Fiat Money and the Business Cycle

2008 Presidential candidate Congressman Ron Paul has, as one of his campaign issues, returning sound money from its current outlaw status. It's an easy process, actually, of reversing the steps by which fiat currency gained its hegemony. It is as simple as removing capital gains taxes on the items people may choose to use as money and calling off the dogs at the Treasury Department that are currently spreading personal opinions as legal fact in regard to alternative currencies.

Congressman Paul is promoting sound money with a populist message: the Federal Reserve is exacting an "inflation tax" by debasing the very dollars in your wallet. It's a simple message (simplified further by his supporters to "abolish the Fed") as far as it goes, and non-controversial from the standpoint that no one other than Ron Paul supporters has even bothered to notice it.

What I've noticed, though, is that Paul seems to be studiously avoiding the subject of fiat money and the business cycle. I have to wonder if he isn't missing an opportunity right now to talk about this far more lecherous effect of the federal reserve system. This will be a controversial topic - what better time to broach something controversial than when everybody seems to be ignoring you?

Respected economists and high finance types are going to start throwing bolts of lightning if an "abolish the Fed" campaign gains the least bit attraction. The axes that unions and corporations will throw at a non-corporatist candidate will pale in comparison.

Big investors, lenders, and borrowers are far too addicted to easy credit to give up without a big fight.