What If Ron Paul Really Killed the Fed?

BOSTON ( MainStreet) -- The most radical proposals to surface during this year's presidential primaries are Congressman Ron Paul's dual efforts to abolish the Federal Reserve and return the Unites states to a monetary standard backed by gold.

Should he prevail in November, and make good on his mission, how would that feat be accomplished and, perhaps more importantly, how would it affect average Americans?

Congressman Ron Paul wants to abolish the Federal Reserve and return the Unites states to a monetary standard backed by gold. The outcomes of those actions are in doubt.

It depends on whom you ask.

Economists -- many freely admit it -- have a spotty record when it comes to prognostication. There are diverse schools of thought within economics, and it is hardly an exact science despite the seeming precision of its mathematical formulas.

Abolishing the Federal Reserve is to take less than a year during a Ron Paul presidency. It would start with an audit of the Fed and end with the Treasury Department assuming its duties, overseeing a monetary supply backed by gold. (Silver has been touted as a potential secondary monetary commodity).

Paul is not the only high-profile figure who has championed an end to the Fed.

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The late Nobel Prize-winning economist Milton Friedman proposed, for instance, that the Federal Reserve could be eliminated and replaced by a computer control the nation's money supply without the interference of politics and emotion and at a shrewd and steady rate.

Across the political aisle from Paul -- though perhaps so far to the left it completes a full circle back to his libertarian brand of conservatism -- Ohio Democrat Dennis Kucinich (recently defeated in his home state's primary election) has floated his own such plan. A bill he filed in September, the National Emergency Defense Act, sees the termination of the Fed and its policies as a move necessary to improve employment, restore homeownership as a "safe harbor for savings," ensure the affordability of higher education and spark national infrastructure projects.

"A debt-based monetary system, where money comes into existence primarily through private bank lending, can neither create, nor sustain, a stable economic environment, but has proven to be a source of chronic financial instability and frequent crisis, as evidenced by the near collapse of the financial system in 2008," the bill says.

The Kucinich legislation promises that abolishing private money creation "can be achieved with minimal disruption to current banking operations, regulation and supervision." The plan would create a Monetary Authority, through the Treasury Department, based on "a governing principal that the supply of money should not become inflationary or deflationary in and of itself." Its policy goals should be "maximum employment, stable prices and moderate long-term interest rates."