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Money – the Key to Freedom?

Money – the Key to Freedom?

 By Duncan Whitmore

In a previous essay concerning the freedom of speech, we noted that, although liberty as a whole is justified by reference to the non-aggression principle, specific freedoms can and should be promoted in their own right. Equally and oppositely, so too should individual examples of state intrusion into freedom be criticised and condemned on their own two feet. In other words, it is possible, and indeed vital, for us to explain the value of free speech, to oppose taxation, to defend against any possibility of forced vaccination and medication, to press for abolition of all forms of state funded medical care, to argue for the freedom of association, to advocate for the legalisation of vices, to promote free trade, and so on. Such arguments are likely to win us at least partial victories in the fight for freedom, victories which may not be achievable simply by repeating the non-aggression principle.

Many of these individual freedoms are enunciated also in bills of rights and charters of so-called human rights, notably the first ten amendments to the US Constitution. Here we find, amongst others, the protection of the right to religion, to speech, to bear arms, to the security of property against searches and seizures, to silence and due process when accused of a crime, and from “cruel and unusual” punishments. The defence of many of these freedoms has now become especially crucial as Western governments have continually sought to dilute them, sometimes in response to crises and calamities such as Islamic terrorism, and other times as a natural consequence of the growth of the state. It has been recognised that the freedom of speech, in particular, has been subject to a grave assault from identity politics and “cancel culture”.

However, a notable omission in many of these schedules of rights and freedoms is the freedom of money. Money is mentioned in the US Constitution, but it is buried in Section Ten of Article One, which limits the rights of the states. It has no prestigious place within the more memorable Bill of Rights, and fails to illicit the kind of passion that surrounds the First and Second Amendments. Freedom lovers today, similarly, will complain about the loss of our freedom of speech and the seemingly sudden transformation of the country into a police state as the result of the government’s reaction to COVID-19. But they will rarely turn their attention to the fact that the state has the power to print its currency, a power which has only existed in its entirety since 1971 when US President Richard Nixon severed the final tie of the US dollar to gold.

What is the Freedom of Money?

Even among free marketers who highlight the problems induced by central banking and the credit cycle, there is a tendency to misidentify the freedom of money as the gold standard. While the classical gold standard, when viewed as a self-contained phenomenon, coincided with a period of relative peace and prosperity at the end of the nineteenth century, it is important to distinguish between monetary standards that are created by the marketplace and those that are imposed by governments. The effect of the latter – for instance, of the state issuing paper notes “backed” by a commodity such as gold – was, in fact, to remove the monetary commodity itself from general circulation while acclimatising people to the use of paper. This allowed for the eventual dissolution of gold as the monetary medium behind the scenes. Without actual possession of the physical gold, and with trade of the extant, paper notes guaranteeing minimal interruption to commerce, people had little power or incentive to do anything about it. Thus, rather than constituting the freedom of money, we can see that the gold standard, when viewed in a wider historical context, was a mere stepping stone in the long, slow journey between the freedom of money and the complete state control over the monetary system from which we suffer today. Indeed, it is quite easy to see that state imposed monetary standards are doomed to failure once we understand that they are hopelessly reliant upon the state to self-police its inflationary impulses. It was this very factor which led F A Hayek, speaking in 1977, to conclude that resurrection of the gold standard would be almost impossible:

Even if, by some international treaty, the gold standard were reintroduced, there is not the slightest hope that governments will play the game according to the rules. And the gold standard is not a thing which you can restore by an act of legislation. The gold standard requires a constant observation by government of certain rules which include an occasional restriction of the total circulation which will cause local or national recession, and no government can nowadays do it when both the public and […] all those Keynesian economists who […] will argue that it is more important to increase the quantity of money than to maintain the gold standard.


I do not see the slightest prospect that with the present type of […] democratic government under which every little group can force the government to serve its particular needs, government, even if it were restricted by strict law, can ever again give us good money.1

In contrast to the pseudo-freedom of state imposed gold standards, true freedom of money exists when ordinary people trading through the marketplace are able to select and use their preferred monetary media. The specific properties of the precious metals which have made them uniquely suited to serve as media of exchange means that they are always likely to fulfil this role. However, there is no guarantee that the specific metal selected will be gold. Given the relatively high value of even a very small quantity of gold, it is more likely that gold would be reserved for large transactions whereas the much more abundant silver (or even copper) would be used for smaller, day-to-day purchases. But whichever commodity is used, the point is that the state should have no part in selecting, issuing and regulating the monetary media.

Why has Money been Ignored?

