What is the best monetary foundation for an economy? Fiat money? A gold standard? Some sort of bitcoin-like currency? A growing movement is pushing a return to the gold standard as the first step in a real economic reform – several current and former GOP candidates in the last year have come out with their support of such a system.
Of course, those who believe in the philosophy of liberty know what the true answer to the question of monetary policy: let the people freely decide which currencies they’ll use.
The Problem With Single-Currency Systems
While some currency systems are probably superior to others (a gold currency compared to a fiat currency, for example), a forced single currency system is inherently insecure and immoral. Not only does it require the use of violence on peaceful people, but it also fundamentally encourages legalized theft and puts the entire economy into a single-currency basket of risk.
Not only is the force itself the first indicator that the system would have massive problems – there are also problems with the very nature of a “single currency” that’s created by the force in the first place.
Here are the fundamental problems with a group-controlled, single-currency system:
All Eggs in One Basket.
If there’s only a single currency used in a market, that currency taking a hit can take the entire market with it – at least temporarily. Multiple currencies allow for a stronger market because the market isn’t tied to any specific currency.
For example, if all oil is priced in dollars around the world, then the dollar suddenly plummeting in value can send shockwaves throughout the entire world because of problems with that currency. The same would be true if the oil was priced in Euros or anything else – even gold.
Conflict of Interest.
As should be obvious from Alan Greenspan’s infamous time at the Fed, people who are at the helm of the printing press will only be serving their own interests. While self-interest is fine in a peaceful since, when mixed with coercion it’s literally deadly.
Greenspan reportedly warned of bubbles that he was creating with low-interest rates – but never had the guts to stop creating them through the bubbles, because an economic contraction would have made him look bad. We have all suffered the consequences.
Restricted Invisible Hand.
Competition in currency is the natural state of the market. Gold, silver, bitcoins, private currencies – these should all be pitted “against” each other for the sake of us all. The invisible hand applied to currency means the currencies will be managed fine and with less risk than a consolidation of control or planning.
Just as no single “plan” for an economy would work, no “monetary policy” could work without allowing market participants to choose freely.
We need to learn from our past mistakes or we’ll just keep making them over and over. And history is clear: the less control and manipulation of money there is, the better off everyone is, period.
What This Means
So, should we not have any specific currency that the government requires for tax purposes? Of course not. We should, however, remove laws that essentially ban certain types of private money. To learn more about this, check out this article on the Free Competition in Currency Act.
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