Modern money, having now become a key tool of government economic policy and a source of massive tax revenues, has strayed far from its original purpose. This is doubly regrettable, as the better money functions at an individual level in satisfying demand for quality, the better it is for economic prosperity and freedom.This book presents how modern money works both in the domestic economy and globally, outlining the essence of what makes good money. How does modern money differ from this ideal? By focusing on the dichotomy between globalization on the one hand and modern money’s base in the nation state (or group of states) on the other hand, the book demonstrates how US dominance in determining monetary conditions globally has grown since the mid-1990s. The book then discusses the adverse consequences, many of which are camouflaged, of present money doctrines now so widely and radically applied, presenting novel research on how the US by pursuing bad monetary policies has been the catalyst to deepening geo-political danger.
The book continues by setting out how the illusions of asset inflation will fade, most likely in the midst of economic and financial tumult. The forces which bring about that income emanate in part from the long-run costs of growing mal-investment and monopolization which occur under monetary inflation especially in the context of a digitalization revolution. Apologists for the present monetary regime rest much of their case on these illusions and on the contention that the bill for the costs comes only in the long run. This book dismantles that case. A Guide to Good Money provides readers with the sight of a pathway to a promised land of real prosperity founded on sound money beyond those lost illusions, and will be of interest to academics, students, practitioners, and central bankers.
Author(s): Brendan Brown, Robert Pringle
Publisher: Palgrave Macmillan
Year: 2022
Language: English
Pages: 283
City: Cham
Preface
Introduction
A Work in Five Parts
Contents
Part I The Present Scene
1 Modern Money—A Matter of Trust
How to Think About Money
The Trust Deficit
How the Roles and the Powers of Officialdom Have Grown
—Especially Since the Global Financial Crisis
Central Banks’ Mandates and Confused Messages
Some Flaws of the Policy Regimes—
—Asset Inflation and Hidden Taxes
—Fomenting Injustices and Arbitrary Power
Chapter Plan and a Warning
References
2 Globalisation Without Global Money
Globalised Money and Its Flaws
How It Came About
An Age of Economic Growthmanship
“Lake Districts of Money”
How Boom-Bust Waves Spread like Tsunamis
“The Dollar Is Our Currency, but It’s Your Problem”
Currency Wars—Back to the 1930s?
Further Symptoms of Monetary Malaise
Large Maintenance Costs
The Erosion of a Rules-Based Order
The Regulation Juggernaut
Muddled Responsibilities
References
3 The Global Menace of US Monetary Policies
How US Inflation spreads—And How It Can Be Resisted
Official Destabilisation Policies
Why Has Resistance Been Rare?
How US and Its Allies Lose, While Their Enemies Gain
Consider the Counterfactual
German Defiance
Fast Forward to the Present
What Might Have Happened in Europe-
—And in Japan?
References
Part II The Essence of Good Money
4 What We Mean by “Good Money”
Good Money at the Level of the Individual
Money as a Medium of Exchange
Whose Store of Value?
The Loan Standard
The Numeraire Function
Good Money for Society
Enter Super-Money
Why Super-Money Is so Important
The Components of a Good Money System
When the Banks Need Super-Money
Money’s Wider Role
Don’t Fret Over Volatile Short-Term Rates
“Price Stability”—An Empty Slogan?
Other Paths for Prices
References
5 Why Good Money Has a Solid Anchor
What Constitutes a Solid Anchor?
Why It Matters
How an Anchor Secures Money
Convertibility to a Real Asset or Fixed Money Supply?
Benefits of a Solid Anchor
How Anchors Emerged Historically
No Golden Guarantee
The Classic Anchors in Practice
Anchors for Fiat Money—Foreign Currency Anchors
Anchoring Money by Constitutional Rules
BASIC PRINCIPLES
References
Part III The Grip of Bad Money
6 Asset Inflation and Illusions of Prosperity
How the Deceptions Form
The Anxious Walker Down Wall Street
Private Equity Loves a Crony
Monetary Repression—Escape from an Invisible Tax?
When Reality Shatters Illusions
The Stimulus Illusion and the Super-Long Cycle
“The Business Cycle is Dead”
The Bricks-And-Mortar Fantasy
Infectious Myths
Take-Aways
References
7 Exposing the State Concept of Money
The Story and Argument in Brief
The Dominant State Theory
The Dormant Classical Theory
America’s Foundational Money
Mill on the Dangers of Bad Money
What is the State’s Proper Role?
