Originally posted Tuesday, January 29, 2013


High among Hollywood blockbusters is the Lord of the Rings trilogy, accompanied, now, by The Hobbit.

Its central device is a quest for possession of one gold ring.

The Wikipedia provides its background:

Image courtesy of Wikipedia

“The Ring seemed to be made simply of gold, but it was impervious to damage. It could be destroyed only by throwing it into the pit of the volcanic Mount Doom where it was originally forged. Unlike other rings, the One Ring was not susceptible to dragon fire.[2] Like some lesser rings forged by the Elves as “essays in the craft” – but unlike the other Rings of Power – the One Ring bore no gem. Its identity could be determined by a little-known but simple test: when placed in a fire, it displayed a fiery Tengwar inscription in the Black Speech of Mordor, with two lines from a rhyme of lore describing the Rings:

Three Rings for the Elven-kings under the sky,
Seven for the Dwarf-lords in their halls of stone,
Nine for Mortal Men doomed to die,
One for the Dark Lord on his dark throne
In the Land of Mordor where the Shadows lie.
One Ring to rule them all, One Ring to find them,
One Ring to bring them all and in the darkness bind them
In the Land of Mordor where the Shadows lie.

“The lines inscribed on the Ring (in boldface above) were pronounced by Sauron when he forged the Ring. The Eleven smiths heard him chanting them, and thereupon became aware of his purpose and took off their own Rings to foil his plan.”

“Tolkien wrote the following about the idea behind the One Ring: ‘I should say that it was a mythical way of representing the truth that potency (or perhaps potentiality) if it is to be exercised, and produce results, has to be externalized and so as it were passes, to a greater or lesser degree, out of one’s direct control.’ (Letter #211, 1958).”

America’s protracted experiment with centrally-planned monetary policy — the exercise of potency by elite civil servants — has demonstrated the truth of Tolkien’s dictum:  the potency “passes … out of one’s direct control.”  Thus the supply of money is best left to be determined within the market itself, with the central banking authorities relegated to the more humble role of maintaining the value of the currency as a fixed, invariable, weight of gold.