MONEY MARKETS AGAINST GOVERNMENTS: TWO CENTURIES OF A SPECTACULAR GAME

Abstract

Monetary history is the chronicle of an unending conflict between the goals of the state and the interests of the individual. In using the power of money creation to gain control over economic resources, governments violate the interests of individuals, more subtly to be sure, but in a manner not essentially different from the foraging of an invading army. Resistance to the exactions of the state has taken two forms in modern times: the writings and counter‐speculations of three great economists—Richard Cantillon, Henry Thornton, and David Ricardo—and more recently through the operations of the money markets. What is remarkable is that this contest between the state and the individual has been staged and restaged without significant variation for more than 200 years. As Santayana said, “Those who cannot remember the past are condemned to repeat it.”