Keynes versus Mises on gold as money

According to David Myddelton, Keynes wrote in his first book, Indian Currency and Finance, published in 1913: “A preference for a gold currency is no longer more than a relic of a time when governments were less trustworthy in these matters than they now are.” This arrogant and stupid statement might well serve as the motto of the next century of government monetary mismanagement―a sorry performance for which Keynes himself bears substantial responsibility and under which the world continues to suffer with no relief in sight. (N.B. I do not have access to Keynes’s book, so I am relying on the accuracy of Myddelton’s quotation.)

Once again, we may regret that Keynes’s German was so poor. Otherwise, he might have understood better and taken to heart what Ludwig von Mises wrote in his first book, published in 1912, Theorie des Geldes und der Umlaufsmittel (first English translation, The Theory of Money and Credit, 1934). In that event, the world might have been spared an enormous amount of unnecessary grief.

Or maybe not. We often suppose that but for the words or deeds of a particular “great man,” the course of history would have been different. But where there is one fool, there may be another. Without Keynes, someone else’s very similar ideas might have taken hold with equally unfortunate effect. Besides, ideas―good, bad, and indifferent―are always contending for acceptance and for influence over actions. Those who propound pernicious ideas deserve censure, but those who accept bad ideas must also bear a share of the blame for their evil consequences.

Robert Higgs is Retired Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Founding Editor of Independent’s quarterly journal The Independent Review.
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