Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

782 Money, Bank Credit, and Economic Cyclesextracted each year (South Africa with 34 percent and the formerSoviet Union with 18 percent of the annual production ofnew gold), 88 the relative importance of the volumes they produce,in comparison with the existing stock of gold in the world(which has accumulated throughout the history of civilizationbecause gold is immutable and indestructible), is practicallyinsignificant (no more than 0.5 percent per year). In fact most ofthe worldwide stock of gold is spread among the countries ofthe European Union, America, and Southern Asia. Moreovernow that the Cold War has ended, it is unclear how nations likeSouth Africa and the former Soviet Union, whose annual goldproduction amounts to only a tiny fraction of the world’s totalstock, could play a disruptive role, especially when they wouldbe the first nations to suffer from the effects of any policy aimedat artificially reducing the production of gold.In any case we must recognize, as we will see in the nextsection, that the transition toward a monetary system such asthe one we recommend would inevitably raise by several times(maybe more than twenty) the market value of gold today interms of current monetary units. This increase in value wouldinitially and inevitably lead to a significant, one-time capitalgain for the current holders of gold and in particular, companieswhich mine and distribute it. However the desire to preventcertain third parties from profiting (perhaps) undeservedlyfrom the reestablishment of a monetary system withso many benefits for society as the one proposed constitutes noprima facie argument whatsoever against such a system. 8988 Skousen, Economics on Trial, p. 142.89 Rothbard states:Depending on how we define the money supply—and Iwould define it very broadly as all claims to dollars at fixedpar value—a rise in gold price sufficient to bring the goldstock to 100 per cent of total dollars would require a ten- totwenty-fold increase. This of course would bring an enormouswindfall gain to the gold miners, but this does not concernus. I do not believe that we should refuse an offer of a massentry into Heaven simply because the manufacturers of harps andangels’ wings would enjoy a windfall gain. (Rothbard, “The Casefor a 100-Percent Gold Dollar,” p. 68; italics added)