by Peter Schiff, Schiff Gold:
Any suggestion of returning the monetary system to a gold standard is immediately met with howls of protest. “It’s impossible!” were told.
But Bettina Bien Greaves who was a translator, editor, and bibliographer for economist Ludwig von Mises’ works argues that there is no practical reason we couldn’t return to a gold standard. The objections are almost all ideological. “If this basic obstacle could be overcome, however, a return to gold money would become a realistic possibility,” she wrote.
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Peter Schiff has argued the private sector will eventually bring us back to a gold standard. He doesn’t think a new gold standard will be imposed by governments.
I think that the free market is going to reject the dollar and other currencies because they’re a flawed form of money because they are no longer a store of value.”
Greaves also believed market actions would be integral in any transition back to a gold standard. But there are steps the federal government could take — short of collapsing the entire monetary system, which is the path we seem to be on — to facilitate a return to sound money.
In 1995, Greaves wrote an article for FEE outlining some of the steps she thought would be necessary to return to a gold standard and sound money. As she points out, “There may be better ways and worse ways. Unfortunately, the science of economics cannot prescribe a correct, scientific, or ‘right’ way.” But considering her ideas and the monetary history she recounts shows that the path toward sound money isn’t impassible. It also reveals some of the monetary pitfalls that have brought us to the place we are today.
The following article was originally published by FEE in 1995. The opinions expressed by Bettina Bien Greaves do not necessarily reflect those of Peter Schiff or SchiffGold.
There is no reason, technically or economically, why the world today, even with its countless wide-ranging and complex commercial transactions, could not return to the gold standard and operate with gold money. The major obstacle is ideological.
Many people believe that it would be impossible to return to the gold standard—Never! There are just too many people in the world, they say, and the economy is too complex. Many others look on a return to the gold standard as an almost magical solution to today’s major problems—big government, the welfare state, and inflation. What is the truth of the matter?
Certainly if the United States went on a gold standard, it would have to carry out many reforms. The federal government would really have to stop inflating, balance its budget, and abandon welfare state programs. Most voters are not ready for such reforms. And politicians, pressured by voters and special interest groups for favors, hesitate to pass them. Thus the major stumbling block to monetary reform is ideological. If this basic obstacle could be overcome, however, a return to gold money would become a realistic possibility.
Let’s consider possible ways for transforming our present paper and credit monetary system, based on fractional reserve banking, into a gold standard. There may be better ways and worse ways. Unfortunately the science of economics cannot prescribe a correct, scientific or “right” way. It can only help us choose among alternatives by analyzing their various consequences. A review of monetary history will also be helpful.
