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(This item originally appeared at Forbes.com on May 20, 2023.) Gold is mined from the earth, in much the same way as other metallic “commodities” including copper, lead, and tin. Thus, it is hard to say that gold is not a “commodity.” Nevertheless, I will here claim that gold is not a “commodity money.” Let me explain what I mean. What are some “commodity monies,” besides gold? In human history, a lot of things have served as common media of exchange. Wheat, certainly. Rice in Asia. Silk cloth has a surprisingly widespread history in Asia; in the Andean and Mesoamerican civilizations (the Incas and Aztecs), textiles were a common exchange commodity before Columbus. Cowrie shells have a very long history of serving as money, even into the early 20th century in some primitive African societies. Salt, cattle and tobacco have served as exchange commodities. At times, prices have been quoted in whale’s teeth, or women. What all these “commodity monies” have in common is: They are found only in primitive societies. It does not take very long — basically, when a society becomes sophisticated enough to mine metals — before gold and silver become the premier form of money (often used alongside other commodities at first), and finally, the only form of money. The earliest complex civilization on Earth was Sumer, in Mesopotamia. Early Sumerians used shell rings as small change, but already by the time of the Laws of Eshunna (1930 B.C.), prices were quoted in silver shekels alone. (The shekel weight was about 8.4 grams.) In all complex civilizations — Ancient Egypt, Ancient Greece, Ancient Rome, Ancient Persia, Ancient India, Ancient China — gold and silver were used as money, and other forms were phased out, mostly before 1 AD. During all this time, the market value of

In Search of a Monetary Constitution (1962) is a collection of papers that summarized some of the more conservative-flavored lines of thinking in 1962. It is a rather depressing book, because, in the middle of an actual functioning (although substantially flawed) gold standard system, where the official policy of the Federal Reserve, Treasury Department, IMF, and the wishes of foreign governments worldwide was that the US dollar would maintain its specified value of 890 milligrams of gold (1/35th of a troy oz.) — a very explicit “monetary constitution” already in actual practice, and one that is, more-or-less, actually defined in the Constitution — there is not a whole lot of explanation of why this policy is even useful. Apparently, according to the book’s title, they couldn’t even find it! This is a very willful blindness. I could go over this book paper-by-paper, which is not a bad thing to do, but it would mean many weeks of haranguing and complaining, and I really want to move on to Renewing the Search for a Monetary Constitution (2015), published by the Cato Institute, where my haranguing and complaining might be a little more pertinent. Nevertheless, I think this book is worth reading for people interested in the topic, not so much for its insight (it is full of error), but to get an idea of what the intellectual landscape looked like in 1962. For students, it is a good exercise to explain how the various authors got it wrong. I have not read the book in its entirety. Honestly, I’ve heard it all before, and wrote out all the counterarguments a decade ago. So, this will be one of those “book notes” where I give something of the flavor of the book, and my reactions. This I will do by commenting on

(This item originally appeared at Forbes.com on May 5, 2023.) Recently, I kicked sand in the face of those who propose “commodity baskets” as a measure of currency value, as an alternative to gold. Gold works very well. The United States based the dollar on gold for nearly two centuries, until 1971, and became wealthy without “inflation.” Everybody knows gold works. So why experiment with solutions that are certain to be inferior? But we can appreciate where this has served a productive role in the past. I think we may be reaching a point in history when the present floating fiat system becomes completely intolerable, and people are ready for new solutions. Governments have always reached this point in the past, eventually, due to chronic currency abuse. Historically, this is when the political time is right to create new institutions — much as the whole world formally went back to gold in 1944, with the Bretton Woods Agreement. This might be within a decade, or maybe sooner than that, if this “trillion dollar coin” thing actually gets any traction. Nevertheless, we are not there yet. Things at the Federal Reserve can’t be expected to change very much, right away. They will keep making it up as they go along, within the context of the present floating fiat system. Congress won’t do anything meaningful, for now. President Donald Trump nominated Judy Shelton and Herman Cain to serve on the Federal Reserve Board of Governors. Both have been outspoken supporters of the gold-based dollar that worked so well before President Nixon blew it up in 1971. Unfortunately, in the kerfuffle following the 2020 election, Congress didn’t quite get to confirming Shelton’s nomination, although support was there. But, what if they had? Obviously, as just one member of the seven-member Board, Shelton would

