Hello. I am Deepak Kundu, an avid book reader and quotes collector. As a hobby, I collect interesting quotes from the books that I read.
This post is a collection of 20 quotes from the book - Gold: The Once and Future Money by Nathan Lewis. I hope you find these quotes useful.
Gold: The Once and Future Money Quotes
I have never seen a correct and complete description of how today’s central banks work, nor have I seen a lot of evidence that others understand their workings, even central bankers themselves.
Monetary theory could be grasped by a dedicated student in less than a year, which is about nine years less than the time required for rocket science—unless, of course, that student already has an advanced degree in economics, in which case it may take a lifetime, if he or she is lucky.
The governments and citizens cry out together for good money, stable money, boring money, forever the same, supremely reliable, the bedrock upon which the extended order can flourish, not this stuff that wiggles and waggles unpredictably every second of every day, a never-ending chaos that saps the vitality of all countries’ economies.
Humans have decided over thousands of years of experimentation that gold is the best approximation of stable value available, and one that, despite its minor flaws, works rather splendidly in practice. Gold’s value varies very little. Gold thus serves as the measuring rod against which the value of currencies can be measured. Gold has been used as a monetary benchmark for millennia, its stability confirmed by centuries of experience.
The ideal currency is as stable and unchanging in value as the meter, liter, or kilogram. The notion that currencies need to be adjusted to economic conditions is wholly erroneous, except to the extent that the adjustment may correct prior monetary error.
Inflations are sometimes accidental, but often they are intentional, in which case they are known as currency devaluations. The temptation to devalue can be intense, and as a result inflation is common throughout history.
Inflation can create a false growth, but genuine growth does not cause inflation.
During Britain’s great stretch of currency stability, between 1698 and 1914, the soundness of the currency was reflected in the ironclad propriety of Victorian society. Marriage was a commitment as strong and reliable as the Bank of England’s everlasting bonds. It’s no coincidence that the golden ages of Rome, Britain, and the United States were also eras when the currencies themselves were as good as gold.
Over long historical experience stretching centuries, humans have learned that once a government’s debts become excessive, it is inevitably tempted to devalue the currency, thus repudiating its debts.
The gold standard was created by the free market, the citizenry, and it operates to manage the supply of paper currency under a self-adjusting market system. There is no central bank, no secretive policy board, no armies of statisticians churning out spurious indexes and aggregates, indeed no discretionary monetary policy at all.
The expansion and contraction of the supply of currency alters that currency’s value in relation to gold, but has no effect on gold itself. Gold is the thermostat of the system.
One reason governments have returned to the gold standard so many times over the course of history is that it is simply cheaper to do so. Because a gold standard lends monetary stability, which in turn allows economic stability, interest rates can fall to very low levels and stay there indefinitely. Interest rates that were common under the gold standard are impossible in today’s environment of monetary chaos.
The decision to use gold as the monetary Polaris, the universal standard of value, is not the product of a deductive process, a weighing of pros and cons, but the end result of millennia of trial-and-error experimentation. It is possible only to postulate, in hindsight, why this process produced the result it has. Nor does anyone claim that gold is a perfect and unchanging measure of value. It is simply the best measure available, the one that, if adhered to in the long run, least burdens the citizenry with the effects of inflation and deflation.
Gold is the world citizenry’s standard of value, and no government action can undo that fact, just as governments were not responsible for its creation.
Gold has been adopted as money because it works. It has defeated every challenger. Though it has been spurned by governments many times, this has never been due to a fault of gold to serve its duty as a standard of value, but because governments had other plans for their currencies beyond maintaining their stability.
If there is some sort of major economic difficulty or disaster in the world, it can usually be traced to some government whose taxes were not low enough (and probably rose sharply) or whose money was not stable enough (and whose value probably fell sharply).
The low interest rates common during times of stable money are a genuine economic advantage, but the effects of “lowering interest rates” through the oversupply of base money and the devaluation of the currency amount to little more than the inflationary boom, malinvestment, and the money illusion.
The capital gains tax is practically a tax on capitalism itself and is one of the most destructive taxes governments can levy.
A floating currency causes a constant, chronic drain on an economy, but at least it is not subject to catastrophic failure. In a sense, it is precollapsed. Floating currencies are not so much a monetary system as they are a lack of a system.
The IMF gives expression to a dark side of humanity, in which the powerful maintain their superiority through the impoverishment of entire continents of fellow humans.