Free Money, Free Markets, Free Speech, and Freedom

In this article, I put forward the case that seldom are man’s liberties lost all at once, and that sound economic theory and history can act as a roentgen meter to detect and avoid destructive and dangerous repeats of the terrible events of past.?

In the 1940s, Ludwig von Mises (1881-1973) wrote the following: "It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights"

?This is a profound, and widely unaccepted or, at the very least, a widely under-realised idea. Just likes man’s right to free speech, Mises puts forward that man has a right to sound money. Whereas we have vehement defenders of free speech and other rights, there is a distinct lack of consciousness applied to the issues surrounding sound money and what the present state of monetary and economic affairs means for the future of civil freedoms. I intend to address this knowledge deficiency in this article, and in my forthcoming book.

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Whereas ‘free speech’ is quite clear in its definition, and we can ring-fence what is or isn’t the exercising of ones right to the freedom of speech and what is an attack on it, it is not as easy to do the same with matters concerning money. What does ‘sound money’ mean? Have not the pound and dollar have stayed relatively stable? Is gold sound money? At what point do economic controls become a risk to civil freedoms? Is there an event horizon?

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This issue is certainly complicated. The most important realm in our present exploration, namely, our analysis on the impact of economic controls on civil freedoms, is the realm of money. By 'the realm of money', I mean money goods, monetary systems and 'money-businesses' (banks).

To simplify it that matter and boil down what Mises meant we can say the following: the idea of sound money is the idea that the government should adopt a strict hands-off policy on influencing or enforcing what medium of exchange people chose to utilise for indirect exchange. Banking (necessarily) would remain decentralised, any attempts to make a cartel in the industry of banking would be met with government re-action, just like in any other industry. The market would (and did) choose a single universal medium of exchange to facilitate a money-economy. People willingly adopt this universal medium of exchange in order to integrate themselves into the continually widening and specialising global market, as this makes them wealthier. No compulsion is required for this to occur.

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If Governments continue to respect the freedom of money and do not try and take control of it, then they will find their economy grows, becomes less unequal, remains crisis free and is capable to respond to shocks. They can still fund themselves via conventional taxation and borrowing on the free and open money market, in fact, they will find their taxable base increasing as the economy becomes wealthier. Never is it necessary to create money to increase government revenue or reduce its costs.

However, if a government takes control of the domestic money and banking industry and begins abusing this monopoly power for their own gain, namely, by monopolising the monetary system and increasing the supply of money, then they have necessarily begun on the road to totalitarian economic control. That isn’t to say that a government that has a Central Bank or invokes price controls, or any other type of economic control, is necessarily totalitarian, far from it. Instead, by this, I mean, that if these policies are not, at some point in the future, relinquished in favour of free marked policies, then greater and greater controls will be necessary to try and stop complete the economic evisceration that economic controls make inevitable. The lessons of economic history and economic theory are clear, the more controls that are enforced the more crippling the economic crisis becomes. Therefore, at some point there needs to be a U-turn in economic philosophy, that is, away from collectivist policy to individualist free market?policies that promote and protect the freedom of the economic individual, if we truly want to solve the issues that come with economic eviceration, namely, negative economic growth, economic inequality, inflation, environmental decay and so forth.

However, the further we walk down the path of economic control over economic freedom, the more likely we are to choose measures of further economic control over measures of economic freedom for the cost of snap back to economic freedom is often great in the short term, as such, very few democratic politicians would choose to make this U-turn. I make the case that someone, at sometime in the future, will need to make this U-turn and the longer we delay it, the more costly it will be to do so.

Below, I explore a period in history that is a good case study to explore the ideas put forth in this article, namely, France in the period 1789-1794. I then use this case study to apply its lessons to the situation we currently find ourselves in. History, as I repeat so often in my articles, is an extremely valuable tool to utilise to educate the democratic voter and the politician to avoid repeating the egregious errors of past. Presenting the findings of a historical look at France in the period 1789-1796 is most interesting in the context of our discussion, for it is the most shocking and useful as a model of the dynamics at play during times of politico-economic stress between voter and government, government and economy, economy and voter, and voter and voter, and, in this case, ultimately, totalitarian and subject. We keep this historical exploration as brief as possible.

