Return to Gold … Do the Right Thing. Libertarian Alliance calls on British Government to restore the Gold Standard

Sean Gabb

In Association with the Libertarian International

Release Date: Friday 4th April 2008
Release Time: Immediate

Contact Details:
Dr Sean Gabb on 07956 472 199 or via sean@libertarian.co.uk

For other contact and link details, see the foot of this message
Release url: http://www.libertarian.co.uk/news/nr065.htm

Statement by the Libertarian Alliance on the Financial Crisis: Time to Return to Gold

The Libertarian Alliance, the radical free market and civil liberties policy institute, today issues the following statement on the present run of crises in the financial markets. This statement is prompted by the various calls made for closer regulation of the financial sector.

Libertarian Alliance Director, Dr Sean Gabb, says:

“The world may or may not be on the edge of financial collapse. But the present run of banking crises is only the latest consequence of the ending of the gold standard. Since 1914, and more particularly since 1971, the ability of governments to create unlimited amounts of fiat money has led to bubble after bubble, each one larger than before. Financial markets have become little more than casinos. Immense resources have been diverted into the promotion and management of speculation. All other economic activity has been subordinated to and therefore distorted by such speculation.

“The latest set of problems, brought on by foolish lending on property in America, is not a failure of the free market system. It is ultimately the effect of government monetary policies. The answer does not lie in some new set of regulations, which may prevent the next speculative frenzy. The true answer lies in the return to a more sensible and more honest set of monetary arrangements.

“We mean by this the return to a fully convertible gold standard.

“The Libertarian Alliance calls on the British Government to do the following:

* To order the conversion of all foreign currency reserves held by in the Bank of England into gold;
* To sell every reasonably marketable asset of the British State, to convert the proceeds into gold, and to lodge these at the Bank of England;
* To revalue the Pound, so that all claims on the Bank of England were equal to the gold reserve of the Bank of England:
* To impose on the Bank of England a legal obligation to pay all claims on it in gold, on demand and without limit:
* To impose on the Bank of England an obligation to do all within its ability, and nothing other than this, to maintain the new parity between the Pound and gold:
* To impose on all deposit receivers operating in the United Kingdom (unless explicitly exempted by contract) to pay all claims on them in gold, on demand and without limit;
* To make the directors or, if they are without the jurisdiction, the most senior management of all deposit receivers in the United Kingdom personally responsible for any failure to make such payments:
* To impress on any foreign government or central bank that might choose to fix a parity against the Pound that no assistance whatever would be given to maintain such a parity.

“We note that these measures would bring about first a severe devaluation of the Pound, and then a credit squeeze that deflated the value of real and financial assets. But this is what we seem already to be facing. A return to the gold standard would provide us with a stable financial system, and would tend to protect us against future bubbles, and would abolish the need for intrusive financial regulation.

“We also note that a fully convertible gold standard would make all money laundering laws unenforceable, and would severely limit the ability of the British State to finance its activities by the unlimited sale of bonds to the banking system. We would unreservedly welcome both these effects.

“We look forward to a Britain, and preferably a world, in which fiat money has become as unusual as state ownership of telephone networks, and in which paper and electronic money is a rare substitute for gold and silver and copper coins.”


Note(s) to Editors

Dr Sean Gabb is the Director of the Libertarian Alliance. His latest book, Cultural Revolution, Culture War: How Conservatives Lost England, and How to Get It Back, may be downloaded for free from http://tinyurl.com/34e2o3. It may also be bought. His other books are available from Hampden Press at http://www.hampdenpress.co.uk.

He can be contacted for further comment on 07956 472 199 or by email at sean@libertarian.co.uk

Extended Contact Details:

The Libertarian Alliance is Britain’s most radical free market and civil liberties policy institute. It has published over 700 articles, pamphlets and books in support of freedom and against statism in all its forms. These are freely available at http://www.libertarian.co.uk

Our postal address is

The Libertarian Alliance
Suite 35
2 Landsdowne Row
Tel: 07956 472 199

Associated Organisations

The Libertarian International – http://www.libertarian.to – is a sister organisation to the Libertarian Alliance. Its mission is to coordinate various initiatives in the defence of individual liberty throughout the world.

