But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.
The best the Fed can do — an average debauch in the dollar’s value of 2% a year while producing recurring financial crises and a more cyclical economy — is demonstrably inferior to the results produced by the classical gold standard. Here’s just one example. The largest gold discovery of modern times set off the 1849 California gold rush and increased the supply of gold in the world faster than the increase in the output of goods and services. The price level in the U.S. did increase by12.4 percent over the next 8 years. That translates into an average of just 1.5% a year. The gold standard at its worst was better than the best the Fed now promises to do with the paper dollar.
The Fed’s best is hardly good enough. The time has arrived for the American people to demand something far better — a dollar as good as gold.
Labels: Fed Reserve Audit the Fed Currency Dollar Devaluation Inflation Fiat Currency Gold Standard Ron Paul Posted by | 2.09.2012 at 5:54 PM
Heck if the Fed Reserve can announce they're going to devalue our Dollars by 33% over the next 20 years, why couldn't the Fed some day announce, say, a 5% devaluation overnight? I guess we're supposed to think that will never happen here. Overnight devaluation of currency is so 2011. Besides, we should just implicitly trust that our Fed Reserve does what's best for us, right?