End The FED. Get The Gold.

by Gary North


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End The FED. Get The Gold.
by Gary North
by Gary North

Recently by Gary North: Ellen Brown Responds to My 31 Historical Criticisms. Now It's My Turn Again.

How can we end the Federal Reserve System? Prior to 2008, this question would have been entirely hypothetical. It is still entirely hypothetical, because the Federal Reserve System is in charge of monetary policy; the Congress of the United States is not. Certainly, the voters of the United States are not. Nevertheless, I wish to indulge myself in a completely hypothetical speculation. I wish it were less hypothetical than it is, but things are better than they were before 2008. "All hypothetical possibilities are equal, but some are more equal than others." Let us assume that the voters of the United States know what the central bank is. Let us also assume that they have decided that the nation would be far better off if control over monetary policy were removed from the Federal Reserve System, meaning removed from the cartel of large banks which the Federal Reserve defends. Let us also

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poor man. The total quantity of gold would be divided into tenth-ounce coins. Where will the Treasury get the money to pay off these bonds? Here is where the fun part begins. by means of political mobilization not presently visible. thereby enabling the coins to be used in circulation. and the President of the United States signs the bill into law. United States government would issue Treasury bonds to the Federal Reserve System. The other 10% would be hard metal.22 per ounce. Get The Gold.lewrockwell. Every American voter would receive the same quality of coins. The Treasury will sell the gold in the form of tenth-ounce gold coins to any American voter at a price of $42. Every American voter would receive a tax-free option to purchase tenth-ounce gold coins at a price of $42. by Gary North http://www. thief: everybody gets the same number of tenth-ounce gold coins. How many coins would each voter be allowed to purchase? This would be determined on a strict mathematical formula. There is no need for an army of lobbyists to recommend the insertion of all kinds of specialinterest language. There do not have to be any additional qualifications. WHO GETS THE GOLD? There would have to be a second law. beggar man. This gold would be 90% fine. This law has to do with the ownership of the gold that is supposedly stored by the Federal Reserve System on behalf of the United States government.com/north/north895.73 Privacy Information 2 of 11 11/15/10 10:05 AM . This was what the old double eagles were back in 1933. "The Federal Reserve Act of 1913 is hereby abolished. To pay for this gold. exemptions. Rich man.End The FED." This wording leaves nothing to the imagination. It would be about ten coins. End The Fed Ron Paul Buy New $9. or anything else. The gold would then be transferred from the Federal Reserve Bank of New York to Fort Knox. Anyone can understand this.html assume that somehow. What should the law look like? The law would be very simple. There would have to be an audit. they convinced the majority of both houses of Congress to pass a bill abolishing the Fed.22 per ounce. The law would specify that the Federal Reserve System must return all of the gold belonging to the United States government at the official price of $42. Kentucky.22 per ounce.

by Gary North http://www. That money was spent into circulation. It could not produce this many coins. but every coin would have to say "1/10 ounce of gold.End The FED. The government would cease authorizing gold coins. There would be no mixing of base metals to such a degree that the coins would be anything less than 90% gold. The reason why I think every American voter ought to be allowed an equal share of all the coins is because that would create considerable political pressure on the government to get that gold out of the hands of the Federal Reserve System and into the hands of the voters.html Of course. and pocket $1. If we are going to do this. In other words." This would get the government out of the money business. The Mint would cease producing gold coins. The government would pay off the bonds with money from the sale of the coins. All that the government would do would be to establish standards regarding the testing of the weight and fineness of the coins. The government would pay a small fee per coin to private companies producing the coins. They would receive a guarantee of purchase within one year of the transfer of the gold to the Treasury. the decision in 1933 was to keep the money supply stable. he would be allowed to sell his gold. Voters would be issued IOUs to their gold coins. we might as well let everybody have a piece of the action. The contraction of the gold supply was offset by an increase in the money supply. if the price of gold is $1.22 per ounce. 3 of 11 11/15/10 10:05 AM . The private mints could lawfully put their own names on the coins.lewrockwell. tax-free. The coins must first be minted. It would enforce these standards in courts of law. pay the Treasury $42. This is a good policy.com/north/north895. 90% fine.342. Every American voter would be allowed to sell all of the gold coin options to anyone.22 per ounce for whatever gold he had received. In other words. Get The Gold. The reason why the government should pay the Federal Reserve $42. they could not be sent the coins immediately. The Federal Reserve could then buy more bonds or not. The coins would be produced according to rigorous standards enforceable by the government.22 per ounce is because the Federal Reserve paid the government $20 an ounce back in 1933.000 per once. The United States Mint could not possibly fulfill this task. The coins would be produced by private mints.

