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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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There would have to be an audit.lewrockwell. This gold would be 90% fine. End The Fed Ron Paul Buy New $9." This wording leaves nothing to the imagination. thief: everybody gets the same number of tenth-ounce gold coins. Anyone can understand this. It would be about ten coins. Rich man. There do not have to be any additional qualifications.com/north/north895. poor man.22 per ounce. by Gary North http://www. This was what the old double eagles were back in 1933. United States government would issue Treasury bonds to the Federal Reserve System. Where will the Treasury get the money to pay off these bonds? Here is where the fun part begins.22 per ounce. beggar man. There is no need for an army of lobbyists to recommend the insertion of all kinds of specialinterest language. To pay for this gold. What should the law look like? The law would be very simple. Every American voter would receive a tax-free option to purchase tenth-ounce gold coins at a price of $42. Get The Gold.End The FED. Every American voter would receive the same quality of coins. The other 10% would be hard metal. thereby enabling the coins to be used in circulation. Kentucky. or anything else. "The Federal Reserve Act of 1913 is hereby abolished. The gold would then be transferred from the Federal Reserve Bank of New York to Fort Knox. they convinced the majority of both houses of Congress to pass a bill abolishing the Fed. by means of political mobilization not presently visible. exemptions. 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.73 Privacy Information 2 of 11 11/15/10 10:05 AM . WHO GETS THE GOLD? There would have to be a second law. 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. The Treasury will sell the gold in the form of tenth-ounce gold coins to any American voter at a price of $42. The total quantity of gold would be divided into tenth-ounce coins.html assume that somehow. and the President of the United States signs the bill into law. How many coins would each voter be allowed to purchase? This would be determined on a strict mathematical formula.22 per ounce.
That money was spent into circulation. The government would pay a small fee per coin to private companies producing the coins. he would be allowed to sell his gold. The coins would be produced according to rigorous standards enforceable by the government. and pocket $1." This would get the government out of the money business. Get The Gold. pay the Treasury $42. It could not produce this many coins.22 per ounce.22 per ounce for whatever gold he had received. The reason why the government should pay the Federal Reserve $42.000 per once.lewrockwell. 90% fine. 3 of 11 11/15/10 10:05 AM . There would be no mixing of base metals to such a degree that the coins would be anything less than 90% gold. The private mints could lawfully put their own names on the coins. we might as well let everybody have a piece of the action. The Federal Reserve could then buy more bonds or not. In other words. In other words.342. The United States Mint could not possibly fulfill this task. All that the government would do would be to establish standards regarding the testing of the weight and fineness of the coins. They would receive a guarantee of purchase within one year of the transfer of the gold to the Treasury. If we are going to do this. This is a good policy. they could not be sent the coins immediately. 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. The contraction of the gold supply was offset by an increase in the money supply. The Mint would cease producing gold coins. Every American voter would be allowed to sell all of the gold coin options to anyone. The government would pay off the bonds with money from the sale of the coins. tax-free. but every coin would have to say "1/10 ounce of gold. the decision in 1933 was to keep the money supply stable. The government would cease authorizing gold coins. The coins would be produced by private mints.com/north/north895. Voters would be issued IOUs to their gold coins. It would enforce these standards in courts of law.22 per ounce is because the Federal Reserve paid the government $20 an ounce back in 1933.End The FED.html Of course. by Gary North http://www. The coins must first be minted. if the price of gold is $1.
