End the Fed by Ron Paul

Out of US presidential candidates, Ron Paul is my obvious pick. Smart, thorough, libertarian to the bone. A vivid supporter of sound money and less intrusive state, something that really doesn't fly in today's America.

This book is all-out rage against the Fed a.k.a. the US central bank, and all central banks in general. A strong believer in gold standard, Congressman Paul rightfully says that printing fiat money out of thin air allows the State to grow exponentially, limit personal liberties, take a socialist-fascist-corporatist-you-name-it turn, act unreasonably, and fund pricey wars.

And all of this, at the expense of an ordinary citizen, whose savings are literally stolen through inflation. In a sense, central banking is no different from counterfeiting – does it really matter who prints the new shiny bills, if your money loses in value? Well, turns out quite few people want to see this link between lost savings and Fed policy – a good example in my previous post.

Anyway, it's an easy 200-page read that sums up many concepts that I hold dear to my mind heart. Well, who is John Galt Ron Paul?

Imagine an irresponsible teenager with an unlimited line of credit. The parents, teachers, pastors, and authorities in his life are ultimately powerless to change his habits. Now imagine that teenager armed to the teeth and also immune even from the rule of law. That is what we have with a government backed by a central bank.

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Following creation of the Fed, the government would discover other uses for an elastic money supply aside from keeping the banking system from defaulting on its obligations. It would prove useful in funding war. It is no coincidence that the century of total war coincided with the century of central banking. When governments had to fund their own wars without a paper money machine to rely upon, they economized on resources. They found diplomatic solutions to preven war, and after they started a war they ended it as soon as possible.

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Greenspan’s claim, in an answer to one of my questions, was that the central bankers essentially had become smart enough to achieve all the benefits of the gold standard without its limitations. Of course, it’s the limitations that are so valuable, and the reason the gold standard is so important to a free society. These thoughts he stated brilliantly in his own historic article, “Gold and Economic Freedom”:

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits as silver or copper or any other good and thereafter decline to accept checks as payments for goods, bank deposits would lose their purchasing power and government-credited bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

According to his own logic, Greenspan had simply become a statist.