The Problems with the Federal Reserve (Fiat Money vs. the Gold Standard) "Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice." - George Washington, January 9, 1787, in a letter to J. Bowen, Rhode Island
"The emergence of money was a great boon to the human race. Without money—without a general medium of exchange—there could be no real specialization, no advancement of the economy above a bare, primitive level." - Murray N. Rothbard, What Has Government Done to Our Money?
Money has allowed humans a consistent, indirect exchange of goods and services in a way that was not practical through direct exchange. Precious and rare metals such as gold and silver were used as monetary commodities, particularly in the form of coinage.
Unfortunately, government officials soon found that manipulating the money supply was an effective and stealthy mechanism for acquiring wealth from hapless citizens who might otherwise rebel against open taxation.
I divided this page into two contrasting (and simple) sections:
Statist Problems- how government manipulation of the money supply around the world results in inflation and destruction of wealth;
Libertarian Solutions- only a free-market in money (backed by precious metals) has historically ensured stability and prosperity.
Stones into Bread: The Keynesian Miracle Such ideas appeal to the uninformed masses. And they are very popular with governments committed to a policy of increasing the quantity both of money in circulation and of deposits subject to check. - Ludwig von Mises, posted July 14, 2005 [Mises]
The Fed’s Folly - Scott Rosen, December 30, 2004 [LewRockwell.com]
Season's Greetings from the Fed The Fed is solely responsible for inflation and has caused economic havoc since its inception. - George F. Smith, December 29, 2004 [Strike the Root]
Mr. Bailout Under Alan Greenspan's rule at the Fed, the function of the central bank as a bailout institution has experienced a new golden age. - Antony P. Mueller, September 30, 2004 [Mises]
Fooled by the Numbers Modern central banks pronounce economic and monetary stability as their target. But what they are after is not the real thing but a statistical chimera. - Antony P. Mueller, September 2004 [Mises]
The Myth of Shock-Free Monetary Policy There is no such thing as a "shock-free" monetary policy any more than a monetary expansion can ever be truly neutral to the market. - Frank Shostak, July 7, 2004 [Mises]
Whose Mug on the Paper? There's a movement afoot to place a portrait of our nation's fortieth President, Ronald Reagan, onto one of the denominations of our currency. - Clifford F. Thies, June 24, 2004 [Mises]
The Fed's Predecessors in American History Before there was the Federal Reserve there was the second Bank of the United States (1817–1836). - H.A. Scott Trask, December 12, 2003 [Mises]
Fair Exchange or Daylight Robbery? ...the basic laws of economics cannot be repealed, only suppressed, and the greater the degree of restraint and redirection imposed by governments on the course which the free market would take, ultimately the more damage the flood waters will wreak when, finally, they are unleashed. - Sean Corrigan, November 22, 2003 [LewRockwell.com]
The Fed, Then and Now The Fed's evolution too, seems to have reached its limit. What more can it do? Suffice to say, as this brief historical sketch shows and as all governmental bodies have done, it will find something to do unless it is stopped. - Christopher Mayer, October 23, 2003 [LewRockwell.com]
“Bad Money Drives Out Good” When I was young American coinage was silver, and it felt nice to handle, unlike the pot metal coinage we have today. But now, the good money — the silver 50¢ pieces, quarters, and dimes — has all disappeared as the bad money has driven out the good, as Gresham’s law predicted. - Charles Adams, June 25, 2003 [The Future of Freedom Foundation]
Painting Itself Into a Corner But, the way things currently stand, as far as economic thinking is concerned, it would not be surprising that if the economy and core price indices were to weaken further the Fed would continue to loosen its monetary stance in the months ahead. - Frank Shostak, May 13, 2003
Deficits Do Matter We now face a situation that resembles the late 1970s when the world began to abandon the dollar and liquidate American investments. It took two years of Federal Reserve inactivity and 20 percent interest rates to restore foreign confidence and lure foreigner investors and creditors back. - Hans Sennholz, February 27, 2003 [Mises]
What Cost the American Empire? Fiat money finances the US Empire. As long as the producers of real goods accept paper dollars, put them in their vaults and call them assets, we will muddle along. - Bill Haynes, February 26, 2003 [LewRockwell.com]
Where the Classical Economists Went Wrong Classical economists committed certain fallacies which provided a rationale for governmental intervention in the production of money. - Nikolay Gertchev, February 18, 2003 [Mises]
Up, Up, and – Oops It's a shame more people don't understand what inflation really is. It's even more of a shame that most economists don't understand it either, because of all people they are supposed to be the ones who do know. - Bob Wallace, January 20, 2003 [LewRockwell.com]
The Demise of the Dollar? The consequences of a markedly diminished position of the US dollar would be dramatic and of global proportions. - Antony P. Mueller, December 27, 2002 [Mises]
Man the Pumps! - Sean Corrigan, December 26, 2002 [Mises]
