New York, NY (PRWEB) July 01, 2011
Lewis E Lehrman, Chairman of the Lehrman Institute has released his observations on the Greece financial crisis, what America can learn from it, and a solution – the adoption of a sound monetary policy, such as the gold standard. Lehrman says, “Greece is only one example of irresponsible, reckless government spending in dozens of countries, both developed and emerging.”
Observations on the Greece financial crisis and what America can learn:
1. The solution to the financial crisis is to prevent governments from requiring their central banks and commercial banks to create new money and credit to finance government spending.
2. The central bank and commercial bank credit financing of the government budget deficits in every country leads to inflation. The mechanism is subtle but pervasive and inevitable.
3. Greece is the concrete lesson for American public finance. Central bank and commercial bank financing of the government budget must be restricted or, even better, prohibited.
4. In the case of America, the budget deficit and the balance of payment deficit affect the entire world because the world is on the paper dollar standard. The dollar is the official reserve currency of the world. These US deficits are financed by the Fed and the banks with new money and credit which cause the depreciation of the dollar, floods the world banking system with excess dollars, causing worldwide inflation.
5. The best restriction on undisciplined Federal Reserve discretion to finance the budget and balance of payments deficit is to establish convertibility of the dollar by statute to a fixed weight of gold and to end the official reserve currency role of the dollar.
6. When the dollar is convertible at a fixed parity to gold, then if the Fed and the banks create too much money and credit, causing inflation, the American people can protect themselves by turning in their dollars for gold at the fixed parity. Since the Federal Reserve and the banks are required to redeem the dollars in gold, the banks must reduce the expansion of credit, because the Fed and the banks and the Treasury are required by law to redeem undesired dollars for gold. The gold standard, in a word, is democratic money. It is also the money of the Constitution stipulated in Article I, sections 8 and 10. Thus, the monetary system must be regulated by a democratic people, and not by economists manipulating the currency at the Federal Reserve Board and the Treasury.
The Gold Standard Now's founder and Chairman, Lewis E. Lehrman, has re-emerged in the national spotlight with his March 17th testimony before the House Subcommittee on Domestic Monetary Policy. As a result, thousands of international newspapers, magazines, and online venues took note of Lehrman's call for monetary reform in The Wall Street Journal's April 26th editorial feature as an essential element to creating the conditions for federal spending restraint, including Forbes.com, Atlas Economic Research Institute's Sound Money Project, India Times, NHInsider.com, Fuse.tv, and The Supply Side Blog.
About The Lehrman Institute
The Lehrman Institute is dedicated to public policy, educational and historical research. It was founded in 1972 by Lewis E. Lehrman. The Lehrman Institute has sponsored a wide range of research and discussion in the fields of economics, historical research, foreign policy, and urban policy. TheGoldStandardNow.org is a news and commentary aggregator focused on domestic and international monetary policy issues.