France, 1789-1796?

Firstly, some important context is required. The French Legislative, in March 1791, voted a formula that oversaw the complete freedom of all markets from any control, be it in employment, produce or price controls. Amazingly, just two years before the Reign of Terror and complete economic evisceration, the winds of laissez-faire economics swirled valiantly. Alas, the French statesmen remained ignorant to the importance of monetary economics, undermining any progress made by the spreading of the free market, for they, whilst simultaneously declaring freedom of markets, remained strong controllers of the market of money and abused this power. This, itself, is an ominous warning to the Western world today for we are doing the exact same thing.

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The newly formed revolutionary government of France, the Constituent Assembly, faced an extremely dire fiscal situation from its outset. Upon taking power, they faced imminent bankruptcy. To avoid this eventuality, they issued a single volume of Assignats in December 1789, printing 400 million units, to put into the state coffers. They promised the public that this would be the only issuance to promote confidence in the currency. Needless to say, this promise was not kept. Quickly, the government had spent the 400 million assignats, and did not make an effort to reduce expenditures and raise taxes, meaning they were once again facing bankruptcy. Thus, they created more Assignats. By December 1791 a further 800 million assignats had been created, but to the surprise of the French state, the assignat only fell by 4.3% on the market despite its supply well over doubling. It seemed as though the French state had found a magic cornucopia of wealth that they could tap when needed to fund themselves. Better still, not only did the early issuances of the Assignat help fund the French state, it actually created an economic boom! As White, author of ‘Fiat money inflation in France’, wrote: “the treasury was at once greatly relieved; a portion of the public debt was paid; creditors were encouraged; credit revived; ordinary expenses were met, and, a considerable part of this paper money having thus been passed from the government into the hands of the people, trade increased and all difficulties seemed to vanish”.

However, quickly, the boom stalled as prices re-equilibrated, as explained by the Misesian theory of the business cycle. Mises, unfortunately for the French still yet to be born, would have heeded the ominous warning; do not inflate again, instead, allow the inflationary manipulation to be shaken off by the market in a recession and, to address the original cause of the issue, that is, the treasury nearing bankruptcy, the French state should at once increase taxes or reduce government spending to balance the budget. If the Constituent Assembly were to inflate again then they will only make the economic crisis in future worse. This, alas, is exactly what they did.

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What is often missed is that the French people cried to the Constituent Assembly for the issuance of more Assignats. Once they got their new issuance, and that too disseminated into the economy, they again cried for more. Much of the economic evisceration that fell on France was as a consequence of the French people’s own wishes. This is not an attack on democracy, instead, it is a lesson on the importance of education and the freedom of speech to offer alternative ideas to damaging dogmas.

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The inevitable consequence of the repeated creation of money was the march higher of the price level. The people then demanded that prices be controlled, the same people, that is, that had demanded for more money creation. In fact, as happened in Weimar Germany, the same people clamoured at the government to issue more money while simultaneously complaining about the rise in prices. Price control laws were quickly issued, known as the Laws of the General Maximum, and these laws increased in severity and scope as the economic crisis worsened. Naturally, crippling shortages followed, especially in the cities. The French mobs in cities around France blamed the shortages on speculators, hoarders and all other such innocent capitalists who simply did not want to sell their property for pennies on the dollar. Thus, to make sure goods came to market promptly, laws were extended to make it illegal to hoard goods (that is, own more than your daily consumption).

To stop people from escaping the assignat, and to try and counter the increase in the price level, it became illegal to buy and sell gold with assignats or use gold as a medium of exchange. Every such law of economic control was tried to keep goods coming to market and stop the rise in the price level, the punishment for the breaking of these laws was commonly death. Further, you weren't trialled at a court. You were instead put to trial in the streets of France by a 'public court'. The issuance of assignats continued.