The relative neglect of the freedom of money can, no doubt, be explained partly by the fact that money and banking are quite tedious and technically difficult subjects. In fact, it is the effort to manufacture complexity in the relationship between states, central banks and the wider banking industry that has largely deflected popular interest away from them. Such deflection has been enhanced by the removal of so-called “monetary policy” from the political arena, designating it instead as an area of technical expertise to be managed by professional bankers and economists. As we shall see later, such complexity and deflection is really a mere subterfuge for the fact that central banking and the cartelisation of the financial system does nothing more than provide the state with free money and ensuring the flow of funds to state approved areas of private industry at the expense of the ordinary citizen.

Nevertheless, Ludwig von Mises recognised that “sound” money was, in fact, an important element of the political programme of classical liberalism, and, indeed, is of the same ilk as the rights and freedoms that we typically see enunciated in charters and bills of rights:

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. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings. The postulate of sound money was first brought up as a response to the princely practice of debasing the coinage. It was later carefully elaborated and perfected in the age which […] had learned what a government can do to a nation’s currency system.


The sound-money principle was derived not so much from the Classical economists’ analysis of the market phenomena as from their interpretation of historical experience. It was an experience that could be perceived by a much larger public than the narrow circles of those conversant with economic theory. Hence the sound money idea became one of the most popular points of the liberal program. Friends and foes of liberalism considered it one of the essential postulates of a liberal policy.2

However Mises’ observation that the impetus for sound money was generated not by careful economic analysis but only by the historical experience of currency debasement is the likely explanation as to why the commitment to sound money was diluted in the twentieth century. The classical economists had done much to explain the benefits and effects of the self-governing, market economy in ordinary goods and services, sweeping away earlier mercantilist fallacies in favour of free trade. A further major milestone was the discovery of the law of marginal utility in the early 1870s, which provided the correct basis for the valuation of those economic goods (while refuting, incidentally, the labour theory of value during Karl Marx’s own lifetime). But it wasn’t until much later that Mises himself, in The Theory of Money and Credit, managed to fully integrate the phenomenon of money into these more general economic discoveries, with the result that rigorous intellectual resistance to inflationism had little time to get off the ground.3 The year of publication, 1912, was only one year prior to the creation of the Federal Reserve System, two years prior to the inflationism sparked by World War One, and less than a decade away from the easy money milieu of the roaring twenties which eventually spawned the Wall Street Crash and the Great Depression. Mises’ infant treatise – further handicapped by the absence of an English edition prior to 1934 – was hardly going to stop these events. As Jörg Guido Hülsmann explains:

One of the great misfortunes of the twentieth century was that Mises’s book was not published some thirty or forty years earlier. Fundamentally new ideas need at least a generation or two to become the majority opinion among the experts, and thus to have any practical impact. The Wealth of Nations (1776) had such an impact only as from the 1840s, after many years of vociferous and strong support from outstanding economists such as David Ricardo, James Mill, and Jean-Baptiste Say. Mises did not have such support. The wrong ideas that he had very effectively refuted […] enjoyed the support of John Stuart Mill and other respected economists. They had already begun to work their way through the minds of academia and politics. By the time Mises published his treatise, this ill-fated movement was in full swing and had conquered the hearts and minds of the new generation. John Maynard Keynes read and even appreciated Mises’s book, but all in all he considered it to be old-fashioned […] Irving Fisher had worked for many years on turning economics into a quantitative discipline, and many others had joined their forces. They would not be deterred because of some difficulties on the level of basic theory, such as the ones Mises had highlighted in his treatise.4

The unfortunate result has been that, throughout the twentieth century, even those economists who otherwise sought to champion the free market tended to make a special case when it came to money (in addition to embracing the more general but equally fallacious gulf between “micro” and “macro” economic factors). Continues Hülsmann:

In the post WWII era, academic monetary economists have turned themselves into handmaidens of central banks and other monetary authorities. In their quest to be “practical” and “relevant” they have neglected to study, and to question, the theoretical foundations of the “conventional” approach that they had inherited […] As a consequence, they have eventually adopted a great number of the inflationist ideas of the nineteenth century. Some of those who a century ago would have been considered to be cranks are today respected academic experts on money and banking.5

The most egregious example of such an economist is probably Milton Friedman, one of the few intellectuals to have achieved both academic and popular renown. However much he may have championed our freedom to choose when it came to food, clothing, cars and other consumer goods, the bulk of his career was spent at the helm of the school of Monetarism, which is generally concerned with using monetary policy to “stabilise” the price level. Such an aim sounds rather modest until you realise that inflationist attempts at price stability can alter the structure of production underneath an apparently stable price level, causing the very malinvestment which ignites the cycle of boom and bust. Friedman’s own policy prescriptions were also hopelessly naïve. His famous “K-percent” rule – that the central bank should increase the money supply by a fixed, annual percentage – suffers from the same problem that Hayek identified with the gold standard: that, if the only restraint is self-policing, any body granted the exclusive ability to inflate will always find the urge to maximise that inflation irresistible.6

State Money and the Destruction of Liberty

However, regardless of the precise causes of our ignorance of the importance of the freedom of money, the consequences have been grave. Nowhere has this gravity been better summarised than in the blunt words of Mayer Amschel Rothschild, founder of the eponymous banking dynasty:

Permit me to issue and control the money of a nation and I care not who makes its laws.

