The latest issue of Forbes features Steve Forbes‘ take on the importance of a stable American currency.
The basic keys to sustainable economic growth are sound money and low taxes. Countries can have lavish welfare programs or even a bevy of state-owned enterprises and still prosper if they get those two things right.
The fundamental importance of sound money has been virtually forgotten by the economics profession today, even though no country has ever achieved sustained prosperity without it. A stable currency is the foundation for the literally billions of transactions and economic arrangements that make growth possible. To simplify, imagine how difficult it would be to function if the number of minutes in an hour were constantly changing. Even cooking would be problematic: If a recipe called for cake batter to bake for 45 minutes, how long exactly would that be? …
… The impact of cheapening money goes beyond economics: “Continuous inflationary periods are often accompanied by a conspicuous decline of morality and civility. Just as people cooperate in the money economy, they cooperate in their daily lives, forming unspoken agreements. During inflation, all the monetary contracts between people are warped and distorted. The deterioration of monetary contracts is matched by a deterioration of social contracts, because monetary contracts, in the end, are also agreements between people.”
