Friday, December 24, 2010

Ron Paul Will Be Auditing The Fed

I'm a little late to the party (this is from 12 Nov.) but it is true.
Ron Paul will be keeping an eye on the Federal Reserve.

Ben Bernanke has had his hands full since his first day on the job as Federal Reserve chairman nearly five years ago. It's about to get even tougher.

His harshest critic on Capitol Hill, Rep. Ron Paul of Texas, is about to become one of his overseers.

With the Republicans coming to power, Paul, who would like to abolish the Fed and the nation's current monetary system, will become the chairman of the House Subcommittee on Domestic Monetary Policy.

If you've never heard of the committee before, you're not alone. But Paul promises you'll be hearing a lot more from it.

"It's basically been a committee that's dealt with commemorative coins. I'm going to deal with monetary policy," he said.
Another site described the move this way:
The greatest critic of fiat currency perhaps anywhere in the world is about to take control of a congressional panel that would conduct oversight on the US Federal Reserve bank.

This could get interesting.
Yes it could.

A book by a well known libertarian author on the subject:

The Case Against the Fed

Here is part of a review from 2000:
This book, written by Murray Rothbard, an economist and historian of fairly well known repute, is a scathing attack on not only the Federal Reserve, but the interests that created this institution. Rothbard is an adept writer, as he takes a concept that can be fairly daunting and makes it accessible to the those readers without an economics background. I considered trying to earn a degree in Economics, but abandoned it when I found out that most of it is tied to higher mathematics. I'm more interested in the conceptual side. Rothbard cuts out math and focuses on the real meat of the issue, the concepts that govern money supply and inflation.

The book starts by discussing the biggest problem with the Federal Reserve system, which is fractional reserve banking. Rothbard explains how this system is only functioning because people believe that it works. If there was a run on banks tomorrow, the entire financial system would collapse, because there isn't enough "real" money in reserve to cover all of the bank notes in circulation
How far are we from such an eventuality? Probably too close for comfort.

Of course metals are no panacea. A flood of precious metals from the new world in the 16th century caused severe inflation in Spain. Now a days it would take a gold asteroid to do the job. But that is a possibility that is not out of the question.

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