The simplicity of these words should not serve as a distraction from their weight. For if, as Rothschild suggests, law can be ignored once the power to print money is assumed by a state monopoly, then all of our efforts to promote other rights and freedoms (which rely upon the law for their protection) may have consisted of little more than rearranging the deck chairs on a sinking ship. For these rights and freedoms will amount to little if, in the long run, the state can either buy its way out of any constraint that they may impose or use its monetary monopoly to patronise causes that would actively undermine them.

Many people today – politicians, economists, journalists and the general public – are likely to assume that our economic system consists, basically, of the free market tempered by some state “adjustments”. Such tempering may include the nationalisation of some “essential” industries, regulations of business to “protect” consumers, and the provision of basic welfare or so-called “social safety nets”. If all of these state endeavours were occurring within a society which was otherwise blessed with the freedom of money, this would probably be true; the state would have to operate as an intrusion into the market system from outside of it, and would suffer a greater degree of constraint by economic factors. For instance, nationalised industries would have the benefit of funding from tax revenue, but they would have to compete in the marketplace for the factors of production that they wished to purchase with this tax revenue, suffering the same fluctuations of price that affect all market participants. Moreover, because every transfer of money would have to be explicit – i.e. the state would have to physically dip into the pocket of Peter to pay Paul – such transfers would have to remain relatively modest to avoid provoking rebellion amongst the taxed population.

However, given that the state has assumed the exclusive right to print and control money, the opposite is, in fact, the case: that we are saddled with what is a basically socialist system tempered by free market elements (namely nominal private ownership of the means of production and free trade and exchange). This correct view has, no doubt, been obscured by the popular myth (promulgated by Western states) that the story of the twentieth century was roughly one of “freedom” against “tyranny”, of “capitalism” against “socialism” – a series of struggles in which “freedom” and “capitalism” eventually prevailed, first against Nazism, and then with the collapse of the Soviet Union. But actually, as we pointed out recently, it is more accurate to suggest that the real struggle was simply between different forms of statism – direct socialism on the one hand and what we might call state corporatism or inflationary socialism on the other (although it can also go by many other names such as crony capitalism or, indeed, as fascism).

One of the “privileges” that inflationism lends to the state is the ability to conduct almost limitless war, bringing with it directly a plethora of economic socialisation and the stifling of personal freedom. It is no accident that the most prolonged and destructive conflicts took place during the inflationism of the twentieth century, because, without the ability to inflate, war has to be funded by direct taxation.7 If the latter is the case then, as we indicated earlier, the repeated increases in taxes necessary to keep the fighting going (coupled with the inevitable shortage of consumer goods) eventually beget “war weariness” amongst the taxed public, leading them to agitate for a cessation of hostilities. Certainly, at the very least, the “unconditional surrender” demanded by the Allies from Germany and Japan in the final stages of World War Two would have been unthinkable, with civilian populations having been much keener to secure a negotiated settlement probably a year or two earlier than VE Day. Conflicts faraway overseas – such as the US invasions of Iraq and Libya – would be unlikely to even get off the ground, and even if they did it would be impossible for them to be dragged out for as long as the Afghan War, now approaching its third decade.

Printing paper money simply allows the state to circumvent this popular resistance. Whereas in previous centuries, the expensiveness of war made it something to be avoided as far as possible, warfare is now a permanent industry, with the military-industrial complex of the United States in particular shuddering at the possibility of an end to the cult of foreign interventionism that plagues Washington DC. It is very unlikely that this scale of industrial warfare – bought at the cost of investment in useful consumer industries – would be possible if people were able to quantify how much they were paying for it through their tax bills.

The same is true also of welfare. The repeated cycles of ballot box bribery – free education, free healthcare, free transport, free childcare, free everything – has possibly been the most significant factor in overriding resistance to the growth of the state in recent decades. But the vast extent of welfare bureaucracies today – and let’s not forget that the majority of the loot ends up in the back pockets of the executives, employees, bureaucrats and favoured contractors of the welfare state rather than in the hands of ordinary people – would be impossible if they were not to be funded by inflation. Indeed, the sad irony is that inflation causes an increased demand for welfare. With increased inflation robbing the poorest of their purchasing power, it becomes easier for them to succumb to the siren song of welfare, demanding the state to make up for the shortfall in their standard of living. More welfare then requires more inflation, and the whole sorry cycle repeats.

