What leads you to the conclusion that a chronic undersupply of money is a system that "worked fine"? What I claimed “worked fine” is commodity money…and that only to counter your sweeping generalizations that say, in effect, that prior to the last few years with 100% fiat money, history was terrible.”
Nor have governments given anyone a monopoly on creating money. Every time a loan is made by a banker money is created and there is no monopoly of this power. Governments convinced no one that banks make sense, this was done by the experts who understood finance such as Hamilton and the great writers in economic theory such as Mill, Ricardo, Smith and Marshall.
The current banking system is a specially privileged cartel that is headed by the Fed which has a monopoly on the creation of currency and bank reserves, upon which the rest of the cartel creates liabilities against itself to further the Ponzi Scheme. Hamilton was the goverment front man for the moneied interests behind the 1st Bank of the US. Every other member of the cabinet, to their credit, opposed Hamilton’s ideas of credit extension (which, by the way, partially, violate some of his own previously stated positions). I doubt you could point to writings of Mill, Ricardo, Smith, or Marshall that justifies your conceptions of a fiat based banking system. It would, in fact, be a foreign concept to them. In any event, von Mises and Rothbard make the most sense to me on these matters.
By 1692 England was forced to charter the Bank of England to finance the government's wars.
You say they were "forced to charter", I say "they entered into an unholy alliance with" ---which has served, to this day, as the model for other central bank cartel systems.
A hundred yrs. later Hamilton brought the American economy into the modern world (out of the world of superstition) by creating the National Bank which worked so well its deadly enemies dropped their opposition.
In addition to the rest of Washington’s cabinet, 5 of our first 12 Presidents also opposed, and spoke out eloquently against Hamilton’s ideas. Which opposition can you point to that realized how right he was?
There is nothing "honest" about gold that is mere rhetoric with nothing to base it on.
You apparently don’t get what I mean by "honest". It is not a characteristic of gold, it is a necessary characteristic of good money. Honest money must be hard to counterfeit and in predictable and limited supply. If it can be created and distributed by a specially privileged class without limit, by whim, without productive effort it lacks an important element that good money requires. A properly constituted fiat currency could be devised which maintains the “scarcity integrity” that is the essence of good money. The current fiat system, however, is substantially worse than the previous commodity money. We are moving backwards.
Saying that a gold standard leads inevitably to an inadequate money supply is not the same as saying "history was terrible before fiat money." That is just a silly misrepresentation of my view.
Hamilton was no one's front man. He was one of the most insightful, original thinkers who ever lived and his financial program was brilliantly conceived and executed much to the benefit of the new nation. There were no "monied interests" behind the 1st National Bank. The fact there was very little money here made the Bank a necessity for developement.
The market recognized its genius since American debt immediately became as good as any nation including far more powerful ones. I have never indicated my "conceptions" of a fiat banking system only attempted to clarify misstatements and distortions of reality spread by the goldbuggers.
Rothbard couldn't sharpen Smith, Ricardo or Mills quills and I have never seen anything indicating that he is more than a economic hack. Von Mises I have a great respect for though not agreement with but I doubt if you have ever read The Theory of Money and Credit.
Smith refers several times to the ability of banks to increase the wealth of a nation in the WoN. He is principally refering to the improvement in circulation of the MS that banks allow and the increase in efficency caused by not relying on gold/silver. Page #s supplied on request. Operations and history of the Bank of England or the Bank of Scotland were hardly "foreign concepts" to him.
Ricardo was a speculator and broker and also well understood the necessity and operation of the BoE after all he was a member of parliament. Are you really unaware of these facts or just attempting to be mendacious?
You are correct England was not forced to charter the BoE it could have just allowed the lack of specie to collapse the economy and produce enormous distress and misery. Smith called the BoE "a great engine of state" because it allowed state policy to be carried out so much more easily than without it. Including the policy of increasing the wealth of the nation.
Well lets examine the opposition to the Bank. Jefferson was an economic illiterate and was totally confused about finances and economics. This was a man who believed this should be an agricultural nation without a navy. But even he shut up about the Bank when elected president.(He claimed Hamilton "duped" him wrt the Bank. Madison could not prevent the radicals in his party from refusing recharter of the Bank even though it caused the government incredible difficulties and brought ruin on the nation. He didn't push for non-recharter. Monroe saw what had happened and even the fire-eaters had to allow recharter so he had little to say in opposition after reality set in. Jackson was a true fanatic and destroyed the Bank resulting in a tremendous depression throughout the nation. As a result of the lack of a money supply thousands of wildcat banks sprang up foisting millions of worthless currency on the nation. Fraud was rampant so much so that bank notes were not valid in different states and the notes of the defunct Bank were still considered the most valuable money.
Most of the opposition to the Bank was ideological and not based upon any understanding of Banking, money, finance or economics. Those presidents opposed were lawyers/farmers and ignorant of such matters.
As is the case with most amateur experts you ignore one of the most crucial aspects of monetary systems and that is the velocity of circulation of money. Business activity itself affects the amount of money available. When it is rapid the MS grows when it slows down it shrinks. Where is the determination of the appropriate degree of scarcity made? How is it determined that a region has too much or too little when gold is used and always gravitates to the large cities and wealthy countries? You really believe a government is going to stand aside and watch its people die because there is no gold to carry business? Of course, it won't and this is why there never was a true gold standard. When it caused difficulties it was ditched in practice if not in theory. Isn't it interesting that the most wealthy nations are precisely those which have money supplies from central banks.
Only to those who know little of history are we moving backwards, accurate analysis without ideological bias demonstrates that non-metal money never worked and never can in a world economy. It was just another fable.