Ron Paul said today that the creation of a sound U.S. currency, “backed by gold or some other commodity respected by the market” was the most important first step to create new jobs and encourage capital investment in America.

In an article published on the Ron Paul website entitled “The Keys to Economic Growth“, Ron Paul argued that the U.S. economy was in “terrible shape” and that the trillions of dollars borrowed and printed by the U.S. government have done nothing to turn things around.  Rep. Paul noted that the real unemployment rate was closer to 20% rather than the officially published rate of 9.1% and that real job growth would only come from private capital financing existing business or entrepreneurial growth. New job growth will not occur, said Ron Paul, if we continue to punish those who accumulate capital needed for business expansion.

Ron Paul listed four essential steps that must be taken to turn around the American economy through new job creation.

1. The U.S. economy cannot be restored, according to Ron Paul, until we “prohibit the Treasury and Federal Reserve from essentially creating money and credit from thin air.”  A currency that is rapidly being debased will not attract private capital.  In order to ensure a sound currency, the dollar should have its value legitimatized via gold or commodity convertibility.
2. The extreme regulatory burdens on business have greatly inhibited job growth.  The vast bureaucracies and compliance nightmares being created by Obamacare and the Dodd-Frank Act have served to choke off business growth and new jobs since businesses cannot cope with “unknowable regulatory compliance burdens.”   Rep. Paul said it is time to “start shrinking the federal registry.”
3. The trillion of borrowed dollars spent on foreign wars has reduced our economic growth by sapping the private sector and increasing the Federal debt. Rep. Paul declared that “There is no point in debating a foreign policy we cannot afford.”
4. According to Ron Paul, the U.S. tax system needs to be revamped to allow U.S. foreign income to be repatriated tax free to the U.S. to allow the funds to be deployed in the domestic economy.   Ron Paul also said it would be better to simply “abolish the income tax altogether.”

Ron Paul noted that free market capitalism and respect for property rights was essential in allowing the creation of U.S. wealth.  The poorest nations on earth routinely demonstrate hostility to free markets, private property and the rule of law, with the predictable result of widespread poverty.

Ron Paul’s attempt to preserve the integrity of the U.S. dollar by backing the currency with gold has little chance of succeeding.  A gold backed currency would prevent Congress and the Fed from running deficits and printing money, something they would fight to avoid at all costs.

It is interesting to speculate, however, on what the value of gold would need to be to in order to back the massive debts and obligations that the U.S. government has piled up.  The United States has issued the most amount of debt of any nation on earth.  Ignoring the trillions in unfunded and off balance sheet obligations, the United States has official debt of $14.2 trillion dollars outstanding, including both marketable Treasuries and intergovernmental debt.

If the U.S. used its official gold reserves of 261.5 million ounces to back the $14.2 trillion of U.S. debt, gold would need to be valued at $54,300 per ounce.