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Gold to dollars to treasury: Dr. Joshua Hendrickson discusses the past, present, and future of money

By Tanner Adomaitis, Staff Writer

Originally Published February 20, 2024

On Feb. 7, Dr. Joshua Hendrickson of the University of Mississippi visited Saint Vincent College (SVC) to give a talk for the Center for Political and Economic Thought (CPET). Hendrickson’s talk, titled The Future of the U.S. Dollar, follows his line of work as an associate professor of economics and chair of the Economics Department at the University of Mississippi and his research focus within monetary economics and historical economic development.

Hendrickson began by offering the term ‘treasury standard’ to describe the monetary system of the United States (U.S.) and how the U.S. uses the position of the U.S. dollar as the reserve currency to issue bonds in exchange for goods and services. His talk would focus on the costs of the treasury standard and predict the implications for the future of the dollar, before branching off to discuss the origins of the system.

“The Federal Reserve has a monopoly over the supply of currency,” Hendrickson said. “This is true of central banks around the world, and this is true around the world. This government monopoly over money actually dates back to Ancient Greece. The system is not new, it’s been around a long time.”

Hendrickson discussed the two competing theories of the emergence of money with one being that money came about spontaneously for the ease of trade and for trust, while the other argues that money would not exist without the government. He followed this with why the state would choose to monopolize money to generate revenue rather than other materials due to such monopolies failing after a short time compared to a monopoly over the production of currency.

“How and why is this monopoly so durable? My argument is that it has to do with emergency financing,” Hendrickson said. “All these other forms of monopolies can get you revenue, but the monopoly on money can generate revenue for the government quickly. Why would you want that? In case you are in war. Historically governments have discovered that this is a way that they can pay for war.”

Hendrickson also noted the additional benefit of a monopoly over money is the protection against a revolution from a competitor within the industry due to the swift revenue generation. He also touched on the crime of counterfeiting, which is considered a form of treason, and how the crime can only be considered treason if the monopoly over the production of currency is necessary for national security and defense.

Throughout his talk, Hendrickson discussed the gold standard, governmental control over inflation and deflation in war times, and the volatility of alternate options to the dollar, such as Bitcoin. Hendrickson also returned to his term the 'treasury standard’ to explain the U.S.’s foreign relations.

“The real birth of the treasury standard is when they want their gold back, the United States starts using diplomacy and argues that since the U.S. is offering protection, they should hold onto the dollars,” Hendrickson said.

Hendrickson began to conclude his talk by explaining how the U.S. achieved its goal of holding the global reserve currency but as a result, incentives have been created that lead to unstainable debt levels, and how such debt levels lead to steep economic costs. Hendrickson claimed that the death of the dollar is long in the future, and that even with the unstainable system of the treasury standard, it does not mean that something is imminent of that the problems can’t be solved.

Hendrickson’s talk concluded with questions from the audience regarding the treasury standard. For those interested, the next CPET lecture will be held Feb. 21, and will feature Dr. Stephen Knott giving a talk titled Coming to Terms with John F. Kennedy.

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