Coercion

John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936. In it, he advocated for dirigistic inflationary policies to stimulate the economy and aid economic recovery. Idle resources—money, labor, capital—had to be employed; otherwise, they were being wasted. William H Hutt provided one of the earliest rebuttals of the general theory. His book, The Theory of Idle Resources (1939), lists several valid reasons for resource unemployment: ...

In earlier posts, I have regarded inflation as counterfeiting conducted by the government. This is not hyperbole. It is merely calling an activity its proper name. The Illegal Case To understand this label, let us go over what happens when an ordinary criminal counterfeits money. Suppose these fake tokens are virtually indistinguishable from already circulating monetary units. The criminal and his associates are able to go to the market and buy goods and services at prevailing rates. These people benefit the most: they did not even have to part with anything of value to obtain these tokens. ...

Private individuals and businesses must either sell something of value to acquire money or expend time and resources to mine it directly (think of gold mining in the case of a gold standard). Governments, in contrast, do not obtain payment for goods or services they produce; they generate revenues through the seizure of assets. In the past, they might have sent their agents to seize grains, cattle, coins, etc. from people. But in a monetary economy, they simply seize monetary assets, which is a lot easier to do. ...

Note that the law applies not just to a particular type of coins, but to the exchange rates between different money commodities as well. Suppose in a bimetallic standard, metal A is pegged to metal B at a ratio of 1:10, but the market value of a unit of metal A is 12x that of metal B. In this case, we have a price ceiling whereby metal A is artificially undervalued, and per Gresham’s Law, will be driven out of circulation. ...

Gresham’s Law is frequently oversimplified as “bad money drives good money out of circulation.” This phenomenon has been observed in history whenever debasement of coins has occurred. In such cases, people choose to collect coins with the greater precious metal content and spend the debased coins. Over time, the ‘good’ money, the coins with more precious metal in them, get driven out of circulation by ‘bad’ money, the debased coins. ...

I recently revisited the chapter titled “Why the Worst Get on Top” from FA Hayek’s The Road to Serfdom. The essay discusses the sociopolitical dynamics within a totalitarian system that inevitably encourage and enable bad actors to gain power while sidelining decent people. The worst features of totalitarian governments are not accidental or avoidable; they are features totalitarianism produces given enough time to operate. Just as a socialist planner must choose between either assuming dictatorial powers or abandoning his plans, a totalitarian dictator must renounce morality or fail. Socialism produces a totalitarian society, which places at its helm a dictator not bound by common morals, and from this system we get social and economic repression, destruction of life and property, elimination of political alternatives, conscription, etc. ...