Constitutional prohibitions
It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.
—Ludwig von Mises. The Theory of Money and Credit, 1912.
The repeated abuses of money by governments and reserve banks, and the impossibility of there being any benefit from monetary manipulation, makes the sanctity of money a valid topic for constitutional guarantee. Government should be constitutionally prohibited from:
- Expanding the money base (which should be fixed but infinitely decimalizable so as to adjust for the effects of growing and shrinking economies and populations);
- Lending;
- Borrowing;
- Accumulating foreign currency beyond its spending requirements;
- Issuing bonds or other instruments of debt;
- Guaranteeing any debt;
- Providing any form of insurance or underwriting any risk;
- Using public funds to subsidize or bail out private businesses;
- Attempting to set or influence interest rates;
- Attempting to set or influence foreign exchange rates;
- Attempting to set or influence prices;
- Attempting to set or influence wages;
- Attempting to set or influence dividends.
Economists
Inflation was brought down, without the use of the prices and incomes controls, which the great and the good all agreed were indispensable. Public spending as a share of GDP fell, which allowed tax rates to be cut—and government borrowing was reduced. We repaid debt. 364 economists who claimed that it was madness to think you could get economic growth by cutting government borrowing were proved wrong: I’m told they were never the same again.
—Margaret Thatcher. Keith Joseph Memorial Lecture, January 11, 1996, transcript available at the Margaret Thatcher Foundation, www.margaretthatcher.org.
Economists are, generally speaking, a group of charlatanistic soothsayers. The knowledge required to optimally devise government’s tampering with the money supply is impossibly complex. The only proper solution is for government not to meddle with the money supply in the first place.
Mankind will eventually realize that the bizarre graphs and complex equations used by central bankers to justify their actions are as bogus as was the analysis of the entrails of birds by the ancient Roman augurs.
