Choice in Currency: A Way to Stop Inflation | Mark Thornton

Hayek is ar also arguing that um inflation is a way to finance government and that this is the worst way to finance government and that [music] we get too much uh government as a result. [music] Choice in currency, how to stop inflation was originally a speech [music] given by FA Hayek in 1975. [music] This was a critical juncture in world history. We had gone off the gold standard [music] in 71. Hayek had won the Nobel Prize in 1973. Americans [music] were allowed to own gold for the first time in 1974. And of course the world was a wash with fiat [music] currency inflation. Now Hayek is very quick to point out that inflation is an ancient [music] superstition that goes back centuries. And the superstition is the idea that [music] we can solve economic problems like a lack of economic growth and like unemployment [music] and like poverty simply by printing up money. And that was a [music] superstition that economists had overcome for almost the previous [music] 200 years. John Maynard Kanes is the person who overturned and returned us to this idea that money [music] can solve our economic problems. Hayek notes that [music] Kanes was a brilliant pmicist but he's somebody who knew very little in terms of economic theory. [music] Now, Hayek's recommendation is for a choice in currency to allow individuals [music] to choose the currency that they use [music] to get a better money that people would choose better, more stable [music] uh money that's subject to less depreciation and that they would avoid unstable monies that were [music] subject to more depreciation through government printing. Hayek is [music] ar also arguing that um inflation is a way to finance government and that this is [music] the worst way to finance government and that we get too much uh government as a result. The two modern applications [music] of Hayek's choice in currency is first of all the advent of cryptocurrency. the idea that cryptocurrency provides an alternative [music] uh way that we can store our value and [music] actually use our value in making transactions. This chapter [music] and this this article and speech by Hayek um has become infamous really as in the intellectual inspiration [music] for cryptoc currencies. the idea that [music] uh you know government inflation was a really bad thing. It was a central uh problem in the world today and cryptocurrency is one way of introducing a non-governmental alternative to currency in the form of cryptocurrency such [music] as Bitcoin. The second great application of Hayek's choice [music] and currency is that people around the world for as a result of technological improvements [music] are much more able to hold things like foreign currency as investments and [music] as transactions accounts. And we're also much more able uh to hold things like gold and silver in various [music] forms and electronic forms as well as physical forms. [music] And therefore we're getting closer and closer back to real [music] money and also that's of course creating competition um with the fiat money. Now, of course, the major stumbling block in all of this is the existence of various [music] government barriers to entry and exit. Most notably at all of all Hayek notes [music] is legal tender laws but also the fact that there are regulations [music] by the government, taxes by the government, capital [music] gains taxes on g any gains that you might achieve while holding foreign [music] currencies or gold and silver. Um but these are things [music] that can be overcome. These are things that can be addressed um and have been addressed uh in many countries and in states [music] around the United States. And so we can see this tendency [music] uh people actually either directly or indirectly following [music] some of the things that FA Hayek wrote about so long ago but are [music] still so relevant today. >> [music]