80 years have passed since the end of the gold standard

Russia Today’s Liz Wahl reports on the 80 year anniversary of the ending of the gold standard on the renewed push for commodity backed currency. Critics of the Federal Reserve cite the extreme devaluation of the US dollar that has occurred since the inception of the Fed and the fact that government calculations for inflation don’t include necessities such as gas, milk and other essential commodities. A commodity backed standard would still be fiat however, and libertarians generally advocate for the legalization of competition in currency, rather than a government backed gold standard.

Critics of the gold standard generally claim that there is not enough gold in circulation to back a currency, but that argument is fallacious. It’s a basic economic principle that if you raise the price of a commodity, you will always have enough. At the moment, gold is listed as a commodity, which has not been the case historically. Gold as a currency would be untaxed and citizens would have the right to trade in the precious metal if they wish, unmolested by central banking authorities. At the moment though, the federal government has declared a monopoly over the creation of currency in the United States and declared the nonviolent practice of creating private coinage an act of “economic terrorism”.

Nobel Prize winning economist Friedrich Hayek discussed government control of the money supply in his treatise, “A Free-Market Monetary System” Hayek wrote:

“I am more convinced than ever that if we ever again are going to have a decent money, it will not come from government: it will be issued by private enterprise, because providing the public with good money which it can trust and use can not only be an extremely profitable business; it imposes on the issuer a discipline to which the government has never been and cannot be subject. It is a business which competing enterprise can maintain only if it gives the public as good a money as anybody else. Under the Gold Standard, or any other metallic standard, the value of money is not really derived from gold. The fact is, that the necessity of redeeming the money they issue in gold, places upon the issuers a discipline which forces them to control the quantity of money in an appropriate manner; I think it is quite as legitimate to say that under a gold standard it is the demand of gold for monetary purposes which determines that value of gold, as the common belief that the value which gold has in other uses determines the value of money. The gold standard is the only method we have yet found to place a discipline on government, and government will behave reasonably only if it is forced to do so.”

Why does the government fear the people having control over their own money supply? If gold isn’t money, as Ben Bernanke has claimed, then why are central banks around the world now loading up on the precious metal? And why must citizens pay such a heavy tax on a metal that has been traded as a currency for thousands of years? Is it because it is harder to tax and harder to trace? Is it because gold is the canary in the coal mine for the value of the dollar? Is it because tyrants have historically stolen their citizens gold on the pretext of national emergencies?

The report on the anniversary of the end of the gold standard is below. 2min 56sec long