The gold was confiscated in the form of gold coins in 1933.html The transfer of the bonds to the Federal Reserve would be neither inflationary nor deflationary. or do they want to be stiffed by their own monetary policies? This is a tough decision. The Federal Reserve would be allowed to hold onto Treasury bonds to compensate it for the loss of the gold. 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. So. Get The Gold. The goal is to reestablish gold as a popular form of currency in the general economy.lewrockwell. the United States government will then default on its IOUs.com/north/north895. by Gary North http://www. It did the exchange at book value. The best way to do this is to let Americans buy gold at $42. The Federal Reserve will receive nice. and it will surrender a large pile of the barbarous relic. Obviously. but only in the form of tenth-ounce gold coins. So. If the Federal Reserve follows deflationary policies. (This is the same long-run issue that faces Americans today: default vs. This would keep the monetary base from contracting. it will be sitting on top of the pile of IOUs to be paid off in money worth less and less. A TRANSFER OF AUTHORITY The main goal here is to get the gold back into circulation in the form of coins. Do they want to be stiffed by the government directly. It sold liquid Treasury debt for illiquid toxic assets owned by the largest commercial banks. the Federal Reserve’s policy-makers will have to make a decision. 4 of 11 11/15/10 10:05 AM .22 an ounce. leaving the Federal Reserve holding a portfolio worth nothing. hyperinflation. If the ideas of John Maynard Keynes are true. this is a very good deal for the Federal Reserve System. and this is the form in which it should be returned to the American voters.) What I am proposing is an exchange of assets exactly like the Federal Reserve pulled off in 2008.End The FED. if the Federal Reserve inflates the currency. not actual market value of the toxic assets. liquid Treasury debt. good and hard.22 per ounce is not the free market price. It must not be sold to investors in the form of large bars. The goal is not to create mass deflation. On the other hand. Let the FED have it. The Federal Reserve System would then be holding a pile of government IOUs. gold at $42.
. Politicians want to spend lots of money. individuals can then take their IOUs down to the bank and demand payment in gold coins. 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. or at least move in that direction. THE VETO This transfers the veto over commercial bank policy into the hands of those individuals who own the gold coins. It presently owns the gold based on massive theft. The proper gold standard is a gold coin standard.html The United States government confiscated the gold in 1933. by Gary North http://www. Rothbard. This is why the governments of Europe abolished the gold coin standard when World War I broke out in August of 1914. This is the great veto of the public over the policies of the banks. 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. This is why the United States government abolished the gold coin standard in 1933. My proposal is a form of restitution. Governments do not want the general public to have a veto over its fiscal policies.95 There is no justification for the stolen gold to Privacy Information remain in the possession of the United States government. Governments want to avoid this system for obvious reasons.. they can go to the central bank. The agency that stole the gold will return the gold to the American voters.com/north/north895. This would restore a gold coin standard. If they turn the gold coins over to a commercial bank in exchange for an IOU from that bank. The Case Against the Fed Murray N. It is a standard in which gold coins are commonly used in the marketplace. but they do not want to get blamed for collecting taxes necessary to fund all of the projects that they plan to fund. So. and gold coins in circulation would transfer this veto to the public. People will become familiar with gold coins. These are American voters. and if the central 5 of 11 11/15/10 10:05 AM .End The FED. Buy New $9. There is surely no justification for the stolen gold to remain an asset of the Federal Reserve System. Get The Gold.lewrockwell. My conclusion is simple: return the stolen goods to the judicial heirs of the victims.
people begin to buy gold. Get The Gold. So. or who use IOUs to gold coins in their economic decisions. This is a run on the banks. it pays someone to own gold. and he takes his gold coins home. 6 of 11 11/15/10 10:05 AM . They expand those loans with fiat money. 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. individuals decide that the price of gold will also rise. Gold-using producers start buying. this is a bank run. When fiat money gets into the economy. when the common man goes down to his bank and turns in an IOU for gold. If the price of gold rises. and the gold is flowing out. because it has the cooperation of the central bank. STATIST GOLD STANDARDS There are some people who say they are in favor of a gold standard.com/north/north895.html bank wants to. it has to sell its debt to private investors. When the monetary base increases. The banks find that digital money is flowing in from the buyers of gold. they increase the money supply. It is the same when the common man turns over his IOUs to gold to someone who sells gold to the general public. But when they increase loans. The IOUs’ buyer also presents the IOU to gold to the commercial banks. because they have expanded the money supply based on the expansion of Federal Reserve credit. this tends to raise prices. If the government cannot sell its debt to the central bank. not based on the expansion of deposits by owners of gold coins. The essence of a gold coin standard is the veto. The government can increase the amount of its debt. commercial banks make more loans. this increases the nation’s monetary base. and therefore over the national government. by Gary North http://www.End The FED. because the government has to offer a higher interest rate in order to persuade investors to buy its debt. As prices rise. 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. So. This creates a crisis. This tends to raise the interest rate. and therefore over the central bank. This indirectly transfers a veto to the common man over the size of the government’s deficit. it buys the debt of the government. 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. When the central bank increases its holdings of government debt.lewrockwell.
