The topic of sound money has enduring relevance for those who cherish a prosperous society and a free enterprise system. However, a period of neglect was set among most academics during the “great moderation” of the 1980’s and early 2000’s. As much of the think tank community shifted focus from research to advocacy, almost no one sounded the alarms on the scourge of inflation or discretionary monetary policy, which has returned with the Federal Reserve’s responses to shocks within the real estate market and financial services industry during the Great Recession. The United States’ long-term challenge with unfunded liabilities in the Social Security and Medicare programs will only exacerbate the problem.
Against this backdrop, there is little consensus among the community of monetary policy scholars about what is to be done. Has the world changed in fundamental ways to reduce the relevance of previous generations’ contributions on sound money? Or does our period cry out for leadership to endure a period of “tough medicine” to return the U.S. to long-term monetary health and fix our broken monetary system?
To answer these questions the Atlas Network launched in January 2009, the Sound Money Project. The project believes that an enlightened citizenship, aware of the immorality of the state manipulating money and credit, is the most secure barrier against the destruction of our assets.
The mission of the Sound Money Project (SMP) is to engage and collaborate with organizations in the Atlas Network to raise awareness throughout the United States about the inherent problems of our current monetary system and develop a set of prescriptions that can serve as the “North Star” of future educational and advocacy efforts by free-market organizations.
The Project’s goals are to be a catalyst to ongoing work on this topic by think tanks and academic centers, to frame the moral debate on the topic, and to ensure that the importance of sound money is not neglected.
The first goal of the Sound Money Project (SMP) is to develop a set of prescriptions that can serve as the “North Star” of future educational and advocacy efforts by free-market organizations. The project is engaging experts in the task of refining and promoting “sound money” principles with relevance to the world’s current challenges through publications and events related to the topic. The second goal is to mobilize and collaborate with organizations in the Atlas Network to raise awareness throughout the United States about the inherent problems of our current monetary system, and to raise interest in the set of solutions that comes out of the first goal becoming more active in promoting public policies that are consistent with these principles.
To start the discussion our Project Co-Director Dr. Judy Shelton has developed 10 core principles of Sound Money set forth in our first publication written by Dr. Shelton, A Guide to Sound Money:
I. Honesty in Money – Money should serve as an honest measure and reliable store of value.
II. Free Markets Need Accurate Money – Money should convey price signals with clarity so that free markets can operate efficiently.
III. Clear Price Signals are Key to Economic Stability – When price signals are distorted through loose monetary policy, economic resources are misallocated and financial capital is misdirected.
IV. Integrity in Money – Sound money forges the link between effort and reward by providing a dependable store of value over time.
V. Ability to Plan Ahead – When money can be trusted, individuals are able to plan ahead with confidence.
VI. Consistency in the Worth of Money Over Time – The virtue of saving goes unrewarded when purchasing power is undermined by inflation.
VII. Asserting the Right to a Reliable Dollar – Money’s most important function is to provide a useful tool for private enterprise – not to serve as an instrument of government policy.
VIII. Constitutional Imperative in Money – The Constitution gives authority to Congress to “coin” money, not print it, in keeping with the Founders’ intention to prevent abuse of money powers.
IX. Limiting Government Intervention – The more power we grant to government to determine the value of money, the more helpless we become as masters of our own economic fate.
X. Sound Money Would Restore America’s Strength – A sound dollar would be a testament to our national values and founding principles.