The True Gold Standard (Second Edition)
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:
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.
The Federal Reserve System's James Narron and David Skeie, career officials with the Federal Reserve System, are two eminent historically erudite figures. Writing in the New York Federal Reserve Bank's online publication, Liberty Street Economics, they recently provided a continuation of their valuable historical "revue," Crisis Chronicles: The Collapse of the...
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Key Monetary Writings
My frequent co-author George Selgin (2012) finds it “more doubtful [today] than ever before that any government-sponsored and administered gold...
Why the Gold Standard?