Is There Such a Thing as a Free-Market Gold Standard?

Twice recently I ’ve come across arguments to the effect that, despite what some libertarians, goldbugs, cryptocurrency fans, and Fed Board candidates imagine, the idea that the historical gold standard kept governments from managing money, leaving the job to market forces, is a myth.Inhis June 24th piece criticizing Facebook ’s Libra Currency, which is being marketed as a sort of internationalstablecoin, Barry Eichengreen writes:Mercifully, Facebook avoided the idea that astablecoin will free us from the tyranny of the Federal Reserve. Typically, stablecoin purveyors invoke a mythical past in which the monetary unit of account was free of government manipulation and backed by tangible assets, such as gold in the 19th century. But as any historian will tell you, the 19th-century gold standard never operated this way. Governments were always involved. The gold backing of national monies was at most partial. Still, these simple facts don ’t prevent the libertarian advocates of stablecoins from abusing the analogy.More recently Greg Ip, ina WSJ article questioning Judy Shelton ’s merits as a prospective Fed governor, made a similar point. “Goldbugs,” he says,claim the gold standard takes away politicians ’ and unelected central bankers’ control of interest rates, which they consider antithetical to free markets. … But it is a myth to claim the gold standard obviated discretion. Someone had to decide which metals would back the currency, and at what price, and h...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs