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A brilliantly simple, clear, persuasive case against inflation,
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This review is from: End The Fed (Paperback)
It is always a delightful surprise when a leading politician writes anything coherent, let alone well-informed and useful. So this delightfully written, fact-filled, and interesting 210-page book stands out a mile. But then Ron Paul is not your average politician. Born in 1935 (and hence 76 years old as I write this review), he previously practiced medicine, specializing in gynecology and obstetrics, and delivering over 4,000 babies. What spurred him to enter politics was President Nixon's "closing of the gold window" in 1971 (when Nixon broke the US government's promise to back the dollar with gold). Ever since, he has been spreading the gospel of hard money, and recommending a return to the use of gold (and, if appropriate, other commodities) as currency. Although generally ignored by the political classes, the voters, and in particular the Republican party establishment, he stood for President in 1988 and 2008, and is now preparing to do so again. His support for hard money, and dislike of government-generated inflation, is only a consistent part of his belief that the USA should return to the principles and specific articles of the US Constitution. It is a dismal commentary on the state of education and citizenship these days that this has led to Paul being regarded as a harmless crank.
The Founding Fathers who wrote the United States Constitution took care to guard against the dangers they foresaw - mainly, of government running amok and expanding without limit. They understood perfectly well that if the federal government could create money, it would be able to engage in all sorts of unwarranted and dangerous activities: raising a permanent army and navy, foreign wars, even interference in the private business of US citizens. As Thomas Jefferson wrote, "I sincerely believe that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale". That is why the Constitution insists that only gold and silver coin should be legal currency; nor does it grant the federal government permission to create a central bank.
Nevertheless, a group of influential bankers, financiers, and politicians got President Woodrow Wilson to authorize the creation of the Federal Reserve in 1913. According to Paul - and plenty of others - it has been all downhill since then, as the value of the dollar has plummeted by a factor of 20. Why has this happened? Simply because, whenever the federal government was pinched for cash, the Fed just printed off additional billions of dollars (or, most recently, trillions - although nowadays nothing is actually printed, as the new money exists only within computers). That means that there is no limit to the schemes that politicians can undertake, including disastrous and incredibly expensive foreign wars. Exactly as Jefferson foretold, the result has been to reduce the value of money already held by those who have earned and saved it, and to pile immense debts on the heads of future generations. Those debts, in fact, can never be paid and the only escape from them will be to devalue the dollar almost to worthlessness.
After giving some personal background and describing his meetings and discussions with decision-makers such as President Reagan, Paul Volcker, Alan Greenspan, and Ben Bernanke, Paul gives the reader a basic education in the nature and history of government-created inflation. He cites the works of the Austrian school of economists: Ludwig von Mises, Friedrich Hayek, Henry Hazlitt, Murray Rothbard, and others. Next, in a series of brief, hard-hitting, lucid chapters, he explains the philosophical, constitutional, economic, and libertarian cases for ending the Fed. And he finishes by explaining the beneficial consequences, including an end to deliberately engineered inflation, the return of limitations to government activity, and the resumption of a truly free market economy in which people and corporations can use anything they choose as media of exchange.