From Nathan Lewis of New World Economics:
Throughout the past hundred and fifty years or so, especially in U.S. politics, a manipulated currency (“soft money”) was favored by left-leaning interests, in practice the Democratic Party. A gold-standard system (“sound money” or “stable money” or “hard money”) was favored by right-leaning interests and the Republican Party.
Along those lines, “soft” money was presented as the friend of the working man, while “stable” money was presented as the favorite of the bankers and capitalist class – a mechanism by which the Scrooge-like lenders stuck it to the hapless masses. This assumption thankfully wasn’t put to the test: the United States maintained the principle of sound money until 1971.
Is this assertion true? In the 1896 presidential election, Democrats wanted what amounted to a 50% devaluation of the dollar via “free coinage of silver.”…
If you want to see what happens to a society that goes through multiple episodes of currency chaos, look to Latin America. The wealthy families of Latin America learned long ago how to deal with the periodic currency crises that have beset the region over the past century. They often keep their assets overseas during a currency devaluation, and then come in later to buy up domestic assets cheaply. The common workingman does not have the ability to do this, and finds only that his salary and domestic assets (savings, real estate, small local businesses) have been devalued along with the currency. Over time, the society tends to bifurcate into a broad class of poor, and a layer of entrenched oligarchs – and foreign multinationals, especially banks, which swoop in to purchase or displace local businesses when they are at their most desperate.
Today, many people think that Greece should leave the eurozone and introduce a new currency, whose sole purpose is apparently to be devalued. These people, for the most part, come from places like the U.S. and Britain…
This is an an unconvincing ad hominem argument. Like saying, if the left argues for it, it must be wrong. The inter-war period provided a wonderful natural experiment for this as countries abandoned the gold standard. The numbers are easy to see: France, the last one off the gold standard, had the worst of it.