Gold, Peace, and Prosperity: The Birth of a New Currency

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by Ron Paul: Got

Peace, and Prosperity

is the title of Ron Paul’s essay for a “modern” gold
standard. According to Paul, such a standard would end the relentless
boom-bust cycle, and maintain the value of King Dollar. However,
King Dollar would have to be founded on a monetary standard that
eschews government tampering.

Paul begins
his treatise by pointing out that “Congress alone is responsible
for inflation, and Congress alone can stop it.” Which means
that the old scapegoats — OPEC, greedy CEOs, labor unions —
are not the real cause of inflation. To support his contention,
Paul relates a story told by Marco Polo in his travels through China.
As Paul states, “Abuse of paper money led to the expulsion
of the Mongol dynasty from China.”

The same thing
happened when the Continental Congress began issuing paper money
during the Revolutionary War. Initially, one Continental paper dollar
was worth one gold dollar. After a while, it took 1000 Continental
dollars to equal one gold dollar. In other words, it literally took
a wheelbarrow full of money to buy a loaf of bread.

Paul provides
a short history “of our monetary decline.” During the
19th Century, the U.S. operated on a gold standard. The economy
was strong and healthy during that time. Then in 1913, the Federal
Reserve Act established the central banking system. That was the
beginning of the end.

Paul asserts
the Federal Reserve Act made America’s entry into World War
I possible. It was accomplished by inflation. And the end result
of inflation was the 1921 depression. Further inflationary tactics
“caused and perpetuated the Great Depression of the 1930s.”

In 1934, the
Gold Reserve Act “outlawed private ownership of gold, prohibited
the use of ‘gold clause’ contracts, and abolished the
gold coin standard.” In effect, the U.S. went on the gold bullion
standard. Paul points out that, contrary to Paul Samuelson’s
declaration that “the Federal Reserve System was formed in
the face of strong banker opposition,” the exact opposite was
in fact true. The biggest banks in the country were all for the
new system because it promoted “inflation that benefits bankers
and big corporations.”

Bretton Woods
— in 1944 — supposedly established a new gold exchange
standard. In Paul’s opinion, Bretton Woods was “nothing
more than an international Federal Reserve System.” And of
course, it didn’t do anything but cause more inflation. Then
on August 15, 1971, President Nixon “closed the ‘gold
window.’” This was the beginning of “managed fiat

the rest of the article

the Ron Paul File

13, 2010

Dr. Ron
Paul is a Republican member of Congress from Texas.

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