(XXX) Legalize Currency Competition and End the Fed
We can tell Rep. Ron Paul is having an impact on ideas.
Newt Gingrich is now all of a sudden saying, even if it’s totally disingenuous and self-serving, that Dr. Paul has been right on adopting the gold standard and limiting the Federal Reserve System.
Without Ron Paul, Mr. Gingrich would never utter anything like that.
Oppositely, Rick Santorum has stupidly been going the other way. He’s saying, e.g., (1) we need inflation for economic growth and (2) the purchasing power of the dollar under a gold standard went down.
Historian Thomas Woods has exploded Rick Santorum’s statements.
Both points are just factually wrong when looking at history.
There’s no way around that.
And they’re wrong theoretically.
Wouldn’t it be nice if Ron Paul directly challenged Rick Santorum in the next debate on this issue?
I would love to see that.
Okay, now we better get to Ron Paul’s book…
A Few Notes:
- We can’t limit government without limiting its power of money creation.
- With money creation, it’s a lot easier to fund the welfare-warfare state.
- Before money was tied to something whose supply was very limited.
- Hence, the supply could not easily be increased or manipulated.
- The Federal Reserve System greatly changed this.
- The issuance of paper legal tender money could be effortlessly increased.
- Hence, this “removed more of money’s commodity backing.” (page 199)
- [Added Note: this was a problem with the gold standard; it was easy to abuse.]
- We are at a unique point: more know about this issue than ever before.
- Existence of Fed creates moral hazard [because it’s there ready to bailout].
- If a family is in trouble, we wouldn’t advise them to go on a spending spree.
- But Keynesians recommend it! That’s why there’s no clear recovery.
- Lots of demagogues enter into this issue and prevent an intellectual debate.
- A free-market would have no central bank.
- And in a free-market there would be currency competition.
- Nobel-prize winner F. A. Hayek made the case for that kind of competition.
A few more points let’s add..
We should think about it this way: fiat paper money can potentially drop to a value of zero, whereas a free-market gold or silver money couldn’t. Which then is safer?
Hyperinflation can only happen with paper money. It has never, and could never, happen when the money is as good as gold. Which then is safer?
Paper money’s value always has fallen, whereas a free-market money’s value would do the opposite. Which then is better for the average man?
I think we made Ron Paul’s case.
He doesn’t see a return to the gold standard as the way to go, however.
Ron Paul is for something much better, i.e., a free-market money. The gold standard’s defects can then be avoided. History shows that any government standard is much too easy to abuse.
Dr. Paul knows that, and uses that knowledge to build a better system.
On this, he advises us to read Choice in Currency by F. A. Hayek.
Another issue has been reviewed. So on to the next at the Ron Paul Notebook…
I hope you join us.