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The madness reached its climax with the passing of a law that made it illegal to even just ask whoever you were trading with by which medium of exchange they were going to pay with. The punishment? Death. That is, the use of a certain form of speech was punishable by death. Food became almost impossible to come by, however, the rich and the politicians of France remained well provisioned for. Rose certainly put it right when he said that the outcomes of the Assignat inflation was “a partial return to the etatisme of the Ancien Regime” that the revolution tried so hard to overthrow. Despite such carnage, the French people supported these laws. They supported the use of the guillotine for hoarders and speculators and supported the ever higher supplies of assignats. There is much to be said for the motivations of this support, but as someone on the internet once said, “never attribute to malice what can be attributed to incompetence”. I’d maybe replace the world “never”, however my point is that the French people, I think, were doing what they thought was right, and punishing people who they genuinely thought were causing the starvation of entire cities.

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It was only when the opinion of French people changed did the economic and social carnage end. They realised that the honest capitalist was not to blame, instead it was the laws coming from the Constituents Assembly and its leader, Robespierre, that was causing the economic evisceration. Only then were the laws repealed abandoned and only then could the French people re-start the process of capital growth. In fact, the smaller French towns and villages got rid of these laws before Paris told them to. The crisis in these villages ceased before it did in the cities. The worthless Assignats were burned along with the printing presses that created them in the very spot the Napoleon Column now stands. Robespierre and his comrades were guillotined. But not after thousands lay murdered for simply not wanting to sell their own property at manipulated prices. What started as a gentle issuance of Fiat currency in order to help a treasury at risk of bankruptcy, that is, a government that spent too much and/or taxed to little, led to complete economic evisceration and institutionalised murder. The people supported this murder for a time, until they realised who was causing the issue.

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After Napoleon rose to power shortly after, he vowed the following: “While I live I will never resort to irredeemable paper.” Napoleon kept his promise, even during the dark days of the emergency of the 100 days. Napoleons monetary re-structuring on the basis of a true Gold Standard lasted until 1914. There was a return to greater economic freedom, and the crisis ended. At any point, this could have occurred. Instead of doing a pro-free market U-turn, France continued to walk down the path of economic control.

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Economic history, be it the lessons from France in this period, or the agricultural controls of the Ancient Egyptian Pharos, or the reign of Roman Emperor Diocletian and other Roman emperors, or the price controls by the Ancient Greeks, is a study that concludes two things. Firstly, do not inflate your currency. Secondly, do not impose broad price controls to stop the necessary eventuality of monetary inflation which is a rise in the price level. They never work, and they only create shortages, black markets and economic evisceration.

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The meaning of economic freedom

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Systems act to protect themselves. Cells act to protect themselves. Individuals act to protect themselves. Villages, as we explained above, act to protect themselves. Economies act to protect themselves. The way in which economies act to protect themselves against the ravages of inflation is by the individual acting to protect himself against inflation. They do this firstly, needless to say, by refusing to accept a Fiat currency. Nowhere in history has there ever been an example of someone creating a fiat currency without a pre-existing natural money already being in circulation. This is no coincidence.

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If, however, a Fiat currency is somehow created, then the economy is in real danger of the inflationary distortion explained by the Misesian theory of the business cycle. If the controllers of that currency decide to inflate it, then the way in which an economy protects itself against the distortionary effects of monetary inflation is by individuals getting rid of the inflating currency by exchanging it for “tangible, real goods”. Doing this is far less easier than simply redeeming your bank notes for specie at the bank. This is why non-redeemable currency inflations are much longer and more damaging than inflations of redeemable into gold bank notes, for non-redeemable inflations can only be stopped via complete hyperinflation. This is because, necessarily, every unit of fiat currency in circulation is owned by someone and as long as it has some exchange value it will be held. Only until the currency is completely worthless will the currency be abandoned and the hyperinflation end. This takes time.

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Naturally, one would want to protect themselves from the inflating currency to escape the economic loss experienced by holding an inflating currency. If one person escapes the currency by buying real goods, then this necessarily means the price level rises even further as the total demand to hold that currency falls. An even higher price level causes more people to reduce demand to hold the currency in a feedback loop scenario. In this situation the only thing that will stop the currency hyperinflating is if the government stops creating money and hyperinflationary expectations cease. However, if the government continues to create money, then hyperinflation is inevitable.

