Do the Swiss People Understand that Gold is Money?

On November 30th the Swiss public will decide whether or not to return to a gold-backed currency system. If Switzerland, the dominant financial hub in terms of offshore wealth, would return to gold, this would be a game changer and would determine many things in the policymaking of our nation. On the monetary level, the power of the Swiss National Bank will be somewhat constrained and the Franc will be (at least partially) backed by gold. It will mean that the Swiss Franc will not be just a figure, but this figure will reflect value and wealth. I firmly believe that a strong and stable currency is the cornerstone of any society that respects individual liberty and private property rights. You will therefore find that this issue of the Outlook is concerned with individual freedom and liberty. It is my great pleasure to include an interview with a person I am grateful to have met and who was able to inspire many people for the cause of liberty: Dr. Ron Paul. Additionally, we included our book summary by the spearhead of Austrian Economics, Prof. Friedrich A. Hayek where he proposes to separatethe state from currency production.

All the eyes of hopeful believers in freedom and individual liberty on this planet are set on Switzerland and the upcoming “Gold Initiative”. On November 30th, the Swiss people can correct a mistake done 14 years ago and return to a currency backed (partially) by physical gold. Some of us are still aware while others have only recently realized that a strong currency is the primary guarantee for sovereignty, stability and prosperity of a nation, as well as the safeguard of the freedom and liberty of its people, because it offers the best protection against government despotism. Until the end of the 1990s the Swiss constitution clearly stated that money in circulation needed to be backed by a minimum of 40% of gold, with the aim to limit the power of the central bank to create unlimited currency out of the printing press. It has now become obvious that weakening the currency never really created wealth, instead it was just redistributed to certain political pressure groups and lobbyists at the expense of the hard working and productive people of Switzerland (and the world for that matter).

Switzerland: The Last Bastion of Liberty

The Swiss model is unique and exemplary! But the truth is that this small federalist country is the last bastion of liberty, where the people can and do limit the power of politicians by collecting 100’000 signatories to challenge a decision made by our parliament (in a so called referendum) or by launching an initiative. This affirms that the Swiss people themselves and not the parliament are the real sovereign. This mechanism protects the Swiss against a totalitarian state. In the etatist world we live in today some may consider it ‘a privilege’. In this regard I always like to refer to the interpretation of the word ‘democracy’ which goes back to Aristotle. ‘Demokratia’ in Greek is simply the rule of the people. ‘Demos’ represents the village or the people and ‘kratia’ stands for strength, power or rule. In a democracy, the power lies with the people. Although, the Athenian model of elite rule is not the example we strive for here, the point being made is that democracy does not turn into a wild animal as long as power within a society is exercised at the lowest possible level whereby people only decide about things which affect them directly in their municipalities, cities or ‘cantons’ (State).

Independent Currency = Freedom

When we look outside of Switzerland it is easy to recognize how the Swiss model successfully protects individual liberty and the property rights of each person better than in any other surrounding centralized government system. Outside of Switzerland politicians have the power to make the law and decide on behalf of the people, whereby the individual is downgraded to a tax paying subject. Therefore an independent hard currency is the most important ingredient when creating the basis for an order based on freedom and liberty. Alan Greenspan wrote back in the following passages in his essay “Gold and Economic Freedom” (originally published in Ayn Rand’s “Objectivist” newsletter in 1966) before he changed sides and took over one of the most powerful jobs on the planet:

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. (…) The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

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