It must not be sold to investors in the form of large bars. Get The Gold. The goal is not to create mass deflation.22 an ounce. but only in the form of tenth-ounce gold coins. (This is the same long-run issue that faces Americans today: default vs. This would keep the monetary base from contracting. if the Federal Reserve inflates the currency. So. If the Federal Reserve follows deflationary policies.End The FED. hyperinflation. Obviously. it will be sitting on top of the pile of IOUs to be paid off in money worth less and less. Let the FED have it. A TRANSFER OF AUTHORITY The main goal here is to get the gold back into circulation in the form of coins. leaving the Federal Reserve holding a portfolio worth nothing. or do they want to be stiffed by their own monetary policies? This is a tough decision. the United States government will then default on its IOUs. and this is the form in which it should be returned to the American voters. good and hard. The Federal Reserve would be allowed to hold onto Treasury bonds to compensate it for the loss of the gold.lewrockwell.) What I am proposing is an exchange of assets exactly like the Federal Reserve pulled off in 2008. The best way to do this is to let Americans buy gold at $42. The Federal Reserve will receive nice. the Federal Reserve System has already established the precedent that it is willing to exchange liquid Treasury assets for other assets that are worth far less. by Gary North http://www. On the other hand. Do they want to be stiffed by the government directly. this is a very good deal for the Federal Reserve System. So. and it will surrender a large pile of the barbarous relic. The goal is to reestablish gold as a popular form of currency in the general economy. 4 of 11 11/15/10 10:05 AM . liquid Treasury debt. It did the exchange at book value. the Federal Reserve’s policy-makers will have to make a decision.com/north/north895. The gold was confiscated in the form of gold coins in 1933. The Federal Reserve System would then be holding a pile of government IOUs. not actual market value of the toxic assets.html The transfer of the bonds to the Federal Reserve would be neither inflationary nor deflationary.22 per ounce is not the free market price. gold at $42. It sold liquid Treasury debt for illiquid toxic assets owned by the largest commercial banks. If the ideas of John Maynard Keynes are true.

It presently owns the gold based on massive theft. This is why the United States government abolished the gold coin standard in 1933. The agency that stole the gold will return the gold to the American voters. This would restore a gold coin standard.html The United States government confiscated the gold in 1933. These are American voters.95 There is no justification for the stolen gold to Privacy Information remain in the possession of the United States government. Rothbard. Get The Gold. or at least move in that direction. and it will do so in such a way that the American voters become the beneficiaries of the discrepancy between the official price of gold and the market price of gold. and gold coins in circulation would transfer this veto to the public. My proposal is a form of restitution.. Governments do not want the general public to have a veto over its fiscal policies. This is why the governments of Europe abolished the gold coin standard when World War I broke out in August of 1914. Governments want to avoid this system for obvious reasons. but they do not want to get blamed for collecting taxes necessary to fund all of the projects that they plan to fund. People will become familiar with gold coins. The Case Against the Fed Murray N. The proper gold standard is a gold coin standard. by Gary North http://www. THE VETO This transfers the veto over commercial bank policy into the hands of those individuals who own the gold coins. Buy New $9. they can go to the central bank. Politicians want to spend lots of money. There is surely no justification for the stolen gold to remain an asset of the Federal Reserve System..lewrockwell. If they turn the gold coins over to a commercial bank in exchange for an IOU from that bank. and the bank abuses the privilege of expanding the number of IOUs to gold coins beyond the number of gold coins held in storage by the bank. So.com/north/north895.End The FED. individuals can then take their IOUs down to the bank and demand payment in gold coins. It is a standard in which gold coins are commonly used in the marketplace. My conclusion is simple: return the stolen goods to the judicial heirs of the victims. This is the great veto of the public over the policies of the banks. and if the central 5 of 11 11/15/10 10:05 AM .