The Theories Compared
Was There a Golden Age of State Money?
Time to Ditch the State Concept
References
8 A Short History of Modern Money
Gold Standard’s Record Re-Examined
The Advent of the Federal Reserve….
….Stirs Asset Price Inflation
A Bad Scene in Europe
The Great Crash
The Monetary World After World War II
De Gaulle’s Gold Play
Germany’s Bid for Monetary Freedom
Living with a Weak Dollar
How Tokyo’s Bids to Resist US Monetary Expansion Failed
Why Governments Chose a Compass, not an Anchor
….In the US…
….And in the Euro Area
“Not Our Job to Target Asset Prices?”
“We delivered sound money!” Really?
References
9 Symptoms and Consequences of Bad Money
Mega Boom-Bust Cycles—
Short-Term Investment Horizons
—And Other Damaging Effects
High Profits, Regulation, Debt and Depression
The Damage to Daily Lives and Growth
How Bad Money Raises Uncertainty
Social Harm of Zero and Negative Rates
How Inflation Targeting Detaches Money from Value
Don’t Blame Liberal Economic Theory
The Left also Should Condemn Bad Money
Illustrating “the Essence of Bad Money”
Modern Monetary Theorists Want Even More Bad Money
Bitcoin—A Red Flag for Fiat Money
Preserving the Appearance of Normality
References
Part IV Vested Interests, Politics and the Pandemic
10 What Keeps a Bad System in Power?
Cash for Cronies
Global Corruption
Muscular Lobbying
Why Money is so Vulnerable to Abuse
A Money Crew Powered by Self-Interest and Greed
Gambling on a Growth Spurt
A Complaisant Media…
Behind the (Lack of) Political Demand for Reform
References
11 Bad Money’s Pyrrhic Victory Over the Pandemic
Fear Recession? Inject Cash…
Sit Back and Enjoy the Profits Boom
What Would Have Happened Under a Regime of Good Money?
Let Invisible Hands Work
Futile Chase of Arbitrary Target
Medium and Longer-Term Downsides of Policies
More Mal-Investment
More Hidden Taxes
–Higher Inflation
Might This Pyrrhic Victory Spur Reforms?
References
Part V Reform, Idealism and Prosperity
12 Two Real Anchors
Back to the Future? A Reformed World Gold Standard
Prospects for the Gold Price
Interest Rates and Prices Under Gold
Shopping with Gold
We Answer Classic Criticisms of Gold Standard
Another Anchor Based on Real Assets—The Ikon
Key Properties of Ikons
Other Benefits of a Real Asset Money
References
13 We Reply to Potential Questions and Criticisms
Introduction
How Should Reforms Improve Society?
Is Money Really as Bad as You Make Out?
How Is “Bad Money” Linked to Low Capital Investment?
Is Excess Debt, Not Excess Money, the Real Problem?
Why Do You Focus on “Super-Money”?
“Democracies Will Reject the Rules You Want”
“There Is No Geopolitical Urgency for Change”
“Your Reforms Would Increase Instability”
Reference
14 Pathways to Good Money
The Monetary Establishment
Digitalisation—How Regulators Stifle Initiative
—And Gold Remonetisation
Engaging in Politics—The US
—The World Outside the US
Don’t Rule Out the EU Led by Germany and France
The Swiss also Like Gold
Britain or Japan: As US Satellites?
—And Then There Is China
Good Money’s Appeal to All Savers
And to Greens
The Pandemic and End of Regime
Further Objections to Our Proposals—Our Answers in Brief
No to Laissez-Faire?
Economies Are Not Self-Stabilising?
Regulation Is Needed to Counter Tendency to Excess Leverage?
Markets Need Central Banks as Lenders of Last Resort?
Markets Cannot Regulate Behaviour?
System Needs 24-Hour Standby Liquidity Support?
The Monetary Base Is Irrelevant?
We Ignore the Fact That Money Is a Public Good?
References
15 Criticism, Realism, Idealism and Reform
Introduction
The Moat of Consensus
Illusions of Prosperity
The Costs of the “Silent Killer”
Steering a Course to Better Money
A Reform Agenda
Money in Its Proper Place
Reference
Glossary
Asset Inflation
Currency Wars
Economic Sclerosis
Goods Inflation
Mal-Investment
Monetary Anchor
Monetary Inflation
Monetary Deflation
Monetary Taxation
Natural Rhythm of Prices
Super-Money
Bibliography
Index