(This item originally appeared at Forbes.com on May 4, 2023.) “To advocate the complete, uninhibited gold standard runs the risk, in this day and age, of being classified with the dodo bird,” wrote Murray Rothbard in 1962. This was certainly odd, since the official policy of the Federal Reserve, the U.S. Treasury, the International Monetary Fund, and all major governments including Britain, France, Germany and Japan, plus communist China and Soviet Russia, was that currencies should be linked to gold. The US dollar was the heart of this system, established at Bretton Woods, New Hampshire in 1944. The dollar’s value was to be 1/35th of a troy ounce of gold, or about 890 milligrams. And, in fact, the dollar really did have a value close to that, at the time; and did so until 1971. Part of the problem was that gold standard advocates including Rothbard had gone off the deep end with pointless radicalism. The quote comes from a book called The Case for a 100% Gold Dollar, in which Rothbard, in an effort to eliminate “fractional reserve banking” (which had coexisted with gold-based money since the Renaissance), proposed devaluing the dollar by 95%. Sensible people classified Rothbard with the dodoes. The gold standard had served America well for nearly two centuries, from 1789 to 1971. The final decade of the gold standard — the 1960s — was a high point of prosperity that has not been matched since. Gold worked; floating fiat currencies have not. Nevertheless, just as in Rothbard’s time, to be a public advocate of gold-based currencies is to invite disdain from the intellectual class. This has created, among public personages who want to avoid needless controversy, a tendency to suggest commodity baskets as a guide to policy, rather than gold itself. One such person was

(This item originally appeared in the New York Sun on May 3, 2023.) With the outbreak of the war in Ukraine in 2022, Russia, China and their trading partners began establishing alternative monetary and financial arrangements.  A leading intellectual on these matters at Moscow, Sergei Glazyev, recently proposed a “Gold Ruble 3.0,” following the gold rubles of both the Czarist and Soviet eras. This new system would be primarily digital, but that is actually not much different than the way things were done in the late 19th century. That was underscored in 2009 by the head of Communist China’s central bank, Zhou Xiaochuan. “An international reserve currency,” he wrote, “should first be anchored to a stable benchmark and issued according to a clear set of rules … [Its] adjustments should be disconnected from economic conditions and sovereign interests of any single country. The acceptance of credit-based national currencies, as is the case in the current system, is a rare special case in history.” This is the opposite of present Anglo-American dogma, which has degenerated into a doctrine of continuous macroeconomic interventionism, unrestrained by any binding rules or principles and enabled by floating fiat currencies that are unstable in value by design. Mr. Zhou’s principles are timeless. James Madison, primary author of the American Constitution, summed it up in a single sentence: “The only adequate guarantee for the uniform and stable value of a paper currency is its convertibility into specie [gold or silver] — the least fluctuating and only universal currency.” This describes why the Constitution — in Article I, Section 10 — prohibits the states from making anything but gold and silver coin a tender in payment of debts. This was almost immediately sidestepped by President Washington himself, who established the First Bank of the United States, an early

