Bob Murphy writes:Most people assume that since money is a very useful institution, and since it obviously is not "natural" but was developed by humans, therefore some wise king or group of experts must have deliberately invented money. But this is a classic fallacy that Friedrich Hayek spent much of his career attacking. There are many aspects of society -- including language and the market economy itself -- that were not consciously planned by a group of experts. Drawing on the Scottish thinker Adam Ferguson, Hayek said they are the products of human action but not of human design...
Nobody set out to consciously create a medium of exchange, yet that is what self-interested individuals ended up producing...
Try as they might, central bankers and politicians can't repeal the laws of economics. They can use various means to foist unbacked paper currencies on their subjects, but printing up more bills will still lead to rising prices.
The Fed's "bold" moves may have temporarily averted a crash in the US financial markets, and the European Central Bank's interventions may have postponed a string of defaults by indebted governments.
But more and more investors -- including the central bankers themselves -- know that these stopgap measures merely pushed back the day of reckoning. As the crisis looms, people are rushing back to gold.read the entire essay
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