States have always tried to manipulate money, credit and interest. In a world where the gold standard exists, their attempts quickly lead to crises. Without the security of gold, their attempts become more daring and their influence on currencies becomes more extensive. That is why, in the last 5 decades, we have witnessed more and more phenomena that were either unseen or almost non-existent before.
Thus, fiat money leads to a reversible change in human culture, insofar as “culture” means “a way of doing something.” In the work Consequences of Monetary Interventions ,Jörg Guido Hülsmann emphasizes the following aspects of cultural changes:
Making Short-Term Decisions Instead Of Long-Term Ones
This is especially true for individuals and governments. “Thinking and action are oriented toward short-term problems and material goals; long-term effects, especially if they are intangible, are ignored.”
As mentioned above, in an environment of artificially low interest rates, people have no incentive to increase their savings in conventional deposits. On the contrary, this seems more economically sensible. The phenomenon undermines the structure of capital, and since capital is used less often and is less and less, every institution tries to direct it only for commercial purposes. The result is the disappearance of the non-commercial.
Politicization Of Life And Restriction Of Freedom
To maintain and support the system, every business and household will eventually be instructed in the smallest details of how and when they can spend or invest their money.
Today, this type of argument is already evident in other government “systems” – notably health insurance.
There may be a need to justify even the most draconian measures by simply pointing out that deviant behavior threatens the functioning of the entire system.
Other Cultural Consequences Of The Removal Of The Gold Standard
The destruction of the gold standard not only leads to high indebtedness (private and public) and the undermining of the purchasing power of the currency. It has many more consequences.
Gold Standardisation Economy
With their government policies and with the help of money printing, governments incentivize and nationalize student loan programs. The result is that in the United States, where such programs are most pronounced, by the end of 2020, student loans exceed $1.7 trillion. They add up to more than car loans and the size of credit cards combined and make up 8.7% of the GDP of the world’s largest economy. Such a number is not surprising – as students graduate with loans, universities can increase the cost of higher education to infinity. That’s exactly what happens.
Post War Gold Version
This leads to delayed marriage, struggling to build up savings, much slower home purchases and fewer children. Such phenomena would never have been possible if the world had remained on the gold standard, taking into account the fact that their post-war version was “diluted”.
For 50 years, the global financial system has been like a ship without anchors, steered by an inexperienced but self-centered crew. Therefore, it moves as the captain requests, and the only beneficiaries of this “course” are the crew of sailors and their associates. Most passengers travel in the hold, mostly against their will, and are forced to row. Everyone knows this ship will sink eventually, but the crew and those close to them hope it won’t be there any longer and that they’ve gotten as much benefit as possible before that happens.
Today, the financial system comes with good and bad news. The good thing is that mankind knows what real money is – gold and silver. Although Western civilization has forgotten this, in many parts of the world precious metals are the only preferred form of savings. The bad news is that if we don’t remember quickly, we stand an even greater chance of financial collapse.