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It was refreshing to see Noriko Hama’s article, especially in these times of disappointing economic performance. There is still more to be said, though. Hama suggests that growth under a gold system is slower or worse than under a fiat money system. It’s worth pointing out, though, that growth spurned through interest-rate manipulation by central banks is artificial, and leads to bad investments and eventual economic decline.

This process has been repeated many times in America and Japan (such as after the collapse of Japan’s bubble economy in the 1990s when interest rates were virtually zero percent). It’s also necessary to point out that central banks manipulate the money supply. This causes inflation that affects the lowest rungs of the economic ladder the most, thus deepening the rich-poor divide that Hama is so concerned about.

At least in the United States, there’s the legal and moral issue of giving central bankers — who are not elected and thus mostly unaccountable — the ability to manipulate the money supply and interest rates. In 2006, the U.S. Federal Reserve stopped publishing M3 figures on total money supply, making it impossible to determine how much money they were creating.

Check out the Ludwig von Mises Institute of the Austrian School of Economics, and its suggested reading.

john gorman