The latest crisis in the European Union—the Irish financial crisis--is the result of the socialization of money, the Euro. The EU has been using the Euro as an enticement for bribing recalcitrant nations into accepting its top-down rule. If governments would not accept the EU’s harmonization policies of high taxes, high regulation of business, and high farm subsidies, they would not get funding at cheap European Central Bank prices. For governments addicted to deficit spending, this was an easy bribe to accept.
In an honest world, one in which money is sound and the rule of law governs commercial transactions, no government would be able to spend beyond its means. If a government threatened default, its bondholders would be able to take possession of assets, to the extent practicable, and then suffer losses. But there would be no bailout. For many years thereafter the government would be forced to live within its means, because its financial reputation would have been ruined. Of course, the very thought of a government being restrained by anything is anathema to modern Progressives, who view government action as the panacea to all of society’s ills. And nothing enables government action like money that can be manufactured in unlimited amounts, if one only adheres to the manufacturer’s demands.
The Irish people may not believe it, but temporarily staying on the Euro is the only thing standing between them and their government’s determination to spend the nation into bankruptcy. Leaving the EuroZone and returning to their own currency would mean hyperinflation and starvation. The Irish government would give in to the demands of powerful constituents that it shower the nation with enough new money to forestall the necessary economic correction. The money printing presses would be running full tilt.
But the Irish should not incur more Euro debt, no matter what terms are offered, for this merely makes the eventual day of reckoning even worse. No, better to face facts now and do what is right. Let the banks go bankrupt. Slash welfare spending. And, most importantly, free the Irish economy from all economic restrictions, even if it means ignoring EU mandates.
Staying on the Euro should be viewed as an intermediate step before returning to the gold standard. At least the Euro provides some restraint on money production, whereas there would be no restraint on punt (the former Irish currency) money production. But gold money is the sine qua non of fiscal discipline. It cannot be inflated and it cannot be destroyed. Governments must tax or borrow honestly for every expenditure. The people are in charge, for government must go to the people for funding rather than to the operators of the money printing press.
The Irish crisis is just the latest indication that the end of the era of fiat money is fast approaching. Despite the daily financial scares, this can be a good thing, for fiat money is the enemy of the peoples’ liberties everywhere. Let the revolution begin in Ireland.