The Essential Rothbard - Ludwig von Mises Institute

40 The Essential Rothbard
Rothbard demolishes freely fluctuating exchange rates with a
simple conceptual point. As he notes in “Gold vs. Fluctuating Fiat
Exchange Rates” (1975), 89 a “free market for money,” 90 as proposed
by Milton Friedman, is on a correct account of money
senseless. Money, in the Austrian view, is a commodity: a specific
amount of money, then, is a quantity of a commodity, usually (as
names such as “pound” suggest) measured by weight. The content
of the monetary unit is no more a matter for negotiation on the
market than is, say, the length of a foot.
To Rothbard, Keynesian economics was responsible for much
of what was wrong with contemporary monetary policy, and he
often does battle with it. Lord Keynes and his disciples spurned the
gold standard, which Rothbard sees as the only basis for a sound
currency. Instead, the Keynesians endeavored to establish a worldwide
fiat currency, under the control of an international bank. To
achieve this, the Keynesians thought, would eliminate a principal
obstacle to their economic plans.
As everyone knows, the Keynesian system often prescribes
inflation. But if one country inflates and others do not, or do so
only to a lesser extent, it will, under a gold standard, lose gold to
them. A Keynesian World Bank would permit all countries to
inflate together: gone would be the check that independent monetary
systems would impose on radical Keynesianism.
Of course, there is the minor matter that a world Keynesian
monetary system spells disaster. “At the end of the road would be
a horrendous world-wide hyper-inflation, with no way of escaping
into sounder or less inflated currencies.” 91 Fortunately, Keynesians
have been unable to put their schemes into full operation: but the
manifest failure of their system has not deterred them, and they
must ever be combated anew. Rothbard’s unique combination of
political and economic analysis is an indispensable weapon in the
struggle.
89Ibid., pp. 350–63.
90Ibid., p. 389
91
Making Economic Sense, p. 254.