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This changes an independent culture into one which is dependent on taxpayer payments for welfare benefits and government jobs with low levels of productivity.[11] According to James Madison the fiat system destroyed social values, particularly, “the necessary confidence between man and man, on necessary confidence in public councils, on the industry and morals of the people and on the character of the Republican government.”[12] Former Congressman Ron Paul even goes on to claim that “When the government can replicate monetary unit at will without regard to cost … it’s morally identical to the counterfeiter who illegally prints currency. Both ways, it’s fraud.” A system based on such morally questionable methods deviates from the cultural values of the nation.[13]

In conclusion while fiat money has impacted culture rather negatively, the system has likewise been the target of personal, political advantage and misguided economic calculation. Ludwig von Mises, a renowned Austrian school economist, explains that fiat money alters the purity of supply and demand with constant regulation of in-pour and out-pour of money in circulation by the government.[14] However, if the economy is to thrive, the free market must be driven by calculated risk-taking, intelligent economic strategies, open competition, efficiency, and private enterprise, not government regulation. Are we all Keynesian now? Not by a long shot. That system has failed. Time to hit the reset button.

[1] Milton Freedman on Budget and Economy. (n.d.). Retrieved April 30, 2015, from http://www.ontheissues.org/celeb/Milton_
Friedman_Budget_ _Economy.htm

[2] Definitions - The Daily Bell. (n.d.).
Retrieved April 30, 2015, from http://www.thedailybell.com/definitions/params/
id/803/

[3] Smith, M. (2012, July 11). Peter Schiff on Gold and Money. Retrieved April 30, 2015, from http://goldinvestingnews.com/26510/peter-schiff-gold-money-fiat-currency-price-outlook-central-banks-investing.html

[4] Harrison, E. (2009, November 4). The Creeping Power Grab by the Executive Branch and Federal Reserve. Retrieved April 30, 2015, from http://www.nakedcapitalism.com/2009/11/the-creeping-power-grab-by-the-executive-branch-and-federal-reserve.html

[5] New Deal. (n.d.). Retrieved April 30, 2015, from http://en.wikipedia.org/wiki/New_Deal

[6] A Bank Holiday. (n.d.). Retrieved April 30, 2015, from http://www.ushistory.org/us/49a.asp

[7] Milton Freedman on Budget and Economy. (n.d.). Retrieved April 30, 2015, from http://www.ontheissues.org/celeb/Milton_Friedman_
Budget_ _Economy.htm

[8] Definitions - The Daily Bell. (n.d.).
Retrieved April 30, 2015, from http://www.thedailybell.com/definitions/params/id/803/

[9] Ghizoni, S. (2013, November 22). Nixon Ends Convertibility of U.S. Dollars to Gold and Announces Wage/Price Controls. Retrieved April 30, 2015, from http://www.federalreservehistory.org/Events/
DetailView/33

[10] Canavan, G. (2014, January 31). The Triffin Dilemma. Retrieved April 30, 2015, from http://dailyreckoning.com/the-triffin-dilemma/

[11] Brassil, R. (2015, April 28). [Personal interview].

[12] Paul, R. (2003, September 5). Paper Money and Tyranny – LewRockwell.com. Retrieved April 30, 2015, from https://www.lewrockwell.com/1970/01/ron-paul/paper-money-and-tyranny/

[13] Paul, R. (2003, September 5).
Paper Money and Tyranny – LewRockwell.com. Retrieved April 30, 2015, from https://www.lewrockwell.com/1970/01/ron-paul/paper-money-and-tyranny/

[14] Brassil, R. (2015, April 28).
[Personal interview].


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Congratulations to Amanda Treadway on receiving the 2015 Greater Irving Republican Club (GIRC) Scholarship Award.
(continued)

Moreover, FDR perpetrated monetary mischief as soon as he assumed office that had clear political motivation. He declared a four day “bank holiday” in March of 1933 and later passed a Gold Reserve Act in 1934 which suspended the gold standard temporarily. Part of his program included confiscating the gold holdings of wealthier Americans, paying them a flat rate of $20.67 and then re-issuing the value of gold at a rate of $35. Thus, the common man with no gold won and the wealthier Americans with gold lost. There were a lot more voters among the common men. [6]

As Milton Friedman and other economists, be they monetarists or Austrian School researchers, have pointed out, increased gold holdings at the start of the Depression should have meant increased money supply in the effort to inject needed capital into the free market. [7] Instead, there was a monetary contraction by both Hoover and FDR. Both men had Federal Reserve Chairmen who were guilty of not applying sound and essential monetary discipline and policy. By retracting the money supply all three Fed Chairmen under Hoover and FDR aggravated the monetary condition of the nation’s money supply. It was a time that we had more gold on hand and the banking system needed to make more money available for businesses to build, invest and to hire.

The next major monetary event intimately tied to monetary pitfalls was the August, 1971 announcement by President Nixon under the Federal Reserve chairmanship of Arthur Burns that the U.S. would no longer give a nation gold in exchange for U.S. dollars. [8] In fairness to Richard Nixon, it must be said that he inherited a difficult situation. The nation had run up a huge debt, due mainly to the expense of fighting the War in Vietnam and multiple social programs passed as part of President Lyndon Johnson’s Great Society, and inflationary pressure was increasing.

Furthermore, President Nixon had inherited an international monetary system that was based on the Bretton Woods Agreements after World War II. Initially, the system worked well, but as competitive economies developed in Asia and Europe, rebounding from the destruction of World War II, the portion of America’s output compared to total world output decreased, which in turn decreased the call for U.S. dollars. Thus, it was more enticing to many nations such as France and Spain to convert their dollars to gold. And they did so. Nixon had little choice but to close the gold exchange window. [9]

Many economists have highlighted the extended period from President Nixon to President Obama as one that illustrates the Triffin Dilemma which is often described as an inevitable process that culminates in a day of reckoning when a nation that has led the world in the capacity of the global reserve as currency gradually loses its supremacy and begins to suffer serious current account deficits with trading partners. In turn holding the U.S. dollar loses its desirability and it status as the globe’s reserve currency is gradually lost. [10]

On a cultural level the ideas and values emphasized by the fiat system have also altered to some degree the morals and principles society has come to uphold based on this system. People naturally seek the comforts of wealth which has a positive effect in a competitive society, guided by the “invisible hand” of Adam Smith. This standard becomes abused, however, with the system of fiat money. People come to believe that monetary manipulations make wealth more available to everyone and this eliminates the need for dedicated work.