It's no secret that Rep. Ron Paul is no fan of the Federal Reserve, but today he likened the system to drug addiction—something that feels good at the time but will end in destruction.
"It's a deception," he said of the central banking system this morning at an event sponsored by the libertarian CATO Institute.
"It's sort of like a drug. You get some benefits if you keep using it—you know, run up debt, run up inflation, monetize the debt, make a bigger bubble," he explained. "Just like a drug addiction, the drug addict feels better when he keeps getting drugs."
But the high can't last forever, and like so many cases of drug addicts, "if you don't do something about it, you kill the patient," Paul said. "And right now the patient is very, very big, and that's the worldwide economy."
Paul's answer? Go back to the gold standard, which tied the value of paper dollars to the value of gold.
Paul advocates a decentralized banking system in which states regulate fraud and abuse—he said they do a better job than federal financial regulatory laws such as Dodd-Frank and Sarbanes-Oxley.
Paul also favors allowing private entities to issue gold and silver coins and wants to prevent federal and state governments from taxing those precious metals.
Paul reads the Constitution's requirement that "No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts" to mean the departure from the gold standard in 1933—and in the 1970s when ties were completely severed—was unconstitutional.
But, he added, he wouldn't end the Federal Reserve in one day. Such a sudden change would be damaging, he said, as would letting the system collapse on its own, which he warned will happen eventually if the Fed is not reined in.
"The Federal Reserve will close themselves down eventually when they destroy money," he said. "But I don't want that to happen."