Today we bring you Part VIII of “A Brief Monetary History of the United States” from the Ron Paul Monetary Policy Anthology. The full series can be found at the following links:
Part I – Colonial Money and the Coinage Act of 1792
Part II – The Banks of the United States, McCulloch v. Maryland, and Private Coinage
Part III – Government Begins to Monopolize Currency
Part IV – The Legal Tender Cases and the “Crime of ’73”
Part V – The Rise of the Fed
Part VI – The Great Depression, Gold Confiscation, and the Gold Exchange Standard
Part VII – The Dollar Reigns Supreme: From Bretton Woods to Stagflation
Part VIII – The 1980s to the Great Recession and on to the Future
The 1980s to the Great Recession
Economic conditions became so bad by the late 1970s that calls to return to the gold standard increased. Congress established a Gold Commission in 1980 to examine the possibility of a return to gold. Although President Reagan was publicly sympathetic to the gold standard, he did not restrain the anti-gold members of his administration. As a result, the Gold Commission was packed with supporters of the existing unbacked fiat monetary system. Despite the Commission’s ultimate endorsement of the fiat paper money system, the Commission’s work did provide some impetus towards the eventual adoption of legislation to authorize the minting of Gold Eagle coins by the U.S. Mint—the first gold coins minted by the United States since 1933.
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Alan Greenspan’s recent comments about gold have been making the rounds online. Greenspan famously declared during his tenure as Chairman of the Federal Reserve Board of Governors that the gold standard was obsolete because the Fed effectively acted as though it were on a gold standard.
But as I have testified here before to a similar question, central bankers began to realize in the late 1970s how deleterious a factor the inflation was, and indeed since the late 1970s central bankers generally have behaved as though we were on the gold standard.
So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard? And the answer is: I do not think so, because we are acting as though we were there.
The video of Greenspan’s exchange with Congressman Ron Paul is worth watching too, as it occurred during Greenspan’s final hearing as Chairman before the House of Representatives. The housing bubble was well underway, and not much more than two years after Greenspan’s testimony the first rumblings of the financial crisis were beginning to be felt on Wall Street.
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This article by Carl Menger Center Board Member Prof. Joseph Salerno has been reprinted with permission from the Ludwig von Mises Institute.
Four Reasons the Bernanke-Yellen Asset-Price Inflation May Be Nearing Its End
By Joseph T. Salerno
There are strong indications that the remarkable run up of asset prices in the last few years is beginning to run out of steam and may be on the verge of collapse. We will leave aside the question of whether the asset inflation is symptomatic of a garden-variety inflationary boom or is a more virulent bubble phenomenon in which prices are rising today simply because buyers anticipate that they will rise tomorrow.
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Former Federal Reserve Chairman Alan Greenspan is coming out with a new book this fall. The title of the book, “The Map and the Territory”, is as descriptive of the book’s subject material as Chairman Greenspan’s Congressional testimony always was of the Federal Reserve’s conduct of monetary policy. We’ll assume that Greenspan in his old age hasn’t taken up geography as a side hobby. In advance of the book’s release, the Chairman gave an interview to Marketwatch late last week. Many of the excerpts published online are typical Greenspan, giving vague answers, answering questions that he wanted to answer rather than what was asked, etc.
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