Freedom, Society, and State - Ludwig von Mises Institute

counterfei ter. Both act ivi ties reduce the value of
the monetary unit by increasing its supply. The effect
in both cases is to transfer purchaSing power from all
other members of society to the government or the count
e r f e i t e r. Not 0 n I y i s t his not h i n g moret han the f t ,
but, they argue, it reduces popular control over government
by enabling the government to expand its expenditures,
and thus the scope of its activities, without
first having to obtain popular consent for increasing
taxes. (59 )
The individualist anarchist chides those individuals,
such as the members of the Chicago School, who advocate
freedom of competition for nearly all goods
except money. One argument in favor or a government
money monopoly is that money can fulfill its function
as a med i urn of exchange only so long as it is scarce.
Since money can be printed at practically no cost, free
compet it ion would lead to hyper-inflation. Thus the
supply of money must be governmentally controlled to
prevent the breakdown of the monetary system.
It is admitted that free banking in a monetary
system based on paper would lead to its destruction.
Yet, this is precisely what most libertarians and all
individualist anarchists desire. Not only does a paper
system require government control but, since its supply
can be so easily Increased, it is seen as the cause of
the t r ad e eye Ie. F r e e ban king wo u 1dIead tothereemergence
of "natural" money, i.e., one that spontaneous
1y emerged from the market process. Because of such
a d van tage s 0 r s carcit y, d i vis i b iIi t y, po r tabiii t y, d u r ­
abi 1 i ty and homogeneity this would almost certainly be
gold and/or silver. Since it is difficult and costly
to dig these metals out of the ground their supplies
could not, like those of paper, be increased at will.
Thus, not only would their values be stabilized and secure
but the prospect of inflation and depression would
be greatly reduced.
Far from leadIng to perpetual inflation free banking
would, they argue, actually lead to a much sounder
monetary system than we now have. "Suppose that I decided
to abandon the slow, difficult process of produc­
Ing services for money, or of mining money, and instead
deCIded to print my own," hypothesizes Rothbard.
What w0 u 1 d P r 1 n t ? I mig h t rna n u fa c t urea
paper ticket, and pr int upon it "10
Rot h bar d s . II I co u 1d the n procIa 1m the tiC ke t
297