Letters to the Editor
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Backatcha, tempus
Tempus,
Woodrow Wilson signed into existence the Federal Reserve in 1913, 16 years before the great depression. We were still on a form of gold standard then, but fractional reserve banking divorces the notes used from actual gold held, rendering not a true hard currency at all. Note that I did not speak against fiat currency as such, or if I did, I misrepresented my position on the matter, and I therefore apologize. It is the fractional reserve system, not fiat currency, that causes the problems of an infinitely exponential increase in the need for economic growth.
The problem with the current system is essentially this: Money represents debt in our system, instead of value. Value is finite and is slow to change, and thus makes a fine medium of exchange. Debt is infinite, and experiences exponential growth.
The Gold standard is not the answer in and of itself, but a value-based monetary system at least has the advantage of not failing when the debt-based system does.
And it will fail. I believe it will do so soon, but it mathematically can not... can not... continue forever. You can't have untamed exponential growth in any finite system and expect the system to hold.
As a side note, the fractional reserve system and the current incarnation of the federal reserve could be brought crashing down very simply by any president without consulting congress. The president would simply appear on national TV and engender a banking panic. He could even do it by telling the truth: The current banking system is absolutely bankrupt (TECHNICALLY true) and unless you go RIGHT NOW, you won't get your money back out. Go! Go! Save yourselves!
This wouldn't particularly solve anything, simply leading to a massive depression, and I do believe anyone who has taken the Hippocratic oath and takes their oaths as seriously as Dr. Paul takes his would not handle it in this manner, but he would technically be telling the truth.
The problem, of course, is that the laws that allow fractional reserve banking would still be on the books, and the root problem would not be solved.