Reply To: Mises and the Gold Standard


Mises’s view is that if gold is actually money in the world economy, then nothing a government, or governments in concert, of some segment of the world economy can do will eliminate the role of gold in the world’s monetary system. Even if they establish fiat money regimes in their own territory, they must use gold in inter-country exchange with counties still using gold as money. This was the situation of the world, under Bretton-Woods, at the time Mises wrote Human Action in 1949 and revised it for the last time in 1963.

And even today with no country using gold officially as money, gold is still used in inter-country exchange and thereby, retains a monetary role. Mises goes on to write (p. 473) that in the future if technological advance makes gold less suitable as a medium of exchange, then people will adopt something else. Clearly, he didn’t have a gold fetish, but was arguing a general point, that governments cannot eliminate by force people making concerted efforts to have their preferences satisfied, applied to the particular case of money.