End the Fed--by Ron Paul (Grand Central Publishing, $21.99). When it comes to money, the mainstream media like to portray Congressman Ron Paul (R--Texas) as a gadfly. Let Federal Reserve Chairman Ben Bernanke enjoy his Time-ly accolades, because history will judge that Paul had it right when it came to the Fed and its often misbegotten monetary policies.
Paul has aroused the fear and ire of the Federal Reserve with his bill calling for the Government Accountability Office to audit the Fed. This tenacious Congressman makes the point that independence should not be confused with a lack of accountability. One doesn't have to agree with Paul's ultimate conclusion that the Fed should be done away with to realize that this powerful institution is a kingdom unto itself. The Fed can bring about depressions (many historians agree with Milton Friedman's belief that the Fed was the chief cause of the Great Depression), horrific periods of inflation, as it caused in the 1970s, as well as the current economic crisis, which the Fed fueled with its excessive easing of monetary policy several years ago. Without the excess liquidity, the housing bubble could never have happened. Yet Congress exercises no oversight of the Fed. In fact, no one outside the Fed has the right to examine to whom it lends money or the agreements it makes with other central banks around the world.
Paul makes the argument that we don't need the Fed at all, that particularly in this high-tech era we can allow--and efficiently function with--competing currencies. Strange? The U.S. did exactly that for most of its existence, up until the Fed was created in 1913. Needless to say, that part of Paul's thesis is highly controversial. But what shouldn't be controversial is his belief that gold should be the ultimate anchor for money. Politicians always end up trashing paper money. Paul correctly hammers home the point that the Federal Reserve's repeated attempts to smooth business cycles and create perpetual prosperity have backfired badly and destructively. As for the Fed's ability to manage money, Paul simply notes that since the Fed's inception the dollar has lost more than 95% of its value.
