U.S. Rep. Ron Paul | Federal Reserve |
Federal Reserve
State Of The Republic
28 January 1998 1998 Ron Paul 2:62
The international currency crisis: Congress lacks concern and understanding of the significance of the Asian currency crisis. Monetary policy has never excited many Members of the Committee on Banking, let alone other members of Congress. A handful of Members do consistently complain to the Chairman of the Federal Reserve, but inevitably it is to object to the high interest rates and not enough credit being available to either the poor or the rich beneficiaries of Central Bank credit largesse.
Federal Reserve
State Of The Republic
28 January 1998 1998 Ron Paul 2:66
The genius of it all is that Federal Reserve credit expansion and its off-budget budgeting permits these funds to be spent without oversight. IMF appropriations are not even counted toward the deficit, and credit expansion is under complete control of the Federal Reserve.
Federal Reserve
State Of The Republic
28 January 1998 1998 Ron Paul 2:73
Currency issues are serious and a much bigger problem than Congress realizes. Even the Fed has convinced itself it is quite capable of managing our fiat currency and our financial markets through any crisis. The money managers are every bit as powerful as the Congress, which taxes and spends, but the Federal Reserve’s actions are much less scrutinized.
Federal Reserve
State Of The Republic
28 January 1998 1998 Ron Paul 2:100
Both types of welfare expenditures benefit from a monetary system that creates credit out of thin air in order to monetize congressional deficits when needed and manipulate interest rates downward to nonmarket levels to serve the interests of big borrowers and lenders. Federal Reserve policy is an essential element in serving the powerful special interests. Monetary mischief of this type will not likely be ended by congressional action, but will be eventually stopped by market forces, just as has recently occurred in the Far East.
Federal Reserve
Credit Union Membership Access Act
1 April 1998 1998 Ron Paul 33:4
The estimated, aggregate cost of bank regulation (noninterest expenses) on commercial banks was $125.9 billion in 1991, according to The Cost of Bank Regulation: A Review of the Evidence, Board of Governors of the Federal Reserve System (Staff Study 171 by Gregory Elliehausen, April 1998). It reports that studies estimate that this figure amounts to 12 percent to 13 percent of noninterest expenses. These estimates only include a fraction of the “most burdensome” regulations that govern the industry, it adds, “The total cost of all regulations can only be larger.”
Federal Reserve
The Bubble
28 April 1998 1998 Ron Paul 39:19
PROBLEMS AND VICTIMS The basic cause of any financial bubble is the artificial creation of credit by a central bank (in this case our Federal Reserve). Artificially creating credit causes the currency to depreciate in value over time. It is important to understand the predictable economic problems that result from a depreciating currency:
Federal Reserve
The Bubble
28 April 1998 1998 Ron Paul 39:54
Liberals are heedless of the significance of monetary policy and its ill effects on the poor. They have no idea that the transfer of wealth from the poor to the rich occurs as a result of monetary policy and serves to hurt the very people they claim to represent. Liberals stick to the old cliche´ that all that’s needed are more welfare benefits. They are, I’m sure, influenced by the fact that if more welfare benefits are handed out, they can count on the Federal Reserve to accommodate them. Unfortunately this will continue to motivate them to argue for a loose monetary policy.
Federal Reserve
FDIC Problem
13 May 1998 1998 Ron Paul 51:6
We have to think about how we got here. In the 1920s, the Federal Reserve created a lot of credit. They created a boom and a booming stock market and good times. Then the Federal Reserve raised the interest rates and there was a stock market crash and a depression. And out of the depression came the desire to regulate banking and commerce. That caused the depression, which was erroneous, because the cause of the depression was excessive credit and then a deflated bubble, which should be all laid at the doorstep of the Federal Reserve.
Federal Reserve
The Indonesia Crisis
19 May 1998 1998 Ron Paul 52:16
The Indonesian government had one idea worth considering under these very difficult circumstances. They wanted to replace their central bank with a currency board. It’s not the gold standard, but it would have been a wise choice under current conditions. But the United States and the IMF insisted that in order to qualify for IMF funding this idea had to be rejected outright and the new central bank for Indonesia had to be patterned after the Federal Reserve with, I’m sure, ties to it for directions from Greenspan and company. A currency board would allow a close linkage of the rupiah to the dollar, its value controlled by market forces, and would have prevented domestic Indonesia monetary inflation — the principle cause of the economic bubble now collapsed. The shortcoming of a currency board is that the Indonesian currency and economy would be dependent on dollar stability which is far from guaranteed.
Federal Reserve
The Indonesia Crisis
22 May 1998 1998 Ron Paul 54:16
The Indonesian Government had one idea worth considering under these very difficult circumstances. They wanted to replace their central bank with a currency board. It’s not as good as gold standard, but it would have been a wise choice under current conditions. But the United States and the IMF insisted that in order to qualify for IMF funding this idea had to be rejected outright and the new central bank for Indonesia had to be patterned after the Federal Reserve with, I’m sure, ties to it for directions from Federal Reserve Board Governor Alan Greenspan and company. A currency board would allow a close linkage of the rupiah to the dollar, with its value controlled by market forces, and would have prevented domestic Indonesia monetary inflation — the principle cause of the economic bubble now collapsed. The shortcoming of a currency board tied to the U.S. dollar is that the Indonesian currency and economy would be dependent on dollar stability which is far from guaranteed.
Federal Reserve
The Indonesia Crisis
22 May 1998 1998 Ron Paul 54:22
We will all know we are on the right track when the people and our leaders are talking of restoring liberty to all equally, and establishing a sound money system that prevents the Federal Reserve from manufacturing money and credit out of thin air for the benefit of politicians, corporations and bankers who directly profit
Federal Reserve
Every Currency Crumbles
24 June 1998 1998 Ron Paul 65:10
For the moment, the market is highly confident. So is the world at large. In 1996, the Federal Reserve Board estimated that some 60 percent of all American currency in existence circulates overseas. The dollar has become the Coca-Cola of monetary brands.
Federal Reserve
Exchange Stabilization Fund
16 July 1998 1998 Ron Paul 79:8
Yes, we can get into the currency markets to the tune of billions of dollars. They say, well, there is only 38; they might not be able to do any mischief. But my strong suspicion is that the line of credit to the Federal Reserve is endless in the time of crisis.
Federal Reserve
Banking Regulations
4 August 1998 1998 Ron Paul 93:11
The estimated, aggregate cost of bank regulation (noninterest expenses) on commercial banks was $125.9 billion in 1991, according to The Cost of Bank Regulation: A Review of the Evidence, Board of Governors of the Federal Reserve System (Staff Study 171 by Gregory Elliehausen, April 1998). It reports that studies estimate that this figure amounts to 12 percent to 13 percent of noninterest expenses. These estimates only include a fraction of the “most burdensome” regulations that govern the industry, it adds, “The total cost of all regulation can only be larger . . . The basic conclusion is similar for all of the studies of economies of scale: Average compliance costs for regulations are substantially greater for banks at low levels of output than for banks at moderate or high levels of output,” the Staff Study concludes.
