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In Defense of the Gold Standard

Ben Bernanke, chairman of the Federal Reserve , recently spoke at George Washington University while on a government sponsored campaign to help prop up the theory of central economic planning in the face of widespread public criticism. During his speech Bernanke took pot shots at free market money. Bernanke remarked that, "Since the gold standard determines the money supply, there is not much scope for the central bank to use monetary policy to stabilize the economy."

To date, Bernanke’s “stabilization” policies have included:

- Buying $2.3 trillion in government bonds, worth about $20,000 per U.S. household.

- Directly placing $8 trillion of tax payer money at risk in the form of bailouts to various commercial banking interests.

- Buying up around $153 billion worth of junk mortgages from private investors that are not worth anything.

- Holding the interest rate that commercial banks pay to borrow money from the Fed at zero percent, while paying them tax payer money not to make loans to the general public.

- Nearly tripling the base money supply in the span of less than two years.

- Handing $1.2 trillion in bailouts to foreign banking institutions.

- Facilitating nearly $14 trillion worth of total bailouts through the Fed and the Treasury, which is roughly the size of the entire U.S. economy.

Obviously Bernanke wouldn’t have been able to do any of those things without access to a printing press. The gold standard would have handcuffed him, along with the rest of the state and its fascist business partners, from looting the public into oblivion. 

When the state prints money, it transfers wealth to those who get the new money first. The printing of money by the state not only transfers vast sums of wealth to the wealthy, but it also grossly distorts the structure of production, leading to a “service” economy that produces nothing, yet consumes everything. Such economies are completely unsustainable. Eventually there will come a day when the rest of the world refuses to sell us their stuff for funny money. 

The gold “standard” isn’t really a standard at all. Gold was chosen to act as money by voluntary market participants. No one had to force anyone to accept precious metals as money. No laws were required, no regulations needed to be put in place and no central planners had to ram it down the people’s collective throats. Free people decided all on their own that precious metals made for good money.

Ask yourself why, if Federal Reserve notes are so wonderful, do those notes have to be rammed down the public’s throats through the use of legal tender laws? Why must the state prohibit competition in money? Why must it force its citizens to use a currency that they would otherwise reject? Is it simply because the public is so collectively dumb that it just doesn’t know what’s best for itself?  

Anyone who advocates for fiat currency is automatically assuming that most people are too dumb to know what is in their own best self-interest. Ramming a currency down the public’s throat requires the same kind of twisted mentality as it does to throw people in cages for smoking dried flowers.

Listen to the economist Thomas Woods explain why the only good money comes from the free market.

Photo Credit: Wikimedia Commons

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