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Thursday, December 22, 2011

Interest Rates In A Gold Coin Standard

Americans are living in a world of central bank profligacy. This has been true ever since 1914, when the Federal Reserve System opened for business. But the most recent bank-created economic crisis, which began in December 2007, has received more attention than ever before. This is mainly the result of Ron Paul's 2007 candidacy for the Republican nomination for President. He warned that this crisis would happen. He also spelled out the reasons: Federal Reserve policy. Then the crisis hit.

The Federal Reserve lost its immunity from criticism in 2008-9. It will never get it back. It also lost its invisibility. The general public now has some limited awareness of the FED. The FED gets a lot of negative publicity. This to a positive development.

This has also created a problem. Some of the critics of the Federal Reserve System propose a solution worse than the FED itself: the creation of a fiat-money based central bank that creates money out of nothing to pay for government-funded projects. These critics argue that this government-run bank will be able to offer interest-free loans to the public, which will keep the economy running at full capacity.


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