In his 1982 article, “Monetary Policy: Theory and Practice,” Nobel laureate Milton Friedman—no friend of gold—said that,
If a domestic money consists of a commodity, a pure gold standard or cowrie bead standard, the principles of monetary policy are very simple. There aren’t any. The commodity money takes care of itself. (emphasis added)
It takes care of itself. Consider that thought for a moment, then ask yourself why we’ve had politically-appointed bureaucrats running the money and banking system since 1914? With a commodity money, exclusively under control of a free market, coupled with enforcement of property rights, a new and far better world would emerge.
In 2011, I self-published The Jolly Roger Dollar and the Pirates that Made It. Its central message is this: Money and banking should be permanently divorced from the state.
Mankind should be divorced from the state but that’s going beyond the scope of this discussion. For now, at least, our goal should be to kill central banking wherever it exists and open up the market to alternative monies—alternatives to the fiat issues of central banks. Market participants should be free to choose what they wish to use for money without government interference.
Legal tender laws—since they constitute invasions of private property—should also be repealed. As Thomas Paine wrote,
As to the assumed authority of any assembly in making paper money, or paper of any kind, a legal tender, or in other language, a compulsive payment, it is a most presumptuous attempt at arbitrary power. There can be no such power in a republican government: the people have no freedom, and property no security where this practice can be acted. . .
For the same reason, banking should lose the legal privileges that protect the practice of fractional reserve lending. What is needed is freedom—freedom to conduct our monetary and banking affairs regulated only by private property rights and economic law. As I have argued elsewhere, the existence of the state precludes these conditions.
The heart of the book is in the title: the monetary and banking system we have is fundamentally an act of theft. It is monetary piracy because the currencies we swap for real goods and property titles are hijacked versions of the real thing. What constitutes the real thing, who did the hijacking, when, for what purpose, and the results it has brought are discussed throughout the text.
To be sure, the money we now carry in our pockets or checking accounts serves the purpose of providing a medium of exchange. If it didn’t, banks would be in the wallpaper business. But it also serves to transfer wealth from those unconnected to the money-creation process to those closely associated with it. This is why monetary policy is more accurately thought of as monetary piracy.
In 2010, Federal Reserve officials celebrated the centennial founding of the Fed at Jekyll Island, Georgia. What was once regarded as a litmus test for a conspiracy theory is now part of the Fed’s official fabric, worn with pride. And notice, although the Federal Reserve Act didn’t become law until December 23, 1913, the Fed regards the clandestine meeting on Jekyll Island three years earlier as its true birthplace. As G. Edward Griffin summarizes,
Those who attended [the Jekyll Island meeting] represented the great financial institutions of Wall Street and, indirectly, Europe as well. The reason for secrecy was simple. Had it been known that rival factions of the banking community had joined together, the public would have been alerted to the possibility that the bankers were plotting an agreement in restraint of trade—which, of course, is exactly what they were doing.
The Fed, people were told, was supposed to make financial crises and bad money virtual impossibilities. Instead, it’s made crises and bad money permanent conditions. If freedom is not allowed to work its curative powers, the Fed and its currency-on-demand machine will continue to create economic havoc and injustice.
Liberty is always on the defensive, having to bargain and plead with a state-backed ruling elite. We should not have to justify human freedom. The free market—centered as it is around consumer preferences, open competition, and private property rights—will keep us honest, to borrow an expression from my father’s era. If there is to be a ruling elite, let them rise to their positions naturally, as entrepreneurs on a free market. Only in such an environment will those on top be on permanent probation, as it were, forever subject to the market’s approval, because the customers who put them there always have the option of removing them when they fail to deliver.
For the most part, The Jolly Roger Dollar is based on articles I have written. Some of the material has been redacted to clarify certain points or update sources. If the same thoughts reappear now and again, I offer this explanation: the subject of money and banking is so corrupted with myth, misinformation, and half-truths that repetition is a necessary corrective. It strikes me as incontestable that, as Goethe is said to have observed,
Truth has to be repeated constantly, because Error also is being preached all the time, and not just by a few, but by the multitude.
