STAFF NEWS & ANALYSIS
New Commission or Dead Fed?
By Staff News & Analysis - March 25, 2013

Getting Beyond the Fed … Let us be the first to endorse the Centennial Monetary Commission Act, which has just been introduced in the Congress. It is being advanced not by one of the so-called marginal figures but by the chairman of the Joint Economic Committee, Kevin Brady. The measure would establish a serious, bipartisan committee on monetary reform as we begin the second century under a Federal Reserve System that, in recent decades, has had an increasingly illogical dual mandate and is churning out money that is convertible by law into nothing but more fiat money. – New York Sun

Dominant Social Theme: Another commission, but really it is not necessary and nothing will change.

Free-Market Analysis: Nope … we truly believe that the world's monetary infrastructure is going to be subject to wrenching change over the next few years.

Central banks have printed and lent trillions to countries, including Western countries, that cannot pay the interest on these loans without keeping rates far lower than they ought to be.

Getting Beyond the Fed … Let us be the first to endorse the Centennial Monetary Commission Act, which has just been introduced in the Congress. It is being advanced not by one of the so-called marginal figures but by the chairman of the Joint Economic Committee, Kevin Brady. The measure would establish a serious, bipartisan committee on monetary reform as we begin the second century under a Federal Reserve System that, in recent decades, has had an increasingly illogical dual mandate and is churning out money that is convertible by law into nothing but more fiat money. – New York Sun

Dominant Social Theme: Another commission, but really it is not necessary and nothing will change.

Free-Market Analysis: Nope … we truly believe that the world's monetary infrastructure is going to be subject to wrenching change over the next few years.

Central banks have printed and lent trillions to countries, including Western countries, that cannot pay the interest on these loans without keeping rates far lower than they ought to be.

Inevitably this causes investment dislocations and stock market euphorias that create yet more busts.

To argue that all this is done out of ignorance is kind of futile at this point, in our humble view. Expansion and contraction of monetary forces are a methodology of control that yields up enormous wealth to those in charge of modern fiat currency.

The system will likely end on its own but only after tremendous damage has been done. What is necessary is to reconfigure it before it implodes yet again – and it will. Markets around the world are in a state of euphoria. This cannot end well. Modern history shows us it never does.

So what to do? How about a commission? But a serious one that will bring alternatives to the national table proactively instead of retroactively. Here's more:

Mr. Brady is emerging as an important figure in the monetary debate. He has not endorsed a gold standard, per se. Nor has he signed on to some of the more radical measures, such as Ron Paul's Free Competition in Currency Act, which would end the whole system of legal tender and open the way for privately issued money to compete with government scrip. Instead, Mr. Brady has been pressing a measure called the Sound Dollar Act, which he has just reintroduced. It would, among other things, end the Fed's dual mandate to both stabilize prices and boost employment.

Mr. Brady's Centennial Monetary Commission Act, which is also known as H.R. 1176, is a parallel measure that would establish a commission "to examine the United States monetary policy, evaluate alternative monetary regimes and recommend a course for monetary policy going forward." It is not a repeat of the United States Gold Commission, which was established at the start of President Reagan's first term. That was an important body, to be sure, but it was stacked with advocates of fiat money and is today remembered primarily for its dissent, written by Congressman Ron Paul and another commission member, Lewis Lehrman, calling for a restoration of gold-based money.

Mr. Brady's bill would establish a much more balanced and bipartisan commission, without a predisposition for or against a gold — or any other — standard. It offers a chance not only to light the way to the repair a broken monetary system but also to illuminate the danger that our reliance on fiat money is itself the cause of our long economic travail. This alone is important. Congress is consuming itself with the fiscal debate at a time when a growing number of our best economists and political leaders are coming to the view that the real problem is the fiat nature of the dollar.

This sounds good to us. As the Sun article notes, commissions are usually a place where controversial ideas go to die. But in this case, the controversy over central banking is bound to continue because the system is both dysfunctional and pervasive. People are reminded of its insufficiency every day. And if they do not notice when prices go up, they certainly notice when they go home at night and turn on the TV – only to be exposed to yet more debates about its competency or lack thereof.

We've provided viewers with a "paper trail" of articles going back to the beginning of the financial crisis – stories in which we tried to explain why we thought the current financial system was inevitably doomed.

Our argument was simply that central banking was economically illiterate and that in the era of the Internet people were eventually going to realize that the idea of a handful of men manipulating the price and value of money was both destructive and unfair.

This realization goes hand-in-hand with the advent of increased economic literacy from the rise of the free-market Austrian school and its sensible tenets regarding the way the world really works.

We stand by our predictions. On the Internet these days it is difficult to find defenders of central banking in feedback utilities – and this is one of the reasons that the mainstream media is increasingly shutting down article feedback.

But it makes no difference. People understand what central banking is by now. Or many people do. And gradually this will translate itself into political action, given the way that Western societies work, dysfunctional though they may be.

After Thoughts

Who knows what this commission will yield? But we are sure it is part of a larger trend, just as we are sure of that trend's direction …

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