The event of a hyperinflation is only long, drawn out and extremely damaging to socio-economic systems if laws are passed and enforced that try to force people to swallow the ever higher and higher money supplies by making it harder for people to escape the inflating currency. Alternatively, if economic freedom is protected and upheld even when huge increases in the money supply are occurring, then the economy would escape economic evisceration quickly as individuals, acting to protect themselves, would rid their cash balance of the inflating currency acquiring anything else. Quickly, a new medium of exchange would be adopted dampening the destructive effects of a dying currency.

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The meaning of economic freedom, then, is the ability of the individual to make the economic decisions that would rid the economy of that which would harm it. In our present exploration, that is ensuring people are free to sell fiat currencies (including government bonds) to buy tangible goods, free to pay taxes in more than just fiat currency, free to sell goods at whatever price they desire, free to sell whatever type of good they desire, and free to leave the country if they so choose.

The situation today?

The issue is that policy makers are balancing our socio-economic systems on a knife edge between high inflation and deflationary depression. The repeated use of fiscal deficits and expansionary monetary policy has created high degrees of malinvestment within our economy. If we were to stop creating currency for an elongated period of time, or if we were to stabilise the money supply at its current level, then this malinvestment would fail onsetting a recession. This recession would lead to a dollar shortage as households and governments around the world tried to get access to dollars to service the huge outstanding dollar denominated debt. This would cause interest rates to rise. As such, the US government, and other governments worldwide, along with private entitles, would quickly find themselves facing bankruptcy. As more households and institutions go bankrupt, the higher unemployment and the deeper the economic downturn goes. This is certainly a scary prospect.

However, instead of the certainty of deep deflationary unwind of the malinvestment within the economy, policy makers could use the Fed to create money out of nothing and buy government bonds and other assets, lowering the rate of interest and providing new dollars to meet the global shortage of dollars avoiding the risk of deflation today. This is the playbook of Central Banks. They act to reduce volatility today via the policy of inflationism but by doing this they only create more malinvestment and make the crisis of tomorrow inevitable.

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I repeat a law of the universe, that if something cannot continue, it will stop. By that, I mean, the policy of inflationism as described above cannot be continued forever, for it necessarily leads to hyperinflation. I am simply saying policy makers are not smart enough to balance on a knife edge forever, in fact, I argue they already have made the mistakes which makes falling off the knife edge inevitable. Mises was clear, the economic system, in the end, will protect itself from the distortionary and damaging effects of inflation by individuals simply getting rid of the currency.

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What does protecting oneself mean?

The issue is that, necessarily, the economy protecting itself means it is protecting itself from something and protecting yourself from something means you damage that something, or at least deny it of what it wants. In our exploration, the economy is protecting itself from the damages of governmental iatrogenic economic policy, namely, from monetary inflation, and the economy does this by dumping government bonds and currency in favour of “real, tangible goods”. However, the damage the economy does to the government and its fiscal position by protecting itself through selling currency and bonds is large therefore, to stop itself from being damaged by acts of economic freedom, governments around the world have been pursuing policies that aim to uphold confidence in the dollar, to supress free market re-actions to market manipulation, that is, encroach on economic freedom. Confidence in the currency is the lychpin of our economic system.

Therefore, i define the encroachment on economic freedom as attempts to create 'fiat confidence', that is, to pursue policies that decree people be confident in the dollar whilst simultaneously inflating it and undermining that confidence further. When confidence falls further as a consequence of even higher monetary inflation, even more fiat confidence is needed to be instilled by ever more encroachment on economic freedom if the government wishes to remain fiscally provisioned. This is exactly the dynamic we say in France in the period 1789-1796.

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In short, as governments create more and more money in an attempt to stimulate economies, they are making themselves more and more allergic to the organic unhampered state of the economy. As such, the government must ensure it remains unfree if it wishes to remain at its present size and not increase conventional taxes. The risk is how far this goes, and, as I explained above, I believe we are doomed to a permanent state of monetary inflation, therefore more and more encroachment on economic freedoms will be needed to stop damage being done the fiscal position of the government. Naturally, you can see ominous winds rising.

