Cruz-ified Economy

"I don't give a damn about a Greenback dollar, spend it fast as I can." -- American folk song.

   Sen. Ted Cruz, a Republican presidential candidate, wants a return to the gold standard, and audit the U.S. central bank in the process. But by hobbling the Federal Reserve Board and restricting the money supply to the amount of gold and silver the nation has in its possession would effectively eliminate paper currency.
   Consider: How far would you get if all your transactions had to be paid for with coins only -- no paper money, no credit or debit cards, and likely no checks, either. After all, that was what prevailed in America in the 19th Century. What little paper money existed was highly suspect and mistrusted.
   A primary mission of the Federal Reserve Board  is to control the supply of money. But by severely auditing the Fed, in effect making it powerless, would mean the money supply goes out of control, leading to hyper-inflation.
   A widespread 19th Century comment was that Greenback dollars were not worth the paper they were printed on, because they were not backed by gold or silver held by the government. That's the underlying rationale behind the call for a return to the gold standard. It was suspended by President Franklin D. Roosevelt during the Great Depression, and later abandoned entirely by President Richard M. Nixon.
   Those of a certain age may remember using "silver certificates" issued by the government, which said, "This certifies that there is on deposit with the U.S. Treasury One Dollar in silver, payable to the bearer on demand."
   Today, bills in circulation merely say, "This note is legal tender for all debts, public and private."
   Returning to the gold standard, mandating that the supply of money be limited to the amount of gold on hand is nothing short of a pipe dream, and a catastrophe to the economy.