Federal Reserve
Worldwide Financial Crisis
10 September 1998 1998 Ron Paul 97:9
The Federal Reserve hints at lower interest rates which means more easy credit. This may be construed as a positive for the market, but it only perpetuates a flawed monetary system.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:4
But last night an emergency meeting was called by the Federal Reserve Bank of New York. It was not called by the banks and the security firms that were standing to lose the money, but the Federal Reserve Bank of New York called an emergency meeting late last night. Some of the members of this meeting, the attendees, came back from Europe just to attend this meeting because it was of such a serious nature. They put together a package of $3.5 billion to bail out this company.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:6
On September 18th, the New York Times, and this is the third time that that has come about in the last several weeks, the New York Times editorialized about why we needed a worldwide Federal Reserve system to bail out the countries involved in this financial crisis.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:7
Yesterday, on the very same day, there was another op-ed piece in the New York Times by Jeffrey Garten, calling again for a worldwide central bank, that is, a worldwide Federal Reserve system to bail out the ailing economies of the world.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:8
The argument might go, yes, indeed, the financial condition of the world is rather severe and we should do something. But the financial condition of the world is in trouble because we have allowed our Federal Reserve System, in deep secrecy, to create credit out of thin air and contribute to the bubble that exists. Where else could the credit come from for a company like Long-Term Capital Management? Where could they get this credit, other than having it created and encouraged by a monetary system engineered by our own Federal Reserve System?
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:9
We will have to do something about what is happening in the world today, but the danger that I see is that the movement is toward this worldwide Federal Reserve System or worldwide central bank. It is more of the same problem. If we have a fiat monetary system, not only in the United States but throughout the world, which has created the financial bubble, what makes anybody think that creating more credit out of thin air will solve these problems? It will make the problems much worse.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:10
We need to have a revamping of the monetary system, but certainly it cannot be saved, it cannot be improved, by more paper money out of thin air, and that is what the Federal Reserve System is doing.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:11
I would like to remind my colleagues that when the Federal Reserve talks about lowering interest rates, like Mr. Greenspan announced yesterday, or alluded to, this means that the Federal Reserve will create new credit. Where do they get new credit and new money? They get it out of thin air. This, of course, will lower interest rates in the short run and this will give a boost to a few people in trouble and it will bail out certain individuals.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:14
If we have an international Federal Reserve System that is permitted to do this without legislation and out of the realms of the legislative bodies around the world, it means that they can steal the value of the strong currencies. So literally an international central bank could undermine the value of the dollar without permission by the U.S. Congress, without an appropriation, but the penalty will fall on the American people by having a devalued dollar.
Federal Reserve
Revamping The Monetary System
24 September 1998 1998 Ron Paul 102:17
But we go one step further. The Congress has reneged on its responsibility and has not maintained the responsibility of maintaining value in the dollar. It has turned it over to a very secretive body, the Federal Reserve System, that has no responsibility to the U.S. Congress. So I argue for the case of watching out for the dollar and argue for sound money, and not to allow this to progress any further.
Federal Reserve
World Financial Markets
1 October 1998 1998 Ron Paul 104:7
More Federal Reserve fixing of interest rates and credit expansion can hardly solve our problems when this has been precisely the cause of the mess in which we currently find ourselves.
Federal Reserve
World Financial Markets
1 October 1998 1998 Ron Paul 104:9
A Federal Reserve orchestrated and arm-twisting bailout of LTCM associated with less than a coincidentally announced credit expansion only puts long-term pressure on the dollar. All Americans suffer when the dollar is debased. Congress’s responsibility is to the dollar and not foreign currencies, not foreign economies or international hedge funds which get in over their heads.
Federal Reserve
World Financial Markets
1 October 1998 1998 Ron Paul 104:11
Credit conditions that allow a company with less than $1 billion in capital to buy $100 billion worth of stock with borrowed money and manage $1.2 trillion worth of derivatives is about as classic an example as one could ever find of speculative excess brought on by easy credit. As long as capital is thought to come from a computer at the Federal Reserve and not from savings, the financial problems the world faces today will persist.
Federal Reserve
World Financial Markets
1 October 1998 1998 Ron Paul 104:12
Our problems today should not be used to justify a worldwide central bank, as has been proposed. What we need is sound money without the central planning efforts of a Federal Reserve system fixing interest rates and regulating the money supply. Let us give freedom a chance.
Federal Reserve
Hedge Fund Bailout
2 October 1998 1998 Ron Paul 105:1
Mr. PAUL. Mr. Speaker, the Federal Reserve orchestrated bailout of the hedge fund Long-Term Capital Management LP raises serious policy questions. At one point, the notional value of the Cayman Island-registered fund’s derivatives totalled about $1.2 trillion. We should look seriously at this issue because of the taxpayer-backed liability concerns raised by the involvement of an agency with the full faith and credit of the U.S. government. The state of Michigan has taken a constructive first step regarding the public policy concerns of derivatives. I urge us to consider the wisdom of the State Representative Greg Kaza as we debate this issue.
Federal Reserve
Hedge Fund Bailout
2 October 1998 1998 Ron Paul 105:3
Although derivatives are a relatively recent development in financial markets, their use by corporations, pension and mutual funds, financial institutions, governments and those involved in money management are clearly ascendant, according to the Federal Reserve and other federal agencies. The issue is not whether the government should ban or in some way restrict the prudent use of derivatives to hedge risk. Rather, the issue is one of disclosure, i.e., how best to provide increased transparency as our complex international financial system enters the 21st Century.
Federal Reserve
Monetary Policy
16 October 1998 1998 Ron Paul 120:14
First, the Federal Reserve should be denied the power to fix interest rates and buy government debt. It should not be central economic planner through manipulation of money and credit.
Federal Reserve
Monetary Policy
16 October 1998 1998 Ron Paul 120:16
Third, we must abandon the tradition of bailing out bad debtors, foreign and domestic. No International Monetary Fund and related institution funding to prop up bankrupt countries, and no Federal Reserve-orchestrated bailouts such as Long Term Capital Management LP. Liquidation of bad debt and investments must be permitted.
