Why are libertarians against the Federal Reserve

There are few politicians these days who can find kind words for Wikileaks founder Julian Assange. One of them is Congressman Ron Paul. The internet platform did nothing else with its revelations "than to expose the government's lies that promote secret wars, death and corruption," Paul said in the House of Representatives last week. Otherwise, the representative from Texas is not afraid to represent minority positions. Two years ago he hit the bestseller lists with a book entitled "End The Fed". The title says it all: Paul calls for a quick end to the central bank, the abolition of paper money and a return to the gold standard.

Until recently, Paul was pigeonholed in the eccentric drawer by most people in Washington. That has now changed radically: the Republicans nominated him to chair the Monetary Policy Subcommittee in the House of Representatives. Its job is to oversee the Federal Reserve. The Fed will therefore be controlled by its worst enemy in Congress in the future - this, too, is one of the many changes brought about by the conservative landslide in the November election in Washington. Before that, the Republican establishment had always avoided Paul; now, after the success of the tea party movement, its views have suddenly become respectable.

"Yes, but not directly"

The least that can be predicted for the next two years is some unpredictability in American monetary policy. Last Friday, a radio reporter asked Paul if he really saw his new post as an opportunity to abolish the Fed. "In a sense, yes, but not directly," was the answer. "What I am asking is competition; we have to get rid of the Fed's monopoly power because that power is not legitimate." In other words, Paul wants to remove the rule that the dollar is "legal tender" and allow anyone to pay in gold or silver.

It is unlikely to achieve that goal in the next legislature, but it will drive the Fed along. A previously neglected addition to the new US laws regulating the financial markets gives Congress greater powers to review the Fed's books. Paul wants to use these powers. So he could propose to change the Fed's mandate. It should then no longer, as before, be committed to full employment, price stability and moderate interest rates at the same time, but, like the European Central Bank, only to price stability. That won't change much, says Paul. "But I like the topic because you can track the Fed with it." Even so, the position of Fed chairman Ben Bernanke will become more difficult. A group of economists close to the Republican Party had issued an open letter calling for the policy of increasing money supply to be abandoned - an unprecedented process.

The now 75-year-old Ron Paul made international headlines in 2008 when he ran for the Republican presidency and expressed sharp criticism of the Iraq war. He called the war an expression of "imperial politics". The terrorist attacks of September 11, 2001 were the "response of the Islamic world to the military interventions" of the USA. A conservative blogger then referred to Paul as "Al Qaeda's favorite in Congress". Paul was sometimes referred to as a "pacifist" in European newspapers, but that is a misunderstanding. Paul is not a pacifist, but a "libertarian" - he wants to radically limit the influence of the state. He campaigned for the legalization of marijuana, even voting "no" when Mother Teresa was awarded the Congressional Gold Medal.

Fed? Unconstitutional!

His involvement against the Fed can also be explained by this libertarian thinking. Paul simply thinks the Fed is unconstitutional. His position is historically and economically not particularly well founded. In 1787, the constitutional fathers of the USA did not concern themselves with the question of what the monetary system should look like. This only happened in the Coin Act of 1792, in which the value of a dollar was set at "371 grains and four sixteenths of a grain of pure silver or 416 grains of standard silver". That was pure pragmatism - the Congress was based on the Spanish silver dollars, which were then in circulation in parts of the newly independent USA. There was no mention of gold. Although the United States, like the German Empire, actually pegged its currency to gold in the last quarter of the 19th century and until the outbreak of World War I, this was not a happy time: one financial crisis replaced the other, among the There was great misery for workers. The time went down in history under the term "Long Depression". The creation of the Federal Reserve in 1913 was a response to these crises.

With his demand for competition for the dollar, Paul orientates himself on the liberal Austrian economist and Nobel Prize winner Friedrich A. v. Hayek (1899-1992). Hayek had proposed the denationalization of money as part of a free market regime. The Austrian school of economics, in its extreme form, plays a major role among the activists of the conservative tea party movement.

For Ron Paul, the tea party is also a family affair. His son Rand Paul, 47, was elected Senator in Kentucky on November 2. As the favorite of the Tea Party, he had prevailed against the Republican establishment. His election marked one of the movement's most important achievements. For the next year, Rand will be moving into his father's House of Representatives in Washington.