The government's monopoly on money creation allows confiscation of wealth through inflation: an undemocratic and illegitimate tax.

 

Why is this idea important?

Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency. Gresham's Law describes this phenomenon, which can be summed up in one phrase: bad money drives out good money.

 

In the absence of legal tender laws, Gresham's Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society.

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