Summary
The transition from private currencies to state-controlled monetary systems has significantly increased government power over money, leading to chronic inflation and diminished economic efficiency despite initial promises of stability.
State Control over Money
The state’s control over money is the result of a 400-500 year process of building state power, destroying private money, and abolishing competing currencies.
State control allows for expansion of spending and borrowing during wars and emergencies, as well as manipulation of money supply for state gain.
By the late 19th century, the state had established a monopoly over note issuance and bank regulation, eliminating institutions that could challenge its monetary control.
Gold Standard Misconceptions
The gold standard was not a free market system, but a state-controlled mechanism relying on government regulation to maintain uniform monetary standards.
Despite limiting currency debasement, the gold standard still allowed for state manipulation and control over the monetary system.
The classical gold standard represented a step towards currency nationalization and away from true market competition in currencies.
Historical Perspective
The gold standard was a brief experiment that paved the way for the nationalization of money and managed currency systems.
The transition from private money to state-controlled currency was a gradual process spanning several centuries.
Modern Implications
The current paper fiat money system is a direct result of the long-term process of building state power over monetary systems.
Today, there is widespread agreement that money should be controlled by sovereign states, reflecting the success of the state’s monetary takeover.
The abolition of truly private banking and market-based competing currencies has led to the current inflationary monetary environment.