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How are governments encroaching on economic freedom?

I sigh as I come to write the following. Governments around the world, led by the US, have been pursuing a monetary war not dis-similar, at least far less severe, to the monetary and economic laws pursued by the constituent Assembly in France. It is important to add, I do not think this war is purposefully being fought to encroach on the freedoms of individuals by hopeful totalitarians, but the war is what is happening, nonetheless. The risk is that we continue on this trend of monetary inflation and as we come into contact with the reality that it produces, namely economic volatility and increases in the price level, we meet this necessary eventuality with even more controls and more manipulation rather than stopping the root cause of the issues which is the arbitrary changes in the money supply. The risk is in the future, that public opinion is misled to support damaging laws, and politicians find themselves being totalitarian despite wanting to be, fearing that the alternative, namely, deflationary recession, is worse.

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Control 1) The existence of a fiat currency

Firstly, the very act of creating a fiat currency is an encroachment on economic freedom. No free actor would adopt or use a fiat currency. The unhampered monetary system is one of free banking where gold is money. People willingly utilise the service banks offer to increase their ease of transacting. They do this by placing gold on deposit at the bank and receiving bank notes, that are better at serving as a medium of exchange, redeemable in gold, and use the bank notes as mediums of exchange. If the bank is trustworthy, people will take payment in that medium of exchange for they know the note is as good as gold.

Inflation cannot occur on a free banking standard, at least not for elongated periods of time or to a significant degree, due to the competitive decentralised nature of free markets. If one bank inflated their supply of bank notes over their specie reserves, then the other banks would expose this inflation by redeeming its bank notes for gold and, therefore, would put it out of business, ending the damaging inflation. Other bankers don’t do this to stop the damage to the economy of inflationary distortion, they do this instead out of their own self-interest.

It is only when the business of money and banking is centralised or cartelised can fiat currencies be created and inflation can go on unchecked conventionally via redemption of specie. Cartels or monopolies such as this, that is, Central Banks and fiat currencies, are backed by the government.

It is widely known that Fiat currencies are backed by "men with guns", as Paul Krugman put it. The value of fiat currency is upheld by the fact it is the only medium through which you can pay taxes, if you try to pay taxes in bitcoin or boxes of cereal, the government will refuse you. If you still refuse to pay in pounds or dollars you will be taken to prison. Thus, one must demand to hold a cash balance in fiat currency in order to pay your tax bill if you wish to avoid prison. That is the main way in which governments maintain the value of the currency.

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Control 2) The war on Gold?

We do not have the space to explore how gold was slowly reduced to a non-monetary role, but the significant events include the abandonment of the Classical Gold Standard in 1914 to fund World War One by creating money. The subsequent return to a gold exchange standard rather than a Classical Gold Standard after World War One (at huge overvalued parities). This meant the population could no longer redeem their currency for gold, and the public across the vast majority of the Western World would never again have direct access to redeem their currency for gold. Executive Order 6102 was perhaps the most radical of attacks on gold, for it outlawed the ownership of gold by the public. Eisenhower extended Roosevelts most egregious 1934 ban on the US citizen owning gold domestically to apply to American’s all over the world. After 1960, it was illegal for the US citizen to own gold bullion anywhere in the US or internationally. It is an interesting footnote of history that the political leaders who banned the public ownership of gold bullion are Adolf Hitler, Vladimir Lenin, Josef Stalin, Mao Zedong, Frank Delano Roosevelt and Dwight D. Eisenhower.

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The Bretton-Woods System, created in 1944, was another attack on gold, for it further reduced the monetary role of gold and made the link with it precariously weak. The only thing that stopped the world from being totally de-linked from gold was trusting US politicians to not be spendthrift. Needless to say, the Bretton-Woods system failed and no conventional check on inflation now remained via redemption of currency for gold. After 1971, only the extreme measure of hyperinflation by the complete abandonment of the currency was left to stop gradual creeping inflation.

