Last night, Stephen Colbert interviewed Congressman Ron Paul, the incoming chair of the Domestic Monetary Policy Subcommittee, and David Leonhardt, an economics writer for the New York Times, who debated whether or not our nation should resume being on the gold standard. See the video of the discussion below.

Paul’s case that he presented was that, over time, inflation makes paper money worthless, while gold has an intrinsic value that is unlikely to be reduced in time. Paper money, when examined over a long period of time is apt to become worthless. Our dependence on this basis has led the Federal Reserve to cause massive inflation since its inception and has permitted our nation to engage in many foreign wars that we would have otherwise not been able to finance. We need a gold standard for our currency since money is generally something that has an intrinsic recognized value over time. Without it, we are likely to have hyperinflation.

Leonhardt argued that the Fed hasn’t made our currency worthless over time since it is accepted everywhere now as a standard of money. He said that inflation currently is at low levels, from which he inferred that paper money has retained its value recently.

The debate, I think, hinged on the time frame each of them wished to discuss. Paul examined the long term implications; Leonhardt preferred to examine the last few years in making his argument. If we prefer to look at the last few years as our gauge, then we don’t accept hyper-inflationary concerns. Here is the video: