[ Pobierz całość w formacie PDF ]
.If Italy, for example, issues a great manylira, the lira will depreciate in terms of other currencies, and Italians willfind the prices of their imports and of foreign resources skyrocketing.What the Keynesians have dreamed of, then, is a world with one fiatcurrency, the issues of that paper currency being generated and controlledby one World Central Bank.What you call the new currency unit doesn treally matter: Keynes called his proposed unit at the Bretton WoodsConference of 1944, the bancor ; Harry Dexter White, the U.S.Treasurynegotiator at that time, called his proposed money the unita ; and theLondon Economist has dubbed its suggested new world money the phoenix. Fiat money by any name smells as sour.Even though the United States and its Keynesian advisers dominatedthe international monetary scene at the end of World War II, they couldnot impose the full Keynesian goal; the jealousies and conflicts of nationalsovereignty were too intense.So the Keynesians reluctantly had to settlefor the jerry-built dollar-gold international standard at BrettonWoods, with exchange rates flexibly fixed, and with no World CentralBank at its head. 242 Murray N.Rothbard: Making Economic SenseAs determined men with a goal, the Keynesians did not fail from nottrying.They launched the Special Drawing Right (SDR) as an attempt toreplace gold as an international reserve money, but SDRs proved to be afailure.Prominent Keynesians such as Edward M.Bernstein of theInternational Monetary Fund and Robert Triffin of Yale, launched well-known Plans bearing their names, but these too were not adopted.Ever since the Bretton Woods system, hailed for nearly three decadesas stable and eternal, collapsed in 1971, the Keynesians have had to sufferthe indignity of floating exchange rates.Ever since the accession ofKeynesian James R.Baker as Secretary of Treasury in 1985, the UnitedStates has abandoned its brief commitment to a monetarist hands-off theforeign exchange market policy, and has tried to engineer a phasetransformation of the international monetary system.First, fixed exchangerates would be obtained by coordinated action of the large Central Banks.This has largely been achieved, at first covertly and then openly; theleading Central Banks picked a target point or zone, for, say, the dollar,and then by buying and selling dollars, manipulated exchange rates to staywithin that zone.Their main difficulty has been figuring out what target topick, since, indeed, they have no wisdom in rate-fixing beyond that of themarket.Indeed, the concept of a just exchange- rate for the dollar is just asinane as the notion of the just price for a particular good.A tempting opportunity for mischief has been offered the Keynesiansby the coming of the European Community in 1992.The Keynesians, ledby now Secretary of State James Baker, have been pushing for a newcurrency unit for this United Europe, to be issued by a European-wideCentral Bank.This would not only mean an international economicgovernment for Europe, it would also mean that it would becomerelatively easy for the post-1992 European Central Bank to becomecoordinated with the Central Banks of the United States and Japan, and tosegue without too much trouble to the long-cherished goal of the WorldCentral Bank and world currency unit.Inflationist European countries, such as Italy and France, are eager forthe coordinated European-wide inflation that a regional Central Bankwould bring about.Hard-money countries such as West Germany,however, are highly critical of inflationary schemes.You wouldexpect Germany, therefore, to resist these Europeanist demands; so whydon t they? The problem is that, ever since World War II, the United The Fiat Money Plague 243States has had enormous political leverage upon West Germany and theUnited States and its Keynesian foreign secretary Baker have beenpushing hard for European monetary unity.Only Great Britain, happily,has been throwing a monkey-wrench into these Keynesian proceedings.Hard-money oriented, and wary of infringements on its sovereignty andalso influenced by Monetarist adviser Sir Alan Wakers Britain mightjust succeed in blocking the European Central Bank indefinitely.At best, the Keynesian Dream is a long shot.It is always possible that,not only British opposition, but also the ordinary and numerous frictionsbetween sovereign nations will insure that the Dream will never beachieved.It would be heartening, however, if principled opposition to theDream could also be mounted.For what the Keynesians want is no lessthan an internationally coordinated and controlled world-wide, paper-money inflation, a fine-tuned inflation that would proceed unchecked uponits merry way until, whoops!, it landed the entire world smack into themiddle of the untold horrors of global runaway hyperinflation.77Money InflationAnd Price InflationThe Reagan administration seemed to have achieved the culmination ofits economic miracle of the last several years: while the money supplyhad skyrocketed upward in double digits, the consumer price indexremained virtually flat.Money cheap and abundant, stock and bondmarkets boomed, and yet prices remaining stable: what could be betterthan that? Had the President, by inducing Americans to feel good andstand tall, really managed to repeal economic law? Had soft soap beenable to erase the need for root-canal economics?In the first place, we have heard that song before.During every boomperiod, statesmen, economists, and financial writers manage to findreasons for proclaiming that now, this time, we are living in a new agewhere old- fashioned economic law has been nullified and cast intothe dust bin of history.The 1920s is a particularly instructive decade,because then we had expanding money and credit, and a stock and bondmarket boom, while prices remained constant.As a result, all the expertsas well as the politicians announced that we were living in a brand new 244 Murray N.Rothbard: Making Economic Senseera, in which new tools available to government had eliminated inflationsand depressions.What were these marvelous new tools? As Bernard M.Baruchexplained in an optimistic interview in the spring of 1929, they were (a)expanded cooperation between government and business; and (b) theFederal Reserve Act, which gave us coordinated control of ourfinancial resources and.a unified banking system. And, as a result, thecountry was brimming with self-confidence. But, also as a result ofthese tools, there came 1929 and the Great Depression.Unfortunately bothof these mechanisms are with us today in aggravated form.And greatself confidence, which persisted in the market and among the public into1931, didn t help one whit when the fundamental realities took over.But the problem is not simply history.There are very good reasons whymonetary inflation cannot bring endless prosperity.In the first place, evenif there were no price inflation, monetary inflation is a bad proposition.For monetary inflation is counterfeiting, plain and simple.As incounterfeiting, the creation of new money simply diverts resources fromproducers, who have gotten their money honestly, to the early recipients ofthe new money to the counterfeiters, and to those on whom they spendtheir money [ Pobierz całość w formacie PDF ]
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.If Italy, for example, issues a great manylira, the lira will depreciate in terms of other currencies, and Italians willfind the prices of their imports and of foreign resources skyrocketing.What the Keynesians have dreamed of, then, is a world with one fiatcurrency, the issues of that paper currency being generated and controlledby one World Central Bank.What you call the new currency unit doesn treally matter: Keynes called his proposed unit at the Bretton WoodsConference of 1944, the bancor ; Harry Dexter White, the U.S.Treasurynegotiator at that time, called his proposed money the unita ; and theLondon Economist has dubbed its suggested new world money the phoenix. Fiat money by any name smells as sour.Even though the United States and its Keynesian advisers dominatedthe international monetary scene at the end of World War II, they couldnot impose the full Keynesian goal; the jealousies and conflicts of nationalsovereignty were too intense.So the Keynesians reluctantly had to settlefor the jerry-built dollar-gold international standard at BrettonWoods, with exchange rates flexibly fixed, and with no World CentralBank at its head. 242 Murray N.Rothbard: Making Economic SenseAs determined men with a goal, the Keynesians did not fail from nottrying.They launched the Special Drawing Right (SDR) as an attempt toreplace gold as an international reserve money, but SDRs proved to be afailure.Prominent Keynesians such as Edward M.Bernstein of theInternational Monetary Fund and Robert Triffin of Yale, launched well-known Plans bearing their names, but these too were not adopted.Ever since the Bretton Woods system, hailed for nearly three decadesas stable and eternal, collapsed in 1971, the Keynesians have had to sufferthe indignity of floating exchange rates.Ever since the accession ofKeynesian James R.Baker as Secretary of Treasury in 1985, the UnitedStates has abandoned its brief commitment to a monetarist hands-off theforeign exchange market policy, and has tried to engineer a phasetransformation of the international monetary system.First, fixed exchangerates would be obtained by coordinated action of the large Central Banks.This has largely been achieved, at first covertly and then openly; theleading Central Banks picked a target point or zone, for, say, the dollar,and then by buying and selling dollars, manipulated exchange rates to staywithin that zone.Their