Moneymakers and the Gold Standard

Yesterday The New York Times Book Review ran my review of Ben Tarnoff’s history of American counterfeiting, Moneymakers. Give it a read – the book deserves readers, and although my piece was on the shorter side I think it’s also worth a read.

Many of the issues raised by Tarnoff’s book seem settled. Sure, the American dollar is still counterfeited – the government of North Korea currently makes the most sophisticated fakes – but the specific class antagonisms brought to the forefront in Tarnoff’s narrative often seem to be put to rest. Not true.  Moneymakers is, to a great extent, a book about class and the refuge that wealth seeks in elite financial instruments.  One of the book’s themes that I didn’t dwell on but that has become increasingly pertinent since I filed my review at the first of the year is the persistent and growing call for a return to the Gold Standard. Annie Lowrey’s recent piece in Slate does a good job summing up the current state of this debate.

Lowrey emphasizes distrust of the Fed, arguing that concerns about inflation and dollar devaluation provide the catalyst for much of the anti-Fed/Gold Standard sentiment. This is surely true, but as Tarnoff’s book  reminds us the call to reintegrate the Gold Standard as the basis of the American economy hearkens back to the same class antagonism masquerading as metaphysical paranoia as it did years ago. The bulk of the nation needed a plentiful supply of currency to pay their taxes and purchase goods; power-brokers were more interested in keeping value attached to precious metals because the scarcity of silver and gold maintained the economic status quo. As Tarnoff writes, “Paper’s proponents didn’t object to a metallic currency on philosophical grounds. Their concerns were practical: coin was concentrated in the hands of the wealthy. Moving [or returning to] to a metallic currency would effectively hand control of the money supply to [the elite].” The argument became rather strange.

As Tarnoff writes:

The intangible nature of paper money caused its detractors in the Massachusetts money war to condemn it in unusual terms: not just as financially unsound, but as immoral and even supernatural. One Protestant minister compared printing paper bills to the “Popish Doctrine of Transubstantiation,” a false metamorphosis that preyed on the laity’s will to believe….Silver and gold were eternal, God-given measures of value. Spurning them in favor of something man-made disrupted the natural order to things, and betrayed an unholy desire to play God.

According to this logic, paper money’s sinful origins meant that its use inevitably encouraged immoral acts, like debtors cheating their creditors and speculators exploiting the volatility of value. Paper was a kind of illusionist’s trick with potentially catastrophic consequences, and intrinsically deceitful medium that bred bad behavior as it spread like a virus through the body politics.

Given the ascendant political sympathies in much of our debtor nation, is it crazy to expect a return to this rhetoric sooner rather than later?

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