A new Gold Commission. It’s going to be a plank in the Republican Party Platform for 2012! Thanks in no small part to Ron Paul’s educational efforts affecting not only his delegates but Republican voters and the occasional establishment-type. In this era of the printing press (actually, computer-clicks), and all of its trappings—inflation, bailouts, corporatism, militarism—the American people, whether conservative or liberal, can’t help but notice the Federal Reserve’s role in growing the government and weakening the dollar. And while there are many disagreements about what should be done, most informed people that are not a part of the mainstream Republican apparatus or the mainstream Democratic apparatus know that something needs to be done.
Whether its ending the Fed, auditing it, tying it to a commodity, subjecting it to competition, allowing the market to set the interest rate, getting rid of interest rates altogether, replacing the Fed with some other body, replacing it with Congress or one of its Committees, replacing it with nothing, or some combination thereof, these people know something needs to happen if we are to discontinue our reckless monetary policy, the Fed needs to change its ways or take a hike.
Ideally, from an Austrian perspective, the Fed should first be fully audited so that Congress and the American people can be made aware of just how bad things are. Things like how much gold is really in Fort Knox, how much money political favorites and special interests really got, how large the payments to Europe and places like Libya before Gaddafi’s ouster really are, why the interest rate is where it is and who benefits either financially or politically, and the effects of other policies.
Then, perhaps after some of these things are dealt with, legal tender laws should be repealed, making it fully legal for other currencies to arise and compete with the Fed. Should should accompany the elimination of the Federal Reserve’s Dual Mandate of steady prices and maximum employment, or as this piece states, its Triple Mandate of “maximum employment, stable prices, and moderate long-term interest rates.” With this, the Fed will either dwindle, making it that much easier to end, or will have to compete, perhaps by going back to some sort of commodity backing. Historically, both before and after the Fed, the US Dollar (AKA Federal Reserve Note) has been backed by gold and silver.
Congress should be made fully responsible for the Fed’s actions and the Fed should be made fully accountable and answerable to the Congress. As soon as fully ending the Federal Reserve or its favored status is no longer a threat to the economic livelihood of hard working people and corporations that have not been engaged in legal or illegal plunder, it should be fully privatized and if this is not plausible, ended. Its cartel status should be ultimately revoked, so that when fully privatized (it is already quasi-private), it is no longer in a position of favor. To keep Congress from merely filling in the void left by the Fed, something which could conceivably be worse than what we have now, given enough time, Article One, Section Eight, Clause Five of the United States Constitution, which states
[The Congress shall have Power] To coin Money, regulate the Value thereof, and of foreign coin, and fix the Standard of Weights and Measures,
should be interpreted as strictly as possible. This means understanding that having the power to do something is not necessarily having the duty to do something, nor does it mean having the sole power to do something.
It is important that the Gold Commission does not simply call for a return to Bretton Woods, because Bretton Woods itself was unstable. The answer to it should not have been Nixon’s untying of the dollar from gold, but a return to the system before Executive Order 6102, if not also to Pre-Liberty Bond Act (1917) or Pre-Federal Reserve Act (1913) monetary policy. It is also important that whatever happens, especially the implementation of a Gold Standard still under the Federal Reserve Cartel, it should not be done abruptly or without taking precautions such that one special interest gains at the expense of another. Remember William Jennings Bryan and his Cross of Gold speech? It is easy enough to label him a monetary crackpot, for he surely was. But understand that he never could have made his case if it weren’t for the plight of the farmers not being able to pay off their debts being exacerbated by the de facto re-implementation of the Gold Standard in 1873. The Coinage Act was passed in the midst of an economic emergency, and led to an era of deflation (called the “Long Depression” despite being nothing of the sort). This was good for the economy as a whole, but as deflation is harmful to debtors, it hurt many a borrower, most of whom were the nations’ farmers.
So, it is a good thing that along with a Gold Commission, there will also be a plank calling for an Audit of the Federal Reserve. For were it just the one, the danger of abrupt changes would be all the greater. Assuming, that is, Republicans take any of the planks seriously. But seriously!