main difficulty has been figuring out what target topick, since, indeed, they have no wisdom in rate-fixing beyond that of themarket.Indeed, the concept of a just exchange- rate for the dollar is just asinane as the notion of the just price for a particular good.A tempting opportunity for mischief has been offered the Keynesiansby the coming of the European Community in 1992.The Keynesians, ledby now Secretary of State James Baker, have been pushing for a newcurrency unit for this United Europe, to be issued by a European-wideCentral Bank.This would not only mean an international economicgovernment for Europe, it would also mean that it would becomerelatively easy for the post-1992 European Central Bank to becomecoordinated with the Central Banks of the United States and Japan, and tosegue without too much trouble to the long-cherished goal of the WorldCentral Bank and world currency unit.Inflationist European countries, such as Italy and France, are eager forthe coordinated European-wide inflation that a regional Central Bankwould bring about.Hard-money countries such as West Germany,however, are highly critical of inflationary schemes.You wouldexpect Germany, therefore, to resist these Europeanist demands; so whydon t they? The problem is that, ever since World War II, the United The Fiat Money Plague 243States has had enormous political leverage upon West Germany and theUnited States and its Keynesian foreign secretary Baker have beenpushing hard for European monetary unity.Only Great Britain, happily,has been throwing a monkey-wrench into these Keynesian proceedings.Hard-money oriented, and wary of infringements on its sovereignty andalso influenced by Monetarist adviser Sir Alan Wakers Britain mightjust succeed in blocking the European Central Bank indefinitely.At best, the Keynesian Dream is a long shot.It is always possible that,not only British opposition, but also the ordinary and numerous frictionsbetween sovereign nations will insure that the Dream will never beachieved.It would be heartening, however, if principled opposition to theDream could also be mounted.For what the Keynesians want is no lessthan an internationally coordinated and controlled world-wide, paper-money inflation, a fine-tuned inflation that would proceed unchecked uponits merry way until, whoops!, it landed the entire world smack into themiddle of the untold horrors of global runaway hyperinflation.77Money InflationAnd Price InflationThe Reagan administration seemed to have achieved the culmination ofits economic miracle of the last several years: while the money supplyhad skyrocketed upward in double digits, the consumer price indexremained virtually flat.Money cheap and abundant, stock and bondmarkets boomed, and yet prices remaining stable: what could be betterthan that? Had the President, by inducing Americans to feel good andstand tall, really managed to repeal economic law? Had soft soap beenable to erase the need for root-canal economics?In the first place, we have heard that song before.During every boomperiod, statesmen, economists, and financial writers manage to findreasons for proclaiming that now, this time, we are living in a new agewhere old- fashioned economic law has been nullified and cast intothe dust bin of history.The 1920s is a particularly instructive decade,because then we had expanding money and credit, and a stock and bondmarket boom, while prices remained constant.As a result, all the expertsas well as the politicians announced that we were living in a brand new 244 Murray N.Rothbard: Making Economic Senseera, in which new tools available to government had eliminated inflationsand depressions.What were these marvelous new tools? As Bernard M.Baruchexplained in an optimistic interview in the spring of 1929, they were (a)expanded cooperation between government and business; and (b) theFederal Reserve Act, which gave us coordinated control of ourfinancial resources and.a unified banking system. And, as a result, thecountry was brimming with self-confidence. But, also as a result ofthese tools, there came 1929 and the Great Depression.Unfortunately bothof these mechanisms are with us today in aggravated form.And greatself confidence, which persisted in the market and among the public into1931, didn t help one whit when the fundamental realities took over.But the problem is not simply history.There are very good reasons whymonetary inflation cannot bring endless prosperity.In the first place, evenif there were no price inflation, monetary inflation is a bad proposition.For monetary inflation is counterfeiting, plain and simple.As incounterfeiting, the creation of new money simply diverts resources fromproducers, who have gotten their money honestly, to the early recipients ofthe new money to the counterfeiters, and to those on whom they spendtheir money [ Pobierz całość w formacie PDF ]