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The War on Gold was popularised in the 1970s after the activities of the ‘London Gold pool’ in the 1960s were disseminated to the public. The London Gold Pool was set up in order to corner the gold market. Not to increase Gold’s price, like most monopolists do, but to supress it. To be fair, the governments of the US, West Germany, UK, France, Italy, Belgium, Netherlands and Switzerland (the members of the Gold Pool) were cornering the gold market to increase the price of their currencies. It turns out they are dirty monopolists!

The Gold Pool, operated mainly by the Bank of England, sold gold if the price ever increased over $35. This was done to try uphold confidence in the dollar and maintain the Bretton-Woods system, which was coming under huge pressure from the monetary and fiscal looseness of the Fed and US government.

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It is important to highlight what was occurring here. The US, instead of addressing the issue and reigning in deficits via spending cuts or taxation increases, or de-valuing the dollar, tried to supress the price of gold and enact other totalitarian laws to uphold the dollar and avoid needing to face the politically expensive policy of tax increases, spending reductions or currency devaluation. This worked for a time, but the dollar was eventually de-valued to zero (link to gold severed). Better a smaller devaluation earlier than a complete devaluation later. Alas, the world was put onto a purely fiat currency standard with destructive consequences.

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The war on gold was not abandoned in 1971. Since 1971 more and more policies that aim to reduce the ease and ability for private entities to buy gold, or outright attempts to lower the price of gold, have been pursued by governments. For example, in the Netherlands, a pension fund was ordered by the Dutch Central Bank to sell its gold holdings with the reason given as the gold position was too risky. The pension fund refused, and the issue went to court. The Dutch Central Bank lost, and then tried to take the Dutch pension fund to court again, losing again. We refrain from explaining the much wider modern war on gold for now, but it certainly does exist.

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Control 3) Further controls.

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In many countries pension funds legally must own a certain amount of government bonds for whatever reason. This upholds the value of the bonds and stops interest rates from rising if these pension funds want to, instead, sell these bonds for other investments.

When Nixon abandoned the Bretton-Woods system, he repeatedly blamed the “speculator”, saying they needed to protect the US economy from these “speculators”. He de-linked the dollar from gold, enforced punishing policies onto foreign countries to support the dollar and enforced price and wage controls in the US. Blaming the speculators and enemies of the US constantly. Not once did he mention the true reason for the abandonment of the Bretton-Woods system, which was the fiscal irresponsibility of the US government and the Federal Reserve. All the blame was pinned on the honest capitalist who was just trying to protect their own wealth by buying gold and fleeing the dollar. The problem, monetary inflation, was not solved by the Nixon shock, it was only made worse.

In the UK in 2023, word leaked from Whitehall that the UK government was mulling over price controls on food to stop the increase in the price level. Price controls never work. They do not control inflation, and they only replace it with even worse economic ills, namely shortages and black markets. The UK government, if it truly wants to stop the issue which is increases in the price level, should instead stop the policy of inflationism. CPI inflation in the UK was (only) at around 10%, and the government began mulling over price controls. Luckily, for every person on the planet, these price controls were not put into effect. However, if inflation was higher, say, 20%, I fear programmes like price controls would be adopted bringing forth the disastrous effects they make necessary.

?Other examples include limiting peoples ability to send money or move money to where they want to. For example, the majority state-owned Royal Bank of Scotland limits its customers to sending ￡5,000 to cryptocurrency exchanges like coinbase. Again, I leave the numerous controls currently pursued today by governments in order to instil fiat confidence in their currencies to be explored more deeply in my forthcoming book.

Developments for the future?

Balancing socio-economic systems on a knife edge will increasingly become harder and harder. When this happens, we must only hope that politicians stop the cause of the issue, namely, iatrogenic economic policy and the economic controls that are necessary to pursue the iatrogenic economic policy. Instead, politicians must make a U-turn. If they don’t, then the only other option is to press on with more control only creating more economic damage.

Bitcoin, Gold, framing, and freedom of speech?

