The Road to a Market-Oriented Monetary System

Whenever I hear the phrase “You can’t let the perfect be the enemy of the good,” I want to cringe. Almost every time you hear it, the person saying that is using it to justify some egregious violation of principle and hide behind the label of “pragmatism.” Inevitably, what they’ve decided to do is neither perfect nor good, and they sully the useful point that that phrase tries to convey. It’s unfortunate because there are instances in which the perfect really shouldn’t be the enemy of the good.

One of the best examples13663213014_f03d515819_z of that is that of the movement for sound money. Imagine monetary systems as a straight line with two endpoints. On the far left endpoint you have a completely government-controlled monetary system. Government monopolizes the issuance of currency, uses that monopoly to devalue money in order to fund its debt-based spending, and makes it illegal for anyone to compete against their monopoly. At the far right endpoint you have the ideal monetary system, one which is completely open to competition, the type of monetary system embodied by Dr. Paul in his competing currencies legislation. It is a completely market-driven monetary system in which the accepted monies serve the needs of the market and are accepted by market actors without any sort of compulsion. In between those two you have various other monetary systems: a gold-exchange standard, a gold standard with a central bank, a gold standard without a central bank, a gold standard with competing currencies, etc.

The monetary system in the United States used to be fairly market-oriented and more toward that rightmost point. People were free to accept whatever type of money they wanted to, and it was not unusual to see gold and silver coins from numerous countries and private mints circulating side by side with U.S. Mint-produced coins. Unfortunately, the trend over the past two centuries has been towards greater government control over the monetary system, with the effect of that control manifesting itself in price inflation that makes it more and more expensive to afford the necessities of life.

Today we find ourselves14630987274_8fe7f93676_z pretty far over towards that leftmost point and growing further in the direction of government control every day. But how many people understand that the reason food, clothing, and gasoline are getting more expensive is the result of an intentional devaluation of the dollar caused by government control over the monetary system? How many people know enough about the workings of the monetary system to know that we want to move rightward on that continuum towards market-based money?

My job is to educate people about sound money and that the ideal monetary system is one in which the government cannot interfere to stack the deck in its favor. But until enough people realize the benefits of a system of competing currencies, there is a great need to form coalitions with others to roll back the influence of the government in the monetary system. A government-run gold standard may not be the perfect system according to my point of view, but it certainly would be far better than the system that exists today. So even though I may disagree with gold standard proponents and see the gold standard as merely a “good” system and not “perfect,” there’s nothing wrong with working together with gold standard proponents to move in the right direction.

As long as we travel together from where we are now in the same direction towards our ideal system, we’ll do alright. If we get back to a gold standard we can thank the gold standard proponents for helping us improve the monetary system, then continue to push on towards a free market monetary system. As long as we never lose sight of the fact that “perfect” is our goal, and never settle for striving for anything less than perfect, there’s nothing wrong with working together with those with whom we might not agree 100 percent. The perfect doesn’t always have to be the enemy of the good.