Federal Reserve
Freedom And Privacy Restoration Act
6 January 1999 1999 Ron Paul 1:8
A more recent assault on privacy is a regulation proposed jointly by the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve, known as “Know Your Customer.” If this regulation takes effect in April 2000, financial institutions will be required not only to identify their customers but also their source of funds for all transactions, establish a “profile” and determine if the transaction is “normal and expected.” If a transaction does not fit the profile, banks would have to report the transaction to government regulators as “suspicious.” The unfunded mandate on financial institutions will be passed on to customers who would have to pay higher ATM and other fees and higher interest rates on loans for the privilege of being spied on by government-inspired tellers.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:56
The recent know-your-customer plan was designed by Richard Small, Assistant Director of the Division of Banking Supervision Regulation at the Federal Reserve. He is not happy with all of the complaints that he has received regarding this proposal. His program will require that every bank keep a detailed profile on every customer, as to how much is deposited, where it comes from, and when and how the money is spent. If there is any deviation from the profile on record, the bank is required to report this to a half dozen government agencies, which will require the customer to do a lot of explaining. This program will catch few drug dealers, but will surely infringe on the liberty of every law-abiding citizen.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:57
After thousands of complaints were registered at the Federal Reserve and the other agencies, Richard Small was quoted as saying that in essence, the complaints were coming from these strange people who are overly concerned about the Constitution and privacy. Legal justification for the program, Small explained, comes from a court case that states that our personal papers, when in the hands of a third party like a bank, do not qualify for protection under the Fourth Amendment.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:69
The U.S.’s ability to inflate has been dramatically enhanced by other countries’ willingness to absorb our inflated currency, our dollar being the reserve currency of the world. Foreign central banks now hold in reserve over $600 billion, an amount significantly greater than that even held by our own Federal Reserve System. Our economic and military power gives us additional license to inflate our currency, thus delaying the inevitable correction inherent in a paper money system. But this only allows for a larger bubble to develop, further jeopardizing our future economy.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:71
The Federal Reserve Board Chairman Alan Greenspan, when the Dow was at approximately 6,500, cautioned the Nation about irrational exuberance and for a day or two the markets were subdued. But while openly worrying about an unsustained stock market boom, he nevertheless accelerated the very credit expansion that threatened the market and created the irrational exuberance.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:72
From December 1996, at the time that Greenspan made this statement, to December 1998, the money supply soared. Over $1 trillion of new money, as measured by M–3, was created by the Federal Reserve. MZM, another monetary measurement, is currently expanding at a rate greater than 20 percent. This generous dose of credit has sparked even more irrational exuberance, which has taken the Dow to over 9,000 for a 30 percent increase in just two years.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:75
A hint of what can happen when the world gets tired of holding too many of our dollars was experienced in the dollar crisis of 1979 and 1980, and we saw at that time interest rates over 21 percent. There is abundant evidence around warning us of the impending danger. According to Federal Reserve statistics, household debt reached 81 percent of personal income in the second quarter of 1998. For 20 years prior to 1985, household debt averaged around 50 percent of personal income. Between 1985 and 1998, due to generous Federal Reserve credit, competent American consumers increased this to 81 percent and now it is even higher. At the same time, our savings rate has dropped to zero percent.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:80
Government propaganda promotes the false notion that inflation is no longer a problem. Nothing could be further from the truth. The dangerous financial bubble, a result of the Federal Reserve’s deliberate policy of inflation and the Fed’s argument that there is no inflation according to government-concocted CPI figures, is made to justify a continuous policy of monetary inflation because they are terrified of the consequence of deflation. The Federal Reserve may sincerely believe maintaining the status quo, preventing price inflation and delaying deflation is possible, but it really is not.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:81
The most astute money manager cannot balance inflation against deflation as long as there is continued credit expansion. The system inevitably collapses, as it finally did in Japan in the 1990s. Even the lack of the CPI inflation as reported by the Federal Reserve is suspect.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:87
Congress is responsible for the value of the dollar. Yet, as we have done too often in other areas, we have passed this responsibility on to someone else; in this case, to the Federal Reserve.
Federal Reserve
Congress Relinquishing The Power To Wage War
2 February 1999 1999 Ron Paul 4:89
It is easy to see why Congress, with its own insatiable desire to spend money and perpetuate a welfare and military state, cooperates with such a system. A national debt of $5.6 trillion could not have developed without a willing Federal Reserve to monetize this debt and provide for artificially low interest rates. But when the dollar crisis hits and it is clearly evident that the short-term benefits were not worth it, we will be forced to consider monetary reform.
Federal Reserve
Why Taxes Are High
15 April 1999 1999 Ron Paul 27:5
Something that we do here in Washington which is also unconstitutional is to inflate the currency to pay for debt. Last year the Federal Reserve bought Treasury debt to the tune of $43 billion. This helps finance big government. This is illegal, unconstitutional, and is damaging to our economy.
Federal Reserve
Introduction of H.R. 1789
18 May 1999 1999 Ron Paul 49:3
Alan Greenspan, now Chairman of the Federal Reserve, described the “world of antitrust” as “reminiscent of Alice’s Wonderland: Everything seemingly is, yet apparently isn’t, simultaneously.” Antitrust is, according to Greenspan “a world in which competition is lauded as the basic axiom and guiding principle, yet, ‘too much’ competition is condemned as ‘cutthroat’. * * * A world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as ‘enlightened’ when initiated by government. A world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.” And, of course, obscure, incoherent, and vague legislation can make legality unattainable by anyone, or at least unattainable without an unauthorized revision which itself impairs legality.
Federal Reserve
Increasing The Minimum Wage Decreases Opportunities For Our Nation’s Youth
10 June 1999 1999 Ron Paul 57:1
Mr. PAUL. Mr. Speaker, I highly recommend Bruce Bartlett’s “Minimum Wage Hikes Help Politicians, Not the Poor”, which recently appeared in The Wall Street Journal, to all of my colleagues. Mr. Bartlett’s article provides an excellent overview of the evidence that an increase in the federally-mandated minimum wage reduces teenage employment. Since those shut out of entry-level work are unlikely to obtain higher-paying jobs in the future, an increase in the minimum wage reduces employment opportunities for millions of Americans. This point was also highlighted by Federal Reserve Chairman Alan Greenspan in testimony before the Senate in January when he pointed out that “All the evidence that I’ve seen suggests that the people who are the most needy of getting on the lower rungs of the ladder of our income scales, develop skills, getting the training, are unable to earn the minimum wage. As a consequence, they cannot get started. And I think we have to be very careful about thinking that we can somehow raise standards of living by mandating an increase in the minimum wage rate.” I hope all of my colleagues will carefully consider how increasing the minimum wage decreases opportunities for our nation’s youth and refrain from reducing economic opportunity for those at the bottom of the economic ladder by raising the minimum wage.
Federal Reserve
Increasing The Minimum Wage Decreases Opportunities For Our Nation’s Youth
10 June 1999 1999 Ron Paul 57:10
In a study published by the Federal Reserve Bank of San Francisco, economist Kenneth Couch Translated these percentages into raw numbers. At the low end of the range, at least 90,000 teenage jobs were lost in 1996 and another 63,000 jobs lost in 1997. At the higher end, job losses may have equaled 268,000 in 1996 and 189,000 in 1997. He estimates that a $1 rise in the minimum wage will further reduce teenage employment by between 145,000 and 436,000 jobs.
Federal Reserve
Conference Report On S. 900, Gramm-Leach-Bliley Act
4 November 1999 1999 Ron Paul 113:2
With the economy more fragile than is popularly recognized, we should move cautiously as we initiate reforms. Federal Reserve Board Chairman Alan Greenspan (in a 1997 speech in Frankfurt, Germany and other times), Kurt Richebacher, Frank Veneroso and others, have questioned the statistical accuracy of the economy’s vaunted productivity gains.
Federal Reserve
Conference Report On S. 900, Gramm-Leach-Bliley Act
4 November 1999 1999 Ron Paul 113:3
Federal Reserve Governor Edward Gramlich today joined many others who are concerned about the strength of the economy when he warned that the low U.S. savings rate was a cause for concern. Coupled with the likely decline in foreign investment in the United States, he said that the economy will require some potentially “painful” adjustments — some combination of higher exports, higher interest rates, lower investment, and/or lower dollar values.
