Free market money

If anyone still has doubts that the natural tendency of governments is to always inflate the currency, they should consider that we now talk freely of annual federal deficits in the trillions of dollars. Thirty or forty years ago, annual federal deficits of twenty or thirty billion were considered shocking. The cumulative federal debt is now over sixty trillion dollars. This debt is greater than the entire world GDP!

No human being or human institution can be given the power to create money at will, out of thin air, and not abuse the power. This is not mere conjecture; all of history proves it.

So thoroughly has government worldwide taken over the creation of money, that most people actually believe money can only be a creation of governments. But historically, this was not the case. Money evolved out of markets, as a means of facilitating transactions, and replacing barter systems. For example, if you were a tailor, and you wanted to exchange products with a grocer in order to get some potatoes, this would be difficult without money. Precious metal coins evolved over time as the perfect medium of exchange because they are difficult to debase, are a stable store of value, are not easily broken or destroyed, and are easily portable.

So, you might ask, if precious metal money is so vastly superior to government paper money, why don’t people use it? The simple answer is that so-called “legal tender” laws make it illegal to do so (although some people on the fringes of the legal economy have begun taking privately minted silver coins as payment).

In the long run, the only solution to the business cycle of boom, bubble, and crash is honest money, which is free market money. Free people have the right to exchange goods and services, using whatever means of exchange they wish. In a free society, this would naturally take the form of precious metal coins for most transactions. The only role the government should have would be the prosecution of those who engage in counterfeiting. (Yes, even though governments historically are the greatest of all counterfeiters.)

Of course, I admit this is extremely radical thinking. There is zero chance of freedom in money happening under Obama, or his successor. Governments love the power to inflate, for obvious reasons: it gives them total control of the economy. But, if things get as bad in the next few years as I think they will, the time may come for an actual revolution, complete with Federal Reserve officers and other government gangsters and pirates locked up in prison, where they belong. If enough people learn the lessons of history and money, that could be the time to move to a system of true economic freedom.