Backing Out of Fiat Money

Via HBL, I encountered a thought-provoking article by Judy Shelton of the New York Sun. Shelton suggests a gold-backed bond as a possible "avenue to monetary reform." My first reaction to this was something akin to that expressed by the title of a Harry Binswanger piece on Bitcoin: "Don't Be Silly, the Entitlement State Won't Allow Bitcoin." Note that I am not expressing disagreement with that sentiment: As things stand now, the powers that be won't allow bitcoin or gold to threaten their power to manipulate the currency, and for similar reasons.

But gold-backed bonds, or rather the idea of gold-backed bonds, is a small step in the right direction that Bitcoin is not, and never was. Bitcoin is, and always was, an attempted end-run around tyranny. Shelton's idea is an actual attempt to engage in the fight that is needed to actually change things for the better: Until a significant number of people become more fed up with not being able to count on having their own money than desire a government that passes around loot; they will remain unreceptive to the idea of gold as money, and they will continue supporting the policies that ultimately necessitate fiat money. (And they won't do this without questioning the idea that we are our brothers' keepers.)

We probably won't see Shelton's proposal come to life any time soon, but at least her idea helps people imagine moving to sound money. Bitcoin, on the other hand, is an odd compound of despair and wishful thinking. It treats persuasion as impossible and evading government force as easy as a natural bodily function.

Although I am ultimately against the whole idea of the government deciding what constitutes money, I see this idea as possibly useful in a transition away from fiat currency. I also appreciate the clarity this piece has afforded me about both Bitcoin, and the vital role of aiding the public's imagination, atrophied as it has been by decades of government meddling in the economy.

-- CAV