Wall Street Journal: Our Unaccountable Fed
At the conclusion of their op-ed piece published in the Wall Street Journal, Sean Fieler and Jeffrey Bell, respectively chairman and policy director of the American Principles Project, make a good case for monetary reform through coordinated efforts at both the national and state levels:
If the history of the Fed proves anything, it is that no mere rule will take the fiat out of fiat money. And there is no reason to believe that a single mandate would have stopped "quantitative easing." More importantly, what would happen to the single mandate of price stability if and when the Fed violated it? At worst, Congress would hold hearings and be very, very upset. Or it wouldn't do even that, because the most likely reason the Fed would allow inflation to get out of control is to finance Congress's ever-growing budget deficits.
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Members of Congress seeking to restrict the Fed's power need to consider what oppositional force is truly capable of hemming it in. One answer is a revived gold standard, which would once again obligate the Fed to redeem dollars for gold at a fixed rate.
Equally effective would be to leave the Fed and the dollar system untouched, but to allow gold a level playing field on which to compete with the dollar. Utah has already taken the first step in this direction by passing a law formally recognizing gold as legal tender. But for the playing field to be truly leveled, all taxes on gold transactions need to be removed and individuals and businesses need to be permitted to report their financial accounts in gold.
While it might not seem obvious to pit the dollar against gold, which has not been used as final money in over 100 years, it would provide a significant restraint on the Fed. Simply allowing gold to be used as currency again would concentrate the minds of the Federal Reserve Board on keeping inflation under control. Competition, after all, would mean that if the Fed doesn't preserve price stability, it will lose its monopoly franchise—not just get a tough talking-to from Congress.