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Dollar, Gold, and Ron Paul in the Sun

My first home delivery of the New York Sun arrived today, and it contained a terrific editorial on the diminished dollar and $1,000 gold.

[A previous] editorial quoted the only member of Congress who seems even to notice the collapse of the dollar, Ron Paul. “Economic law dictates reform at some point,” Mr. Paul had written in the fall of 2006. “But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become.” He warned that “runaway inflation inevitably leads to political chaos” and declared that the time for action is now.

… The Federal Reserve has been maneuvering frantically to find a way to solve the credit crisis without igniting inflation, putting, as our Julie Satow reports on the business page this week, something on the order of $200 billion in liquidity into the banks via new approaches. …

All this has amounted to the Fed changing its business model, bringing onto its books not only obligations of the United States treasury, which had been its main asset in recent years, but various collateral that once was held by commercial banks.

On the opposite page is a different take from Martin Felstein, a former Reagan adviser who embraces the weak dollar–calling it the “competitive dollar.”

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