The Republic of Molossia is a 1-acre micronation in Nevada not recognized by anyone on Earth. Its currency, however, is sounder than the dollar, pegged to a fixed commodity the way U.S. currency was once fixed to the value of gold, a policy that serves as a built-in barrier to inflation.
Molossia is a 1-acre joke and a tourist destination. Its “president,” Kevin Baugh, rules as a benevolent dictator over 35 citizens — 32 of his relatives and three dogs. Transactions are conducted in Valora, and bank notes and coins are issued in various denominations.
The currency’s value is fixed to Pillsbury Chocolate Chip Cookie Dough at a rate of five Valora per 30-ounce tube, the way the dollar was once fixed to the price of gold, limiting the amount of cash the government could inject like heroin into the economy.
“Our mission,” according to Molossia’s website, “is to pursue sound monetary and financial policies aimed at price stability and create an enabling environment for sustainable economic growth,” worthy goals for the other 2.43 billion acres of America to pursue.
Inflation is at its highest in 41 years and the nation is in a recession, defined as two consecutive quarters of negative economic growth. Printing presses at the Treasury are going full tilt, with 80% of dollars in circulation by December 2021 having been created in the previous 22 months.
In dollar terms, $4 trillion existed in January 2020; by October 2021, the number had increased five times to $20 trillion, and still, the lust for easy money continued, meaning greenbacks in your wallet, 401(k), and bank account are shedding value every day.
On Friday, Jeff Sommer wrote in The New York Times, “The latest government figures showed that in August, even a fistful of dollars bought 11.4% less food, 25.6% less gasoline, and 6.2% less housing than they did a year earlier.”
When America followed the gold standard, it needed sufficient reserves on hand to convert paper money into bullion. Since, like tubes of cookie dough, the amount of gleaming bars it was possible to accumulate was finite, it prevented the dangers of fiat currency that we’re experiencing today.
The nation abandoned the system for the most part in 1933, seeking more flexibility in the name of combating the Great Depression, and cut the last remaining links between the dollar and gold in 1971, when President Richard Nixon feared that foreign nations might call in the notes and clean out Fort Knox.
But by empowering flawed human beings at the Federal Reserve to crank out endless greenbacks as if the faces of dead presidents somehow gave them value, there was no longer any restraint. A member of President Ronald Reagan’s Gold Commission, Rep. Ron Paul, explained the dangers in a 2021 New York Sun column.
“Ronald Reagan once told me that no nation has abandoned gold and remained great,” he wrote. “Fifty years after Nixon closed the gold window, prices are heading toward 1970s-era increases. … It is clear that America is heading toward another Federal Reserve-created economic crisis.”
The crisis is here, and although the gold standard seems a relic of the dusty days of President William McKinley, it’s worth another look to rein in the big spenders in Washington who have delivered nothing like the “prosperity” and “sound money” that produced to at last end the Long Depression of the Gilded Age.
“Inflation is just like alcoholism,” Nobel Prize-winning economist Milton Friedman said. “In both cases, when you start drinking or when you start printing too much money, the good effects come first, and the bad effects only come later,” and like alcoholism, the fixes are long and painful.
But the first step is the same for both spending and drinking too much: Stop pouring.
Molossia may be a joke of a country, but all good comedy — as my late boss Rush Limbaugh used to say — is based in truth. And when a nation seeks to print its way to prosperity with fiat currency, it’s no laughing matter. It’s the surest way to ensure that an economy, like the fabled cookie, crumbles.
• Dean Karayanis (@HistoryDean) is a producer of the “Clay Travis & Buck Sexton Show,” longtime Rush Limbaugh staffer, and host of the “History Author Show” on iHeartRadio.