|Cato Policy Analysis No. 16||September 9, 1982| by Joseph T.
Salerno Joseph T. Salerno is an assistant professor of economics
at Rutgers University. The case for a free-market commodity
money as provided by a genuine gold standard is simple yet
decisive. It is based on the insight that the root cause of
inflation in the modern world is the almost absolute monopoly
over the supply of money which all national governments possess
within their respective political jurisdictions. That such an
arrangement necessarily produces inflation is not difficult to
explain. To begin with, almost all governments obtain the bulk
of their revenues through taxation which, regardless of its
particular form, ultimately involves -- indeed, is definable as
-- a coerced levy upon the monetary incomes or assets of its
citizens, i.e., the net taxpayers. However, whatever ethical or
practical considerations may be brought forward to justify
taxation, since it is essentially coercive, tax increases have
always found little favor among t