George Gilder’s brilliant new book — The Scandal of Money — underscores an odd fact. There’s an expanding list of newspapermen and writers who, having reached a certain age and covered the intellectual and political wars, have turned late in their careers and at the peak of their powers to the problem of money. They are riveted by the recognition that our abandonment of a system of honest money is at the root of our national travail.
James Grant does this in his famed bi-weekly, the Interest Rate Observer (the latest number opens with an essay on what he calls the “inflation cheering section”). Steve Forbes has brought out two late-career books on this head, including “Money,” which is a call for a restoration of the gold standard. The dean of American editorial writers, George Melloan, who spent a long career at the Wall Street Journal, has brought out “The Great Money Binge.”
What is so special about Mr. Gilder’s contribution is its radicality. He opens with a quote from Friedrich Hayek asserting that the “source and root of all monetary evil” is “the government monopoly on the issue and control of money.” He brings to the question an almost Supermanly x-ray vision that enables him to see through orthodoxy, and he opens by brushing aside the Federal Reserve, on which so many focus for its role in our long travail.
“Our misplaced faith in the power of the Federal Reserve to order growth into being by manipulating its monopoly money has led,” he writes, “to the capture of Wall Street by Washington and the consequent starvation of Main Street and decay of Silicon Valley.” Understanding “the real sources of our economic crisis,” he writes, “requires surrendering our faith that the Fed has the answers.” He calls it the key not just to political victory but, too, to a national restoration.
All that is but the prologue to this invaluable volume. His second chapter is called “Justice Before Growth.” He calls money an “information utility” and asserts that “monetary systems” can be “judged as moral systems — do they lie or tell the truth?” He follows with a chapter dealing with Milton Friedman, with whom Mr. Gilder travelled through China in 1988. Then he focuses on China, flicking aside Donald Trump as if he were a flea.
Mr. Gilder’s own advice to the Chinese communists “skipped money altogether,” he writes, and focused on freedom. To Mao’s famous command to “let 100 flowers bloom” the Gilder riposte was “let a billion flowers bloom.” The Sage of Tyringham is less worried about the military challenge from China than the idea that our own economy is hobbled by its attachment to what he calls “the monetarist delusion.” That sets him up for a chapter on the “high cost of bad money.”
Here Mr. Gilder deals with such pests as Paul Krugman, who gloat over America’s success relative to, say, Europe. Mr. Gilder focuses on what he calls a “forced transfer of wealth from Main Street to Wall Street” that is “so gigantic” as to halt 50 years of “miraculous and broad-based advances in global living standards.” He writes of banks being relegated to “an obsequious role of borrowing money from the Fed at near-zero rates and lending it to the Treasury at rates as high as 2 percent.”
Reading Mr. Gilder is not always easy but it’s always fun. “Sound money requires hostility to time travel,” he asserts as he gets into high gear. (Explains he: “You do not want someone to go back and re-spend the same money that he has already given you.”) To Bitcoin and the digital alternatives to money he gives serious consideration, particularly to the degree that they mimic gold. At the end of the day, though, Mr. Gilder returns to deregulation, modest taxation, and real money, meaning gold.
Mr. Gilder wants a gold standard complemented by Bitcoin-related technologies on the Internet. It would, he reckons, “produce a supply of real money for the first time sinc 1971.” He points out that under the gold standard in the United States, “the money supply rose faster than at any time before or since — by a factor of 160 — while the population rose by a factor of twenty-five and the nation forged its industrial revolution.” All with what he calls “almost no inflation.” Maybe we could call the new money the gold-internet-dollar-exchange-ruler, or simply the Gilder.