Bernankeian Economics It has been interesting to read reactions to the recent speech (Deflation: Making Sure "It" Doesn't Happen Here) given by Fed Governor Ben S. Bernanke before the National Economists Club in Washington, D.C., on November 21, 2002. - Michael King, December 9, 2002 [Mises]
Salvation by Printing Press One thing is for sure. Greenspan's repeated attempts to manipulate interest rates do nothing for the economy. - William L. Anderson, November 8, 2002 [Mises]
The Fed's Prescription for Disaster Last year, the Fed cut interest rates 11 times. Why anyone should believe the 12th is the charm is beyond me. - Interview with Frank Shostak, November 7, 2002 [Mises]
To Chairman Sir Alan Greenspan America, has at this time, more than six hundred and fifty thousand million dollars of public money in paper, for which she has no real property: besides a large circulation of bank deposits, bank CDs, and promissory notes, derivatives, and drafts of private bankers, merchants and tradesmen. - Sean Corrigan, October 8, 2002 [LewRockwell.com]
The Fed on the Horns of a Dilemma The Fed's dilemma springs from an abused and maladjusted credit market which, after many years of Fed intervention and manipulation, is turning unmanageable. - Hans F. Sennholz, October 2, 2002 [Mises]
Can More Yen Save Japan? In the latest move to revive Japan's financial system, the governor of the Bank of Japan (BOJ) announced that the central bank would buy stocks directly from lending institutions in order to help them reduce the impact of falling share prices. - Frank Shostak , September 25, 2002 [Mises]
Lincoln, Gold, and Greenbacks The Party of Lincoln wanted to transform the American government from the limited, constitutional republic of the founding fathers to an empire that would rival Great Britain’s, and they knew they needed a central bank to achieve that task. - Thomas J. DiLorenzo, September 24, 2002 [LewRockwell.com]
Greenspan's Black Magic No matter how many times the mainstream mindlessly intones the mantra that the ‘60% of GDP’ cart comes before the horse, consumption without production is a finite exercise in exhaustion, a rake’s progress to ruin. - Sean Corrigan, September 21, 2002 [LewRockwell.com]
The Hubris in Monetary Policy Award ...in the midst of a recession, and with the credibility of central banking itself being called into question, what is a central banker to do? Why, blame executive pay, of course, and impugn the morality of anyone who might believe that Fed governors are a greater threat to economic stability than shareholders that make wage decisions. - Christopher Westley, September 19, 2002 [Mises]
War As A Distraction The currency is inflated...I do hope you realize, though, that the war is a distraction, just as Hemingway said, to take your mind off all the real problems that President Bush is not even trying to solve. - Charley Reese, September 16, 2002 [Charley Reese]
Ayn Rand’s Failed Student The fact is if Greenspan possessed even a basic respect for the market, that is, a respect for the virtue of individual productivity and the benefit of mutual trade to mutual advantage, he would not be blaming the market for the recent spell of losses. - Nicholas Provenzo, August 26, 2002 [Capitalism Magazine]
The Color of Money Ready for "Pinkbacks," that is, for Federal Reserve notes with a pink hue? - Clifford F. Thies, August 23, 2002 [Mises]
WorldCom as Piker: Profit Inflation by the U.S. Government WorldCom's overstatement of its profits...pale into insignificance in comparison with the overstatement of profits regularly engineered by the U.S. government. - George Reisman, August 16, 2002 [Mises]
Assigning Blame Let us repeat the following: Bill Clinton did not give us an era of permanent prosperity. Nor did his administration present the picture of "fiscal restraint." His administration created the economic boom that turned to bust, and now it is George Bush's turn to make a bad situation worse. - William L. Anderson, August 14, 2002 [Mises]
More Soma! New money from the Federal Reserve is like the state's happiness drug in Brave New World. - Llewellyn H. Rockwell, Jr., August 8, 2002 [Mises]
The Government Confidence Game Confidence doesn’t make the economy grow, just as confidence cannot replace the value lost through dollar inflation. - Matt Lasley, July 15, 2002 [LewRockwell.com]
The Supply-Side Gold Standard: A Critique The belief that the present unstable financial system can be cured by means of a monetary policy that targets the price of gold is erroneous. - Frank Shostak, June 27, 2002 [Mises]
Defining Inflation The U.S. government’s plan to introduce an improved Consumer Price Index in order to more accurately measure inflation is an exercise in futility. - Frank Shostak, March 8, 2002 [Mises]
German claims ten-euro note making him impotent Thousands of people in Germany are claiming they have been struck by allergies and ailments after handling the note. - March 2, 2002 [Ananova]
Should Japan Fight Deflation? The prolonged Japanese economic slump is not due to price deflation but is the product of aggressive fiscal and monetary policies aimed at arresting the general fall in prices of goods and services. Contrary to the popular view, price deflation as a rule is always good news for the economy. - Frank Shostak, February 20, 2002 [Mises]
The Case for Counterfeiting "Granted, this plan is a joke, but it is no less a joke than what much of the economics profession has been recommending for the past several months." - William L. Anderson, December 12, 2001 [Mises]
Operation Enduring Inflation In the weeks since September 11, the Federal Reserve has zoomed the money supply at an astounding rate--an amazing fact when you consider that the economy has actually shrunk during this time. - Llewellyn H. Rockwell, Jr., November 8, 2001 [Mises]
