A Genuine Gold Dollar vs. the Federal Reserve

A Genuine Gold DollarIn recent years an increasing number of economists have understandably become disillusioned by the inflationary record of fiat currencies. They have therefore concluded that leaving the government and its central bank power to fine tune the money supply, but abjuring them to use that power wisely in accordance with various rules, is simply leaving the fox in charge of the proverbial henhouse. They have come to the conclusion that only radical measures can remedy the problem, in essence the problem of the inherent tendency of government to inflate a money supply that it monopolizes and creates. That remedy is no less than the strict separation of money and its supply from the state. The best known proposal to separate money from the state is that of F. A. Hayek and his followers. Hayek’s “denationalization of money” would eliminate legal tender laws, and allow every individual and organization to issue its own currency, as paper tickets with its own names and marks attached. The central government would retain its monopoly over the dollar, or franc, but other institutions would be allowed to compete in the money creation business by offering their own brand name currencies. Thus, Hayek would be able to print Hayeks, the present author to issue Rothbards, and so on. Mixed in with Hayek’s suggested legal change is an entrepreneurial scheme by which a Hayek-inspired bank would issue “ducats,” which would be issued in such a way as to keep prices in terms of ducats constant. Hayek is confident that his ducat would easily outcompete the inflated dollar, pound, mark, or whatever. Hayek’s plan would have merit if the thing — the commodity — we call “money” were similar to all other goods and services.