The new Spielberg/Favreau movie, Cowboys and Aliens, tells a story about a town named "Absolution ... about to experience fear it can scarcely comprehend as the desolate city is attacked by marauders from the sky. Screaming down with breathtaking velocity and blinding lights to abduct the helpless one by one, these monsters challenge everything the residents have ever known." Arguably, it is a political allegory about Republicans (cowboys) vs Progressives (aliens) much as James Cameron's blockbuster Avatar was an allegory of environmentalism.
But its interest, here, has nothing to do with its politics. The movie is predicated on the aliens' motivation to get gold: "Aliens, in this film, come to earth for a specific purpose rather than invading the whole of humanity. We are told that these aliens want ‘gold’, so they steal anything which is made out of gold – coins, shields and they even resort to extracting gold directly from earth deep in the mountains."
Gold holds such an enduring fascination for the human imagination that finds its way even into the predicate of a science fiction movie. Conversely, the 1951 science fiction classic Foundation, by Isaac Asimov, posits a planet on which the currency is forged not of precious metals but of stainless steel. From pages 48-49 of the Doubleday edition:
"Let's get back to business," urged Hardin. "How would you take these so-called taxes, your eminence? Would you take them in kind: wheat, potatoes, vegetables, cattle?" The sub-prefect stared. "What the devil? What do we need with those? We've got hefty surpluses. Gold, of course. Chromium or vanadium would be even better, incidentally, if you have it in quantity." Hardin laughed. "Quantity! We haven't even got iron in quantity. Gold! Here, take a look at our currency." He tossed a coin to the envoy. Haut Rodric bounced it and stared. "What is it? Steel?" "That's right."" "I don't understand."
In 1951, an iconic novel by one of the three most famous science fiction writers of the era considered that the oddest and most alien concept for currency would be to forge it from base metal.
Odd how science fiction so often anticipates reality. And how reality often repeats itself. As the prophet Isaiah wrote, around 700 BC, complaining of Israel's debased standards, "thy silver is become dross." That is, its coinage was adulterated with base metal:
How is the faithful city become an harlot! it was full of judgment; righteousness lodged in it; but now murderers.
Thy silver is become dross, thy wine mixed with water:
Thy princes are rebellious, and companions of thieves: every one loveth gifts, and followeth after rewards: they judge not the fatherless, neither doth the cause of the widow come unto them.
In every era, past, present or most distantly imagined future, gold connotes value and integrity.
... In the last 100 years, there has been unbridled recourse to fiat currency. This column draws heavily on a benchmark address by Lewis E. Lehrman on “The Federal Reserve and the Dollar” at the 31st Annual Monetary Conference at the Cato Institute, Washington DC.,US (November 14, 2013).
Lehrman quotes Keynes in “Indian Currency and Finance”, to say that whether a central bank holds its reserves in gold or in foreign exchange “is a matter of comparative indifference …India, in her Gold-Exchange Standard… far from being anomalous, is in the forefront of monetary progress …(heading towards) “the ideal currency of the future”. What glory for India!
... It is difficult to interpret [Jeb] Hensarling’s declaration to hold hearings on “the entirety of their hundred year history and what America has looked like since adopting a fiat currency” as anything but an intention to bring the Commission up for a vote. Hensarling promises to process vast amounts of information. The constraints on a committee hearing, and on a committee staff, cannot do such a huge topic justice. As Rep. Kevin Brady put it in his own remarks at Cato, a “brutally bipartisan” Commission — with Hensarling a Commissioner — is called for.
Publisher's Note: Originally released in June/July of 1991, this detailed report discusses Jacques Rueff's economic theories and applies them to modern economic events.
By John D. Mueller
The Problem of Say's Law
For several decades, the theories of John Maynard Keynes replaced the classical theory which had dominated policy-making for more than a century until the Great Depression. This brought things full circle, because the classical economists had succeeded the Mercantilists. And the Mercantilists were proto-Keynesian in their contention that, left to itself, the economy has a tendency toward “under-consumption,” which, they argued, must be combated by public spending, combined with measures to increase the money supply.
"Double-entry bookkeeping developed in 14th century Italy, whence the precise, simplified ledger and balance sheet accounting basis for the development of a 'fractional' reserve banking system emerged. In such a banking system a new kind of 'abstract' fiduciary money developed – subject to transfer by checks. They came to be called book entry bank deposits, bank advances, credit money, or checking accounts, sight liabilities, or demand deposits. The banks held bullion or coin reserves against this new credit money. The precious metal reserves were equal to a prudent 'fraction' of the total bank note and deposit money circulation, hence the phrase 'fractional reserve banking system'."
We are pleased to announce the publication of– Money, Markets, and Government: The Next 30 Years.
The articles in Money, Markets, and Government were first presented at the Cato Institute’s 30th Annual Monetary Conference, held on November 15, 2012. The 2008-09 financial crisis and Great Recession have vastly increased the power...
Speaking in Berlin November 21, European Central Bank President Mario Draghi declared: "Let me react towards what is a nationalistic undertone in some of our countries whereby we [are said to] act against the interests of some countries and in defense of our own countries." German members of the European...