Federal Reserve
Conference Report On S. 900, Gramm-Leach-Bliley Act
4 November 1999 1999 Ron Paul 113:5
Government policy and the increase in securitization are largely responsible for this bubble. In addition to loose monetary policies by the Federal Reserve, government-sponsored enterprises Fannie Mae and Freddie Mac have contributed to the problem. The fourfold increases in their balance sheets from 1997 to 1998 boosted new home borrowings to more than $1.5 trillion in 1998, two-thirds of which were refinances which put an extra $15,000 in the pockets of consumers on average — and reduce risk for individual institutions while increasing risk for the system as a whole.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:83
Government housing programs are no more successful than the Federal Government’s medical and education programs. In the early part of this century, government housing was virtually unheard of. Now the HUD budget commands over $30 billion each year and increases every year. Finances of mortgages through the Federal Home Loan Bank, the largest Federal Government borrower, is the key financial institution pumping in hundreds of billions of dollars of credit into the housing market, making things worse. The Federal Reserve has now started to use home mortgage securities for monetizing debt. Public housing has a reputation for being a refuge for drugs, crimes and filth, with the projects being torn down as routinely as they are built. There is every indication that this entitlement will continue to expand in size regardless of its failures. Token local control over these expenditures will do nothing to solve the problem.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:91
Unfortunately, their concerns as they were reflected in the Constitution have been ignored and as this century closes we do not have a sound dollar as good as gold. The changes to our monetary system are by far the most significant economic events of the 20th Century. The gold dollar of 1900 is now nothing more than a Federal Reserve note with a promise by untrustworthy politicians and the central bankers to pay nothing for it.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:95
Our Central Bank, the Federal Reserve System, established in 1913 after two failed efforts in the 19th Century, has been the driving force behind the development of our current fiat system. Since the turn of the century, we have seen our dollar lose 95 percent of its purchasing power, and it continues to depreciate. This is nothing less than theft, and those responsible should be held accountable.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:96
The record of the Federal Reserve is abysmal, yet at the close of the 20th Century, its chairman is held in extremely high esteem, with almost zero calls for study of sound money with the intent to once again have the dollar linked to gold.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:98
The reasons for rejecting gold and promoting paper are not mysterious, since quite a few special interests benefit. Deficit financing is much more difficult when there is no Central Bank available to monetize government debt. This gives license to politicians to spend lavishly on the projects that are most likely to get them reelected. War is more difficult to pursue if government has to borrow or tax the people for its financing. The Federal Reserve’s ability to create credit out of thin air to pay the bills run up by Congress establishes a symbiosis that is easy for the politician to love.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:103
There are other real costs as well that few are willing to believe are a direct consequence of Federal Reserve Board policy. Rampant inflation after World War I as well as the 1921 depression were a consequence of monetary policy during and following the war. The stock market speculation of the 1920s, the stock market collapse of 1929 and the depression of the 1930s causing millions to be unemployed, all resulted from Federal Reserve Board monetary mischief.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:105
All the price inflation, all the distortions, all the recessions and unemployment should be laid at the doorstep of the Federal Reserve. The Fed is an accomplice in promoting all unnecessary war, as well as the useless and harmful welfare programs, with its willingness to cover Congress’ profligate spending habits.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:107
Although many claim the 1990s have been great economic years, Federal Reserve Board action of the past decade has caused problems yet to manifest itself. The inevitable correction will come as the new century begins, and it is likely to be quite serious.
Federal Reserve
A Republic, If You Can Keep It
31 January 2000 2000 Ron Paul 2:111
There was a good reason the Federal Reserve rushed to rescue long-term capital management with a multibillion dollar bailout: It was unadulterated fear that the big correction was about to begin. Up until now, feeding the credit bubble with even more credit has worked, and is the only tool they have to fight the business cycle, but eventually control will be lost.
Federal Reserve
A Republic, If You Can Keep It – Part 2
2 February 2000 2000 Ron Paul 5:10
We know, of course, it has been involved in the past 50 years in assassinations and government overthrows on frequent occasions. The Federal Reserve operation, which works hand in hand with the administration, is not subject to congressional oversight. The Fed manipulates currency exchange rates, controls short-term interest rates, and fixes the gold price, all behind closed doors.
Federal Reserve
Manipulating Interest Rates
May 15, 2000 2000 Ron Paul 36:3
* Business cycles are well understood. They are not a natural consequence of capitalism but instead result from central bank manipulation of credit. This is especially true when the monetary unit is undefinable as it is in a fiat monetary system, such as ours. Therefore, it is correct to place blame on the Federal Reserve for all depressions/recessions, inflation, and much of the unemployment since 1913. The next downturn, likewise, will be the fault of the Fed.
Federal Reserve
Manipulating Interest Rates
May 15, 2000 2000 Ron Paul 36:4
* It is true that the apparent prosperity and the boom part of the cycle are a result of the Federal Reserve credit creation, but the price that must always be paid and the unfairness of inflationism makes it a dangerous process.
Federal Reserve
Manipulating Interest Rates
May 15, 2000 2000 Ron Paul 36:6
* A central bank that has no restraints placed on it is always available to the politicians who spend endlessly for reelection purposes. When the private sector lacks its appetite to lend sufficiently to the government, the Federal Reserve is always available to buy treasury debt with credit created out of thin air. At the slightest hint that interest rates are higher than the Fed wants, its purchase of debt keeps interest rates in check; that is, they are kept lower than the market rate. Setting interest rates is an enormous undertaking. It’s price fixing and totally foreign to the principles of free market competition.
Federal Reserve
Manipulating Interest Rates
May 15, 2000 2000 Ron Paul 36:9
* This silly notion of money and credit gives rise to the conventional wisdom that once the economy gets really rolling, it’s time for the Fed to stop economic growth. The false supposition is that economic growth causes higher prices and higher labor costs, and these evils must be prevented by tightening credit and raising interest rates. But these are only the consequences of the previous monetary expansion and blaming rising prices or higher labor costs is done only to distract from the real culprit-monetary inflation by the Federal Reserve.
Federal Reserve
INTERNATIONAL TRADE
May 23, 2000 2000 Ron Paul 39:6
The Federal Reserve believes that prosperity causes high prices and rising wages, thus causing it to declare war on a symptom of its own inflationary policy, deliberately forcing an economic slowdown, a sad and silly policy, indeed. The Fed also hopes that higher interest rates will curtail the burgeoning trade deficit and prevent the serious currency crisis that usually results from currency-induced trade imbalances. And of course, the Fed hopes to do all this without a recession or depression.
Federal Reserve
CONGRESS IGNORES ITS CONSTITUTIONAL RESPONSIBILITY REGARDING MONETARY POLICY
October 11, 2000 2000 Ron Paul 84:3
The Federal Reserve clings to the silly notion that economic growth causes inflation, thus trying to avoid the blame it deserves. The Federal Reserve then concludes that an economic slowdown is the solution to the problem it created. Those who argue to continue the inflationary process are equally in error. As if the economy were an airplane, the monetary authorities talk about a soft landing with the false hope of painlessly paying for the excesses enjoyed for a decade.
Federal Reserve
CONGRESS IGNORES ITS CONSTITUTIONAL RESPONSIBILITY REGARDING MONETARY POLICY
October 11, 2000 2000 Ron Paul 84:7
The Federal Reserve, which maintains a monopoly control over the money supply, credit and interest rates, is indeed the culprit and should be held accountable. But the real responsibility falls on the Congress, for it is Congress’ neglect that permits the central bank to debase the dollar at will.
Federal Reserve
WARNING ABOUT FOREIGN POLICY AND MONETARY POLICY
October 12, 2000 2000 Ron Paul 86:6
Today, the American people have a negative savings rate, which means that we get our so-called capital from a printing press, because there are no savings and no funds to invest. The Federal Reserve creates these funds to be invested. On a short-term, this seems to benefit everyone.
