Smitty, Stacy, and others calling for the abolition of the Federal Reserve are treating the symptoms, not the disease. It’s the equivalent of curing gout by having leeches drink the excess blood, or treating schizophrenia by relieving the pressure on the brain.

Now hear this: We have a fiat currency, and we will have fiat currency for the foreseeable future. “Hard” currencies have failures and drawbacks of their own. It’s just been so long since anybody lived under a hard-currency regime that we’ve forgotten why we went to fiat currencies in the first place.

The only choice we really have is who is to manage the fiat currency, and the problem there isn’t that it’s fiat currency, it’s slapping Maserati badges on it and turning it over to incompetents who aren’t quite sure which end has the headlights but are absolutely certain that they need no further training or experience behind the wheel. To be scrupulously fair to Bernanke & Co., it is perfectly possible, even likely, that the combined wisdom and expertise of every economist since the concept became current would not be sufficient to manage the situation created by people who Want It Now and are blithely unconcerned about the cost — Daddy will whip out the credit card, as usual.

People with Great Ideas quite often fail to ask themselves, “What happens after I succeed?” Eliminating the Federal Reserve has exactly nil, nada, zero, zip, no chance whatever of returning us to the Good Old Days of a gold double eagle in every pocket and a chicken freshly killed by a virtuous libertarian hunter in every pot; to begin with, the Good Old Days are largely mythical, based on remembering the chicken and forgetting the chicken shit. There will be fiat currency, and it will be managed, and trading the Federal Reserve for the Bank of the United Nations does not strike me as a well-thought-out transaction.

 

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