William L. Silber

 

On his book The Story of Silver: How the White Metal Shaped America and the Modern World

Cover Interview of May 08, 2019

A close-up

I would urge the reader to start with the Introduction, called Obsession, which provides a bird’s eye view of how silver has seduced investors and politicians throughout the ages, and then turn to the last chapter, called The Past Informs the Future, which focuses on the transformation of the white metal from soft money during the nineteenth century to hard asset today. The discussion focuses on the worldwide experiment in fiat currency, pure paper money, which began on August 15, 1971, when President Nixon suspended the right of foreign central banks to convert dollars into gold. The experiment almost failed at the start. The newly-designed freedom from precious metals allowed America’s central bank, the Federal Reserve System, to deliver easy credit in response to political pressure, spawning the Great Inflation of the 1970s and nearly destroying the U.S. dollar. But the chaos unleashed popular support for making price stability the primary objective of an independent central bank.

Since then, central bank independence throughout the world has replaced gold and silver as guardian of the currency. And if central bankers do their job that arrangement will continue but public support can evaporate, undermining banker resolve. The U.S. Congress, for example, can abolish the Federal Reserve with a simple majority vote, suggesting that America’s central bank might run a printing press when rising interest rates bring an avalanche of protest to Capitol Hill. The Federal Reserve has survived the fifty-year trial of fiat currency, but that period is less than a heartbeat in world history. The Soviet Union’s experiment with communism challenged America for world domination for the better part of the twentieth century before expiring like the worthless paper currency of Germany’s Weimer Republic. Central bankers remain on trial, and the uncertain verdict sustains the ancient role of gold and silver as storehouses of value in the new millennium.