lewrockwell. He said it because he did not trust the wisdom of a self-selected. knowledge. So. Buckley over a half century ago came up with a delightful quip.html but they do not want a gold coin standard. I believe in decentralized political authority. Murray N.. They do not want the authority to exercise the veto held by the common man. he did not trust the judgment of academicians. it is more 7 of 11 11/15/10 10:05 AM . They spend their money on aspects of their lives that they are closely familiar with.. In other words. Buckley was talking about political sovereignty. 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. 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. It was extended by the Bretton Woods agreement of 1944. So. Rothbard. It was the gold standard that Nixon abolished unilaterally on August 15. Its defenders trust the wisdom of central bankers. I am talking about economic authority. William F. They spend their money constantly.. They are barely familiar with local politicians. This gold standard places authority in the hands of governmentlicensed monopolies called central banks.End The FED. This was the gold standard that was established in 1922 at the Genoa conference. They want a gold standard based on cooperation among central banks. I am in agreement with him. by Gary North http://www. the defenders of non-coin gold standards are impressed with the wisdom and reliability of central bankers.. What Has Government Done to Our Mone. tenured or tenure-seeking faculty at the most prestigious academic institution in the United States. Buy New $17. He did not say this because he was a graduate of Yale. But I also believe that the transfer of economic authority in the form of private property. It does not trust the wisdom of individual citizens. is more important for the preservation of liberty than the transfer of political sovereignty back to local units of civil government. Get The Gold. He believed that the common sense of the average man is more reliable than the highly rarefied academic skills of the University faculty. with respect to that crucial resource. 1971.com/north/north895.00 Privacy Information People are more careful about spending their money than they are about voting. especially the ownership of gold or silver coins.
The major decisions will still be made by the central government. but it should not have any power to monopolize the production of coins. their right to vote locally will be compromised politically.lewrockwell. but they 8 of 11 11/15/10 10:05 AM . The only standards that should be enforced by law are standards of contract law.End The FED. I am proposing the transfer of all authority over money to the free market. If private enterprise produces coins that meet these standards. but simply as residents of the United States. This is true of virtually all academic economists. They both should be decentralized. 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. They would exercise this authority over money. They say they believe in the free market in many areas of life. not as voters. Get The Gold. This would be a free-market system in coinage. The government lawfully controls the form of taxation. They do not favor lodging the veto in the hands of the common man. They would have the right to use this money as currency. The government should be out of the money business.com/north/north895. The proof that they do not believe in the free market is that they oppose the creation of a full gold coin standard. or hoard the coins. What I am describing is the restoration of a free market in money. by Gary North http://www. that bank by law must have coins and reserve to enable it to honor its contracts for gold coins.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 government should limit itself to a statement regarding the weight and fineness of the tax coins. When a bank issues an IOU to a specific fineness and weight of gold coin. or deposited in warehouses on their behalf. and they have always done so to the detriment of liberty. The government does have the right to establish the form of money that citizens must use to pay their taxes. or sell to jewelry companies. the government must accept such coins as valid for the payment of taxes. by means of a gold coin standard. This means that the authority over money must be removed from the United States government and transferred to the users of gold coins. Governments have always asserted this authority. but if local voters do not have authority over the monetary system. A LITMUS TEST FOR FREE MARKET ECONOMISTS Very few people believe in the free market.
