While he’s frustratingly reluctant to utter the three simple words “End the Fed,” Senator Rand Paul deserves credit for raising the bar in recent weeks when it comes to Presidential candidates discussing monetary policy. Last week I noted that his op-ed in Business Insider was effective in demonstrating how increases in the money supply disproportionately helps Wall Street and the well connected – the first to receive the new funds – at the expense of everyone else, echoing a point made by Ludwig von Mises about the myth of “neutral money.”
This past weekend, writing in Time, Senator Paul quotes Mises in discussing the role sound money plays in constraining the powers of government:
In a similar vein, the great Austrian economist Ludwig von Mises also recognized that limiting government power in the realm of money was a matter of liberty, not merely economics. Mises explained that “the idea of sound money … was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.”
How far we have come as a country that these words from Jefferson and Mises sound so foreign today. Perhaps we have all been blinded by the credit and equity bubbles that surround us.
While the 2016 election has generally been the expected horror show when it comes to sound economic policy, the widespread adoption of anti-Fed rhetoric has been one of the few bright spots of campaign season (and another sign that Mises is winning.) Hopefully going forward we will continue to hear more about sound money and competing currencies and less about inane DC schemes, such as rules based monetary policy like NGDP targeting.
