Baron Acton observed in 1887 that “Power tends to corrupt, and absolute power corrupts absolutely.” Since fiat currencies are created by monetary monopolies out of nothing and from nothing through loan contracts, they provide a legal means of obtaining something for virtually nothing. As a result, those responsible for issuing fiat currencies enjoy almost unlimited influence over economic and, therefore, political life. As famously written by Roman poet Juvenal, “Quis custodiet ipsos custodes?”, or, “Who will guard the guards themselves?”.
If fiat money isn’t “sound money” what is it? Simply put, fiat money is control of freedom and power over people. As stated by Ron Hera: “The erroneous conflation of ‘money’, which is an abstraction, and ‘value’, which is an abstract concept, is an example of sophistry; a trick of words played on unsophisticated minds. In fact, fiat currencies which exist today, not principally as notes or coins, but as electronic digits in computers, have no value.”
Beyond the obvious moral hazards encouraged by fiat currencies, fiat currency schemes always, without objection, function as a means to redistribute and concentrate wealth. Arbitrarily increasing the quantity of currency in an economy becomes a hidden tax on savers and wage workers, distorting the distribution of money and, therefore, redistributing purchasing power. The political and corporate elite have a well-protected and legal means by which to steal wealth from and control the majority, a point illustrated by former Federal Reserve Chairman Alan Greenspan in his well known 1967 essay, Gold and Economic Freedom: “Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
Further, it is through power over money printing that governments enable “Centralisation of credit in the hands of the state, by means of a national bank with state capital and an exclusive monopoly,” as listed by Karl Marx and Friedrich Engels in their Communist Manifesto of 1848 as #5 in a list of measures necessary to establish communism. Central banks around the world do control money issuance, and certainly do not seek to give up this power. Governments maintain an exclusive and legally protected monopoly over money printing while “owing no allegiance & acknowledging no responsibility to the people.” – Julian Assange in State & Terrorist Conspiracies.
As Francisco d’Anconia, one of the central characters in the novel Atlas Shrugged by Ayn Rand, explains in his famous “money speech”: “…Money is made possible only by the men who produce… Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into bread you need to survive tomorrow… Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values… Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims…”
As written by John Maynard Keynes: “Lenin was certainly right. 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.” – In The Economic Consequences of the Peace (1919).
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