Ron Paul is right and it is Megan who is ill-informed, still clinging to her Keynesian belief system. When Megan can show us where she has predicted recession based on Federal Reserve policies, I'll put stock in her beliefs. Since Ron Paul accurately predicted the recession of 1987 and it was recorded, I'll put more stock in his economic wisdom.

Oh, and by the way, Paul's prediction was 4 years in advance of the recession and came during a debate with Federal Reserve Governor, Charles Partee.

The video is here: http://www.youtube.com/watch?v=5hMeNnbSqkk

The prediction arrives at about 2:13 in.

"The monopoly of a single bank is certainly an evil. The multiplication of them was intended to cure it; but it multiplied an influence of the same character with the first, and completed the supplanting the precious metals by a paper circulation. Between such parties the less we meddle the better." --Thomas Jefferson to Albert Gallatin, 1802. ME 10:323

"I sincerely believe... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale." --Thomas Jefferson to John Taylor, 1816. ME 15:23

"Specie (Gold & Silver) is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war." --Thomas Jefferson to John Wayles Eppes, 1813. ME 13:430

"Paper is poverty,... it is only the ghost of money, and not money itself." --Thomas Jefferson to Edward Carrington, 1788. ME 7:36

"Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us." --Thomas Jefferson to John W. Eppes, 1813. ME 13:276 (This is what is happening right now. Our currency is being debased as the fed and other central banks flood the market with paper money printed out of thin air. The result. The rich get richer and the poor get poorer.)

"It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not." --Thomas Jefferson to Richard Henry Lee, 1779. ME 4:298, Papers 2:298 (They just don't make leaders like this anymore. Oh wait.......Ron Paul!)

Just a reminder. Thomas Jefferson was the author of our Declaration of Independence and was our third president.

I'm glad this article at least tried to address why his suggestion is crazy rather than immediately writing it off as self-evident insanity (the virally ubiquitous "batshit insane" label). That being said, it would be interesting to see why the economists think eliminating the fed would be a bad idea, and to have more concrete reasons for opposing Paul's unpopular proposal.

Putting aside such questions as to whether most of the gold in the world has already been mined...

Let's pick this question up again. Inflation is caused both by printing more money as well as market fluctuations to be sure. It seems that the real question is whether the total amount of gold in circulation will increase by an amount greater than the current rate of inflation. For example, using the CPI index as a measure of inflation shows about a factor of 20 devaluation of the dollar in the last 100 years. It's hard to believe the gold supply will double in the next 100 years let alone match the the reprint-component of the devaluation factor.

I actually think the fed makes the economy more stable in the short term, as it allows the govt to deal with small crises by printing more money, and I think it allows us to tolerate a larger national debt than we would be able to otherwise. But this debt is not a "fixed rate mortgage" and I think the real risk we run will be a larger scale version of the current housing crunch (replacing the housing lenders by the Chinese in this toy analogy) when and if our lenders start to demand a higher interest rate for our monopoly-money stocks. After all the act of printing more money is an indirect tax on all U.S. cashholders, foreign and domestic. This is only coming from an engineer though. Are there any smart economists around?