[ExI] In gold we trust/was Re: Bank of England

dan_ust at yahoo.com dan_ust at yahoo.com
Tue Jun 23 13:48:09 UTC 2009

--- On Tue, 6/23/09, BillK <pharos at gmail.com> wrote:
> On 6/22/09, Stefano Vaj wrote:
>> Why then not to entrust monetary control to
>> governments, and/or other
>> bodies, such as municipalities?
> No way. Stick with private enterprise.
> Let Madoff or Stanford or Enron look after your money.

First, all of these happened under heavy financial regulation with the regulators' approval.  So, that's a failure of regulation, don't you think?  (By the way, being for free markets does not mean being pro-business or pro any particular businesses.  In fact, my view is I think many businesses are crappy, scheming, and out to just separate you from you money.  I think it's good to have a healthy distrust of anyone trying to sell you something.  But I also think it's idiotic to trust someone simply because he claims to be a public servant or seems to operate from "higher" motives.  Just as we should be skeptical of businesses, we should also be skeptical of governments.  Usually, though, I find people either trust government implicitly but fear businesses or trust businesses implicitly but fear government.)

Second, on a truly free market, yes, some people -- perhaps many, seeing how many trust government fiat monies today (what's backing the US dollar or the Euro today?) -- would be duped.  However, at least there would be a corrective mechanism.*  Under government money, there is little corrective mechanism.  This is why, e.g., the dollar is now aomewhere around 1% to 5% of its pre-Federal Reserve System value today.

Finally, it's really up to each person to look after her or his money.  This is true no matter what system you live under.  If you're looking for a system where you don't have to worry, it doesn't exist.  All that can be said, though, is government controlled money systems give the illusion of security at the price of freedom.  The current crisis and all the previous ones of the last two centuries or so should be proof enough of this.



*  And historical studies of free banking periods in the US, Scotland, Australia, and Sweden seem to show these mechanisms work.  See, e.g., Kevin Dowd's _Laissez-Faire Banking_, George Selgin's _The Theory of Free Banking: Money Supply under Competitive Note Issue_, and Lawrence White's _Free Banking in Britain: Theory, Experience, and Debate, 1800-1845_.


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