[An] audit of the Federal Reserve and return to it’s original purpose – a single charter to only manage inflation.Sound familiar? He is trying to grab from Ron Paul's playbook by calling for an audit of the Fed, but has no clue that the original purpose of the Fed was just as bad as what the modern day Fed has morphed into. It makes no sense to return to the original purpose of the Fed The Fed was founded to create inflation. As Murray Rothbard wrote in The Mystery of Banking:
The new Federal Reserve System was deliberately designed as an engine of inflation, the inflation to be controlled and kept uniform by the central bank.This management of inflation causes the boom-bust cycles that we see in the economy. Rothbard again:
[New York Fed Governor Benjamin] Strong pursued an inflationary policy throughout his reign, first during World War 1, and then in spurts of expansion of the bank reserves in the early 1920s, 1924 and 1927...With the Federal Reserve System established and in place after 1913, the remainder of the road to the present may be quickly sketched.....Fed inflation led to the boom of the 1920s and the bust of 1929...This is what Santorum wants to return to?
Ron Paul is calling for an audit, because the Fed has been up to even more mischief since its founding, but this in no way means that he wants to bring the Fed back to simply its original purpose of inflating the money supply and causing the boom-bust cycle.
Santorum's call for a return to just the original purpose of the Fed shows just how clueless he is about the subject.
He is basically saying, "Let's return the Fed to the days when it created the boom-bust cycle that ended up creating the Great Depression."
Scary.
Suggestion: stop writing about what Santorum doesn't get, it would be far more easier to write about what Santorum actually gets, i.e. nothing
ReplyDeleteMIT's Simon Johnson says we need to listen to Ron Paul when it comes to finance:
ReplyDelete"Ron Paul and the Banks"
http//www.wilmott.com/blogs/irismack/
That's quite a list he has there...I got a chuckle out of 19: "Negotiate 5 Free Trade Agreements..."
ReplyDeleteHey Rick, free trade does not need any agreements.
Agreements = government managed trade.
Looking forward to getting past this guy...what a waste of time.
Even on a gold standard you have inflation since new gold is mined every day, it's just very low inflation, around 3% per year. If the fed could be forced to limit inflation to 3% it would work but they can't be trusted so you can't have a fed.
ReplyDeleteDon't sweat it Bob. Concentrate on the moves President Romney will be doing.
ReplyDeleteSantorum is really just stupid.
ReplyDeleteI think the twit is just power mad.
@Anon 1:42
ReplyDeleteAt last, someone who thinks Romney could beat Obama. Why? Please don't answer if you thought McCain had a chance.
And isn't auditing the Fed a dangerous idea?
He is doing what the terror group referred to as "Democrats" do...Say what is popular at the moment until you are safely elected then rob and enslave the feeble-minded fools who voted for you.
ReplyDeleteShipley, I don't think the gold supply increases that much every year. But even if it does, wouldn't it merely match advances in other industries, for the most part? And still end up in bank vaults with paper issued on its value? And wouldn't that mean that inflation of the paper currency is in addition to the inflation of the gold supply, not in lieu of it?
ReplyDelete@Michael P. Shipley
ReplyDeleteOut of that supposed 3%, some of it would serve its role as a commodity and the rest would serve its role as a unit of exchange. So it would possibly be even lower.
@Anonymous 3:25
It's dangerous to know who the bankers' friends are?
No.32's genius (no, I didn't, I started from the bottom up):
ReplyDelete"Strengthen our national security and national defense so that we are not dependent upon our foes or competitors for critical manufacturing, technology, energy and other security needs"
It manages to be both meaningless and nonsense at the same time and yet promise protectionism.
Point of clarity - you said....
ReplyDelete"This management of inflation causes the boom-bust cycles that we see in the economy. "
I thought inflation causes the boom-bust cycles that we see in the economy.... managing it merely disguises and obfuscates the real cause of inflation; namely central banks!
@Peter
ReplyDeleteIt's not just inflation, it's inflation through investment and lending that causes the business cycle. So it's not even just central banks that cause the business cycle, it's fractional reserve banking in general. The central bank element puts it on a different level, since even fractional reserve banks that were competing with each other would have to minimize inflation (in the sense of producing more notes than were actually backed) or they would be outcompeted.
So, you're right, is indeed inflation (through lending), not the management of inflation that causes the business cycle, but it would likely not even be noticeable if there was no management of inflation.