Wednesday, 25 November 2009

From "Denationalisation of Money" by Hayek

Mi propuesta concreta consiste en que los países se comprometan mediante un tratado formal a no obstaculizar en manera alguna el libre comercio dentro de sus territorios de las monedas de cada país (incluidas las monedas de oro) o el libre ejercicio, por instituciones legalmente establecidas en cualquiera de los países firmantes del tratado, de la actividad bancaria sin trabas.

F. Hayek, Denationalisation of Money (1976)

A strong discussion is being held in the world on how to tackle the current financial, economical and credit crisis and on how to prevent the crisis from ocurring again in the future. Everyone is speaking, some are listening, most are waiting for others to come up with the solution, but only a very few are actually giving original, potentially appropriate ideas. Well, that is what usually happens in any debate.

However, no matter how one can argue for a better answer or how inappropriate the executed propositions are, only the empowered parties are able to put their ideas into practice within the scope of their power. Thus governments are able to take their (almost always) wrong decisions and waste taxpayers' wealth; companies' and banks' directors are able to take their (often) wrong decisions and waste shareholders' wealth; property or capital owners are able to take their (frequently) wrong decisions and waste their own wealth; workers are able to take wrong decisions and waste their own efforts.

Free market makes directors, shareholders, workers and property or capital owners accountable of their own decisions. However, governments and governors are not subjected to the free market but have enough power to avoid any accountability (even before the taxpayer). One of the main signs of this lack of accountability for governments is inflation or depreciation of the currency.

Hayek claims in his "Denationalisation of Money" that History is in a great part a series of inflations caused by the authority and the governments. I concur.

Love and freedom.