by Gary North http://www. The essence of a gold coin standard is the veto. it pays someone to own gold. This is a run on the banks. it has to sell its debt to private investors. The banks find that digital money is flowing in from the buyers of gold. But when they increase loans. It is the same when the common man turns over his IOUs to gold to someone who sells gold to the general public. This tends to raise the interest rate. This means that the holders of gold coins can exercise a veto over the central bank’s decision to expand its ownership of government debt. people begin to buy gold. or who use IOUs to gold coins in their economic decisions. If the government cannot sell its debt to the central bank. when the common man goes down to his bank and turns in an IOU for gold. When fiat money gets into the economy. So. and therefore over the national government. Where should the veto be lodged? Defenders of the gold coin standard say that it should be lodged with those people who use gold coins. This creates a crisis. STATIST GOLD STANDARDS There are some people who say they are in favor of a gold standard. When the central bank increases its holdings of government debt. this tends to raise prices. commercial banks make more loans. and he takes his gold coins home. They expand those loans with fiat money. not based on the expansion of deposits by owners of gold coins. Get The Gold.End The FED. When the monetary base increases. This indirectly transfers a veto to the common man over the size of the government’s deficit. The government can increase the amount of its debt. they increase the money supply. because they have expanded the money supply based on the expansion of Federal Reserve credit. and the gold is flowing out. it buys the debt of the government. The defender of the gold coin standard says that the individuals who use gold coins or own IOUs to gold coins are the most reliable people to exercise a veto over the commercial banks. because the government has to offer a higher interest rate in order to persuade investors to buy its debt. because it has the cooperation of the central bank.html bank wants to. The IOUs’ buyer also presents the IOU to gold to the commercial banks.lewrockwell. As prices rise. Gold-using producers start buying. this is a bank run. individuals decide that the price of gold will also rise. and therefore over the central bank. 6 of 11 11/15/10 10:05 AM . So. If the price of gold rises. this increases the nation’s monetary base.com/north/north895.

They want a gold standard based on cooperation among central banks. In other words. So. He believed that the common sense of the average man is more reliable than the highly rarefied academic skills of the University faculty.com/north/north895. They spend their money on aspects of their lives that they are closely familiar with. He said it because he did not trust the wisdom of a self-selected. But I also believe that the transfer of economic authority in the form of private property. It was the gold standard that Nixon abolished unilaterally on August 15. knowledge. Buckley was talking about political sovereignty. I believe in decentralized political authority. tenured or tenure-seeking faculty at the most prestigious academic institution in the United States. He did not say this because he was a graduate of Yale. He said that he would prefer to be governed by the first 200 names in the Boston telephone directory than by the faculty of Harvard University. with respect to that crucial resource. especially the ownership of gold or silver coins.lewrockwell. I am talking about economic authority. I am in agreement with him. by Gary North http://www. They do not want the authority to exercise the veto held by the common man. William F. They are barely familiar with local politicians. 1971.. This gold standard places authority in the hands of governmentlicensed monopolies called central banks. he did not trust the judgment of academicians. They spend their money constantly... Murray N. This was the gold standard that was established in 1922 at the Genoa conference. So. it is more 7 of 11 11/15/10 10:05 AM .. Rothbard. the defenders of non-coin gold standards are impressed with the wisdom and reliability of central bankers. What Has Government Done to Our Mone. Buckley over a half century ago came up with a delightful quip. It was extended by the Bretton Woods agreement of 1944. Get The Gold.End The FED.00 Privacy Information People are more careful about spending their money than they are about voting. Its defenders trust the wisdom of central bankers. They vote only occasionally. I believe that governments are more responsive to voters at the local level than they are at the state or national level.html but they do not want a gold coin standard. It does not trust the wisdom of individual citizens. Buy New $17. is more important for the preservation of liberty than the transfer of political sovereignty back to local units of civil government.

They say they believe in the free market in many areas of life. but if local voters do not have authority over the monetary system. They would exercise this authority over money. Get The Gold. This means that the authority over money must be removed from the United States government and transferred to the users of gold coins. They do not favor lodging the veto in the hands of the common man. but they 8 of 11 11/15/10 10:05 AM . or sell to jewelry companies. the government must accept such coins as valid for the payment of taxes. but it should not have any power to monopolize the production of coins. This would be a free-market system in coinage. but simply as residents of the United States. The government should limit itself to a statement regarding the weight and fineness of the tax coins. by Gary North http://www. by means of a gold coin standard.com/north/north895. that bank by law must have coins and reserve to enable it to honor its contracts for gold coins. This is true of virtually all academic economists. their right to vote locally will be compromised politically. What I am describing is the restoration of a free market in money. I am proposing the transfer of all authority over money to the free market. or deposited in warehouses on their behalf. The government should be out of the money business. They both should be decentralized. and they have always done so to the detriment of liberty. The proof that they do not believe in the free market is that they oppose the creation of a full gold coin standard. The major decisions will still be made by the central government.html important to decentralize ownership than it is to decentralize political power. They are gold standards that favor the expansion of centralized political power. The only standards that should be enforced by law are standards of contract law. The government lawfully controls the form of taxation. not as voters. If private enterprise produces coins that meet these standards. This is why various forms of gold standards that do not transfer complete authority over gold in the hands of common citizens are phony gold standards.lewrockwell. They would have the right to use this money as currency.End The FED. When a bank issues an IOU to a specific fineness and weight of gold coin. The government does have the right to establish the form of money that citizens must use to pay their taxes. or hoard the coins. Governments have always asserted this authority. A LITMUS TEST FOR FREE MARKET ECONOMISTS Very few people believe in the free market.