Sean Gabb’s personal website – http://www.seangabb.co.uk – contains about a million words of writings on themes interesting to libertarians and conservatives.

Hampden Press – http://www.hampdenpress.co.uk.– the publishing house of the Libertarian Alliance.

Liberalia – http://www.liberalia.com – maintained by by LA Executive member Christian Michel, Liberalia publishes in-depth papers in French and English on libertarianism and free enterprise. It is a prime source of documentation on these issues for students and scholars.


  1. Irrespective of whether the government is able to do what it right or not, it is important to issue a Fatwa on this matter.

    (Not my phrase, but Sean’s own, about what he has done here.)

    Earlier, on http://www.yahoogroups.com/eurorealist, I calcuated that the £100 billion watsed on Northern Rock would buy about 5,370 Imperial Tons of Gold metal, for the BoE, at $1,000 USd per Troy ounce, and at about a mean of £1=$1.80 over time.

  2. Much as reverting to a gold standard is right, the proposal does not require vast amounts of gold – it never did. It is simply necessary for currency to be convertible to gold on demand as it once was. The amount of base money in circulation is then controlled by the issuer to limit significant demand for gold conversion. To reduce base money, the issuer may sell bonds. To raise base money, the issuer may buy bonds. Thus, the total holding of gold does not limit expansion of the economy. For a full explanation see Nathan Lewis’s excellent and readable book: “Gold: The Once and Future Money”.
    He also advises and presents proof that low taxes and stable money have been behind all the ‘economic miracles’ of the last 50 years.

  3. Do you really expect Gordon Brown, a Fabian Socialist, to heed such a call???

    I support such a proposal (going back to a gold standard), because it is the only sane one.

    Unfortunately, Socialists detest money and free market capitalism, and they are incompetent when it comes to economics. Gordon Brown has already proven it.

  4. Freemarketman is perfectly correct. Moreover there is no chance whatever of the Browndarlings reverting to Gold or even being able to.

    However that does not stop us from recommending what is right.

    Somebody might do it, somewhere, sometime, and that will concenrate the minds of the others.

  5. I’ve often wondered what gives Gold its value. I know there are the aesthetic qualities and several industrial uses, but aside from that you’re really banking on something which, compared with food and water etc, has no guaranteed desirability. Please correct or enlighten me if I’m wrong.

  6. Steven:

    Gold gets its value from the same place that everything else does. Subjective preference.

    Gold has served quite well as a store of value and a medium of exchange. But its appeal is archaic.

    The best answer to the “Money” question is a fully free market in monies. People then choose the monies which best serve their requirements; and failed currencies go out of circulation. In the days before electronic conversion calculators and hand-held note authenticators, there was some excuse for this being difficult.

    Now, it’s easy.



  7. Thanks for that Tony, I had to overcome my fear of putting my hand up to ask that…


  8. I agree that there should be a free market in monies. In fact, Ron Paul, despite his bluster about the Fed, admitted that were he the president he wouldn’t have the power to abolish the Fed. But he would have the power to allow competition with it.

    However, surely in a free market, the money issuers that survive and prosper will be those that provide the money that does the best job at being money (if that sentence makes sense!). That means the best store of value, the widest circulation, easily divisible, etc.

    Gold is great for these things, which means that it is likely to be the prevailing money selected by a free market.

  9. I agree with Richard, and I suppose with Tony. Consenting adults should be free to use whatever money pleases them. However, we do at present have a statist monetary system that has been used to blow up a vast speculative bubble. A fully convertible gold standard is one way to get the politicians into a corset. I also think gold would emerge spontaneously in any free market in money.

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