GOP Longshot: Ditch the Fed and Go Back to Gold

Anyone planning a long career at the Federal Reserve better think again if Republican presidential hopeful U.S. Rep. Ron Paul makes it to the White House in 2008.

Paul (R., Texas) is so disgusted with the Fed and its role in failing to stem inflation that he wants to eliminate the entire institution, including its army of economics Ph.D.s and other money wizards.

In its place, he proposes returning to a system of money abandoned more than three decades ago, after slowly falling out of favor for much of the 20th century: the gold standard, or backing paper currency with bars of the precious metal.

"Once you have a central bank [like the Fed], they can't resist the temptation to create excessive volumes of money," says Paul, a longshot for the GOP nomination who leapt into the limelight earlier this year when he clashed in a debate with former New York City Mayor Rudy Giuliani over past U.S. foreign policy actions in the Middle East. "And the consequence [of printing money] is rising prices or inflation."

Axing the Fed and introducing a new monetary regime is Paul's answer to what he sees as unsustainable fiscal imbalances and inflationary pressures in the U.S. economy. (For a video on this topic click here.)

Because no personnel appointments at the Fed would satisfy him -- no matter how hawkish on inflation they might be -- he says it's just better to do away with the institution.