In the future, as explained above, I think governments around the world cannot stop inflating. Therefore, I see the value of scarce desirable assets, namely, gold, bitcoin, stocks, art etc, all rising in value (that is, representing the falling value of fiat currencies). I also see rises in the CPI, that is, rises in the price of food, energy, housing and consumer goods. This, I believe, as I explain in my article titled ‘Information dissemination, Informational frictions, Money, Debt and Economic Systems’, will lead to more and more people abandoning fiat currencies. However, this will cause pain for those who remain trusting the governments currency. These people would have their wealth crushed in the inflationary period if they continued to hold fiat currencies or bonds. Those who escape would have much less of their wealth destroyed.

The issue is in how the problem is framed. As explored above, the French citizens blamed the hoarder and the speculator for the economic evisceration. Nixon blamed the speculator for the abandonment of Gold. The true cause was none of these things.

If gold or bitcoin (or any other commodity that is rising aggressively in price as people buy it as a safe haven asset) is blamed for the fiscal issues of the government and the economic pain felt by parts of society, and the public broadly supports this, then I think this is an egregious error. It is not the rise in the price of gold or bitcoin that is the cause of the economic pain and fiscal crisis, but instead it is the decades of economic iatrogenesis pursued by governments. Individuals buying gold or bitcoin or even frying pans to escape the inflating currency is merely the economy protecting itself from the damaging presence of inflation, and trying to rid itself of the inflationary currency. The economy, if left alone on a system of free banking, would have never got to the position that we currently find ourselves in with huge levels of malinvestment. It is instead the decades of malinvestment producing monetary policy and fiscal deficits.

The rise of bitcoin and gold is a warning sign to investors and individuals around the world that the confidence in fiat currencies is falling. Gold always has been a canary in the monetary mine. It makes sense, for if gold and bitcoin is an insurance policy against the fiscal irresponsibly of governments, which they certainly are, then a rise in the price of the insurance policy means the likelihood of the event in which you are trying to insure yourself against is rising. However, if they could supress the price of gold, that is, turn try to muffle the alarm, better still, turn it off, then they might be able to instil some extra fiat confidence and delay the inevitability of deflationary recession. Gall explains why this is a silly idea:

?"At Three Mile Island, the alarm signal that indicated a valve stuck in the “open” position was connected to the control panel in such a way that merely pressing the “close” button was enough to silence the alarm signal, even when the valve actually remained in the “open” position. That is to say, the control panel was designed to register what the operator wished the state of the System might be, rather than what it actually was.

Clearly, a System whose controls are so arranged is going to spend most of its time deeply mired in the Potemkin Village Effect. As events get further and further ahead of the System’s inappropriate responses, the Model of the Universe generated in the control room by such Wishful Feedback bears less and less resemblance to outside reality. The System hallucinates its way to Terminal Instability. In summary:

JUST CALLING IT “FEEDBACK” DOESN’T MEAN THAT IT HAS ACTUALLY FED BACK

To speak precisely:

IT HASN’T FED BACK UNTIL THE SYSTEM CHANGES COURSE"

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That is to say, just turning the monetary alarm off by reducing the price of gold through banning ownership of it, closing gold markets or anything else, may help things look better in the control room, namely the central bank and the treasury, but it makes nothing better where it matters, namely, in the economy.

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I include the words “free speech” in the title of this article for a couple of reasons.

Firstly, it is because there has been an attack on the fabric of speech, namely, the definition of words. Clarity on the definition of words presupposes effective conversing. Socrates once said that “the beginning of wisdom is the definition of terms”.

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1) The Biden administration tried to re-define what a recession was. 2) The Powell Fed, when they failed to meet their 2% inflation target (that is, it went over 2%), solved the problem by just changing their definition of their inflation target from "2%" to the much easier "long run average of 2%". 3) Currency has been called money, when the two are totally different things. However, the most impactful semantic shift, 4), has been the changing of the definition of the word “inflation”. Since 1945 it has slowly morphed into meaning an increase in the price level rather than what it always used to mean, namely, an increase in the supply of money. Defining inflation as a rise in the price level is merely describing the consequence of what is truly at work, namely, an increase in the supply of money. It feeds back the wrong information to the control room and to the system. People, even after getting pay rises equal to the level of CPI still find themselves worse off. Taking apart why this seemingly harmless semantic shift is so damaging is not an easy or short winded feat, and I aim to do this in my forthcoming book.

