Ron Paul, Meet the Austrian Economists

Chapter three of Ron Paul's book, End the Fed, is entitled "My Intellectual Influences." In it he describes how he came to embrace the free market and sound money ideas he advocates in the book. He starts with the work ethic that was instilled into him by his father as he worked as a small boy in the family's dairy business during the Great Depression. The scarcity of money caused him to value the virtues of hard work and saving, and led him to explore how money "works." (It's my experience that children who grow up having to earn their own money, rather than receiving an unearned allowance, come to understand economics better.)

Later he came across the proponents of the Austrian school of economics. Of course, he mentions Ludwig von Mises, F. A. Hayek, Murray N. Rothbard, and Hans F. Sennholz, as formative influences. He had the most personal interaction with Rothbard.

In was an event that occurred on August 15, 1971 that led him to enter the political fray. That was when President Nixon "announced the U.S. government would default on its pledge to deliver gold to any foreign government holding U.S. dollars at the rate of one ounce of gold for each $35."

The consequence is that we have a monetary system that is not tied to the value of gold at all. There is no hard metal backing our currency. As a result, through various devices, the supply of money can be inflated at will, which of course devalues the dollar and impoverishes all of us. The government benefits. Monied interests who are in the know benefit. But ordinary people, middle class and poor people, are ripped off.

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