Another advantage awarded to the state by the printing of money is that more funding can be directed towards court academics and intellectuals. It is no coincidence that the majority of macroeconomic research is funded by central banks, and so we should not be surprised when armies of professors and PhDs churn out endless journal articles in favour of central bank manipulation of the economy. As we have seen recently with climate change and COVID-19, this cancer has infected the “hard” sciences also, with scientists now taking on the role of fortune tellers and witch doctors as they torture data and “models” so as to fit a government narrative before concocting unnecessary medicines for barely existent diseases.

However, in spite of the inevitable engorgement of statism and the vast quantities of resources that are transferred to the state as a result of these factors, they don’t capture the essence of how inflationary finance changes the entire nature of the economy. Instead of the state operating as a mere intrusion into the market system, inflationary finance allows the state to shape and control that system itself. For money is the lifeblood of the economy, serving not only as one half of every exchange but also as the unit of account which allows pricing, profits and losses to determine how economic resources should be best deployed. Thus, privileged access to new money has made it possible for the state and its cronies to reap all of the benefits of personal enrichment and economic power that socialism awards to the inner cadre of elites, but without having to directly own and control the means of production.

In a genuine free market, the direction of economic progress is determined by the spending preferences of consumers. Those entrepreneurs and entities which best meet the needs of consumers will be rewarded with profits; those who do not will be punished with losses. Those profits will be reinvested in producing more capital goods – machinery, tools, and equipment – which, in turn, will produce more consumer goods that customers want to buy. The stock and bond markets are one of the mechanisms that we have devised in order to channel capital into the entities that investors believe will best fulfil the needs of consumers. The listed companies that better serve these needs will be rewarded with profits and, hence, more investment. Thus, the entire structure of the economy, all the way up from shops through factories to research and development, forms a pyramid on the base of consumer desire.

However, constant inflationism has meant that the state has been able to control the flow of funds – either directly through state spending or indirectly through credit expansion – to the politically privileged and connected. The structure of the economy and those private entities which benefit therefore depends more upon the priorities of the state and its beneficiaries rather than the preferences of consumers.

Given that all newly printed money must, by necessity, enter through the financial services sector, the latter is always the first to be privileged with new funds which can then be lent out through the fractional reserve system, enhancing the profits that flow to the banking industry. Not coincidentally, the share of profits awarded to this sector began to balloon once money was relieved of its golden shackles in 1971. Moreover, there tends to be a revolving door between the financial services sector and state treasuries and central banks. In the UK, the most recent Chancellors of the Exchequer, Sajid Javid and Rishi Sunak, are ex-city bankers, as too is Mark Carney, the former Governor of the Bank of England.

However, in addition to money and finance, the state, historically, has always had a preoccupation with a number of key sectors that have facilitated the maintenance of its control over the population: education, for the purposes of controlling the ideas to which the young are exposed; defence and policing, for the purposes of enforcing order and maintaining the monopoly on violence; and communications (traditionally mail delivery and broadcasting) for the purpose of regulating the flow of information. To this, we might as well add healthcare given its status as one of the major components of the welfare state.

Of all of these, education, defence and healthcare are, in whole or part, directly socialised and funded through taxation in many jurisdictions, although private contractors for each of those sectors will still benefit disproportionately from state expenditure. But take a look at the following table which shows a breakdown, by sector, of the S&P 500 stock market index.8 What do we notice about all of the dominant industries?

As we mentioned earlier, the composition of the stock market should reflect the preferences of consumers. But four out of the five industries which achieve a double digit percentage share of the index – Information Technology, Healthcare, Communications and Financials – are sectors which serve as priorities for the state. The collective size of Information Technology and Communications is especially alarming. All of the biggest corporate behemoths – Google, Apple, Twitter, Facebook, Microsoft, Netflix, etc. and their subsidiaries YouTube, Instagram, Whatsapp, Gmail and other associated services – reside in one of these sectors. To this, we should add Amazon, which is classified as consumer cyclical but takes pride of place as one of the top ten individual corporations in the index.

In and of themselves, all of these companies produce very little. Instead, their importance lies in the fact that they serve as the channels through which everything flows. They are the networks and the nodes of the digital economy, between them controlling the transfer of information through email, instant communication, news and entertainment, while acting also as harvesters and repositories of private data. Amazon, for its part, is fast becoming the single, online warehouse of all consumer items, a status enhanced by the closure of bricks and mortar businesses as a result of COVID-19 restrictions. Together, all of these entities have the power to control what we can see, what we hear, what we are allowed to think, the content of our TV programmes, and the things that we are able to buy. In turn, all of the production habits of the smaller, private entities that feed into these giants will respond to their preferences. The big wigs have no need to own the shops when they control the entire mall.

