Monetary and Economic Freedom

Last week, Mark Thornton wrote that the U.S. is headed towards losing its monetary and economic freedom for the first time since the founding of the nation unless serious reforms are implemented:

As we enter the era of decline for the dollar all sorts of reforms will be used to address this decline and the economic instability it causes. However, reforms designed on Wall Street or in Washington will not work and will amount to nothing more than rear guard action by the moneyed interests that control the government.

The only true path to reform is monetary freedom. We have gone from a situation where money was entirely free from government intervention to one that is completely dominated by government. Instead of privately minted coins made from precious metals we now have a system of government-printed paper fiat currency. We have gone from a system of private banking that provided bank notes and checks for demand deposits to one where banks are completely regulated by the central bank and a host of other regulatory bodies. The idea that our current financial mess resulted from a lack of regulation is truly laughable. Of course this process has taken centuries to complete. By giving up our monetary freedom—particularly over the last one hundred years—we have given government the ability to grow in size and scope and to achieve unthinkable levels of power. Every step forward towards government control of money has resulted in social chaos and economic destruction. The real economy only grows in the interludes when monetary mischief is at a minimum.

We are now at a point in time when the US government is bankrupt. It cannot pay its bills, it cannot pay off its debt, and it has future unfunded liabilities with a current value in excess of $60 trillion dollars—and that was before all the current bailout packages!¹

His comments about increasing government control over U.S. monetary policy reminded me of this statement by Ezra Taft Benson about economic freedom:

All of us are anxious to see our country progress, but we want to know by what means. The whole American concept of progress, which has outstripped every other nation on earth, is based on certain fundamental principles which [some] men now ask us to abandon. Certainly we are entitled to challenge such proposals when they are asking us to give up what has worked so well and substitute something which they merely hope will work.

What are these fundamental principles which have allowed the United States to progress so rapidly and yet remain free?

First, a written Constitution clearly defining the limits of government so that government will not become more powerful than the people.

Second, an economic system which is characterized by:
Free enterprise the right to venture, the right to choose.
Private property—the right to own, develop and enjoy.
A market economy—the right to exchange and to profit.

Third, building an open society where each individual enjoys the greatest opportunity to improve himself, to travel, to become educated, to invent, to compete, to build, to speak, to worship, and to pursue happiness in whatever way the individual finds most satisfying and worthwhile.

Fourth, assigning government the role of referee rather than competitor—giving it enough power to provide peace, order and security but not enough power to rob the people of their liberty or take their property “without due process of law.”²

Many U.S. citizens may not be aware that creating a “new reserve currency” to replace the dollar and an “international central bank” to further control the international economy will most likely cause greater deterioration of U.S. monetary and economic freedom (see Ron Paul on the G-20 Summit).

What’s your take on these troubling events?

Sources:

1. Thornton, Mark. “Monetary Freedom and Its Opposite“. 12 November 2008. Ludwig von Mises Institute. 17 November 2008.↩
2. Newquist, Jerreld L., ed. ”Fundamental Principles of Progress“. Prophets, Principles and National Survival. Salt Lake City: Publishers Press, 1964. 161-162. 17 November 2008.↩

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