We Are All Counterfeiters Now
Intellectuals and politicians often try to verbally summarize or justify conventional thinking in pithy ways. Milton Friedman (in 1965) and Richard Nixon (in 1971) both said different versions of the phrase “we are all Keynesians now.” . . . Friedman and Nixon were describing the thoughts behind the implementation of Great Society redistribution programs and an inflationary monetary policy designed to offset the cost of those programs.
—Brian Wesbury and Robert Stein, We Are All Keynesians Now
If there is one central myth supporting the folly that passes for monetary policy and by extension fiscal policy, it would have to be the unchallenged assumption that money should be defined and controlled by government.
Given the role of money in the economy—that it serves as a trade intermediary, one half of virtually every transaction—nothing has been more destructive to the well-being of most people than the government’s usurpation of money from the market.
Money was once the most marketable commodity, albeit a special commodity. Unlike other commodities such as oil or corn,
gold lasts forever. If someone uses gold, it remains to be used again. . . . If oil production stops, so does our supply of oil. If gold mining stops, we don’t lose our supply. All gold ever mined is still here with us and will stay with us forever.
Today, money is whatever the government says it is, and since 1933 in the US, it has been pieces of paper or their digital substitutes issued by the central bank and its members, the commercial banks.
What’s wrong with having the government or its agent, the central bank, define money and regulate its supply, which in practice means regulating the rate at which the supply is increased?
First, the money is not theirs—it doesn’t belong to the government or the central bank. Banks legitimately get their funds from depositors or invest
Article from Mises Wire