Federal Reserve
WARNING ABOUT FOREIGN POLICY AND MONETARY POLICY
October 12, 2000 2000 Ron Paul 86:8
The only problem with this is it always ends, and it always ends badly. And this is the reason that we have to meet up with a policy that seems ridiculous. The economy seems to be doing quite well, but the Federal Reserve comes along and says there is a problem with economic growth. Economic growth might cause prices to go up; so, therefore, what we have to do is cut off the economic growth. If you have slower growth, the prices will not go up any longer.
Federal Reserve
WARNING ABOUT FOREIGN POLICY AND MONETARY POLICY
October 12, 2000 2000 Ron Paul 86:9
They are talking about a symptom and not the cause. The cause is the Federal Reserve. The problem is that the Federal Reserve has been granted authority that is unconstitutional to go and counterfeit money, and until we recognize that and deal with that, we will continue to have financial problems.
Federal Reserve
ECONOMIC PROBLEMS AHEAD
November 13, 2000 2000 Ron Paul 93:7
* Government statistics continue to tell us that price inflation is not a problem, and when an inflation statistic comes out it does not like, it drops out food and energy and claims the number is totally benign. Ask any housewife, and they will tell you that the cost of living is going up steadily and much more rapidly than the government will admit. We in the Congress should be prepared for lower revenues in the future since the revenues received in the last couple of years were artificially created by a stock market that had skyrocketed due to the credit expansion by the Federal Reserve. These capital gains tax revenues will soon disappear. The savings rates of the American people are now negative. Without savings, true capital investment cannot be maintained. Creation of credit out of thin air by the Fed was the original problem, so it surely can’t be the solution.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:2
* I do not believe either should be blamed. I think we should deal with the real cause of the business cycle, and that is the Federal Reserve system. The FederalReserve system causes and brings about a boom period in a cycle, but it also brings about the bust. Because the bust, the correction, is inevitable consequence of the boom caused by unduly inflating the money supply.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:4
* The only way the Federal Reserve can lower interest rates is by inflating the money supply, increasing the money supply, which is the cause of our problems. So if the cause of our problem is the inflation, increasing the money supply which causes a boom, we can hardly solve our problems by further inflating. And then, too, there is a period of time in the business cycle where inflating the money supply or lowering interest rates do not get the response that many people hope for.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:7
* The problem I see is that Congress for too long has conceded too much of their authority over control of the monetary system to the Federal Reserve system, which acts in secrecy.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:8
* It is something that is directly stated in the Constitution that the Congress shall have the responsibility over the money supply, not a Federal Reserve system. Quite frankly, the Federal Reserve system is not even authorized by the Constitution.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:9
* Now, if in the midst of a recession the Federal Reserve decides that they want to lower interest rates but the dollar is also dropping and we lower interest rates, we cause the dollar to go down and price inflation will occur because of that. So it is not quite so simple as saying, well, let us just tell the Fed what to do, lower the interest rates and it will solve our problems.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:13
* What I think is going to happen is that once the recession sets in and there is a need for additional spending and there will be no longer a concern at all about the deficit; and that is when the Congress will spend, the Federal Reserve will inflate. And it may temporarily help, but in the long-run it does not do the trick. It is not the way we gain economic prosperity out of a printing press. We just cannot allow a Federal Reserve to believe it creates capital by creating credit out of thin air.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:16
* And yet, depending on many variables, a deliberate attempt by the Federal Reserve to lower interest rates may instead lead to higher interest rates and precipitate a period of accelerating price inflation. Instead of boosting the stock market, this effort can do the opposite by producing conditions that will lower the stock market and do nothing to avert the economic slump that more people are now worried about.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:18
* Many are starting to talk now about a legislative stalemate with no clear majority in the House or Senate and the Presidency being uncertain. This concern about a stalemate is overblown. Not that the problem isn’t serious, but I am certain that under the conditions that we are about to experience, the Congress and the President will be all too willing to deal with the deteriorating conditions with increased spending and with a concerted bi-partisan effort to pressure the Federal Reserve to further inflate the currency in pursuing the fiction that the Federal Reserve can prevent a “hard landing” by merely increasing the money supply in an effort to dictate short-term Fed funds rates.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:20
* For decades now the Federal Reserve has followed a policy of “fine-tuning” the economy and with the relative success of the recent boom cycle, it has been deceived into believing its ability is more than it actually is. But in this effort to fine-tune the economy the Federal Reserve, since the middle of 1999 until May of this year, has systematically raised the Fed’s fund rates from 4.75% to 6.5%.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:22
* Ironically it’s argued that the deliberate raising the cost of borrowing money for everyone is that this will hold prices in check. Yet consumers and businesses suffer from this additional cost - pushing all prices upward. But even more ironic is the claim that they now care about “inflation” after a decade of massive monetary inflation-the real culprit.-The Federal Reserve meanwhile ignores the fact that the money supply is key to monetary policy, not admitting the damage has already been done.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:23
* Signs of economic slowdown are now all around with the seriously slumping stock market being the most visible and eliciting the most concern. As the slowdown spreads and accelerates the politicians will be anxious to advise the Chairman of the Federal Reserve, Alan Greenspan. Politicians from both sides of the aisle will become deeply and especially concerned when the evidence is clear that the revenues are plummeting and the “surplus” is disappearing. Since this will challenge the ability of the politician to continue the spending spree many will become deeply and vocally concerned.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:24
* The big debate already started in the financial and political circles is when, how much, and how quickly the Federal Reserve should lower interest rates. Indeed all will clamor to lower rates to revive the economy again. With the signs of rising prices in many sectors, especially energy, and in spite of the weak economy we can expect the Federal Reserve chairman to issue precautionary statements. He will reiterate that he must watch out for the resurgence of (price) inflation. In spite of his statements about concerns for inflation, if the stock market slumps and the economic slowdown is significant enough, we can be certain of one thing, the money supply will continue to grow rapidly in an attempt to keep interest rates low. But Mr. Greenspan will never admit that inflating is exactly what he’s been generously doing for the past 13 years.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:25
* A short time after Chairman Greenspan took over the reigns of the Federal Reserve the stock market crash of 1987 prompted him to alleviate concerns with a heavy dose of monetary inflation. Once again, in the slump of 1991 and 1992, he again re-ignited the financial bubble by more monetary inflation. There was no hesitation on Mr. Greenspan’s part to inflate as necessary to alleviate the conditions brought about by the Mexican financial crisis, the Asian crisis, the Russian ruble crisis, and with the Long-Term Capital Management crisis. Just one year ago the non-existent Y2K crisis prompted huge, unprecedented monetary inflation by the Federal Reserve. All these efforts kept interest rates below the market rate and contributed to the financial bubble that is now starting to deflate. But, there is no doubt that this monetary inflation did maintain an economy that seemed like it would never quit growing. Housing markets thrived, the stock market and bond market thrived, and in turn, the great profits made in these areas, especially gains made by stock market transactions, produced profits that inflated greatly the revenues that flowed into the Treasury. The serious problem that we now face, a collapsing stock market and a rapidly weakening economy, was caused by inflating the money supply along with artificially low interest rates. More inflation and continuing the policy of artificially low interest rates can’t possibly be the solution to the dilemma we face.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:26
* We should never blame economic growth as the culprit. Instead artificial growth, mal-investment, overcapacity, speculation, and excessive debt that comes from systematic monetary inflation should be blamed, since these are all a result of Federal Reserve Board policy. Let there be no doubt political and financial leaders will demand lower interest rates in order to alleviate the conditions that are developing. But just because a boom can come from generous Fed credit, it doesn’t mean the bubble economy can be maintained or re-inflated by easy credit once a correction sets in.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:27
* Besides, Alan Greenspan knows full well that the scenario we are now experiencing can be made worse by lowering interest rates. Under the conditions we are facing it’s very likely the dollar will weaken and deliberately lowering interest rates will accelerate this trend. Price inflation, which the Fed claims it is so concerned about, will not necessarily go away even with a weak economy. And the one thing we will come to realize that even the best of all central bankers, Alan Greenspan, will not be able to determine interest rates at all times of the business cycle. Inflation premiums, confidence, the value of the dollar, and political conditions all can affect interest rates and these are out of the control of the Federal Reserve Board.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:29
* The question is what should one expect the Federal Reserve Board to eventually do? We can expect it to continue to inflate as they have always chosen with every crisis. There’s no evidence that Alan Greenspan would choose to do anything else regardless of his expression of concern about inflation and the value of the dollar. Greenspan still believes he can control the pain and produce a weakened economy that will not get out of control. But there’s no way that he can guarantee that the United States might not slip into a prolonged lethargy, similar to what Japan is now experiencing. We can be certain that Congress will accommodate with whatever seems to be necessary by bailing out a weakened financial sector.