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Protecting the freedom of speech is important because, like revolutionary France, I see it possible that speech, as a way to spread ideas and alternatives to our present monetary system, may be supressed in order to stop people from escaping the currency. The most obvious thing that could could be attacked is bitcoin, for it already has much stigma around it. The government may make it illegal to own, and further, make it illegal for those who support and buy it to share information about it, citing its use in criminal activity, or its pseudonymity. We are already seeing much of this today by politicians and the public. Only yesterday was Jamie Dimon saying bitcoin should be banned outright.

However, we know why the government, if it tries to ban it, is doing so. It is because it can threaten the monopoly the government has over the industry of money and banking. It another interesting footnote that China has tried to hard to also ban bitcoin. I will leave it up to you to research how that has gone for them.

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Nationalisation

My final point is a more technical one, related to Mises’ theory of the business cycle.

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In 2008, the Royal Bank of Scotland blew up. It required ￡46 billion of taxpayer’s money to be invested in the failed business enterprise to stop it from being liquidated. The taxpayer, after all the dust settled, ended up owning 84% of the company. Since then, the taxpayer has slowly sold off its ownership, however, today, still owns over 50% of the company.

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When economic downturn occurs, the Fed and the government often have to support the economy by buying assets. That is, by creating money and buying stakes in companies, like described above, or by buying corporate debt, or other types of assets. The issue is monetary policy is the cause of economic downturns, as such, we are in a feedback loop. By buying assets the Fed causes the next crisis, which, when it occurs, the Fed must buy more assets.

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In 2008 the Fed ‘bailed out the bankers’. This as much is clear. I merely ask: What happens in the future if we get a similar financial crisis and equity and house prices halve? Will the Fed ‘bail out the people?’ I argue they would be politically forced to. As such, they would buy stocks broadly (which they nearly did in 2008), not limiting themselves to individual companies. They would support house prices more than they already do so through some sort of facility with a catchy acronym. The risk is more and more private assets end up being owned by the government, simply to stop the malinvestment from causing a deflationary recession.

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Across the world, 2008 led to a huge injection of state ownership and control in the banking system. With the rise of de-banking and the proliferation of political polarisation, the risk that a state gains control of the banking sector in a future crisis is the risk that they then have the ability to use personal economic controls to control ‘dissenters’. I am not speaking about hypothetical examples here. This year, Nigel Farage was de-banked by NatWest, a majority state-owned enterprise. We can only hope this is a unique case, and a huge mistake on the part of the UK government not being able to control its employees and their political opinions. In Canada, a lawful protest was combatted by the Canadian government by freezing peoples bank accounts, stopping people having access to their money. These are egregious attacks on the freedom and on the property rights of people.

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Conclusion?

I am not and do not want to sound like a conspiracy theorist. However, it is seldom that mans freedoms are lost all at once, and I am merely pointing out the current trend in which we are going.

I conclude by returning to the root of the issue. That is, the ineffectiveness of monetary policy and the governments dishonesty in communicating the true cost of its provisioning to the people in which it is meant to serve. Gold, bitcoin and frying pans are only a threat to the government and therefore an enemy of it because they have the power to expose the rate of taxation the government is taking from the private sector. This is why there has been a war being fought against them for decades. In times of stress, one must go back to first principles thinking, as such, we return to the words of Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Central Banks around the world, only a year after fighting unacceptable increases in the price level, will return to stimulative monetary policy next year, despite the result of this being more increases in the price level. They will do this because if they don't, then the economy would enter deep deflationary recession. However, this only delays and exacerbates what is inevitable. When we will stand up to economic truth and expose the cost of fiscal dishonesty?

We live in a complex world full of contradiction. It is my wish that the freedom of speech and economic freedoms are upheld, for these freedoms exist in the hope and faith that we let our ideas and our business die rather than our bodies.