There are convincing arguments for the abolition of central banking and the restoration of the gold standard. The most obvious advantage of replacing Federal Reserve chairman Ben Bernanke with a blind, automatic, impersonal system is that minerals, unlike people, are free from political control. A gold standard makes things more predictable. It imposes fiscal discipline on the government. It restricts the opportunities for inflationary abuses. It brings stability to the real economy. It can also wreck the market through deflation when real output grows faster than we can increase the amount of gold in the vaults of the private banks.
In one of my commentaries last year, I briefly discussed the Austrian business cycle theory. Ludwig von Mises was the first to argue that the main cause of recessions is monetary disturbance. Milton Friedman's fundamental work A Monetary History of the United States, 1867-1960 (co-authored with Anna Schwartz) confirms that every time the government messes up with the money supply, the economy gets derailed. Friedrich Hayek also realized that, while the capitalist economy cannot expand at a constant rate, the worst downturns in the business cycle are induced not by market forces but by government intervention.
Since it is naïve to expect the dismantling of the Federal Reserve banking system and the replacing of fiat currency with gold coins in my lifetime, the next best thing would be to free Bernanke and his colleagues from some of their responsibilities. Just as our democratically elected Congress suffers from being charged with impossible goals, our appointed monetary authorities are burdened with the incompatible tasks of keeping low inflation and high employment at all times. Number one priority of our representatives should be to revoke the "dual mandate" of the Fed. It needs to be structured as the European Central Bank-with the single goal of controlling inflation. Bernanke does not need more congressional pressure from Ron Paul; he needs more freedom to focus on maintaining long-term price stability.