He does not believe in the logic of decentralized private property. What would the result be? Within a few years. Besides. They believe in central banks. When you hear a self-designated free market economist defend the idea of central banking. So.End The FED. There would be no further legal connection between the Federal Reserve System and the United States government. It is not limited merely to control over the money supply. We have seen this with a vengeance with the passing of the banking reform bill of 2010. there is no government 9 of 11 11/15/10 10:05 AM . and he sees the central bank as the agency of such planning. He believes in central planning. They do not believe in the widespread use of gold coins by the general population. and they believe in government control over the banking system. you can be sure that this person does not believe in the free market. meaning a government-licensed monopoly over the monetary base. 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. Control over money is the central form of economic control. What I recommend is simple: the removal of all government authority possessed by the Federal Reserve System. Get The Gold. Why is this? Because money is the central institution in a market economy.lewrockwell. They are making the decisions as to who gets what and on what terms. This is not a mistake. It means government control over the money supply. They could not operate in a competitive environment. The great winner in the reform is the Federal Reserve System. it now possesses the authority of direct regulation and intervention. Central planning over money increasingly has become central planning over the entire economy.com/north/north895. above all other areas of the economy that ought to be governed by the free market. It receives the authority over the banking system. This has been the fate of the two previous central banks of the United States.html do not believe in the free market with respect to the monetary system. This is consistent with the original logic of central banking. Yet. They could operate only by means of a grant of monopolistic power by the United States government. the Federal Reserve System would go bankrupt. by Gary North http://www. the money system should be. The central banks of the world have now become allocators of capital. I am not at all worried about the operation of the Federal Reserve System without government supervision.
Third. Congress does not control the FED: the FED controls Congress. There is supervision of the government by the Federal Reserve System.html supervision of the Federal Reserve System. the entire academic economics profession. 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.lewrockwell. The Congress would simply buy votes directly with newly created money. and it is not likely to change. Get The Gold. all of the decisionmakers of the Federal Reserve System. 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. The Powers That Be fear the transfer of authority over money to the 10 of 11 11/15/10 10:05 AM .End The FED. This is why we are unlikely to see this pair of laws passed in our generation. but who believe that the Congress of the United States is reliable in the area monetary policy. however. followed by hyperinflation. They oppose the Federal Reserve System. Fifth. Congress would be unrestrained by any fear of inflation. than this recommendation. There would be no concern about the proper allocation of capital. That is far more fearful then idea of control over money by the Federal Reserve System. Second. we would see the restoration of liberty.com/north/north895. There be no concern about profit and loss potential of the banking system. Who are the opponents of such a procedure? First. but only on the assumption that all power over money should be transferred to Congress. by Gary North http://www. the power of money will be transferred to the United States Congress. I can think of no better prescription for mass inflation. There are people out there ("Greenbackers") who call themselves conservatives. Should this ever change. all the bureaucrats who work for the Federal government. The Federal Reserve System at least tries to make its clients some money. CONCLUSION If we were to abolish the Federal Reserve System. This has been true since 1914. Fourth. the Congress of the United States. the vast majority of all commercial bankers. There would simply be the printing press in the hands of the Congress.
The fear of that veto is great inside the Washington Beltway.com Invest In Gold Coins Or Bullion. Visit http://www.com. by Gary North http://www. Copyright © 2010 Gary North The Best of Gary North Buy Gold The Smart Way www. He is also the author of a free 20-volume series.garynorth. It would let them veto the spending policies of the Federal government.lewrockwell. 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. October 16. because that would transfer enormous power politically into the hands of the people.cashforgoldoflasvegas. Fast Free Delivery. An Economic Commentary on the Bible. Call Us Now! Back to LewRockwell.AmericanBullion.html general population. Get The Gold.usgoldbureau.com Home Page 11 of 11 11/15/10 10:05 AM .End The FED.com/gold/ Highest Prices for Gold Jewelry Call Now 233-6261 Buy Gold Bullion www.com/north/north895.
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