html do not believe in the free market with respect to the monetary system. It means government control over the money supply. They could operate only by means of a grant of monopolistic power by the United States government. Besides. They believe in central banks. What would the result be? Within a few years. meaning a government-licensed monopoly over the monetary base. He does not believe in the logic of decentralized private property. This is not a mistake. there is no government 9 of 11 11/15/10 10:05 AM . by Gary North http://www. above all other areas of the economy that ought to be governed by the free market. the money system should be. It receives the authority over the banking system. I am not at all worried about the operation of the Federal Reserve System without government supervision.com/north/north895. They could not operate in a competitive environment. He believes in central planning. Yet. Get The Gold.lewrockwell. the Federal Reserve System would go bankrupt. So. and they believe in government control over the banking system. It is not limited merely to control over the money supply. Control over money is the central form of economic control. This has been the fate of the two previous central banks of the United States. When you hear a self-designated free market economist defend the idea of central banking. and he sees the central bank as the agency of such planning. Central planning over money increasingly has become central planning over the entire economy. The few academic economists who are willing to accept even a pseudo-gold standard do not believe the government should be out of the money business. Why is this? Because money is the central institution in a market economy. This is consistent with the original logic of central banking. you can be sure that this person does not believe in the free market. We have seen this with a vengeance with the passing of the banking reform bill of 2010.End The FED. The central banks of the world have now become allocators of capital. They do not believe in the widespread use of gold coins by the general population. it now possesses the authority of direct regulation and intervention. There would be no further legal connection between the Federal Reserve System and the United States government. They are making the decisions as to who gets what and on what terms. What I recommend is simple: the removal of all government authority possessed by the Federal Reserve System. The great winner in the reform is the Federal Reserve System.

all the bureaucrats who work for the Federal government. The Congress would simply buy votes directly with newly created money. I can think of no other pair of laws that would transfer more authority to the voters the abolition of the Federal Reserve system and transfer of the gold in the form of tenth-ounce coins back to the voters. That is far more fearful then idea of control over money by the Federal Reserve System. Should this ever change.com/north/north895. and it is not likely to change. Fifth. CONCLUSION If we were to abolish the Federal Reserve System.html supervision of the Federal Reserve System. This is why we are unlikely to see this pair of laws passed in our generation. we would see the restoration of liberty. There are people out there ("Greenbackers") who call themselves conservatives. the power of money will be transferred to the United States Congress. and if the government would then transfer to American voters all of the gold presently said to be in the vaults of the Federal Reserve Bank of New York and Fort Knox. This is why this essay is hypothetical. but only on the assumption that all power over money should be transferred to Congress. Third. the Congress of the United States.End The FED. all of the decisionmakers of the Federal Reserve System. Congress does not control the FED: the FED controls Congress. Congress would be unrestrained by any fear of inflation. They oppose the Federal Reserve System. the vast majority of all commercial bankers. however. followed by hyperinflation. the entire academic economics profession. Who are the opponents of such a procedure? First. There is supervision of the government by the Federal Reserve System. There be no concern about profit and loss potential of the banking system. This has been true since 1914. The Powers That Be fear the transfer of authority over money to the 10 of 11 11/15/10 10:05 AM . by Gary North http://www. The Federal Reserve System at least tries to make its clients some money. but who believe that the Congress of the United States is reliable in the area monetary policy. Get The Gold. than this recommendation. I can think of no better prescription for mass inflation. Second. There would simply be the printing press in the hands of the Congress.lewrockwell. There would be no concern about the proper allocation of capital. Fourth.

October 16. Call Us Now! Back to LewRockwell.com.cashforgoldoflasvegas.com Home Page 11 of 11 11/15/10 10:05 AM . An Economic Commentary on the Bible. Visit http://www.garynorth.com Invest In Gold Coins Or Bullion. He is also the author of a free 20-volume series. It would let them veto the spending policies of the Federal government.html general population. The fear of that veto is great inside the Washington Beltway.com/north/north895. Fast Free Delivery. Get The Gold. because that would transfer enormous power politically into the hands of the people.usgoldbureau.com/gold/ Highest Prices for Gold Jewelry Call Now 233-6261 Buy Gold Bullion www. by Gary North http://www. 2010 Gary North [send him mail] is the author of Mises on Money.com/Free-Guide Avoid Rookie Mistakes of New Buyers Request a Free Gold Investor's Kit Sell Gold | Las Vegas www.lewrockwell. Copyright © 2010 Gary North The Best of Gary North Buy Gold The Smart Way www.AmericanBullion.End The FED.