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June 15, 2019

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Letter to the editor:

Monetary system is destined to fail

Gail Collins writes a pretty nice column Tuesday about Texas Rep. Ron Paul and shows she was indeed “listening to Ron Paul.”

Needless to say, Paul’s ideas are pretty foreign to a writer for The New York Times. The idea that the Federal Reserve should be abolished is hard for a progressive writer to take seriously. Possibly Collins ought to do some reading on the subject wherein she would learn that the concept of fiat money, money that has no connection to a commodity such as gold, is not at all new to the world. While it’s been the accepted policy worldwide in the past century, it has always failed as money.

In theory, paper money not tethered to a commodity would work fine. In practice, it has never worked for an extended period of time because governments can never live within their means. When governments need cash for worthwhile projects such as the latest war, the necessary costs of a war on poverty, funds for would-be homeowners, to save failing banks or what have you, the central bank can always be counted on to make “money” available.

So the real effect of the central bank’s accommodations is to allow the state to spend pretty much whatever it wants as well as enriching banks and bankers.

Not having to ask taxpayers for permission to spend is clearly both undemocratic and what makes the Fed so vital to our politicians, whatever their flavor.

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