Why Sound Money Is “Green” and Central Banks Aren’t
[Editor’s note: this is a special preview—for Mises Wire readers—of Europe’s Century of Crises under Dollar Hegemony: A Dialogue on the Global Tyranny of Unsound Money, a dialogue book by Brendan Brown and Philippe Simonnot newly published by Palgrave Macmillan.]
Although many central bankers have claimed the central banks are instrumental in ushering in a more green economy, a closer look suggests central banks are anything but “green.” In fact, a sound money economy might be a much more effective tool in improving the physical environment.
Ecology is where statism and socialism now have their revenge on capitalism, which stands accused of responsibility for all maladies, especially the running down of our planet’s resources and degradation of climatic conditions. Let us discuss the multiple flaws in this indictment:
First, capitalism has nothing to do with these problems. Marx himself described how the “fanatical perseverance of capitalists to economize on the means of production implies that these are only consumed as economically as possible—nothing gets lost or wasted.”
Second, economists defending capitalism have been the pioneers of research on “externalities” and “public goods” and have proposed solutions (for example carbon pricing) which respect in principle the laws of the market and have had significant positive effects.
Third, capitalism ravaged by unsound money is a source of waste and erroneous investment spending. Capitalism underpinned by sound money, founded on the principles of the gold standard, would be better at finding solutions to problems of the environment, because such a monetary regime is anchored in a real commodity, gold, and not on fictional assets as in the present unsound money regime.
Fourth, the ecologists should be the first to defend a return to the gold standard or at least to a monetary regime respecting the same principles of reality.
There are several ways in which unsound money impedes the “invisible hands” from guiding efficient allocation of resources in the face of environmental dangers. All of these involve the corrupting influences of monetary inflation.
First, investors eschew long-gestation investments, inc
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