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Source link: http://archive.mises.org/3617/rothbard-classic-the-case-for-the-100-percent-gold-dollar/

Rothbard Classic: The Case for the 100 Percent Gold Dollar

May 23, 2005 by

When this essay was published in 1962, America was in the midst of the Bretton Woods system, a Keynesian inter­national monetary system that had been foisted upon the world by the United States and British govern­ments in 1945. The Bretton Woods system was an international dollar standard masquerading as a “gold standard,” in order to lend the well-deserved prestige of the world’s oldest and most stable money, gold, to the increasingly inflated and depreciated dollar. But this post-World War II system was only a grotesque parody of a gold standard.

Here Rothbard presents the most pure proposal for reform ever written: private mintage, 100 percent reserve banking, circulating coins, full convertibility.

Preface Text | PDF | Published Edition


Paul Marks May 24, 2005 at 2:03 pm

Murry Rothbard (like other followers of Mises) was often attacked for not supporting the empirical method in economics.

However, in every case where a nation has established a fiat currency, both credit bubble booms and busts and a long term inflation has occured.

One would have thought that “empirical” economists would, therefore, question the desirability of fiat money – but they do not.

Perhaps empirical economists are not empirical at all. Perhaps, like Austrian economists, they work from principles – but, unlike Austrian economists, have no logical arguments to defend these principles.

As for the desirability of a 100% gold Dollar. Well it need not be gold (although it must not be more than one commodity – different commodities fluctuate in supply and demand differently over time, and index money ideas do not work), but certainly it should be a 100% one commodity Dollar (and gold is what people tend to choose). Government backed credit expansion (whether by a government backed central bank, or by the 1861 National Banking Act or by the 1913 Federal Reserve Act) leads straight to a boom-bust economic cycle which undermines people’s faith in the market economy.

Both Ludwig Von Mises’ “Theory of Money and Credit” and Murry Rothbard’s “The Panic of 1819″ are useful reading here.

billwald May 25, 2005 at 9:54 pm

Back when money was 100% gold backed the average American lived in poverty and didn’t have any gold.

Paul Edwards May 26, 2005 at 8:31 pm

Hi Bill:
I guess you are talking about the US prior to the civil war. I’m not certain you are correct about the level of poverty during those years, but if for sake of argument we say you are, how do you assign the blame for this on a gold standard? And what is it about money with no connection to a commodity that brings about prosperity. Finally, i note there is still poverty in the world and at the same time these poverty stricken nations are not on a gold standard. How did fiat currency fail to solve the poverty problem in those cases?

Paul Marks May 26, 2005 at 8:40 pm

Bill’s comment is part of a broader tradition.

The tradition takes the growth of government (of which fiat money is only part) and the growth of average living standards in the United States and links the two. “They happened at the same time so the statism must have created the improved living conditions”.

Thus we get ideas such as the one that producing more money makes people better off.

One can get angry over the neglect of a basic rule of logic (“a correlation is not a cause”) and one can be upset that people do not understand the real causes of the rise in prosperity in the United States over the last 200 hundred years, but one has to accept that such opinions are part of broad tradition – it is not just a matter of Bill being stupid.

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