End the Fed but Keep the Fiat

By Glen Wallace

We need to end the Fed, but not go back to a gold or silver standard.  Sometimes I think there is a conspiracy within a conspiracy whereby the powers that be deliberately put forth a gold standard as the only alternative currency if the Fed was abolished.

The general conspiracy is the creation and existence of the private central bank 'The Fed' and all the other private central banks around the world and their issuance of debt based currency.

The conspiracy within that general conspiracy is where the private central bank conspiracy is exposed, but only in a manner where the only alternative given is one that allows the private bankers, that own a majority of the worlds gold, even more power with a gold backed currency. The banksters would then be gaining increased power through the ability they would then have to manipulate the money supply to their advantage through the manipulation of their own huge stockpiles of gold. The plebs are then effectively being led down a primrose path to a destination not of freedom from the banksters, but just the opposite, further enslavement to the private banking system.

Bill Still, in his documentary 'The Secret of Oz' (that I've embedded at the end of this post) shows in historical instances of where gold-backed money was issued, how the masses were oppressed by bankers who withheld their gold, leading to an unnecessary scarcity of money, which in turn lead to a deflationary depression among the masses, but was advantageous to the wealthy bankers insofar as they could then buy up properties of the downtrodden masses for pennies on the dollar.

But Mr Still also showed how when president Lincoln issued, via the US Treasury, the Lincoln Greenbacks as debt free fiat money, there was widespread prosperity as a result.  Backing money with gold limits the growth of the economy because the supply of gold itself is limited.  The Lincoln Greenback on the other hand effectively amounted to a barter equivalency which grew in supply as the growth in goods and services also grew.

And as occurred with the Lincoln Greenback, when a money supply is not limited by the supply and suppliers of gold nor is arbitrarily limited according to the vested interests of the private central bankers, a bountiful burst in organic economic growth seems to occur once the unnecessary limits to the money supply are removed. It is as though, within all of us, is a natural eagerness and curiosity to create and explore in ways that, if harnessed, will result in a verdant economy flourishing in an environment of widespread entrepreneurship.  But we are tied down and shackled by the bankers, prevented from exploring our human potential, while at the same time we are chastised for the very indebtedness that is the shackles the bankers put on us that keeps us from actualizing our potential.        

So there still would be a backing of sorts to a fiat currency that was issued by the US Treasury insofar as the dollars could be exchanged for a given market-determined amount, of any given goods or services.  Just so long as the fiat dollars are issued in a controlled manner that varies directly with the supply of goods and services in existence, that the dollars are exchanged for, hyperinflation will not occur.  Hyperinflation would not occur because the money printers would be limited in the amount of money they could print to the amount of real goods and services in the economy and not the amount of paper and ink available to print that money.

While some may argue that we could not count on our government to issue fiat currency in a controlled manner, I would counter that the risk would be just as great for a gold backed currency to be issued in an uncontrolled manner by an irresponsible government.  It is just as easy to print a dollar that says it's backed by gold as one that does not.  After all, isn't that why I so often read the goldbugs urging people to take physical delivery of their gold and not trust paper gold certificates?  If the issuers of gold backed certificates cannot be trusted, why would they necessarily expect an improvement from an institution that the goldbugs seem to generally mistrust -- the government.

I think that if there is sufficient transparency along with adequate democratic measurement, we can at least sufficiently count on the government to issue our currency in a controlled manner. I certainly think that a transparent democratically controlled government is many times more trustworthy than the private banking system that is currently controlling our central bank, the Federal Reserve.  And for the reasons I've explained, if the government is going to be issuing money, it should be in the form of debt free fiat currency.

If you go to the Federal Reserves website you can see where they tell the story of the Continental.  The Continental is the name of one of Americas earliest currencies.  In what seems like an ironic case of the pot calling the kettle black, the Feds article argues that the continental became worthless because it is a fiat currency, not backed by anything, and as a result became worthless due to rampant printing.  What the article ignores is that Federal Reserve Notes, the dollar, is also a form of fiat currency insofar as it is not backed by anything material either. Additionally the only reason that the Continental fiat currency became worthless, due to hyperinflation, was because the British, in a military act against the American Colonies, printed mass quantities of counterfeit Continental notes in a successful attempt to undermine the value of the money used by the Colonies.  But there is no reason to believe that the British would have been any less successful had the Continental been printed with a statement that said it was backed by gold or silver.

All things being equal, history and reason shows that the best chance for economic success as a nation is with a government treasury being the sole issuer of a debt free fiat currency, issued in a controlled manner.