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(This item originally appeared at Forbes.com on April 9, 2024.) This month, the Central Bank of Zimbabwe launched a new gold-based currency, the first gold-based currency from a government since Richard Nixon effectively ended the world gold standard system in 1971. Probably nobody, including me, has very high hopes for this endeavor. After all, Zimbabwe not only had a riotous hyperinflation in 2007-2009, it has attempted six more currencies since then, each ending in disaster. We even included a picture of Zimbabwe’s 100 Trillion Dollar banknote in our book Inflation: What It Is, Why It’s Bad, and How To Fix It. But, you have to agree, nobody has more experience with Inflation: Why It’s Bad, than Zimbabwe. This naturally leads them to ask: What It Is, and How To Fix It. They have apparently ended up with the same conclusion as in our book, which is: link the value of the currency to gold. This is the same method used in the US Constitution, in 1789. The US Dollar’s value was to be fixed to gold. The Americans actually stuck with it for over 180 years, until 1971. This was no great innovation, of course. The US was founded on the same good monetary principles that the leading countries had adopted for the previous three thousand years — as I documented in my 2017 book, Gold: The Final Standard. At the time, there was no good reason to expect the American colonists to become Hard Money enthusiasts. The Colonists had been one of the world’s biggest paper-money abusers, with a series of paper money depreciations and hyperinflations going back to 1690, when Massachusetts Colony started printing paper money to pay soldiers. Britain banned paper money issuance among the Colonies in 1764. The Colonists (including Benjamin Franklin) chafed at the new

In most countries, including Japan and, I think, most of Europe, payroll taxes are specifically earmarked to pay for welfare-type benefits. This is true in the US as well, with payroll taxes specifically earmarked for Social Security, disability, and Medicare. The basic idea is that of an insurance program, or, in the case of public pensions (Social Security in the US), a retirement annuity. I think most Generation X-ers do not generally think of payroll taxes in this manner. They are just a tax like any other, with their supposed “earmark” characteristics nothing but archaic fiction. From the 1980s to the present, when asked by researchers, Gen-Xers have always said that they did not expect Social Security to exist when they retire. It would blow up before then, due to the greed and irresponsibility of the Boomers. Boomers would say that “I deserve my Social Security benefits because I paid into them all my life,” as if it was a private-sector annuity. Gen-Xer’s attitude was more like “you took money from me all my life and then blew everything up, leaving nothing for later generations.” This seems obvious today, but I can attest that this was also the common assumption back in the 1980s, just as the historical polls indicated back then. So, it might take a little effort for a Gen-Xer to get more in the mindset of Boomers and other prior generations, actually imagining payroll taxes to be part a sort of separate welfare system from the rest of the Federal Government — its original conception, even if it was always a little fictional. The idea is that all of the welfare-type programs, including public pensions but also healthcare, unemployment benefits, and other need-based support programs, are bunched into a separate “welfare” program, with this directly financed by

My 2019 book The Magic Formula is now available in free .pdf form. Read The Magic Formula I wrote this as a one-volume introduction to the “supply side” school of economic thought, since 1970. I think that not even some core “supply siders” (such as Steve Moore or Dan Mitchell) have a full appreciation of how powerful these tools are, as I show in my many historical examples. Since US policy has been rather stagnant since the Reagan tax cut era ended in 1991, mostly this has been happening outside the US. Real life keeps coming up more amazing than the wildest fantasies. Most of this goes unnoticed by the economics intelligentsia. They are still wasting their time on nonsense. In The Magic Formula, I have a six-page description of how a turn from “austerity” policy toward a lower tax/lower spending strategy (combined with a stable euro, basically the Magic Formula) produced a dramatic turnaround in a number of European governments in 2014-18. I have not seen a good description anywhere else (and I was looking in 2019, when I was writing this). That alone would be a good book or PhD dissertation; or, better yet, a PhD dissertation that becomes a book. Plus, there are countless examples from farther back in history, that should be investigated. I turned up some very interesting whiffs of a successful Magic Formula policy during the reign of Anastasius I, emperor of Byzantium from 491 to 518. Plus, there is an interesting Free Enterprise history of the Muslim Empire, also known as the Saracens, which was explored in books such as The Discovery of Freedom, by Rose Wilder Lane (Laura Ingalls Wilder’s daughter), and also in The Mainspring of Human Progress, by Henry Grady Weaver. It gets three pages in my book. This also

