Economics, Eugenics and Population Control

I was reading the latest edition of Imprimis from Hillsdale College the other day. Imprimis is latin for “in the first place”. Hillsdale College is a private college in Hillsdale Michigan that has never accepted one dime of government funding. You can not attend there if you can not pay for it by yourself, they will not accept “Pell Grants” or Stafford loans which are backed by the government. They promote conservative principles in regard to governing our country and that includes monetary policies as well.

The article was an adaptation from a speech by Seth Lipsky, the founding editor of the New York Sun delivered at the Hillsdale National Leadership Seminar in Poenix Arizona on Feruary 16, 2011. It was titled “The Floating Dollar as a Threat to Property Rights”. It focused upon the valuation of money in regards to pay for federal judges.

According to the Coinage Act of 1792 the value of a dollar was fixed at 371 ¼ grains of pure silver (this was based on a coin in wide use at the time called the Spanish milled dollar). Now the article failed to mention the conversion factors for grains to ounces so let’s first consider that convention. Precious metals are measured in Troy ounces. There are 12 troy ounces in one pound. One troy ounce is equal to 480 grains. Therefore, the original value of the American Dollar was .7796875 Troy ounces of pure silver. At today’s spot value of silver ($37.83 per Troy ounce), that original dollar was worth $29.50 in today’s dollars! My, how our dollar has devalued over the 219 years since it was introduced. I wondered, why has this devaluation occurred and what could be driving it?

In making comparisons of values over time, there are several factors to account for.  Everyone has heard about inflation. Inflation is defined as the situation that results from when there are too many dollars chasing too few goods. It is easy to understand this from a simple supply and demand view. When there are many people with money and there is not enough goods to go around, some people will be willing to pay more in order to acquire one or more of the goods available for sale. This is one of the natural mechanisms that operate in free markets to maintain equilibrium. The opposite situation would be an example of deflation but it operates in the opposite direction forcing prices lower, although in reality supply is adjusted to cancel this effect. But are there other significant drivers involved with inflationary pressures on an economy besides supply and demand? By the way, supply and demand principles apply to both sides of the economy, the goods and services sought, and the actual monetary supply (the amount of money in circulation at any given point in time). And then there are the monetary policies that act to moderate access to the money supply (interest rates, laws, access to credit, regulatory barriers etc.). We have heard of easy access to money causing “bubbles” and tight access to money causing businesses to close resulting in job losses (both conditions often have roots in well-intentioned albeit misguided administrative policies).

What occurred to me last night in a dream was that nowhere have we heard much of the effects of overall global population growth on monetary policy as it relates to currency valuations around the world. Let’s consider for a moment the fact that there is only a finite supply of the various precious metals. There is only so much gold on the planet, only so much silver, and only so much platinum. Let’s assume that most of these precious metals have been found, mined, and refined and are in circulation already. As the global population continues to increase over time, the value of currencies based on precious metals must naturally decrease.

If all global currencies were backed by precious metals, then overall poverty would be on the increase because of dilution of monetary values due to the increasing population growth. To combat poverty, progressives like FDR started the United States down the path towards a fiat currency. Nixon finished what FDR began by completing the removal of our currency from the gold standard in 1971.

Now that we have a floating currency the effects of global population growth in general and United States population growth in particular on our monetary devaluation have been lessened somewhat. What remains is regulation of the monetary supply through the FED and natural market forces with market forces being the more influential of the two.

In 1800 the estimated global population was about 1.125 billion. Today’s estimate is 6.9 billion! This explosion in population is a good argument for fiat currencies as a way to keep many people from falling into poverty. However, even Jesus told us “the poor will always be with you”. Perhaps there is a better way besides monetary policies to combat poverty that we just have not yet considered.

This article up to this paragraph was taken from an email that I sent to family members about two weeks ago. What makes this remarkable is that the very next issue of Imprimus that I received just the other day had an article in it Titled "The Not So Dismal Science: Humanitarians v. Economists" that completely validates my supposition that there is in fact, a better way to raise people up out of poverty than just monetary policies!

What was particularly interesting was how the enlightened humanitarians referenced in the article were all in favor of population control instead of encouraging economic opportunity for all as the great economists of the day were! Why this was particularly poignant to me was how my own mother responded to my original article. She said that she was a believer in population control. She said that we should actually support an effort here in America to control the population!

I couldn't believe what I was hearing! I reminded her about what Hitler was all about with his campaign to exterminate the Jewish race. How that an American atheist named Margaret Sanger picked up the hitleresque mantle of eugenics and focused it like a laser on the black race here in our own country. I reminded her how China's hideous experiment in population control was wildly skewed against females and led to rampant human rights atrocities.
Every one of my examples was also referenced in this newest article of Imprimus and well as a few others. Like the mass forced sterilizations in India, which caused the political backlash that ousted Indira Gandhi from power. 
I am outraged at the mere thought of any semblance of population control. I couldn't believe what my own mother was saying! It makes me wonder sometimes if I could actually belong to the postman! How could I have come from those loins?
It is nice to be validated and vindicated by this article taken from the speech of William McGurn delivered at Hillsdale College on March 3rd 2011. William McGurn is the Vice President of News Corporation and writes a weekly "Main Street" column for The Wall Street Journal.
You can view the latest article in Imprimus at the following link http://www.hillsdale.edu/news/imprimis.asp