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“the same speech he’s given for the past 30 years of his political career, the one espousing the Austrian school of economics.”

Ron Paul doesn’t understand economics. I have a libertarian economic bent, too, but abolishing the Fed would ultimately be a precursor to a recession that would rival the Great Depression. True, the Fed is not perfect, and makes mistakes. But the money supply won’t just magically grow at a steady pace merely because you abolish the Fed.

Economics is actually Ron Paul's strong suit, just as foreign affairs are clearly not. However, the Austrian School of Economics, to which Paul subscribes, seems to ignore the evidence that money and credit cannot be treated like manufactured goods such as steel and commodities such as cotton.

When President Jackson essentially put the Second Bank of the United States out of business, the United States operated without a central bank for about 80 years. While it was a period of strong growth, it also was one with an unstable money supply and frequent panics, or depressions. Since the establishment of the Fed in 1913, these sharp corrections have ended. Arguably, the Fed mishandled the monetary supply and credit during the Great Depression, but it was the rapid expansion of Federal power and regulation under the New Deal that prolonged that depression into 1939-40. While inflation has been an ongoing problem since the 1950s, the almost unending string of budget deficits the Federal government has incurred in that period has been a major element in price rises. While some have complained of the Fed's independence, the reality is that is not sufficiently so, as the central bank has been effectively blackmailed by Congress and the White House on many occasions.

Ron Paul doesn’t understand economics. I have a libertarian economic bent, too, but abolishing the Fed would ultimately be a precursor to a recession that would rival the Great Depression. True, the Fed is not perfect, and makes mistakes. But the money supply won’t just magically grow at a steady pace merely because you abolish the Fed.

Why should a Central Bank, with no oversight, control our currency and interest rates?

Yes, there will be some difficulty in getting rid of it, but the damage that it is doing would be worth it in the long run.

“But the money supply won’t just magically grow at a steady pace merely because you abolish the Fed.”

I received an emailed article from the VonMises Institute this week. Essentially, the article argued that any increase in the money supply was inflationary. In fact, the rate of inflation would be equal to the rate of increase in the money supply. IOW, the Austrian School believes that the money supply should be constant.

The problem with this is that if the money supply is constant and the population increases, then the per capita supply of money must decrease, ie, the deflationary rate would be equal to the rate of population increase.

Now, I’ve had Austrians argue that this would be offset by falling prices. Well, maybe, but that means that the value of your house would decrease at the same rate the population increases. And, the amount of money you would have to pay your mortgage will decline in proportion to the increase in population.