After about eight years of focused reading, mostly the Harvard Classics but a lot more than that too, I am a little tired of reading all the time. This year’s list is short. I got started on the Story of Civilization, by Will and Ariel Durant, which definitely deserves its reputation as a classic. These are big books, but they intend to describe periods of civilization from different aspects, not just a political history of battles and kings. The Life of Greece, for example, contains explications of arts and literature, architecture, science and philosophy, economic activity, daily life, customs, social organization, and religion, in addition to the dramas of wars, changing governments, and high-profile characters like Pericles or Alcibiades. That is a lot, so writing just a little about each topic turns into a big book. It was very well written and worthwhile, and the first stop for anyone interested in these wonderful periods of history. It helped me understand also why the Greeks and Romans have always been considered (at least since the Renaissance) the source of Western Civilization. I feel that connection now, back to those days — in part because I recognize that many of our institutions, democratic government among the most obvious, but also the 26-letter alphabet, arise from those roots. Most of the other books were economics texts that I had been planning to get to. For 2024, I expect to continue in much the same fashion, with Thucydides, SOC#3, and Gibbon. That should be enough “big books” for one year. The Landmark series is really great, and highly recommended if you plan to read Herodotus or Thucydides, or one of the other classic texts in that series. The Story of Civilization #1: Our Oriental Heritage, by Will Durant Gift from the Sea, by Anne Morrow

(This item originally appeared at Forbes.com on December 31, 2023.) In recent weeks, it has taken about $2067 to buy an ounce of gold — an important landmark, although few today remember why. Basically, it is this: The dollar today is worth about a penny in 1930. From 1834 to the devaluation of 1933, the dollar’s official value was 23.2 troy grains of gold. Since there are 480 troy grains in a troy ounce, this means the dollar was worth 1/20.67th of an ounce, or $20.67 per oz. These ancient measures are a little confusing. The “grain” was the weight of a common grain of barley. 23.2 troy grains is equivalent to 1503 milligrams. Prior to 1834, according to the Coinage Act of 1792, the gold value of the dollar was 24.75 grains; or 371.25 grains of silver. This was based on the average weight of Spanish silver dollars used in the American Colonies. In 1834, the gold value was adjusted to make the ratios closer to market values. The dollar’s value in silver was unchanged. The effect was to make gold the premier basis of the dollar, instead of silver. This was formalized in the Gold Standard Act of 1900, which officially replaced the previous bimetallic system. The United States did not always stick to its official gold standard policy. There was an era of floating paper money in the Civil War, and smaller but still significant deviations in both World Wars. But, these were corrected after the wars’ end. As we noted in our recent book Inflation: What It Is, Why It’s Bad, and How to Fix It, as long as the United States stuck to its Stable Value policy, in practice a gold standard system, there was never an “inflation” problem. Prices still went up and down,

Now that Javier Milei won an important election in Argentina, let’s see what his options are on fiscal policy. We looked at monetary policy earlier. I agree with Nicolas Cachanosky and Steve Hanke that full dollarization would be the best option for Argentina at this time. This would have a few complications, but it looks doable to me. November 12, 2023: A Quick Look at Argentina I don’t really know much about Argentina, but let’s take a look at some basic indicators. Government debt/GDP is pretty high. It has come down recently, mostly due to rising commodity prices (and thus GDP), and maybe, due to the devaluation of domestic currency debt. I assume the remaining debt is basically USD debt. The government’s budget situation is not too bad. The problem is, they have been funding it with the printing press, since nobody wants to buy bonds from Argentina. The corporate tax rate has come down, which I am sure has helped. The personal income tax top rate is 35%, which is not too high by itself. The problem with countries with a lot of “inflation” is that middle class and lower middle class people get pushed into top brackets intended for the wealthy. But, Argentina has had so much currency depreciation over the years that I would imagine (I am obviously doing a lot of guessing here) that the income tax system is pretty well indexed to at least the CPI, ameliorating some of these issues. The “Sales Tax” or VAT is high at 21%. Payroll taxes are also very high, in the European socialist model. But, this has come down too. This payroll tax is split into a Corporate share of 20.4%, and an Individual share of 17%. There are also some other goofy taxes, such as a 0.6%

This poem by Rudyard Kipling was first published in 1919. It has its own page at Wikipedia. Britain, before WWI and certainly afterward, had taken a huge lurch toward Marx-inspired Socialism. This began with the introduction of the “graduated” income tax — one of Marx’s Ten Pillars of Communism — in 1910, following 70 years of “uniform” tax rates (one rate for everyone). The top tax rate rose from 5% to 60%, and, unlike in the US where income tax rates fell in the 1920s, in Britain they stayed at high levels. (See Chapter 5 of The Magic Formula.) Plus, socialistic programs expanded everywhere. Kipling saw where this was going and … he was right. A “copybook” was a notebook to practice penmanship. Students would practice by copying the “heading,” typically a short moralistic phrase. *** As I pass through my incarnations in every age and race,I make my proper prostrations to the Gods of the Market-Place.Peering through reverent fingers I watch them flourish and fall,And the Gods of the Copybook Headings, I notice, outlast them all. We were living in trees when they met us. They showed us each in turnThat Water would certainly wet us, as Fire would certainly burn:But we found them lacking in Uplift, Vision and Breadth of Mind,So we left them to teach the Gorillas while we followed the March of Mankind. We moved as the Spirit listed. They never altered their pace,Being neither cloud nor wind-borne like the Gods of the Market Place,But they always caught up with our progress, and presently word would comeThat a tribe had been wiped off its icefield, or the lights had gone out in Rome. With the Hopes that our World is built on they were utterly out of touch.They denied that the Moon was Stilton; they denied she