(This item originally appeared at Forbes.com on March 29, 2023.) Recently, I argued that the correct tax rate for interest income, dividends, and capital gains, at the individual level, was zero. This makes sense from a theoretical perspective (capital is taxed via the corporate income tax), and also, produces the best real-world results. This will drive the socialist “taxing all income the same” people nuts, but actually, I agree with them at a basic level. We should “tax all income the same.” First, we have to define “income.” This is basically the profit of business — either selling goods or services, or selling labor (employment). It is commerce, or economic activity. It is not the trading of assets, or “capital gains.” When you “tax all income the same,” you end up with a Flat Tax, as people like Steve Forbes have recommended for years. This Flat Tax should be broad: There should be no exemptions, where the income of people who make charitable donations, or install solar panels, is treated differently from those who don’t. It should also have a low rate, below 20%. The same principles apply to corporations or other business, at the same low rate as individuals pay. It would look something like Herman Cain’s “9-9-9 Plan,” where both individual and corporate income is taxed at 9%. There would only be one tax rate for all income. We would get rid of “graduated” income tax rates, where people with high incomes pay a different rate than people with low incomes. That is not “taxing all income the same” is it? This is the Principle of Uniformity in Taxation, which is actually already in the Constitution, known as the Uniformity Clause. The Flat Tax proposals of the 1990s were designed to be politically feasible, in the environment of that

(This item originally appeared at Forbes.com on March 28, 2023.) I was interviewed recently by a somewhat Left-leaning outlet, and the question came up: Why don’t we “tax all income the same”? In other words, shouldn’t we tax dividends, interest and capital gains at the same (high) rates as the regular income tax? This question has been around forever, but it is particularly pertinent now that President Joe Biden has released a budget proposal that indeed taxes capital gains at potentially the highest rate of income tax, presently 39.6%. This is about double the current capital gains tax on long-term holdings, of 20%. Biden is not the first one to try this. Republican president Richard Nixon did something similar in 1969, which contributed to the disastrous economic outcome of the 1970s. Congress, realizing its error (despite its Democrat majority at the time), returned rates to their pre-Nixon levels in 1978. A tax reform in 1986 reduced the top Federal income tax rate to 28%; and, perhaps to gain Democrat support, also raised the capital gains tax to 28%. But, these rates again diverged soon afterwards. Indeed, this has been tried again and again in developed countries since at least the 1920s, and has also been abandoned again and again, such that this supposed principle of “taxing all income the same” exists nowhere today. It is one of those things — like state communism — that might sound nice on paper, but doesn’t work in the real world. Today, high-tax Europe has low taxes on capital — lower rates on corporate income, dividends, interest and capital gains, than the US. That is one reason why Europe’s economies are somewhat healthier than one might expect, given their very high tax burdens (tax/GDP ratio). For many years, some of the most successful countries didn’t tax

“Ukraine” is basically Russia, and has been for centuries. “Russia” originated around the capital city of Kiev in 879-1240, or “Kievan Rus.” In those days, they fought many battles with Khazaria, which is certainly an interesting angle. Here was Kievan Rus in 1054: In 1240, the Mongols invaded Kievan Rus, reducing the remnants to vassal states. Here is a record of the Mongols’ path of destruction and subjection in the region: Some of the Rus fled the region and organized in the hinterlands around Moscow, from where they eventually drove out the Mongols from the Eastern lands. However, some of the Rus remained around Kiev. They eventually fell under the rule of the Grand Duchy of Lithuania, which drove out the Mongols from Eastern Europe. Lithuania later merged with Poland to form the Polish-Lithuanian Commonwealth (aka Polish Empire). Over the centuries, the Rus remaining in the region acquired their own ethnic character, a blend of Russian and Polish influences, and became “Ukrainian.” Here’s a map of the region in 1619, the maximum extent of the Polish-Lithuanian state. We can see that it extended well to the east of Kiev and the Dneiper river. Here we have a map of the expansion of Russia since 1300, as it slowly drove out the Eastern invaders. Already by 1657, Ukrainians fought against Polish rule, and signed the Treaty of Pereyaslav with Russia, asking for Russian protection of Ukrainians. This was accompanied by the Russo-Polish War (1654-1667), which ended with Russian control of Kiev and the lands east of the Dneiper, as shown in this map: Naturally, over time, this Eastern region became more Russified, while the Western region, still under Polish control, retained its Ukranian/Polish flavor. Note that the southern coast, along the Black Sea, was controlled by the Ottoman Empire. The Ottomans