From time to time, I’ll read an article on a libertarian or paleocon site that bemoans the end of the gold standard, and dreams of a day when we can replace those worthless fiat banknotes we carry around in our pockets with some form of money that’s firmly backed by something of real value.

Fiat currency leads to inflation, which whittles away the savings of people who try to store up their value in money. It also is a sort of grandiose, slow-burning Ponzi scheme, which strikes some people as fundamentally dishonest.

But attempts to establish a new medium of exchange that is backed by something concrete have had a hard time getting off the ground. In part, this is because the government jealously guards its monopoly on issuing legal tender (with some exceptions).

But also, most people really don’t pine for the days when they could take a $50 silver certificate to the U.S. Treasury and demand fifty silver dollars. People seem content to use inflationary fiat currency as a medium of exchange, and to use other mechanisms to attempt to store economic value.

, the United States Postal Service began issuing a non-inflationary, value-backed currency in the form of its “Forever” stamps. A sheet of 18 stamps, about the same size as a dollar bill, will “forever” (that is, as long as the Postal Service honors its promise) get 18 first class envelopes from here to there, which seems to me a more constant measure of value than even a particular weight of gold. These sheets have a built-in exchange rate with U.S. currency (currently one sheet is pegged at $7.38).

I wonder that the gold bugs haven’t yet converted their greenbacks to stamp sheets.


Some newfangled neuropsychological research indicates that similar regions of the brain “light up” in people when they donate money to a good cause voluntarily and when money is involuntarily taken from them for the same good cause. People are wrapping big stories around small data points with this one, but it may give some insight into the psychology of taxpaying:

The brain responses were measured by a functional MRI machine as a series of transactions occurred. Sometimes the student had to choose whether to donate some of her cash to a local food bank. Sometimes a tax was levied that sent her money to the food bank without her approval. Sometimes she received extra money, and sometimes the food bank received money without any of it coming from her. Sure enough, when the typical student chose to donate to the food bank, she was rewarded with that warm glow: increased activity in the same ancient areas of the brain — the caudate, nucleus accumbens and insula — that respond when you eat a sweet dessert or receive money. But these pleasure centers were also activated, albeit not as much, when she was forced to pay a tax to the food bank. This doesn’t mean that the student, or anyone else, would necessarily enjoy writing a check to the IRS that would be spent on plenty of programs less appealing than a food bank. It is more like the tax collected by a state lottery that dedicates its profits to schools.


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