Ahead of the Federal Reserve’s meeting … an old metaphor — helicopter money — is gaining new traction as world leaders try to improve global economic growth, which the IMF recently described as “fragile.” – CNNMoney

People may wonder why sound money advocates have become so militant about the hazards of allowing governments to issue unbacked fiat currencies. However, when the Federal Reserve and other central bankers so frequently discuss dropping money from helicopters, you know monetary policy has run amok.

The case for money backed by gold and/or silver is founded on the premise that real wealth is created by productive activity in the real economy. When governments and central banks take on the role of printing money at will, expanding credit, slashing interest rates to zero (or even negative), and bailing out giant financial corporations, they’re penalizing capital, punishing savers, and robbing purchasing power away from workers and transferring it to the financial elite.

The Federal Reserve is hoping dropping money from helicopters will encourage Americans to spend money and kick start the economy. According to CNNMoney, “consumer spending makes up the majority of U.S. economic activity so more spending would boost the country’s growth prospects, which are currently very dim.”

But real growth in the U.S. economy has been hampered for decades, and this problem accelerated when the U.S. abandoned the gold standard in 1971.

The Foundation for the Advancement of Monetary Education (FAME) points out that the country’s trade deficit started going negative when the dollar was no longer tied to gold. Manufacturing was pushed offshore. The break from gold backing also enabled government deficit spending and a skyrocketing national debt.

Interestingly enough, Mario Draghi, President of the European Central Bank (ECB), commented that, “the ECB has no such plans [to implement helicopter money] and that it hasn’t been discussed. He argues that helicopter money is fraught with challenges.” But no mention of the “challenges” caused by a fiat money system?

Under a gold standard, it would be difficult for bureaucrats to make spending commitments that are unsustainable. Under the current system where central banks can create new money with a few strokes of a computer keyboard, politicians know when they dole out lavish entitlements and spending programs which future generations of taxpayers cannot cover, the Federal Reserve is there to bail them out with more money printing.

Of course, the result is more inflation in the real economy, and the purchasing power is continuously whittled away. Rather than overtly defaulting on entitlements programs and government creditors, the default is stealthy in nature. The default doesn’t come in the form of missed payments, it’s a default on the value of our currency.

Former Fed chairman, Alan Greenspan, agrees with CNNMoney’s assessment that the U.S.’s economic health looks particularly grim these days. In an interview with Bloomberg, he admitted, “Productivity is dead in the water… [Entitlement spending] will grow wholly independent of what the ability to fund is… Nobody wants to touch it. And that is gradually crowding out capital investment, and that’s crowding out productivity, and it’s crowding out standards of living.”

He should know. In 1983, he directed the National Commission on Social Security Reform. He was responsible for shoring up Social Security by convincing Congress to increase taxes and changing the retirement age. However, Greenspan must have known that his plan was ultimately unsustainable – the fundamental problem with our monetary system was never addressed. A reform of that nature would have been considered politically unacceptable.

Greenspan seems to have come to his senses, recognizing the realities of our weak economy, unsustainable debt, and unwise monetary policy. But he spent most of his career directly enabling the problem. His easy money policies helped create huge bubbles and mal-investment, and today’s central bankers have merely doubled down on Greenspan’s approach. Shame on him.

Meanwhile, the Congressional Budget Office admits that the country’s deficit shows no signs of decreasing. The deficit is projected to be $544 billion this year and over $1.4 trillion by the year 2026. Those deficits will add to the $19+ trillion national debt the politicians have already piled up.

The Federal Reserve is usually wrong in its economic forecasts, and the Fed’s only monetary tool anymore seems to be helicopter money. But bailouts and monetary stimulus are THE problem. And the solution is a new monetary system based on sound money principles and gold and silver.

Stefan Gleason is President of the Sound Money Defense League, a national grassroots lobbying organization working to restore gold & silver to their historical role as America’s constitutional money. He also leads Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason has frequently appeared on national television networks such as CNN, FoxNews, & CNBC, & his writings have appeared in hundreds of publications such as the Wall Street Journal, TheStreet.com, Seeking Alpha, Detroit News, Washington Times, & National Review.