Libertarians know that gold and silver help keep government spending under control.
Nowhere in history has liberty ever caused a nation to lose its mind and soul like collectivism has. Never. For proof, all one has to do is look at history: the Jacobins during the French Revolution; in Russia — Lenin, Stalin and the Bolsheviks; from China — Mao and the Great Leap; in Southeast Asia … Pol Pot and the Khmer Rouge; the Kim Dynasty in North Korea. Once in power they all forcefully imposed their collectivist agenda through sheer terror because a dictatorship was the only way to maintain it.
Then you’ve got the Castro brothers and the late Che Guevara in Cuba; their “progressive” brand of socialism has the country stuck in a time warp where almost nothing has changed since the two imposed their statist ideology on everyone more than 50 years ago. Progress, indeed.
The analog to collectivism is Libertarianism.
Libertarian Principles
At its most basic level, Libertarianism is centered around the principle that a government’s only role is to preserve our property rights and protect us from foreign invasion — and this, in essence, is the role the Founding Fathers limited government to in the United States’ Constitution. Nothing more.
If it’s not specifically listed in the US Constitution, the federal government is not authorized to do it — as those powers are reserved specifically for the individual states.
It is certainly not the role of government to provide us with benefits, healthcare, subsidies, or control the distribution of wealth — as it does today. In essence, the Constitution only guarantees equal opportunity for everyone — not equal outcomes. And yet, sadly, a majority of Americans have lost sight of these basic facts.
So what does this have to do with macroeconomics? Everything.
The reason libertarians advocate a return to sound money — and governments do everything in their power to avoid it — is because a gold- and silver-based money system constrains human nature. The only way a government can try to provide its citizens with all of the benefits and subsidies they promise is by abandoning sound money.
Why humans use money at all is fundamental to understanding all that’s wrong with how central banks are destroying money and productivity along with it.
The Benefits of Sound Money
Libertarians know that gold and silver play three important roles that facilitate and amplify human productivity: they act as a medium of exchange; they are a unit of account; and they are a store of wealth. However, fiat currency is not a store of wealth — therefore, it cannot be real money. This is because governments are always tempted to inflate the amount of fiat currency in circulation to help pay for benefits and subsidies they could never afford to provide under a sound money system. Unfortunately, humans are not perfect — so it’s a given that most politicians eventually succumb to that temptation; and since the Law of Supply and Demand is sacrosanct, every fiat currency loses value over time.
But that’s not all: Eventually, the government provides so many benefits that many people actually find that it makes more sense not to work — and who can blame them? The problem is, when that happens, there is a tipping point that causes the system to collapse on itself — this occurs when more people are in the cart catching a free ride than there are those who are doing the pulling. This is why libertarians push for gold and silver as money.
Today’s pols understand all of this, but they’ll never admit it, because a significant portion of the fiat currency created by the government out of thin air eventually ends up in their pockets and the pockets of their cronies; meanwhile, the people pay for it through the loss of their purchasing power.
Fiat Currency: The Road to Ruin
Because of this temptation, it’s no coincidence that even the world’s greatest civilizations eventually transition from sound money to fiat currency. As a result, their average life span is just 200 years; and all of them end up following the same road to ruin:
- Bondage to spiritual faith
- Spiritual faith to great courage
- Courage to liberty
- Liberty to abundance
- Abundance to selfishness
- Selfishness to complacency
- Complacency to apathy
- Apathy to dependence
- Dependence back into bondage
America is somewhere between the last two bullets in that list. Oh … and the United States will soon be 250 years old.
The good news is, when the US dollar finally loses the exorbitant privilege that comes with being the world’s reserve currency, most Americans who currently prefer dependence will have no choice but to finally see the light. I fully expect the path to liberty will follow shortly thereafter — and with it, a return to prosperity and a rebirth of the American Dream for everyone, especially for those of us in the lower- and middle-class.
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