How Much Money Should There Be? Since the present monetary system is fundamentally unstable, there cannot be a "correct" money supply rate of growth. - Frank Shostak, October 10, 2001 [Mises]
The Federal Reserve Has Destroyed the Meaning of Saving In the pernicious economic environment created by the Federal Reserve’s continuous debasement of our money, it is clear that a simple, yet crucial, word such as 'saving' can literally lose its meaning. - Eric Englund, September 7, 2001 [LewRockwell.com]
The Fed's Con Game If we really want to end this nonsense, let's make the dollar as good as gold again, and send the Fed chairman out to earn an honest living. - Llewellyn H. Rockwell, Jr., March 16, 2001 [LewRockwell.com]
Why Does the Fed Set Rates, Anyway? When it comes to money and interest rates, the only thing we have to fear is the Fed itself. - Sheldon Richman, March 1997 [Future of Freedom Foundation]
Mad Fed Disease The Federal Reserve is the most powerful yet least questioned of all Washington institutions. It can make or break elections, bail out entire governments, send the stock market to the stratosphere, or bankrupt whole industries. Yet it operates with less oversight than the CIA. - Llewellyn H. Rockwell, Jr., May 1996 [Mises]
Central Banks, Gold, and the Decline of the Dollar Are inflation, currency depreciation, and business cycles inevitable facts of life? Are they part of the very laws of nature? Or do their origins stem from the actions of man? If so, are they discoverable by economic science? And, if economics can teach us their origins, can it also teach us how to avoid them? - Robert Batemarco, November 1995 [The Freeman]
The Mysterious Fed "It is interesting that, of the rulers of the Fed, the only ones that seem to be worried about the inflationary nature of the system are those Fed regional bank presidents who hail from outside the major areas of bank cartels." - Murray N. Rothbard, October 1991 [Mises]
On the Edge of Hyperinflation in Brazil "Monetary expansion and the price inflation that it brings in its wake always eat away at the social and economic fabric of a society." - Richard M. Ebeling, March 1990 [Future of Freedom Foundation]
"In the course of the centuries, no wager has been more of a certainty than that a piece of gold, inaccessible to the inflationary policies of governments, would keep its purchasing power better than a bank note." - Wilhelm Röpke
Your Right to Deflation Instead consider again the ideal method for securing the value of money against the depredations of state power: the gold standard. - Llewellyn H. Rockwell, Jr., June 24, 2004 [LewRockwell.com]
Why Gold? Whatever we may think of gold, it always looms in the background, beckoning to be used as money, as it has been since the dawn of civilization. - Hans Sennholz, March 6, 2003 [Mises]
Interest Rates Can Do Their Job! Interest rates can do their job, but they need some on-the-job training. - Roger W. Garrison, September 17, 2002 [Mises]
Is the Gold Standard History? It won't surprise you that my answer is no...What is essential for us today is to continue the research, the writing, the advocacy for sound money, for a dollar that is as good as gold, for a monetary system that is separate from the state. - Llewellyn H. Rockwell, Jr., September 14, 2002 [LewRockwell.com]
The Imaginary Evils of Deflation Whether or not a widespread deflation does hit the U.S. economy, given the analysis summarized here and assuming it is not of the confiscatory variety, it is certainly not something to fear or prevent. - Christopher Mayer, September 11, 2002 [LewRockwell.com]
Why Gold? Gold and freedom go together. Gold money is both the result of freedom and its leading protector. - Llewellyn H. Rockwell, Jr., June 8, 2002 [LewRockwell.com]
Gold: The Sovereign Power of the Veto For politicians, the free market's speculators who publicly expose the government's monetary policies as detrimental to the public are regarded by the government as barbarians or vigilantes. - Gary North, January 15, 2002 [LewRockwell.com]
The Deflation Hysteria "So to those who warn of deflation in our future, we should say: please, Br’er Fed, don’t throw us in that briar patch." - Llewellyn H. Rockwell, Jr., November 16, 2001 [LewRockwell.com]
Is E-Money Our Future? Any scheme that holds out a serious hope for loosening the state's grip on our lives is well worth examining. - Gene Callahan, July 14, 2000 [LewRockwell.com]
Money and Freedom The historical embodiment of monetary freedom is the gold standard. - Joseph T. Salerno, February 2, 2000 [Mises]
Monetary Reform We need a new monetary system. We live in a global economy, we promote free trade and free capital flows -- so why do we limp along with a monetary nonsystem that not only is dysfunctional but dangerous? - Judy Shelton, December 21, 1998 [Washington Post]
How to Return to the Gold Standard There is no reason, technically or economically, why the world today, even with its countless wide-ranging and complex commercial transactions, could not return to the gold standard and operate with gold money. The major obstacle is ideological. - Bettina Bien Greaves, November 1995 [The Freeman]
Free Market Money - Instead of Political Manipulation "Contrary to government propaganda, this would not lead to economic 'anarchy' or collapse." - Richard M. Ebeling, February 1990 [Future of Freedom Foundation]
![[Most Recent Quotes from www.kitco.com]](http://kitconet.com/images/quotes_2a.gif)
