In November 2003, a month before the 90th anniversary of the creation of the Federal Reserve, I spoke to a group of money managers and bond traders in south Florida about the Federal Reserve’s nine decade legacy. At that time the price of gold was approximately $380 per ounce. I informed the attendees that gold was the most undervalued asset on the planet. Nearly six years later, gold has nearly tripled in price and may have been the best performing asset class in the world since then, and one of the best investments in this decade.

Hopefully, the money managers who heard my remarks about the evolution of our monetary system took my advice for their clients’ sake and added gold to their personal portfolios as well. But then again, gold was so out of favor as an asset class by Wall Street a few years ago, it would not be surprising that the attendees ignored my advice and did not add the yellow metal to their portfolios.

With gold currently trading at $950 per ounce, where will the price of gold be six years from now? Conceivably, much higher than any current forecast. How high? Later in this essay, I will explain how returning to a “hard money” dollar and a sound banking system will require a gold price of at least $6,000 per ounce and possibly much higher

Before we hypothesize a future price of gold, it is imperative we understand the current financial crisis and the need to abolish fractional reserve banking, paper money and central banking. In other words, for the American economy—and the global economy-- to enjoy sustainable prosperity we need to inject a heavy dose of free enterprise in our money and banking systems.

This is easier said than done. The political and financial elites of America want to maintain the status quo, namely, the creation of money out-of-thin air, artificially low interest rates, and massive bailouts engineered by the FED and the U.S. Treasury.

Nevertheless, the financial meltdown of the 21st century has been well documented in two outstanding books of the past year, William Fleckenstein’s Greenspan Bubbles and Thomas Woods’ Meltdown. If you have not read them both, they should be on the top on your summer reading list. Both authors place the blame for the back-to-back bubbles, the dotcom bust and the housing collapse, squarely on the Federal Reserve’s easy money polices under Fed chairman Alan Greenspan.

In a nutshell, easy money drives down interest rates, which in turn set into motion feverish activity and speculation in sector or sectors of the economy that benefit from the flow of new money from the FED. The excess credit propels prices higher for common stocks, real estate, commodities, etc. When the FED “tightens” credit to rein in the overheated economy, the inevitable correction sets in. Bankruptcies soar, unemployment rises, stock prices drop precipitously, and state and local governments face huge revenue shortfalls as income and sales tax revenues drop. In other words, the unsustainable boom appears to create a perpetual “party” in the economy, only to be exposed as a period of “false” prosperity.

The booms and busts of the past two decades are textbook examples of the financial and economic crises caused by central banking. Of all the schools of thought, only the Austrian School of Economics explains how waves of boom and bust are inevitable if central bankers try to substitute credit created out-of-thin air for genuine savings. Working in the same tradition, economist Jesus Huerta de Soto in his monumental survey of world economic history (Money, Bank Credit and Economic Cycles), explains how economic fluctuations are the result of bank