Saturday, February 14, 2009

Americans Must Demand a Gold Backed Dollar

Brian Simpson writing in Capitalism Magazine explains why we need our money to be backed by gold: to make politicians toe the line about spending. Our money right now is backed by nothing except the productivity of Americans but it allows politicians to spend money we don't have by creating it out of thin air.

Many blame capitalism for the current financial crisis. Even Alan Greenspan, who at one time was an advocate of the free market, blames capitalism. He recently testified in front of a congressional committee that "A critical pillar to . . . free markets did break down. I still do not fully understand why it happened." The first thing that Greenspan and most other commentators on the crisis must do to understand why the crisis occurred is to learn that the free market did not cause the crisis because the U.S. is not even close to being a free-market economy. Massive government interventions in the market in the form of myriad regulations and financial irresponsibility on the part of the government are really to blame. This makes the "solution" being imposed doubly absurd: more government controls, borrowing, and spending to solve the problems created by government controls, borrowing, and spending.

But this isn’t surprising. Ayn Rand observed decades ago that "one of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary."

The real solution to the financial crisis is not more financial irresponsibility and government controls, but forcing the government to be financially responsible and abolishing the controls. This means we need to establish a free market in our financial system. As a part of the move to a free market, we need to establish a full-fledged gold standard--one that the government must be prevented from breaching. This is something we have never had in this country

No comments: