A man’s suit costs about the same today as it did 100 years ago. Not in dollars, but gold. For at least a century, an ounce of gold could buy you a quality man’s suit. In 1910 the suit would cost around $25, according to the Morris County historical prices survey. Today an ounce of gold is around $1,400, or a nice suit at Nordstrom.
Why tolerate our government’s monopoly on money? Money is a medium of exchange and a store of value. But our government produces inflation-prone fiat money. The Federal Reserve devalues your earnings by effectively printing more bills. The Fed also manipulates interest rates, which promotes economic booms and busts fueled by malinvestment. A million YouTube viewers learned this from the hilarious rap video, “Fear the Boom and Bust.”
Money wasn’t always like this. My 1935 dollar bill says “silver certificate” across the top and “One dollar in silver payable to the bearer on demand” under George Washington’s portrait. A dollar was a unit of measure — a specific weight of gold or silver. A dollar was a certificate of deposit for a real commodity with stable value over time – independent of its use as money.
If you like fiat money like today’s U.S. dollar, fine. But that’s no reason to support its having a government-granted monopoly on money. Let dollars compete with other monies, such as those backed by previous metals, in a competitive market, as 2009’s Free Competition in Currency Act would allow.
- What Has Government Done to Our Money? by Murray N. Rothbard. Full text and excellent audio version (you can download the mp3s) on-line at Mises.org.
- “Is the Gold Standard Still the Gold Standard among Monetary Systems?” by Lawrence H. White, Cato Institute Briefing Paper, 2008.