Gold Bugs versus Theft Bugs

Calling someone a gold bug is rarely a compliment, and often an insult. For most people, a gold bug is a weirdo, at best, and a complete nut case, at worst. Don’t these gold bugs understand that gold does not pay interest or dividends? And as for those who advocate a return to the gold standard, geez, what are they thinking? Don’t they know the relic of a vanished politico-economic order when they see one?

The alternative, of course, the modern, sophisticated setup that hardly anybody can imagine doing without, comprises fiat money, legal-tender laws, fractional-reserve banks, a central bank, and a cornucopia of regulations on money, banks, and nearly everything they touch, which is now pretty much everything in existence.

And how cool is that? Why, without this modern monetary regime, we might never have experienced the grandeur of the Great Depression or the thrilling 95 percent shrinkage of the dollar’s purchasing power since the Federal Reserve System’s creation in 1913. We’d have been forced to forgo even the joys of stagflation in the 1970s, because we’d have had no serious inflation to combine with the real stagnation. Christ, Jimmy Carter might never have been elected, and—horror of horrors—we’d have had to endure four more years of newspaper stories about Gerald Ford’s stumbling over his own feet or hitting his head against something.

So, obviously, gold bugs are too old-fashioned for us to abide. Instead, we moderns vastly prefer, in effect, theft bugs, because the inflation that is inherent in the modern politico-monetary (dis)order entails, among other evils, a hidden tax on all those who hold assets denominated in dollars and who fail to anticipate the impending depreciation of the dollar and to rearrange their affairs to compensate for it. Stealing is good, of course, especially if you are a professional thief, as any politician can attest, and being able to pull off a heist without the victim’s even knowing that he’s been fleeced is fabulous, indeed.

As John Maynard Keynes wrote in one of his more insightful moments (The Economic Consequences of the Peace [1919], p. 236), “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Who among us can resist such a deliciously wicked prospect? Evidently, only a gold bug.

Robert Higgs is Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Editor at Large of Independent’s quarterly journal The Independent Review.

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