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Say What?

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By abolishing the Federal Reserve we would return to a system that never worked

For those of you who thought politics was mostly about people running for office and a trip to the polls—guess again. Politics, among other things, is about being in control of those who are in control. It is about influencing those who badly need to be influenced. It is about doing for others what they are incapable of doing for themselves.

In many instances it doesn’t take much to make a case for any of the above. We can do strange things, to make ourselves feel good, in the name of making life better for all mankind. It is somewhat like the picture of a Fish and Game guy wrestling a bear for his own good. That tranquilizing shot is a victory of sorts.

Anyway amongst us is a small group of dedicated folks who, after finding Ron Paul was a candidate for President, found he was a spokesman for a subject dear to their hearts—getting rid of the Federal Reserve System, getting us back on the gold standard and, along the way, dumping the Internal Revenue Service. That is what we call “talking in big numbers.” No petty stuff here.

That the central banking system dates back to 1913 doesn’t prove anything. That it was established to exercise some form of control over the banking system and the consequences of its failures is inconsequential. It has been unconstitutional, in the minds of some, for 95 years

In case you don’t know who Ron Paul is or really care, let me repeat what his web site tells us.

He is a 9-term Republican from the 14th Congressional District in Texas. That’s a gerrymandered district that covers various parts of south Texas south of Austin. And so you will know, Ron Paul is Doctor Ron Paul. His degree is not in economics or finance but in delivering babies and the system required. Nevertheless, Ron Paul is a strong advocate of returning to the gold standard.

Paul has worked at the highest levels with others supporting the same idea. His published work is “A Case for the Gold Standard.” The locals are so encouraged by the few delegates he garnered for the 2008 National Convention that they have managed to send a Resolution to Congress encouraging our Representatives to dump the world’s largest functioning monetary system in favor of one that has failed not once, but many times.

The heart of any banking system is confidence. The value of our currency is based on what we feel it is worth. The theory of the gold- or silver-backed currency people is that as long as you can redeem a piece of paper (called flat money) for precious metal, you have something worthwhile.

The silver dollar is supposedly worth more than a dollar.

Actually, a silver dollar is worth what you are willing to exchange it for. If the silver dollar is a rare mint or has greater value to a collector than a shopper, the dollar might be worth more than something else priced at a dollar. These days a silver dollar is a collector’s piece and is worth whatever the traffic will bear. Its value is also higher because the price of silver is higher, if for no other reason because the costs of mining are far greater than ever before.

The case for a gold certificate is much the same except there is less gold available than silver.

In the old days a piece of flat money redeemable in gold was passed easily simply because it was easier to use than a gold coin and gold coins were abused (shaved) along the way. But there is another consideration

As our economy grew and the dollar became the currency of choice world wide, we could not accumulate enough gold to back every dollar afloat. Silver took over for a while but in the long run it is the confidence we have in the value of our dollar that gives it stability. And fortunately the Federal Reserve System has stabilized our banking system restoring confidence in your bank to protect your deposits (FDIC). When you think your bank is failing, you rush to withdraw your money. When everyone does this, we have a panic. Prior to 1913 we had a number of such events that had disastrous affects on both business and the public at large, even with gold-backed paper money.

But the most telling argument against Dr. No (as Ron Paul is called in polite circles) is the size of our economy and the global reach of our economy. That the current system works is evident in the history of our country, especially after WWII. Forget that we had the capacity to win two huge conflicts and still build our country to the envy of the world. Forget that our standard of living can’t be compared to any time past even when flat money was backed with gold or silver. Forget that our monetary system has worked.

Of course all this means little or nothing to the average guy who is ‘fat, dumb and happy,’ going to work every day and making payments on his house, car and boat while raising a couple of children. What is important is that it is easy to be critical of anything especially when you don’t have to offer a better solution. Keep those Resolutions going to Washington, D.C.; Rave on Ron!

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Paul Rechnitzer Paul Rechnitzer Transplanted 30 years ago, Paul is a retiree from the oil business who knows no other place he would rather live and breathe local history.

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