None of this categorically rules out the possibility that Google, Facebook, Twitter etc. really are the entities that are meeting the preferences of consumers. But does it not seem a bit odd that – once you strip away the digital element – the world’s biggest and most prestigious companies are basically telephone directories, photo albums and postal services? Rewarding Google with so much investment seems to be the equivalent of treasuring a book for its index rather than its content. And even if we admit that these companies do have real utility and are popular with consumers, is it consumer demand driving their dominance or is their dominance preventing consumers from patronising alternatives? At the very least, it seems remarkably suspicious that these sectors correlate with the traditional areas of state preoccupation and, moreover, are the very industries that we regard as responsible for the sapping away of our freedoms today. Can it really be a coincidence that “Big Tech” censorship, “fact checking” and efforts to tackle “misinformation” disproportionately benefit the leftist/liberal/globalist establishment agenda? Is it just happenstance that all of these dominant industries are also the fountainhead for the coming technocracy, where every gadget and appliance from cars, thermostats, televisions and kitchen appliances are connected to the so-called “Internet of Things” – a dystopian nightmare of surveillance and control delivered through the Trojan Horse of convenience? It takes little intuition to conclude that this is unlikely.9

What we can see from this is that the bank bailouts, the socialisation of losses and zombie companies on life support – together with the decade or so of economic stagnation they have caused – have only served to make explicit what was already happening for a long time before: that the entire economy is being funded, shaped and oriented in accordance with the preferences of the state and its beneficiaries. Increased doses of new money not only allow the state to spend more directly on its own projects and boondoggles, but privileged access to new money has served to transfer purchasing power over private economic resources into the hands of a dwindling elite. Whereas, under a system of sound money, the stock market allocates investment to the most productive entities, inflationism has turned it into a casino. Indeed, it is impossible to imagine how, without inflationary finance, a year which saw the worst depression in centuries closed with record stock market highs. Such absurdities reflect not the welfare of consumers as much as what is decided in political lobbies, in central bank committee rooms, through political donations, or over dinner in Davos.

An important effect of this is that, whereas “business” was seen as the free-market antidote under direct socialism, large corporations are not, on balance, entities of the free market. Rather, they are creatures of inflationary socialism – what we might call “outsourced” extensions of the state. Such confusion over their status is why free marketers find themselves in a quandary over what to do about the perceived left-liberal bias of so-called “Big Tech” and its pervasive ability to censor and control the news. Indeed, one of the great coups of Western social democracy generally is to have completely blurred the line between where the state stops and the private sector begins. It is not, however, a blurring that is without precedent – the same could be said of the political cronyism and corporate welfare that benefited the “robber barons” of nineteenth century America. A further result of this is that the entire economy becomes infected with political priorities rather than commercial ones. For instance, the obsession of corporations with the wokeish agenda and bending over backwards in obeisance to political correctness shows that they know who their true masters are.

But another reason why it has taken so long for us to recognise the reality of the situation is that the residual free market elements of nominal private ownership and free exchange have allowed the system to continue without suffering from the problems of incentivisation and economic calculation that plagued systems of direct socialism. Thus, it has been possible to sustain the illusion that real consumer desires are being met. Moreover, as we described recently, Western liberal democracy as a whole has lacked any serious ideological opposition following the end of the Cold War, allowing this system’s natural tendency towards centralisation, consolidation and globalism (into transnational outfits such as the EU) to continue unabated. All of this has contributed to the mirage that the Western-style “mixed economy”, underpinned by democratic governance, has been the fountain of stability and prosperity, an illusion which, prior to 2016, was taken for granted by those who benefit from it.

The Collapse of Inflationary Socialism

Unfortunately for them, all socialised systems are destined to some kind of failure, and our system of inflationary finance is no exception.10 In fact, this system never really “defeated” Soviet-style socialism at all – it has simply outlived it, the stay of execution having merely been delayed on account of its relative advantages. Following successively larger and more catastrophic booms and busts (culminating in the housing market crash of 2008), increased doses of inflation have reached the point where they are no longer able to reignite economic growth, thus shattering the illusion of general prosperity. Welfare states are teetering on the edge of bankruptcy, unable to cater for ageing populations, and consuming an ever greater percentage of government budgets. All of this, coupled with the increasing alienation of domestic populations from a remote and cosmopolitan political class, has led to the rejection of every aspect of the globalist, corporatist system by the general population – a rejection signified most explicitly by the votes for Brexit and for Donald Trump in 2016.

