September 1, 1996

In Defense of Fiduciary Media

  • Lawrence H. White

    Distinguished Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics
  • George Selgin

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Fiduciary media are not fiat money. A monetary system with a commodity standard, competitive banking, and the freedom to use fiduciary media among consenting transactors is consistent with justice, efficiency, and economic stability. It is preferable on these scores both to a system (like today's) where the law has forced money-users to give up gold and gold-redeemable fiduciary media in favor of fiat money, and to a system (like those proposed by 100-percent-reserve advocates) where the law restricts money-users from holding any or some types of fiduciary media.

Read the article at the Mises Institute.