Krugman debates Ron Paul

[politicaljunkie12]

7. debate

There are solid arguments for and against using some form of monetary standard. In a perfect world the Fed works as a safety net for failing economies and does a pretty good job at helping an economy recover during a recession (much faster than when you have a gold standard). However, in an imperfect world, the Fed is used not only as a safety net during an economic crisis, but as an unchecked funding machine for federal initiatives. When you borrow money in this way, it amounts to a politician reaching into your pocket for money. Hell, if I had a magical piggy bank that had the words "Endless supply of money--Break open upon emergency" scrawled on it I would bust it open immediately and use it whenever I felt like it. This is Ron Paul's issue with the Fed. It's a hidden tax. This is a godsend when you're in a crisis, but it does debase the dollar and minimalize the middle and lower class. The gold standard is an automated check and balance system that prevents power hunger politicians from using the Fed as their personal piggy bank, it prevents hyper-inflation, stabilizes the dollar and would have limited the government in some positive ways over the past 30 years. The real issue though isn't whether or not we go to the gold standard or keep the Fed, it's what we do to keep the politicians out of "our" piggy banks.