Ron Paul: The Ideal Global Monetary System Is One Without Government

The website Market Sanity published part of a conversation between Mike Maloney (founder of and Ron Paul (former Congressman and free market enthusiast) which appeared on the Hidden Secrets of Money

Ron Paul explains that the ideal global monetary system would be one in which the government would be out-of-the-way; markets should decide and apply the rules of  ’no counterfeiting’  to the people and to the government.  He says:

I would allow the market to work, because I think we’re more sophisticated on money now through free market understanding. The Founders accepted the notion of a fixed ratio between gold and silver. Bimetallism is not a good economic theory because it’s too rigid. If there’s a discovery of silver, and the price of silver goes down, you know, you want that to be flexible.

But that doesn’t mean the free market wouldn’t use gold and silver. Just look today. It’s so much easier to adjust with our computers. In many places, more likely in foreign countries, they’ll take dollar or their local currencies and have immediate conversion. But you can also have immediate conversion between gold and silver, or certificates in silver or a credit card in silver. You could pay it in silver. You can pay it in dollars or Euros today and it’s immediate.

Additionally, Ron Paul explains that, if the market was allowed to decide, it could also chose to use anything else, for instance a basket of commodities. It all boils down to measuring things in terms of a unit of account. The units of account that are currently on paper or credit card could equally be based on silver or gold. He says it would not be flawless because people have the tendency to break rules; it even happens with the government. The US, for instance, has the worldwide fiat currency for 40 years and it has been breaking rules during that whole period of time.

That is such gross distortion, and that’s why the imbalances are so great right now of the debt and the debt system and all the malinvestment. They did not prevent the correction, they just propped it up in 09′. So the correction didn’t occur, and if you want the system to continue you really have to allow the correction to happen. That, of course, is why we haven’t had a recovery.

In other words, Ron Paul is propagating the idea to make fraud and theft illegal for everybody, including the financial sector (a sector which is enjoying a privilege in the current system). Suppose a gold standard was implemented and someone would emit gold certificates, that person should be punished, and it would be the minimal role of government. Today, however, the Constitution still says – even though they ignore it – that only gold and silver can be used as legal tender.

If the government wanted to issue a gold coin and make sure that it was an honest weight and measure, it still would be legal for the state to do that. But, I think because it’s a mandate on the states; the states should not use anything other than silver and gold. That interpretation should be rather broad too: that the states could do it. The prohibition against the states was that they couldn’t issue bills of credit. The Founders knew what paper money meant because the states were doing it like crazy. That’s one of the reasons why they had the Constitutional Convention was because of the monetary issue. So they [the states] aren’t allowed to print money. And that’s OK, that’s counterfeiting. At the same time, they could use gold and silver.

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing