Inflation or Gold Standard·

[Title Page and Publication Information]: Title and publication details for the work 'Inflation, or Gold Standard?' by Professor Hans F. Sennholz, published by Bramble Minibooks. [What Inflation Is]: Sennholz defines inflation not merely as rising prices, but as the deliberate creation of new money by authorities through deficit spending or credit expansion. He argues that this monetary destruction erodes savings, generates boom-and-bust cycles, and leads to government tyranny and the loss of a free society. The section provides historical context on the depreciation of the British pound and U.S. dollar, referencing Jacques Rueff's 'The Age of Inflation'. [Ideas Shape Policies and Government Control of Money]: The author explores how the universal acceptance of government control over money leads to monetary destruction. He argues that the state's need for revenue to fund welfare and war drives currency expansion once taxation limits are reached. Sennholz describes the historical progression toward government monopoly, including the separation of monetary unit names from their weights and the enforcement of legal tender laws to facilitate debt repudiation. [The Role of the Central Bank and Welfarism]: This section identifies the central bank as the executive arm of inflation, detailing how the Federal Reserve finances government deficits through credit expansion. It highlights the 1971 suspension of gold payments by President Nixon as the final step toward absolute fiat standards. Sennholz links chronic inflation to the 'redistributive' aspirations of the welfare state, where spending on social programs like Medicare and foreign aid necessitates currency creation. [Labor Union Pressures and the New Economics]: Sennholz analyzes how labor union demands for higher wages lead to stagnation, which governments then attempt to solve through further credit expansion to lower real labor costs. He critiques the 'New Economics' for providing a pseudo-scientific justification for inflation, claiming it can create wealth from nothing. The author argues that these policies inevitably lead to a command system involving wage and price controls. [Statistical Analysis of U.S. Inflation (1933-1973)]: A data-heavy section providing tables on the Federal budget, public debt, and the quantity of money (currency, demand deposits, time deposits) from 1933 to 1973, including the author's projections through 2003. It illustrates the drastic decline in the purchasing power of the dollar following the 1933 expropriation of gold and the subsequent era of unrestricted money management. [Redistribution of Income and Wealth]: The author explains how inflation acts as a silent tax that shifts wealth from creditors (savers, pensioners, insurance holders) to debtors (often wealthy industrialists and the government). He notes that fixed-income earners, including teachers and clergy, are particularly victimized, which may drive their radical political outlook. Additionally, he discusses how inflation squeezes regulated industries like railroads whose prices are fixed by government decree. [Booms and Busts: The Trade Cycle]: Sennholz attributes the recurrence of economic recessions and depressions to monetary expansion rather than a lack of consumption. He argues that credit expansion creates an artificial boom characterized by malinvestment, which inevitably ends in a bust when factor prices rise and profit margins disappear. He warns that attempting to sustain the boom through more inflation leads to a 'crack-up boom' and a flight into real values, potentially resulting in socialism. [The World Monetary System and the Gold Standard]: This section advocates for the gold standard as the only means to restore monetary stability and freedom. Sennholz traces the history of gold as money from ancient civilizations to the 19th-century classical gold standard, contrasting it with the failures of bimetallism and the gold-exchange standard. He argues that gold provides an international standard that facilitates trade and capital export without the need for intergovernmental treaties, as it is controlled by economic law rather than politicians. [Enemies and Fallacies of the Gold Standard]: Sennholz critiques the various opponents of the gold standard, including classical economists like Ricardo (for their naivety), nationalists, and inflationists who view easy money as a panacea. He addresses the fallacy that there is 'not enough gold' by explaining that fiat money can circulate alongside gold. He emphasizes that the gold standard is not a technical fix but a manifestation of civil liberty and private property that prevents government manipulation of money. [The Road Back to Monetary Freedom]: The final section outlines a four-step plan to restore the gold standard through freedom rather than government decree: 1) freedom to trade and hold gold, 2) freedom to use gold in contracts (exempting gold clauses from legal tender laws), 3) freedom for private coinage, and 4) eventual government convertibility. This 'parallel standard' would allow gold and fiat money to circulate side-by-side, letting the market determine their exchange ratio and eventually restoring sound money. [Author Biography and Subscription Information]: Biographical sketch of Hans Sennholz, noting his education in Germany and the US and his status as a disciple of Ludwig von Mises. Includes advertisements for other Bramble Minibooks by authors like Murray Rothbard and Leonard Read.