"The supply of gold is governed by nature; it is not, like the supply of paper money, subject merely to the schemes of demagogues or the whims of politicians. Nobody ever thinks he has quite enough money. Once the idea is accepted that money is something whose supply is determined simply by the printing press, it becomes impossible for the politicians in power to resist the constant demands for further inflation. Gold may not be a theoretically perfect basis for money; but it has the merit of making the money supply, and therefore the value of the monetary unit, independent of governmental manipulation and political pressure. "And this is a tremendous merit. When a country is not on a gold standard, when its citizens are not even permitted to own gold, when they are told that irredeemable paper money is just as good, when they are compelled to accept payment in such paper of debts or pensions that are owed to them, when what they have put aside, for retirement or old age, in savings banks or insurance policies, consists of this irredeemable paper money, then they are left without protection as the issue of this paper money is increased and the purchasing power of each unit falls; then they can be completely impoverished by the political decisions of the 'monetary managers.' "The tremendous merit of gold is, if we want to put it that way, a negative one: It is not a managed paper money that can ruin everyone who is legally forced to accept it or who puts his confidence in it. The technical criticism of the gold standard become utterly trivial when compared with this single merit.

"If the welfarist-socialist-inflationist- trend of recent years continues in this country, the outlook is dark. It is a prospect of mounting taxation, snowballing expenditures, chronic deficits, a budget out of control, an accelerating rate of inflation of the kind endemic in Latin America (at least for the last generation), a collapse of the dollar, increasing world currency chaos, and more and more ruthless price, wage, and exchange controls, leading toward a regimented economy and dictatorship. And if this trend is interrupted temporarily, it may be by riots, assassinations, and a breakdown of law and order.

"If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.

"From a strictly economic point of view, buying gold in a major inflation and holding it probably presents the least risk of capital loss of any investment or speculation. "The possibility of a discriminatory capital-gains tax on gold 'profits,' or even of outright confiscation, cannot be wholly dismissed. We must remember that in 1933, when private citizens began to exercize their clear legal right to convert their Federal Reserve notes and gold certificates into gold, President Franklin D. Roosevelt suspended the conversion, ordered the citizens to exchange their gold for paper money, and made it illegal for private citizens to hold or own gold. In other words, the government not only broke its solemn and explicit pledge to convert its notes into gold on demand, but treated the holder (and dupe) who had taken the pledge seriously as the real culprit. And the Supreme Court later upheld the president's act and the new law."

Henry Hazlitt was a world-famous economist, lecturer, and writer of literacy criticism, philosophy, politics, and economics. He wrote for the Wall Street Journal, the New York Sun, the New York Times and the Nation; he was also editor of the American Mercury. He wrote a column for Newsweek and his column was syndicated in the Los Angeles Times. He wrote numerous books.