Choice in Currency

Choice in Currency

A Way to Stop Inflation

By:

F. A. Hayek

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Summary

A path-breaking essay by Hayek, newly in print in cooperation with the Institute of Economic Affairs, this piece first appeared in 1976, during an inflationary bout in the U.S.. Hayek saw that it was crucial to bring the forces of competition to bear in currency markets, not just between countries but within them as well.

All people should be free to use any currency of their own choosing, even if that means rejecting the favored domestic one. This provides a check against inflation, permitting citizens to keep assets denominated in any unit.

Governments, then, would have greater incentive to avoid inflating because a depreciating unit would lead people to flee to other currencies. At least this would work as some check, and it would be a great improvement over the existing system in which citizens in a currency region are caged sheep led to the slaughter.

This is an important essay in many respects, because it represents a reform that could take place right now, one that would change the institutional incentives faced by central banks. This is not his full plan for sound money but rather a creative idea to diminish the total power of central banks within individual countries.

Summary courtesy of the Ludwig von Mises Institute. The Mises Institute is the premier organization in support of the free market, peace and prosperity. They provide free educational material, books audio books, lectures and courses that free your mind. This site would not exist were it not for the generosity, hard work and dedication of the Mises Institute, its employees, fellows and its benefactors. Books of Liberty is eternally grateful to all of their work and efforts. Please consider supporting the Mises Institute in any way you can.

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