An End to 'Fiat Currency'Recently by Thomas Schmidt: Another 'Blunder' of the Progressive Era
LewRockwell.com emulates in the best way the Universities of old, a place where scholars come together to present ideas, debate vigorously, and learn to accept truths made clear through the reasoned arguments of their peers. One of my favorite lessons is Dr. Gary North’s demonstration that "if you build a better mousetrap, the world will beat a path to your door" is utter rubbish. North has also pointed out that the mousetrap is essentially unchanged for over 100 years, because no one wants to touch a dead mouse to re-use a spring-loaded one, and so low cost is the feature most desired in a mouse-trap, one that the 19th-century design covers well. Of course, as Victor Hugo once wrote: "On résiste à l'invasion des armées; on ne résiste pas à l'invasion des idées," which implies that armies are more easily resisted than ideas. A modern paraphrase is that there is nothing more powerful than an idea whose time has come. This did not hold up well in the Greek Diaspora around the Mediterranean, of course. Archimedes, we now know from a palimpsest, was very close to creating the Calculus when invading Roman soldiers murdered him. The Antikythera mechanism was a proto-computer, close in componentry to Babbage’s Difference Engine, if intended to calculate for a specific purpose, the heavens, instead of a general purpose. Heron of Alexandria invented a type of steam turbine that could be used to generate breezes. And yet, with all these inventions and components of the industrial revolution so close at hand, the Roman Empire devolved into a brutal dictatorship, and an eventual collapse to a feudal society. Two thousand years of human progress were lost because there was no need to avoid labor, not with the Roman legions regularly subduing nearby nations and bringing back slaves to perform manual labor. As Jane Jacobs pointed out in The Economy of Cities, labor performed by slaves or women could not be economically improved upon, as it had no value, and so Rome stagnated in the areas where that labor predominated. Hilaire Belloc pointed out that one side effect of the gradual change from slave to serf to freedman was that the value of labor necessitated its being treated fairly, a change he credited to the Catholic Church’s influence in the moral realm. The need to substitute machinery for human labor arose from this end of slavery, and the value imbued within each individual.
Better mousetraps are adopted when armies do not force other decisions, and when the spirit of the time is correct for them, as Jim Quinn and The Fourth Turning might well point out. In this regard, consider the work of the market, especially in ideas. The Harry Potter books have turned their authoress, J K Rowling, into the wealthiest woman in the United Kingdom, even more wealth than the political means to wealth can supply Queen Elizabeth II. It has been 14 years since the first book came out, and over that time millions of children the world over have desired to see themselves as wizards, the especially brave and brilliant denizens of Hogwarts, a boarding school for wizards. Their non-magical counterparts are the Muggles, normal humans devoid of magical powers. The world that Rowling created is described in some detail. Most interesting to an Austrian is the monetary system. In Harry Potter and the Philosopher’s Stone, Harry takes a visit to Gringott’s Bank, where he sees that his parents have left him a vault full of gold, guarded by goblins. He learns that the Magical World deals with coinage consisting only of gold Galleons, silver Sickles, and copper Knuts, in contrast to the money he has always known. While no one upbraids his economic understanding in this first book, Muggle medicine is brought to ridicule in Harry Potter and the Order of the Phoenix, when Mr. Weasley subjects himself to stitches instead of magical healing; millions of children laughed along at the folly of the Muggle way of doing things. Laughter is a powerful tool of undermining the existing order. Boss Tweed might have remained in power, but for the mocking and muckraking of Thomas Nast’s cartoons. As Hans Christian Andersen once pointed out, the Emperor can abide anything but the laughter of children at his nakedness and foolish ways. We must use the power of the young to ridicule that which is ridiculous as they build a better way in the world, with a sound, gold-based money. We must stop using the technical term "fiat currency" known to Austrians, and refer to it simply by the words that make clear to a new generation that it ought to be an object of scorn. Call it Muggle Money, let the children mock Bernanke, and the battle is half won. April 12, 2011 Thomas M. Schmidt [send him mail], a native of Brooklyn, looks forward to the delightful tinkle of silver coins returning to the repertoire of the common purse.
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