In addition, the mining of gold will add to supply. Normally, an increase in supply of any commodity is a benefit to society, since abundance is preferred to scarcity. But in this case, the value of gold is determined primarily by its role as a medium of exchange and not as a commodity.

This should naturally lead Austrian economists to also advocate for the creation of a medium of exchange whose supply is even more stable than gold: a worldwide currency built on block chain technology. If money was this crypto currency (e.g. bitcoin), counterfeiting would be impossible since there is nothing in a crypto currency to counterfeit. Banks would no longer manage deposits since deposits would reside outside these banks in crypto currency wallets. This would essentially end fractional reserve banking (here and here) and the ability of banks to create money out of thin air. What about legal counterfeiting? Normally no, but all currency systems still require governments to play by the rules of the game. The gold standard ended when the government reneged on its social contract to play by those rules.

A monetary reform to sound money would significantly boost growth, as well as significantly alter and diminish the roles of government and banks in our economy. [5]

Stable money was a chimera. It did not bring stability to the world economy. It did not counter the instability emanating from deposit banking. It actually added to the severity of booms and busts. To function efficiently, capitalism needs a foundation of sound money, not stable money.

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Footnotes:

1. The CPI is an inaccurate measure of a subset of all prices: everything money can be spent on. (here)

2. Bastiat understood this back in 1849 when he wrote in What Is Money?:

“a measure of length, size, surface is a quantity agreed upon, and unchangeable. It is not so with gold and silver (money). This varies as much as that of corn, wine, cloth or labor, and from the same causes, for it has the same source and obeys the same laws.”

3. Monetary policy is “econspeak” for legal counterfeiting.

4. Rothbard’s, America’s Great Depression, page 26

5. The transition period would require the government to exchange this new crypto currency, before the first transactions (the genesis block), for bank assets in a variant of the Chicago plan. (here)