Somewhat ironically, it was John Maynard Keynes who best summarised the destructive, socialising effects of inflationary finance, the gradual realisation of which has helped to motivate this rejection:

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.11

Does Keynes not mention all of the economic complaints that are repeated today? Impoverishment to many, riches to some; lack of economic security; no confidence in the equity of wealth distribution; “profiteers” becoming the object of hatred; and the process of wealth creation descending into a gamble and a lottery?

The starkest of possible warnings as to where this could lead is delivered by Henry Hazlitt:

[Inflation] discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men towards desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse.12

The descents into fascism, communism and totalitarianism that Hazlitt mentions are made necessary because the accumulating economic degradations drive the state to a position in which it has one of only three options.

The first is to cease inflating and to return to a “sounder” monetary system. This option would be the most equitable and would return a nation to a trajectory of real, stable economic progress. However, it would also have the effect of inducing a massive transfer of wealth from all of those billionaires, corporations, lobbyists, contractors, bankers and speculators whose riches are dependent upon the inflationary system. This is not an option that the state is likely to take unless it is forced to do so.

The remaining two options are described by Hayek:

At present the prospects are really only a choice between two alternatives: either continuing an accelerating open inflation, which is, as you all know, absolutely destructive of an economic system or a market order; but I think much more likely is an even worse alternative: government will not cease inflating, but will, as it has been doing, try to suppress the open effects of this inflation; it will be driven by continual inflation into price controls, into increasing direction of the whole economic system. It is therefore now not merely a question of giving us better money, under which the market system will function infinitely better than it has ever done before, but of warding off the gradual decline into a totalitarian, planned system, which will, at least in this country, not come because anybody wants to introduce it, but will come step by step in an effort to suppress the effects of the inflation which is going on.13

It is submitted that this latter option – the “decline into a totalitarian, planned system” – is what has motivated the political and economic elites in 2020, a year in which the absurd and wholly unjustified response to COVID-19 in the form of lockdowns has served to concentrate wealth and power in this tiny oligarchy. Many on the right have identified this response as a prelude (or cover) for a globalist “Great Reset”, imagining this programme to be a sweeping away of capitalism and its replacement with technocratic socialism. This view, however, is only half right. Yes, we are being driven towards technocratic socialism; but it is a mistake to suppose that we are seeing an old order being overthrown, a mistake which relies on the fallacious view that our current system is basically a capitalist one.

Instead, what we are witnessing are the death throes of the existing power structure as the elites struggle to maintain their privileged status while the economic system supporting them crumbles. Rather than relent in the face of opposition, they are doubling down on the ideological and economic status quo. Thus, the so-called “Great Reset” is not a leap into something new – it is the current corporatist, globalist, inflationary system on steroids. Indeed Klaus Schwab, the author of the eponymous version of this programme, claims that his plan is needed precisely so as to avoid revolutions, i.e. revolutions that would knock him and his rich friends off of their pedestal. For them, a real reset – the abolition of state monopoly finance, the dissolution of welfare states, an end to corporate privilege and the restoration of the genuine free market – is unthinkable. Backed into a corner, they are ripping away all of the old facades that have justified the system until now, leaving only naked aggression: now that people have stopped voting according to the elites’ plans, democracy is derided, the results of elections being either rejected or manipulated; governments are ruling by decree; courts are tossing out any challenge on the flimsiest of grounds; extra-judicial fines can be issued on the spot for breaching a myriad of lockdown rules; narratives that the government simply disagrees with are being censored and deleted with impunity. States do not behave like this unless they themselves are facing an existential threat (such as a foreign invasion) – there would be little need to do any of these things if the real threat was “only” a virus, even a serious one. In fact, under normal circumstances, it would be in the state’s interest to keep the population as sanguine as possible by avoiding disruption to every day life, possibly to the extent of even downplaying the viral threat.

To top all of this off, within the monetary sphere, the apparent ascendance of so-called “Modern Monetary Theory” shows that the state may even be willing to admit that it should be able to just print as much money as it likes. Such a realisation would be a convenient segue into the total elimination of cash, its replacement by state controlled digital currencies and the transformation of money from media of exchange into mere “reward” tokens through vehicles such as a “Universal Basic Income” or “Social Credit” score.


Surveying all of this has the capacity to invoke in us a mixture of despair and optimism. On the one hand, we must despair because our neglect of the freedom of money has led us to the quandaries in which we now find ourselves. Not only, in retrospect, were there plenty of missed opportunities to stem the inflationist tide, but one cannot help feel as though any other victory against statism has, in the long run, been rendered null and void by inflationary finance.

