Chatham's Next Column, Robert Welch Speaking, and the Relgious Roots of Liberty

A More Perfect Union
Bretton H. Chatham
#31

Ludwig von Mises, perhaps the greatest true champion of liberty in the twentieth century, has been credited with saying, “Government is the only institution that can take a perfectly good piece of paper, print some noble words on it, and make it perfectly worthless.” Whether or not Mises actually said this is not as important as the message itself. Simply put, money doesn’t grow on trees, and value doesn’t fall from the skies.

Monetary policy is the single most important economic issue today. And the Federal Reserve Bank, which is no more federal than FedEx, has a monopoly on our money supply. Although Congress has the power to “coin Money, regulate the Value thereof, and of foreign Coin” (Article I, Section 8, Clause 5), it delegated that dubious distinction to the private central bank in the Federal Reserve Act of 1913. Though the Fed is entirely relevant to the current topic, I’ll devote a column to it in the very near future. But first, we need to understand the nature of money itself.

Money, of course, is a medium of exchange. Surely no one would disagree with that basic aspect. Rather than bartering for bread or blankets, people can more efficiently meet their own needs by exchanging some commonly accepted item. Historically, commodities (like salt, shells, and cigarettes) have been used as money. However, the best monies have proven to be durable, in relatively stable supply, and easily divisible for more accurate transactions. Gold and silver have, time and again, demonstrated their superiority as money. And perhaps most importantly, gold and silver remain valuable and desirable regardless of any government mandates.

The reason this all matters goes back to the Framers’ choice of words in writing this particular clause of the Constitution. Note that it reads, “coin Money” not “print Money.”
Early Americans knew that printing money out of thin air would devalue each individual unit of currency. Gen. Washington constantly complained about how army suppliers wouldn’t accept the worthless Continental dollar that he had been given to finance the Revolutionary War effort. Experience had taught them that value depends on scarcity. Anyone concerned with their own finances can trust the relatively stable value of gold and silver; the government can’t just make more when it feels like spending more money. Not so with fiat paper money, which is, by definition, without any value of its own.

So why isn’t our current currency worthless? Because Congress says so! Isn’t that reassuring? Our federal government has avoided the problem that Gen. Washington faced by forcing everyone to accept dollar bills regardless of true worth through legal tender laws.
A few weeks ago, I mentioned that governments can raise revenue in only three ways: tax, borrow, or print. Each has its consequences. Taxing leads to revolt, and borrowing leads to liability; but printing leads to inflation, from which all suffer but few understand. So crime does pay…if you make the laws.

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The Religious Roots of Liberty
Rev. Edmund Opitz