Alex Linder
August 8th, 2009, 10:22 PM
[Tom Woods comments on recent pope encyclical.]
In addition to some of its more unfortunate statements, Caritas in Veritate is also a gigantic missed opportunity. There are legitimate moral concerns to be raised about the structure of the world’s monetary systems, but Benedict XVI does not discuss them.
If those moral concerns interest you, I suggest Jörg Guido Hülsmann’s brilliant work The Ethics of Money Production, or my The Church and the Market. (The former title was greeted with great enthusiasm in The Wanderer by Paul Likoudis, a good man whom I would classify as a third-way distributist of some sort, so its appeal extends well beyond the usual Misesian circles.) Hülsmann shows that within Catholic tradition there is ample testimony to the wickedness of monetary debasement, fractional-reserve banking, and numerous other institutional commonplaces we hardly give a second thought. As Hülsmann argues, there is no moral or economic case for the monetary system under which we are forced to live—a system that has never been introduced voluntarily but has always been enforced by violence, with the police empowered to suppress alternatives. The insidious nature of the government’s monopoly on money becomes even clearer when a currency degenerates into hyperinflation, all known examples of which have occurred under monopoly fiat-money systems. Short of a completely state-run system, it is as far from a free market as one can imagine.
The system we have now involves a government-privileged central bank with a monopoly on the creation of legal-tender money, charged with watching over a cartel of ostensibly private but also state-privileged commercial banks. Its debasement of money makes it very difficult for people to save for the future without having to become speculators of one kind or another. A hard-money system, on the other hand, permitted the average person to save for the future simply by accumulating precious-metal coins, which, back in the days when they served as money, held or increased their value over time. Who today would save for the future by piling up Federal Reserve Notes? Society’s most vulnerable now must enter the stock market or take other kinds of risks just to hold on to their wealth. Is this not a moral issue?
The present system gives rise to the business cycle when it attempts to push interest rates below their free-market level. The resulting discoördination within the structure of production puts the economy on a path it cannot follow indefinitely. The bust then throws countless households into turmoil, and inevitably encourages the most despicable, predatory behavior on the part of firms seeking bailouts.
The monopoly central bank institutionalizes the problem of moral hazard. There is no physical limitation on the creation of additional paper money. For that reason, major market actors know there is no physical constraint on bailing them out in emergencies. The only obstacle, easily conquered, is one of political will. It should be obvious enough how a system like this both promotes an artificially elevated level of risk tolerance and benefits the already privileged at the expense of the average person.
http://www.takimag.com/site/article/truth_charity/
I agree with the above. The government's job is to keep the money honest so that White men living the right way can accumulate wealth through savings and solid investments. That is the right policy for a White nation.
In addition to some of its more unfortunate statements, Caritas in Veritate is also a gigantic missed opportunity. There are legitimate moral concerns to be raised about the structure of the world’s monetary systems, but Benedict XVI does not discuss them.
If those moral concerns interest you, I suggest Jörg Guido Hülsmann’s brilliant work The Ethics of Money Production, or my The Church and the Market. (The former title was greeted with great enthusiasm in The Wanderer by Paul Likoudis, a good man whom I would classify as a third-way distributist of some sort, so its appeal extends well beyond the usual Misesian circles.) Hülsmann shows that within Catholic tradition there is ample testimony to the wickedness of monetary debasement, fractional-reserve banking, and numerous other institutional commonplaces we hardly give a second thought. As Hülsmann argues, there is no moral or economic case for the monetary system under which we are forced to live—a system that has never been introduced voluntarily but has always been enforced by violence, with the police empowered to suppress alternatives. The insidious nature of the government’s monopoly on money becomes even clearer when a currency degenerates into hyperinflation, all known examples of which have occurred under monopoly fiat-money systems. Short of a completely state-run system, it is as far from a free market as one can imagine.
The system we have now involves a government-privileged central bank with a monopoly on the creation of legal-tender money, charged with watching over a cartel of ostensibly private but also state-privileged commercial banks. Its debasement of money makes it very difficult for people to save for the future without having to become speculators of one kind or another. A hard-money system, on the other hand, permitted the average person to save for the future simply by accumulating precious-metal coins, which, back in the days when they served as money, held or increased their value over time. Who today would save for the future by piling up Federal Reserve Notes? Society’s most vulnerable now must enter the stock market or take other kinds of risks just to hold on to their wealth. Is this not a moral issue?
The present system gives rise to the business cycle when it attempts to push interest rates below their free-market level. The resulting discoördination within the structure of production puts the economy on a path it cannot follow indefinitely. The bust then throws countless households into turmoil, and inevitably encourages the most despicable, predatory behavior on the part of firms seeking bailouts.
The monopoly central bank institutionalizes the problem of moral hazard. There is no physical limitation on the creation of additional paper money. For that reason, major market actors know there is no physical constraint on bailing them out in emergencies. The only obstacle, easily conquered, is one of political will. It should be obvious enough how a system like this both promotes an artificially elevated level of risk tolerance and benefits the already privileged at the expense of the average person.
http://www.takimag.com/site/article/truth_charity/
I agree with the above. The government's job is to keep the money honest so that White men living the right way can accumulate wealth through savings and solid investments. That is the right policy for a White nation.