On the other hand, there is room for optimism also. Rather than standing on the edge of a dark and despotic future, we could instead be witnessing the last great gasp of the century of socialism – a century which began in earnest with World War One and was only partly killed off by the fall of the Berlin Wall. All of the panic and hysteria are the death throes of the globalist/corporatist/inflationist system, the final remnant of socialism in all of its evil. It is time for us now to deliver the coup de grâce.

The chances of this are not as remote as they may presently seem. Ideologically and economically, the continuation of globalist, corporatist inflationism in the form of any kind of “Great Reset” has nothing to say to the nationalist, populist and traditionalist fervour that is now springing up across the globe. The efforts to fight these movements have simply shown up the system for what it is. Indeed, the four-year long battle to extract Britain from the EU did more to unveil the true nature of the rotten, Remainer establishment (and to deliver a much stronger break with the EU) than a quick victory ever could. The same could be true of Donald Trump’s protracted attempt to obtain re-election, even if he ends up losing anyway.

Many on the right have lamented the loss of our rights and freedoms in such a short space of time as a result of COVID-19 lockdowns imposed by states. But as frustrating as it is to have witnessed the seemingly blind obedience of the “sheeple”, it should be remembered that most people have had little reason to previously consider viruses as a political and ethical problem. It is, therefore, not entirely surprising that they acquiesced in the face of something with which they have never had to deal before. But attitudes do change as people learn the true nature of the problem.

To give an example, following the electorate’s 1975 decision for Britain to remain a member of what was then the European Communities, Enoch Powell (who had campaigned to leave the bloc) was asked whether he had been wrong to suggest that joining the Common Market would never happen. Powell’s response is instructively prophetic:

In September, October 1938 I’m sure that, if Neville Chamberlain had gone to the country, he would have swept the country for an act of abnegation. But the very same people, within twelve months, when they saw behind the facade, when they penetrated to the realities, stood up to fight for the continued existence of our nation; and that’s what will happen.


To remain part of the Common Market is to renounce national status for Britain – they say the nation state is obsolete and we are to recognise it […] I do not believe that when that is realised, that it will be assented to.


The British people […] have still not been able to credit the implications of being in the Common Market. They still think they will be a nation. They still think they will govern and tax and legislate for themselves. They are mistaken […] But they will learn.

As we all now know, the British people did indeed see behind the facade and learn about the true nature of the European project. In the same way that Powell acknowledged the novelty of European political integration, so too must we acknowledge the novelty of a virus situation when assessing people’s current attitudes.

Thus, rather than despairing over the belief that the state has crushed all freedom permanently, we should find a measure of relief in the fact that the state has brought the question of viruses to public attention with a rather flimsy precedent. Generally, people respond to proximate and visible factors more readily than they do to distant and invisible ones.14 If COVID-19 really had been the kind of disaster that it has been hyped up to be – with visibly significant loss of life and hospitalisations of many more – then the very real and immediate terror would have engrained in the popular psyche the alleged “necessity” of lockdowns and harsh government restrictions. Such measures would then meet with little resistance – if they aren’t actively demanded – with every future viral outbreak, however serious.

With COVID-19, however, the state has perpetually ramped up the fear factor, continually crying wolf with outlandish predictions of deaths and hospitalisations which have failed to materialise. All that people visibly see is not their sick and dying relatives. Instead, they see shops shut, people forced out of work, other serious health problems ignored, and all of the enjoyment and prosperity sucked out of life in order to combat what, for most people, is a phantom disease. Once the enormous, visible cost that the state has imposed upon us to achieve an imperceptible benefit is felt, it is quite possible that the state’s judgment in such matters will lose all of its trust, perhaps for a generation or more. Thus, should they come along, future viral outbreaks, even serious ones, could find lockdowns and government restrictions being resisted.

So there is no reason to conclude that COVID-19 restrictions necessarily mark the final death of freedom. Indeed, the fact that the elites have had to act on (and blow out of all proportion) such a weak pretext – together with their desperation to drive home the talk of a “new normal” that will implement as much of the advent of digital socialism as possible – shows that they are on the backfoot. Indeed, I have previously wondered aloud why it is that the state is proceeding in such an overt an obvious manner. Power becomes entrenched most effectively when its growth is slow, insidious and unseen, but our elites are behaving in a manner which all but proves so-called “conspiracy theorists” right about everything. The obvious answer is that  they know that they no longer have the luxury of waiting – it is now or never, and they need to squeeze out of this manufactured crisis as much as possible before people wake up.15  One commentator even explains how the rampant censorship of alternative opinions is really a sign of weakness rather than of strength:

The nervous response of our government to any criticism of its Corona measures shows that it has reason at present to be seriously concerned about who controls people’s opinions. When critical voices are widely defamed in the media, while hardly being allowed a say in the matter, this again points to their fear that public opinion could escape their control.

