There is no single topic of greater importance to the cause of liberty and peace than the nature and control of money. When free market participants are no longer able to choose their medium of exchange, a critical part of the free market dies. The resulting seeds of a centrally planned economy slowly grow and suffocate the power of choice. Productivity and prosperity begin to decline as the incentives for producers are removed. When a chosen few are granted the exclusive right to counterfeit legal tender, the power of individual votes is eventually drowned by a sea of new money.
It’s a complex relationship that the majority of people simply don’t understand. The following video does a good job of introducing the topic in a way that will, hopefully, generate further interest. For a more complete understanding of the subject, I highly recommend Murray Rothbard’s What Has Government Done to Our Money? (Available for download as a free PDF.)
The video makes a couple of points that are particularly worth noting. The first is the fact that government decreed gold standards don’t work. In theory they put strict limits on how much the government can spend. But in reality, when a government feels restricted by a gold standard, it simply reneges on it’s promise to pay in gold. This is precisely what the British government did in 1914 and the United States in 1971.
The second important point is that wars are enabled by fiat money, as it allows governments to simply print the money required to pursue them. It could also be argued that empires are formed by those countries that most successfully inflate their money supply. At the same time, however, this expansion of money and debt also plants the seeds of their demise. Eventually the ever expanding debt forces an end to an empire’s overreach through the process of bankruptcy.
If we are ever to keep real fiscal reins on the government, then we must get the government out of the business of money. Abolish all legal tender laws and let the free market choose its medium(s) of exchange. Put it in the Constitution that the government may only tax and transact in gold. Require a referendum on all spending initiatives, with the cost to the individual attached. Watch how few spending measures are approved when voters see the real cost of each bill, instead of paying through the hidden taxes of inflation and debt accumulation. Watch how few senseless wars are fought when voters see the large war tax deduction on every paycheck.