Federal Reserve
ECONOMIC UPDATE
December 4, 2000 2000 Ron Paul 97:31
* We must someday recognize that neither Congress nor the Fed is supposed to “run” the economy. Yet we still live with the belief that the Administration, our Presidents, our Congress and the Federal Reserve should run the economy. This is a dangerous concepts and always leads to the painful corrections to so-called the good times for which everyone is anxious to take credit.
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:51
When the recession hits full force, even the extraordinary power and influence of Alan Greenspan and the Federal Reserve, along with all the other central banks of the world, won’t be able to stop the powerful natural economic forces that demand equilibrium. Liquidation of unreasonable debt and the elimination of the over-capacity built into the system and a return to trustworthy money and trustworthy government will be necessary. Quite an undertaking!
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:59
A slumping stock market will also cause the dollar to decline and interest rates to rise. Federal Reserve Board central planning through interest-rate control is not a panacea. It is instead the culprit that produces the business cycle. Government and FED officials have been reassuring the public that no structural problems exists, citing no inflation and a gold price that reassures the world that the dollar is indeed still king.
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:66
There is much more to inflation than rising prices. Inflation is defined as the increase in the supply of money and credit. Obsessively sticking to the rising prices definition conveniently ignores placing the blame on the responsible party – the Federal Reserve. The last thing central banks or the politicians, who need a backup for all their spending mischief, want is for the government to lose its power to create money out of thin air, which serves political and privileged financial interests.
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:68
Much else related to artificially low interest rates goes unnoticed. An overpriced stock market, overcapacity in certain industries, excesses in real-estate markets, artificially high bond prices, general mal-investments, excessive debt, and speculation all result from the generous and artificial credit the Federal Reserve pumps into the financial system. These distortions are every bit, if not more, harmful than rising prices. As the economy soars from the stimulus effect of low interest rates, growth and distortions compound themselves. In a slump the reverse is true, and the pain and suffering is magnified as the adjustment back to reality occurs.
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:69
The extra credit in the 1990s has found its way especially into the housing market like never before. GSEs, in particular Freddie Mac and Fannie Mae, have gobbled up huge sums to finance a booming housing market. GSE securities enjoy implicit government guarantees, which have allowed for a generous discount on most housing loans. They have also been the vehicles used by consumers to refinance and borrow against their home equity to use these funds for other purposes, such as investing in the stock market. This has further undermined savings by using the equity that builds with price inflation that homeowners enjoy when money is debased. In addition, the Federal Reserve now buys and holds GSE securities as collateral in their monetary operations. These securities are then literally used as collateral for printing Federal Reserve notes; this is a dangerous precedent.
Federal Reserve
CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC —
February 07, 2001 2001 Ron Paul 7:78
Ultimately the solution will require a recommitment to the principles of liberty, including a belief in sound money- when money once again will be something of value rather than pieces of paper or mere blips from a Federal Reserve computer. In spite of the grand technological revolution, we are still having trouble with a few simple basic tasks – counting votes or keeping the lights on or understanding the sinister nature of paper money.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:1
Mr. Speaker: Many government and Federal Reserve officials have repeatedly argued that we have no inflation to fear. Yet those who claim this, define inflation as rising consumer and producer prices. Although inflation frequently leads to price increases we must remember that the free market definition of inflation is the increase in the supply of money and credit. Monetary inflation is seductive in that it can cause great harm without significantly affecting government price indices. The excess credit may well go into stock market and real estate speculation with consumer price increases limited to such things as energy, repairs, medical care and other services. One should not conclude, as so many have in the past decade, that we have no inflation to worry about. Imbalances did develop with the 1990’s monetary inflation but were ignored. They are now becoming readily apparent as sharp adjustments take place—such as we have seen in the past year in the NASDAQ.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:2
When one is permitted to use “rising prices” as the definition for inflation it is followed by a nonsensical assumption that a robust economy is the cause for rising prices. Foolish conclusions of this sort lead our economic planners and Federal Reserve officials to attempt to “solve ” the problem of price or labor-cost inflation by precipitating an economic slowdown. Such a deliberate policy is anathema to a free market economy. It’s always hoped that the planned economic slowdown will never do serious harm, but this is never the case. The recession with rising prices still comes. And that’s what we are seeing today.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:5
And what’s happening to employment conditions? They’re deteriorating rapidly. Economist Ed Hyman, reported that 270,000 people lost their jobs in January, a 678% increase over a year ago. A growing number of economists are now doubtful that productivity growth will save us from the correction that many free market economists predicted would come as an inevitable consequence of the interest rate distortions that Federal Reserve policy causes.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:6
Instead of blind faith in the Federal Reserve to run the economy, we should become more aware of Congress’s responsibility for maintaining a sound dollar and removing the monopoly power of our central bank to create money and credit out of thin air and fix short term interest rates—which is the real cause of all our economic downturns.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:7
Between 1995 and today, the Greenspan Fed increased the money supply as measured by (MZM) by $1.9 trillion or a 65% increase. There is no reason to look any further for the explanation of why the economy is slipping with labor costs rising, energy costs soaring, and medical and education costs skyrocketing, while the stock market is disintegrating. Until we look at the unconstitutional monopoly power the Federal Reserve has over money and credit we can expect a continuation of our problems. Demanding lower interest rates is merely insisting the Federal Reserve deliberately create even more credit, which caused the problem in the first place. We cannot restore soundness to the dollar by debasing the dollar—which is what lowering interest rates is all about—printing more money.
Federal Reserve
The Economy
February 13, 2001 2001 Ron Paul 13:9
This need not happen and won’t if we demand that our dollar not be casually and deliberately debased by our unaccountable Federal Reserve.
