Visiting Ron Paul’s Fed-free utopia
Posted by Justin Fox
Tuesday, December 29, 2009 at 2:22 pm
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As for his welfare state argument, there’s surely something to it, but not nearly as much as Paul seems to think. In the post World War II era, Germany has followed much more of a hard-money (that is, Ron-Paulish) line than the U.S., yet it has a much bigger welfare state. So the growth of government can be a political choice, not just the result of the machinations of central bankers.
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It’s hard to imagine the Germans creating their welfare state WITHOUT a fiat currency. That’s what enabled them to create the state without seizing the nation’s wealth silently. If there was a non-fiat monetary base (i.e., gold or competing currencies), then the German politicians would have had to inflict pain on the wealth holders to acquire the funds to give away. With a fiat currency, they can silently inflate away wealth without taxes.
Note that gold isn’t necessary. Repealing the legal tender laws would allow the folks to use a non-inflating alternative.
From times long past, sovereigns always debased the currency to serve their needs. I cite the French Franc from Louis 1 to 17. And rest my case.
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