Moving Away From Fiat Currency Dependency
Culture, politics, and economic matters are always intertwined. The rise of relativism, secularism, and socialism will continue to shape the attitudes of central bankers, whether or not they as individuals subscribe to these modern liberal doctrines.
Pedigreed from the large institutions that they protect and manage, and ultimately exposed to a media that is also very influenced by shifting cultural values, tolerances for pain of any kind are so reduced that support for moving to any other system of money is nil.
Moreover, trading off some added inflation for maintaining high employment is a political winner, so hopes for heightened consideration of controlling monetary aggregates look dim.
Indeed, it took double digit readings in the CPI-U before Fed Chairman Volcker, appointed in August 1979, took strong action and abandoned interest rate targeting despite political attacks and protests such as the blockading of the Eccles building on C Street by indebted farmers.
In fact, as undersecretary of the Treasury for international monetary affairs, Volcker had played an important role in suspending gold convertibility in 1971.
There is a human and moral problem with operating a faulty system and legitimizing it at every turn. Academic studies embolden market participants to invest their life savings, only to see these vaporized either through a collapse of asset prices, inflation, or even more dangerously, through putting in place a cure that accomplishes both in sequence.
It is like imposing slavery — after the fact, because a life’s worth of labor is lost.
Inflation of the money supply is the electricity of relativism and this modern brand of socialist capitalism, for it courses through our circuitry and transfers the energy of producers and savers to consumers and borrowers, lights the darkness of business depressions, sparks bubbles and purportedly economic growth also, discounts looming entitlement liabilities through sleight-of-hand CPI measurement, and negates the theism of rewarding prudent institutions and citizens.
To move away from fiat currency is to reject socialism.
Like the mighty Mississippi River, which periodically through nature’s wrath breaks free of government’s dikes and levies, once again gold, the natural money of the millennium, might freely meander through commerce and stop the erosion of the rich delta soil lost each year to corrosive incursion of the salt water of socialism.
Regards,
Bill Baker,
for The Daily Reckoning
[Editor’s note: This passage is reprinted from William W. Baker’s book, Endless Money: The Moral Hazards of Socialism, with the permission of John Wiley & Sons, Inc (©2010). You can get your own copy here.]
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