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Manipulation Of Interest Rates Cause Economic Problems
20 March 2001 2001 Ron Paul 22:1
Mr. PAUL. Mr. Speaker, today the Federal Reserve lowered interest rates by a half a percentage point. They have been asked to lower this interest rates by just about everybody in the country. Whether they are investors or politicians, everybody literally has been screaming at the Fed and Alan Greenspan to lower the interest rates, lower the interest rates.
Federal Reserve
Manipulation Of Interest Rates Cause Economic Problems
20 March 2001 2001 Ron Paul 22:3
Interest rates have been manipulated by the Federal Reserve as long as I can remember, especially in the last 30 years since we have had a total fiat monetary system. So it is the manipulation of interest rates that causes a problem.
Federal Reserve
Manipulation Of Interest Rates Cause Economic Problems
20 March 2001 2001 Ron Paul 22:4
In a free market economy, you do not have a central bank pretending it has knowledge it does not have, that it knows exactly what the money supply should be and what interest rate should be. That is a prescription for disaster; and it leads to booms and busts, speculations in the stock markets, crashes in the stock markets. This is a wellknown phenomenon. It has been with us since 1913, since we have had the Federal Reserve. We have seen it in the speculation in the 1920s and the depression of the 1930s. It is ongoing.
Federal Reserve
Manipulation Of Interest Rates Cause Economic Problems
20 March 2001 2001 Ron Paul 22:10
The money supply right now is currently rising at the rate of 20 percent, as measured by MZN. This is horrendous inflation. This is inflation. Everybody says no, there are reassurances. The Federal Reserve and all the statisticians say there is no inflation. The CPI is okay and the PPI is okay. But there is inflation. Because if one increases the supply of money, one is creating inflation.
Federal Reserve
Addressing Monetary Problems
22 March 2001 2001 Ron Paul 23:4
Only a free market can tell us what interest rates should be or what the money supply should be. But we have become dependent on a Federal Reserve system that pretends to know all these things, and we have allowed Alan Greenspan to believe that he can regulate the entire economy as well as the stock market by the Open Market Committee.
Federal Reserve
Addressing Monetary Problems
22 March 2001 2001 Ron Paul 23:6
This is what is happening. Right now we are increasing the money supply as measured by MZM at the rate of 20 percent per year. This means that, ultimately, that dollar that we use to purchase goods and services will go down in value. And yet the only thing that we hear about is the cry to the Federal Reserve, just print more money, faster, because that will save us all. It will raise the stock market; it will make sure that the economy does not go down and go into a downturn.
Federal Reserve
Addressing Monetary Problems
22 March 2001 2001 Ron Paul 23:9
In 1996, the chairman of the Federal Reserve Board talked about the exuberance, the irrational exuberance in the stock market; and yet I think he knew, I certainly knew, and others knew, that there was irrational exuberance, because even at that time we were printing money like crazy. There was overspeculation.
Federal Reserve
Addressing Monetary Problems
22 March 2001 2001 Ron Paul 23:10
If he had been seriously concerned about the exuberance getting out of control in 1996, he might have considered not inflating the currency quite so rapidly, not devaluing the money quite so rapidly. But what has he done since that time? The Federal Reserve has literally created $2.3 trillion of new money since 1996, further creating a bigger bubble, which eventually had to collapse, and that is what we are in the midst of. It can be tough. It is going to be tough for a lot of people. We can have this economic downturn, and this means jobs and a standard of living that will be threatened.
Federal Reserve
Inflation Is Still With Us
3 May 2001 2001 Ron Paul 30:5
The most serious economic myth that Federal Reserve economists perpetuate is that a booming economy causes prices to rise and a slowing economy will hold “inflation” in check. Ever since 1971, when the fiat dollar was established, records show that during each of our economic slumps, prices rose even faster than they did during periods of economic growth, supporting the argument that rising prices are a consequence of monetary policy.
Federal Reserve
Inflation Is Still With Us
3 May 2001 2001 Ron Paul 30:7
Rising prices and the economic slowdown must be laid at the feet of the Federal Reserve. Likewise, the existing financial bubble is a consequence of the same policy of monetary expansion and artifically low interest rates. Although the NASDAQ bubble has already partially deflated, the entire world financial system suffers from the same distortion; and a lot more adjustment is required. Merely re-inflating with monetary expansion and manipulating interest rates will not solve the problems of debt, mal-investment and overcapacity that plague the system.
Federal Reserve
A NEWSPAPER ARTICLE ON THE LIFE OF FREDERIC BASTIAT -- HON. RON PAUL
July 26, 2001 2001 Ron Paul 67:2
* Mr. PAUL. Mr. Speaker, I commend to the attention of members an editorial appearing in the Wall Street Journal which is headlined “In Praise of an Economic Revolutionary.” The column is authored by Mr. Bob McTeer, president and CEO of the Federal Reserve Bank of Dallas.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:3
In the 20 th Century, however we saw the systematic undermining of sound money, with the establishment of the Federal Reserve System in 1913, and the outright rejection of gold, with the collapse of the Bretton Woods Agreement in 1971.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:4
We are now witnessing the effects of the accumulated problems of thirty years of fiat money-not only the dollar but also all the world currencies-something the world has never before experienced. Exactly how it plays out is yet unknown. Its severity will be determined by future monetary management- especially by the Federal Reserve. The likelihood of quickly resolving the deeply ingrained and worldwide imbalances built up over thirty years is remote. Yielding to the addiction of credit creation (as has been the case with every market correction over the past thirty years) remains irresistible to the central bankers of the world. Central planners, who occupy the seats of power in every central bank around the world, refuse to accept the fact that markets are more powerful and smarter than they are.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:9
The monetary inflation of the 1900s produced welcomed profits of $145 billion for the NASDAQ companies over the five years between 1996 and 2000. Astoundingly this entire amount was lost in the past year. This doesn’t even address the trillions of dollars of paper losses in stock values from its peak in early 2000. Congress has expressed concern about the staggering stock-market losses but fails to see the connection between the bubble economy and the monetary inflation generated by the Federal Reserve.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:10
Instead, Congress chooses to blame the analysts for misleading investors . The analysts may not be entirely blameless , but their role in creating the bubble is minimal compared to the misleading information that the Federal Reserve has provided, with artificially low interest rates and a financial market made flush with generous new credit at every sign of a correction over the past ten years.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:11
By preventing the liquidation of bad debt and the elimination of mal-investment and overcapacity, the Federal Reserve’s actions have kept the financial bubble inflated. Of course it’s an easy choice on the short run. Who would deliberately allow the market tendency to deflate back to stability? That would be politically unacceptable.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:18
Fiat money has been around for a long time off and on throughout history. But never has the world been so enthralled with the world economy being artificially structured with paper money and with a total rejection of the anchor that gold provided for thousands of years. Let there be no doubt, we live in unprecedented times, and we are just beginning to reap what has been sown the past thirty years. Our government and Federal Reserve officials have grossly underestimated this danger.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:19
Current concerns are expressed by worries about meeting the criteria for a government-declared recession and whether a weaker dollar would help. The first is merely academic, because if you are one of the many thousands who have been laid off, you’re already in a recession. The second doesn’t make a lot of sense unless one asks “compared to what?” The dollar has been on a steady course of devaluation for thirty years, against most major currencies and against gold. Its purchasing power in general has been steadily eroded. The fact that the dollar has been strong against third-world currencies and against most major currencies for the past decade doesn’t cancel out the fact that the Federal Reserve has systematically eroded the dollar’s value by steadily expanding the money supply. Recent reports of a weakening dollar on international exchange markets have investment implications but do not reflect a new policy designed to weaken the dollar. This is merely the market adjusting to thirty years of systematic monetary inflation.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:20
