Ending Monopoly Money

Photo credit: Andrew Gustar via Flickr (CC BY-ND 2.0)
Photo credit: Andrew Gustar via Flickr (CC BY-ND 2.0)

John Tamny’s new book Who Needs the Fed? is richly praised by such towering figures as George Will, who observes that “John Tamny [is] a one -man antidote to economic obfuscation and mystification,” and by Steve Forbes, who writes of it, “Like a blazing sun melting away a dangerously thick fog, this delightfully written, well-argued and insightful book clears away disastrous misconceptions about money, credit, and the operation of the Federal Reserve. It will become one of the most enormously — and positively — influential treatises of our time.”

Among many noteworthy thoughts contained in this book the chapter entitled The Money Supply Myth, pp. 144-145, contains the following trenchant observations:

Perhaps an even better solution (to the problem of dollar policy) would be for Congress, once again, per the Constitution, to simply define the dollar (let’s again assume at 1/1000th of an ounce of gold), only to leave the creation of actual money to the private sector. That was von Mises’s point when he observed that absent government-issued money supply, “commerce will create for itself other media or circulation, such as bills, which will take the place of notes.” Austrian thinkers have long argued in favor of competing private currencies. Assuming a legal definition for the dollar, it’s folly to assume that private issuers wouldn’t create a dollar measure redeemable for 1/1000th of a gold ounce.

[…]

[A]rguably the best answer in light of the U.S.Treasury’s sad oversight of the dollar in modern times is to fully legalize private money without any Treasury or congressional input. Perfect money is that which is unchanging in value. Market actors produce all manner of other necessary goods. Why not empower them to compete on money, too?

Tamny’s underlying theme in Who Needs the Fed? is the intrinsic effect of government to destroy, and its inability to create, equitable prosperity. “Monopoly Money” — alluding to the board game which, after many rounds of play, gets larger in denomination yet lower in buying power — connotes something valueless.

Tamny here offers a radical proposition. “Radical” means “from the root.” His proposal to remove the government’s monopoly on the issuance of currency is offered as a radical route to economic prosperity coupled with economic justice.

John Tamny’s Who Needs the Fed?

Highly recommended.

Ralph Benko, internationally published weekly columnist, co-author of The 21st Century Gold Standard, lead co-editor of the Gerald Malsbary translation from Latin to English of Copernicus’s Essay on Money, is American Principles Project’s Senior Advisor, Economics.