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Jul 23, 2012, Vol. 17, No. 42 • By LEWIS E. LEHRMAN
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According to its founding legislation—led by the experienced gold Democrat Carter Glass—the Federal Reserve Act of 1913 was designed to reinforce the existing gold standard. The Federal Reserve System was not designed to manipulate a floating paper dollar and, at its discretion, print money to subsidize the banking cartel and the budget deficit.

So, which rule should it be for monetary policy? The proven, impartial, constitutional, rule-based monetary system is the rule of dollar convertibility to gold—that is, a dollar defined in law as a weight unit of gold. No one knows better than the very practical Governor Romney that past monetary policy, tax policy, and national income accounting—and their consequences—must be studied in the only real and practical laboratory available, the economic history of American business.

Such a study shows the true (or classical) gold standard to be the least imperfect monetary system in American history.

Lewis E. Lehrman is chairman of the Lehrman Institute.

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