of free markets that people should be free to choose the goods that they do or do not wish to purchase and the price that they are willing to pay, so it is even more valid that they be allowed the freedom to use and contract in their natural money.
The freedom to mine, refine, mint, hold, bank, hoard, save, exchange, invest and transport Gold and silver, unimpeded at any step of the way is the most fundamental requirement of a free society. All other rights and freedoms can exist only with monetary freedom intact.
Those who seek a new Gold standard run by government central planners should know that this has been tried ad infinitum over the millennia. Over the longer term it has never worked and we can reasonably assume from this that it never will. Any government role in the area of money will be abused, expanded upon and eventually used to justify the negation of money itself.
The saying that insanity can be defined as doing the same thing over and over and expecting a different result is poignantly apt in this area. Stuck-in-the-mud thinking that seeks the future by dredging up the past will not get us out of our current predicament.
The height of western civilization was achieved under the classical Gold standard of the nineteenth century. Out of that stunning success, governments managed to once again seize failure. Gold was withdrawn, debt notes were introduced and the volatile and self-destructive modern era of fiat paper was born.
Government has no legitimate role to play in money. Central planning of our money can work no better than central planning of any other facet of the marketplace, but worse, it will prove always to be even more damaging, for it inflicts itself upon every transaction other than barter.
On the current path so doggedly pursued by our monetary central planners, barter will be all that is left to us.
A State dependent for money on the volition of a free people will always be a saner and more moral situation than a people dependent upon the honesty of the State for its money. As Church and State were separated, so must be money and State.
Unless the present monetary course is altered, a New Age beckons that will be primitively unpleasant. It will arrive within the lifetime of most reading this today.