There are many possible routes to sound money. On the 18th of May, I outlined my plan to reform the banking system. Yesterday we published an alternative proposal from our Founding Fellow Dr. Anthony J. Evans. Today I’d like to highlight some pure Austrian thinking from Philipp Bagus, Assistant Professor at Universidad Rey Juan Carlos, Madrid.
His paper is entitled Monetary Reform – The Case for Button-Pushing. The abstract lays out his approach:
In this paper I present a monetary reform plan that seeks to achieve a sound monetary system. I suggest the following three criteria of a good reform: it must be ethical, it must be based on sound economic theory and it must leave room for evolutionary processes. Based on these criteria and applying them to the monetary system, I argue for an immediate cancellation of all government intervention into the monetary realm.
Most plans for monetary reform have been interventionist and unethical and they impose results. This is partly so, because of a problematic underlying economic theory regarding deflation. Sometimes the reform plans are in apparent contradiction to other writings of the very same author. An ethical, dynamical reform based on value free economic analysis consists in the immediate abstention of state intervention into monetary affairs (“button-pushing”). This plan would very likely imply the deflation of the old money and the purge of the banking system, i.e. those consequences that other reforms tried to avoid. Even though this plan is far away from getting only near to a political approval it is important to show its advantages. It can serve as a standard for comparison.
Please read the whole paper.