None of this means, however, that there is any justification for complacency. While all forms of socialism will eventually fail – including inflationary finance and any “Great Reset” – the longer they go on the more destructive they will be. Indeed, as we have seen throughout history, the mere attempt at making socialism work is terrifying enough. As the state likely knows that the pandemic narrative is living on borrowed time, they will try to implement as much as possible before that time runs out. Thus, every day that this crisis goes on is an extra day in which they lay another paving stone on the road to the dystopian future they have planned for us.

More generally, if the resistance to the state is to really have any teeth, we must now be prepared to fight for the freedom of money because the success of any replacement to the inflationary socialist system must realise that freedom itself will be impossible without it.

Unfortunately, there is no sign that any of the rebellions against globalism realises this. On the one hand, you have the “harder” leftists represented by the likes of Bernie Sanders and Jeremy Corbyn who misidentify our present system as “capitalist”, believing that a return to direct, economic socialism is the answer. Clearly this would be a disaster. But on the other hand, nationalist, populist and traditionalist movements confuse problems caused by inflationary finance with problems caused by free trade, a factor we have described in detail before. Suffice it to say that a return to protectionism and economic nationalism could, in the long run, end up sowing the seeds of future conflicts, including inflationary funded warfare.

The message, therefore is clear: an end to inflationary finance and the restoration of the freedom of money is essential if liberty is to have a future. It is the most important of all of the freedoms that we fight for and should be the jewel in the crown of any case for liberty.

*    *     *     *     *


1F A Hayek, Toward a Free Market Monetary System, Lecture Delivered at the Gold and Monetary Conference, New Orleans, LA., November 10th 1977, 2 and 6.

2Ludwig von Mises, The Theory of Money and Credit, Ludwig von Mises Institute (2009), 414.

3Moreover, it has been pointed out that Mises’ thoughts on monetary theory were not, in any case, completed in this first treatise, with various developments and clarifications being made in Human Action some forty years later. See Nikolay Gertchev, Dehomogenizing Mises’s Monetary Theory, Journal of Libertarian Studies, Volume 18, No. 3 (Summer 2004), 57-90 at 58.

4Jörg Guido Hülsmann, Introduction to Idem (ed.), Theory of Money and Fiduciary Media: Essays in Celebration of the Centennial, Ludwig von Mises Institute (2012), viii – ix.

5Ibid, x.

6Cf. Murray N Rothbard, Milton Friedman Unravelled, Journal of Libertarian Studies, Volume 16, No. 4 (Fall 2002), 37-54 at 50-1.

7Borrowing is also an option, but the state’s ability to borrow is also enhanced by inflation as the state can simply print the money with which to pay off the debt.

8In November of 2020. Source.

9Moreover, it is not necessarily the case that inflationary finance is entirely responsible for the inflated market capitalisations of these businesses. Direct regulatory privilege and the shutting off competition can, for instance, inflate a company’s profit potential, leading, in turn, to disproportionate levels of private investment. But the extent of their dominance demands another explanation.

10Indeed, no system with socialised elements is ever stable, because the distortions caused by those elements force the system to tend either towards greater liberalisation (i.e. a rejection of the socialised elements) or towards greater control.

11John Maynard Keynes, The Economic Consequences of the Peace, Harcourt, Brace and Howe (1920), 235-6 [emphases added].

12Henry Hazlitt, Economics in One Lesson, Ludwig von Mises Institute (2008), 157 [emphasis added].

13Hayek, 6 [emphases added].

14This tendency has produced mixed results for the state. On the one hand, it has worked very well when deflecting blame for economic catastrophe away from the state’s inflationism and onto private banks; on the other, it has resulted in the failure of populations to fully embrace the state’s climate change narrative.

15In fact, should the coming technocracy accelerate too quickly and too obviously, it would not be surprising if the result will be a widespread public distrust and, ultimately, rejection of technology in general. While this may help in disabling digital socialism, it would obviously deprive us of the very real benefits that technology can bring. Unfortunately, it is usually the case that a social trend tends towards an intolerable extreme which is then met by a fierce reaction towards the opposite extreme instead of settling at a more sensible point of moderation. As a case in point, the nationalism of the 1930s has led, today, to an irrational and pathological fear of anything remotely patriotic instead of modest pride in one’s national and cultural identity. Thus, instead of a technocratic dystopia, the young and middle aged may well find that their near future will be characterised by technological austerity, the endurance of which will precede a rebirth of trust in technological progress for its genuine benefits.


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