Keynesians and followers of the Chicago School are quick to dismiss those who argue for hard currency as “gold bugs.” We who understand the impact of monetary manipulation, however, have both history and logic on our side. While no medium of exchange is without its challenges, there are significant advantages of commodity currencies over the current fiat scheme.
Arguments against a commodity currency, like gold or silver, while numerous, are generally without merit. For example, the claim that not enough gold exists in the world to accommodate a return to the gold standard implies that there is a optimal amount of currency. However, as Ludwig von Mises explained in Human Action:
As the operation of the market tends to determine the final state of money’s purchasing power at a height at which the supply of and the demand for money coincide, there can never be an excess or deficiency of money.
Others claim that the price of gold is too volatile to allow it to be used again as a medium of exchange. However, the fluctuation in the money price of gold is at least partly due to monetary manipulation. Absent this, there would be little reason for a commodity media to fluctuate dramatically.
The real reason that commodity currencies are no longer used is related to that last point: they severely limit the ability of governments to inflate. With paper currency, governments can monetize their debt to fund international adventurism, war and the like.
In a recent press briefing, “Defense” Secretary General Jim Mattis was asked what metrics he plans to employ to measure success in the longest war in U.S. history. His response was very telling:
“Yes, I’m not prepared to give those yet, because I need to get to Afghanistan, and I need to sit down in Brussels with the other nations and talk with them together about what the metrics are, and make certain we all put our heads together on this.”
For those keeping score, sixteen years of conflict were not sufficient to provide a seasoned military man any idea of what success looks like. The fact is, there have been no means to measure U.S. military success in Afghanistan to date and we are unlikely to have any in the near future.
One might assume that a goal in war is to defeat an enemy. However, in the “war on terror,” there is no enemy to defeat: terrorism is a means employed by an inferior force to strike at a superior force through fear and intimidation.
The primary reason that Gen. Mattis lacks a means to measure success in Afghanistan is that the ultimate goal of the U.S. government is perpetual war; such metrics for success would only stand in the way. Perpetual war keeps patriotism kindled, justifies ever expanding military “defense” spending as well as growth of the surveillance state, and equates to perpetual power for Washington.
One of the perhaps unexpected drawbacks of a representative republic is the temporary nature of leadership. While the limited tenure of politicians is often portrayed as a benefit of the system, the potential brevity of an individual’s office lends itself to a much shorter time preference. The result of this is representation prone to exhaust available resources as quickly as possible because there is no incentive to save for the next person to fill the office.
Short representative terms are also detrimental because of how they allow power to accumulate. For example, when one representative expands the power of an office, the opposition will often remain silent about it knowing that they may regain the position, and therefore the power, at the end of the current term.
One glaring example of this concerns the supposed power to wage war gathering in the office of the President. While progressives and their representatives were vocally against George Bush’s wars, they grew quiet when Obama continued and expanded those same conflicts. Now that Trump gives them every reason to again oppose war, they remain silent. Why? Because Trump is only temporary and the next President might be one they support. As long as Presidents are able to accumulate power in the office, particularly related to the ability to wage war, politicians of all stripes will benefit and individuals will suffer.