The case for gold is overwhelming. Only commodity money can constrain government's insatiable appetite for inflation. Fiat money gives government unlimited power to expand the money supply, funding wars, boondoggles, and welfare programs that taxpayers wouldn't willingly support. The result is chronic inflation, business cycles, and the gradual transfer of wealth from productive citizens to the politically connected. The attacks on gold as 'barbarous' are propaganda designed to justify government monetary monopoly. Gold worked magnificently for centuries, providing stable purchasing power and facilitating global trade. The problems attributed to the gold standard were actually caused by government interference with the gold standard—fractional reserves, legal tender laws, and central banking.

While I share Mises's appreciation for the gold standard's constraining effect on government, I'm skeptical that resurrecting it is practical in today's political environment. Governments won't voluntarily accept genuine gold standard discipline—they'll rig the rules as they did before, maintaining the form while evading the substance through fractional reserves and sterilization policies. A better approach is to denationalize money entirely: abolish legal tender laws and allow competing private currencies to circulate freely. Market competition would select for stable currencies, achieving the discipline of gold without requiring political commitment to maintaining gold convertibility. This competitive solution is both more robust and more adaptable than a government-administered gold standard.

The gold standard Mises defends was actually a government-managed system with serious flaws. Central banks held gold reserves, manipulated discount rates, and sterilized gold flows to prevent automatic adjustment. The interwar gold-exchange standard was even worse, creating a fragile pyramid of liabilities. A genuine gold standard would involve competitive banks issuing notes redeemable in gold, without central bank intervention—free banking on a gold base. This would combine gold's long-run stability with the short-run elasticity that free banking provides. Such a system existed in Scotland and other places and worked well. The government-run gold standards that Mises and Rothbard defend were compromised systems that retained government monetary monopoly while using gold as a constraint.

The stabilization argument is a Trojan horse for inflation. In practice, 'price stability' means preventing prices from falling, even when falling prices reflect productivity growth—a sign of economic health. This asymmetric policy amounts to continuous inflation masked by productivity gains. Moreover, focusing on the 'price level' distracts from the real problem: distortions in relative prices caused by monetary expansion. Even if the CPI remains stable, monetary expansion can drive asset price bubbles (housing, stocks) while distorting the structure of production. The sound money approach rejects stabilization in favor of a predictable monetary rule—ideally, a gold standard that limits money creation regardless of price level movements.

The knowledge problem dooms stabilization policy. Central bankers don't know what the 'correct' price level is, they don't know which price index to target, they don't know what policy will achieve the target, and they face inevitable lags in both information and policy effects. The result is policy that amplifies rather than dampens fluctuations. More fundamentally, price level stability is the wrong goal. What matters is maintaining the coordinative function of the price system, which requires stable money demand relative to supply, not a stable CPI. Free banking would achieve this automatically through competitive adjustment of currency supply to currency demand, without requiring anyone to target a price level.

Under free banking, the price level would vary with productivity changes, falling during periods of rapid productivity growth. This is actually beneficial—it rewards savers by increasing the purchasing power of their holdings and doesn't require any deflationary policy that would cause recession. The stable price level ideal assumes that all price changes are bad, but prices should fall when costs fall due to innovation. Free banking accommodates this by allowing the money supply to expand with money demand (driven by economic growth) but not faster. This provides the optimal monetary policy without requiring anyone to calculate or target a price level—it emerges automatically from competitive banking.

The political economy of fiat money explains why reform is so difficult. The current system serves powerful interests: government can finance itself through inflation rather than unpopular taxation, banks profit from credit creation, and politically favored groups receive subsidies through inflation. The victims—savers, workers on fixed incomes, those on the periphery of the financial system—lack political organization. Education about the evils of inflation is necessary but not sufficient. What's needed is a political movement committed to radical reform: abolishing the Federal Reserve, returning to a gold standard, separating banking from government, and ending the legal tender privileges that enforce use of fiat money. Nothing less will suffice.

Rather than seeking political reform of government money—which seems increasingly unlikely—we should pursue the denationalization of money. Abolish legal tender laws and allow private currencies to compete. Technology now makes this feasible in ways that weren't possible in Mises's time. Cryptocurrencies, commodity-backed digital currencies, and competitive bank notes could all circulate, with market forces selecting for stable, trustworthy currencies. This bypasses the political obstacles to official reform while achieving sound money through market competition. It's more realistic and more robust than hoping for political conversion to sound money principles.

Free banking offers a middle path between government fiat money and a government-administered gold standard. Allow banks to issue competing currencies subject only to basic fraud laws and bankruptcy rules. Let the market determine what these currencies are redeemable for—gold, silver, commodity baskets, or other assets. This achieves the benefits of sound money (stability, market discipline, competitive efficiency) without requiring political authorities to manage the system. Historical experience shows that free banking works well when tried. The obstacles are not technical but political—vested interests in the current system, and widespread but mistaken beliefs that money must be government-provided. Education and gradualist reform are the path forward.