The Austrian ‘Free Market for Currencies’ Hoax
Many people have been seduced by the Austrian Economics notion of a ‘free market for currencies’. But ‘free markets’ exist only for one second. Then they are taken.
By Anthony Migchels for Real Currencies
In the old days of Austrian Economics things were simple: one just derided fiat currency. It is unfair to be raped by interest for paper money created out of nothing, even the Austrians will admit. So, they claim, stop fiat money and replace the paper with Gold. We’ll all feel a lot better when we can slave away for our usurious tributes to the Money Masters if we can pay in Gold coins.
Gary North built a whole career on a pretty hilarious little book with that premise, called ‘Coogan’s Bluff’.
But later things became a little more complicated. People started to wonder about the Gold Standards of the past. Weren’t these just banker operations? Don’t the bankers own all the gold? Haven’t they controlled Gold throughout modern history? And how about these Government controlled Gold Standards? Can’t Government just change the fixed price and mess up everything that way? And can we really trust them to indeed have the Gold they claim they have?
The whole Gold Standard idea became untenable. So the Austrians came up with something that was closer to their world view anyway: a free market for currencies!
Of course, Austrian Economics is well known for its trust in the magical ‘freedom’ of the market. First it has Government declare a ‘free market’, then it has Government enforce the contracts in this ‘free market’ and third it has Government look away if a few monopoly capitalists take this market overnight. Of course Government should not interfere if these capitalists show such wonderful ‘human action’ and gobble up the whole thing. Surely these capitalists would not win, were they not doing something right.
And so it will be with the so called ‘free market for currencies’.
The minute Government creates this ‘free market’, it will be quickly conquered by the Money Power with its vast resources. It will have thousands of independent journalists and professors discuss the wonders of Gold as currency at its media outlets. It will pour in billions to open up thousands of ‘competing’ Gold banks, providing Gold based credit. The one at 4,9%, the next at 5,0%. Many of these outlets will actually believe they are really competing.
The Money Power will bribe politicians to only accept Gold coins in taxes.
Meanwhile, nobody will be investing one cent in Mutual Credit based facilities. Because there is nobody with the necessary resources.
So this ‘free market for currencies’ is just a silly label, not unlike ‘liberty’ itself. It means nothing, unless we have a clear idea of what will really happen.
And if there were real competition?
Of course, would there be real competition, Gold would be absolutely irrelevant in a free market.
As we explained earlier (here and here), if Ron Paul’s “”Free Competition in Currency Act” (HR 1098)” (which would end legal tender laws and end taxing metals) would ever be enacted, nothing would happen.
Everybody would continue to hoard Gold and pay with Federal Reserve notes.
It’s called Gresham’s law: bad money drives out good money. It’s no use discussing this: just check it out for yourself: would you pay with your Gold coins or with your notes?
The second issue is, that would there be Mutual Credit Facilities competing with Gold banks, they would be offering credit at 0%, while the Gold banks would want 5% for their mortgages.
Where would you go for your loan?
Is it really any use discussing this further?
The ‘free market for currencies’ is just a ruse, made possible by Austrian Economics’s standard way of ignoring market power. They only look at Government intervention, but they always ignore the elephants monopolizing the helpless ‘free market’.
Should there be a ‘free market’ for currencies, especially if the Federal Reserve Notes would be phased out, the massively funded and promoted Gold dealers would quickly gobble it up and tightly controlled specie, easily inflated and deflated and taxed with interest, would provide the Money Power with the de facto Gold Standard it wants.
How the Money Power created Libertarianism and Austrian Economics
Gary North’s Bluff: the Lie he’s been sitting on for 50 years
What Gary North is not telling you about Interest
Discussing Gold and Interest with the Daily Bell