Regardless of whether the experts demand a weak dollar or a strong dollar, each inevitably demands lower interest rates, hoping to spur the economy and save the stock market from crashing. But one must remember that the only way the Federal Reserve can lower interest rates is to inflate the currency by increasing the money supply and by further debasing the currency. In the long term, the dollar is always weakened, even if the economy is occasionally stimulated on a short-run basis.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:26
The Federal Reserve credit created during the last eight months has not stimulated economic growth in technology or the industrial sector, but a lot of it ended up in the expanding real-estate bubble, churned by the $3.2 trillion of debt maintained by the GSEs.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:28
In addition, the Federal Reserve treats GSE securities with special consideration. Ever since the fall of 1999, the Fed has monetized GSE securities, just as if they were US Treasury bills. This message has not been lost by foreign central banks, which took their cue from the Fed and now hold more than $130 billion of United States GSE securities. The Fed holds only $20 billion worth, but the implication is clear. Not only will the Treasury loan to the GSEs if necessary, since the line of credit is already in place, but, if necessary, Congress will surely accommodate with appropriations as well, just as it did during the Savings and Loan crisis. But the Fed has indicated to the world that the GSEs are equivalent to US Treasury bills, and foreign central banks have enthusiastically accommodated, sometimes by purchasing more than $10 billion of these securities in one week alone. They are merely recycling the dollars we so generously print and spend overseas.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:31
Concerned Federal Reserve economists are struggling to understand how the wealth effect of the stock market and real estate bubble affect economic activity and consumer spending. It should be no mystery, but it would be too much to expect the Fed to look to itself and its monetary policy for an explanation and assume responsibility for engineering the entire financial mess we’re in.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:36
Our dollar problem, which affects our financial and budgetary decisions, originated at the Fed with our country’s acceptance of paper money thirty years ago. Federal Reserve officials and other government leaders purposely continue to mislead the people by spouting the nonsense that there is no evidence of inflation, as measured by government-rigged price indices. Even though significant price increases need not exist for monetary inflation to place a hardship on the economy, stock prices, housing prices, costs of medical care and education, and the cost of government have all been rising at very rapid rates. But the true inflation, measured by the money supply, is rising at a rate of greater than 20%, as measured by MZM. This fact is ignored.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:40
Someday, stable money based on the gold standard must be reconsidered. Stable money is a constitutional responsibility of Congress. The Federal Reserve Board’s goal of stable prices, economic growth and low interest rates, through centralized economic planning by manipulating money and credit, is a concoction of 20 th Century Keynesian economics. These efforts are not authorized by the Constitution, and are economically detrimental.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:45
Only reining in the welfare-warfare state will suffice. This eliminates the need for the Fed to monetize the debt that politicians depend on to please their constituents and secure their reelection. We must reject our obsession with policing the world by our endless foreign commitments and entanglements. This would reduce the need for greater expenditures while enhancing our national security. It would also remove pressure on the Federal Reserve to continue a flawed monetary policy of monetizing endless government debt.
Federal Reserve
The US Dollar and the World Economy
September 6, 2001 2001 Ron Paul 75:46
But we must also reject the notion that one man, Alan Greenspan, or any other chairman of the Federal Reserve Board, can know what the proper money supply and interest rates ought to be- only the market can determine that. This must happen if we ever expect to avoid continuous and deeper recessions and to get the economy growing in a healthy and sustainable fashion. It also must happen if we want to preserve free-market capitalism and personal liberty.
Federal Reserve
Sometimes The Economy Needs A Setback
10 September 2001 2001 Ron Paul 77:9
In markets all things are cyclical, even the idea that markets are not cyclical. The notion that the millennial economy was in some way “new” was an early portent of confusion. Since the dawn of the industrial age, technology has been lightening the burden of work and industrial age, technology has been lightening the burden of work and driving the pace of economic change. In 1850, as the telegraph was beginning to anticipate the Internet, about 65 percent of the American labor force worked on farms. In 2000, only 2.4 percent did. The prolonged migration of hands and minds from the field to the factor, office and classroom is all productivity growth — the same phenomenon the chairman of the Federal Reserve Board rhapsodizes over. It’s true, just as Alan Greenspan says, that technological progress is the bulwark of the modern economy. Then again, it has been true for most of the past 200 years.
Federal Reserve
A SAD STATE OF AFFAIRS --
October 25, 2001 2001 Ron Paul 90:27
It is both annoying and sad that there is so little interest by anyone in Washington in free market solutions to the world’s economic problems. True private ownership of property without regulation and abusive taxation is a thing of the past. Few understand how the Federal Reserve monetary policy causes the booms and the busts that, when severe, as now, only serve to enhance the prestige of the money managers- while most politicians and Wall Streeters demand that the Fed inflate the currency at an even more rapid rate. Today’s conditions give license to the politicians to spend our way out of recession, they hope.
Federal Reserve
Foolishness Of Fiat
31 October 2001 2001 Ron Paul 92:9
Since the Federal Reserve first panicked in early January, it has created $830 billion of fiat money out of thin air. The country is no richer. The economy is weaker. The stock market has continued downward, and unemployment has skyrocketed. Returning to deficit spending, as we already have, will not help us any more than it helped Japan, which continues to sink into economic morass.
Federal Reserve
Statement before the House Capital Markets Subcommittee
Monday, February 4, 2002 2002 Ron Paul 3:4
The SEC, like all government agencies, is not immune from political influence or conflicts of interest. In fact, the new SEC chief used to represent the very accounting companies now under SEC scrutiny. If anything, the Enron failure should teach us to place less trust in the SEC. Yet many in Congress and the media characterize Enron’s bankruptcy as an example of unbridled capitalism gone wrong. Few in Congress seem to understand how the Federal Reserve system artificially inflates stock prices and causes financial bubbles. Yet what other explanation can there be when a company goes from a market value of more than $75 billion to virtually nothing in just a few months? The obvious truth is that Enron was never really worth anything near $75 billion, but the media focuses only on the possibility of deceptive practices by management, ignoring the primary cause of stock overvaluation: Fed expansion of money and credit.
Federal Reserve
Stimulating The Economy
February 7, 2002 2002 Ron Paul 5:4
Today, we hear from strong advocates of higher taxation, increased spending, higher budget deficits, tougher regulations, bailouts and all kinds of subsidies and support programs as tools to restore economic growth. The Federal Reserve recognized early on the severity of the problems and, over the past year, lowered short-term interest rates an unprecedented 11 times, dropping the Fed funds rate from 6 1/2 % to 1 3/4 %. This has not helped, and none of these other suggestions can solve the economic problems we face either. Some may temporarily help a part of the economy, but the solution to restoring growth lies not in more government but less. It is precisely too much government, and especially manipulation of credit by the Federal Reserve, that precipitated the economic downturn in the first place. Increasing that which caused the recession can’t possibly, at the same time, be the solution.
Federal Reserve
Stimulating The Economy
February 7, 2002 2002 Ron Paul 5:9
In recessions, to remain solvent, consumers ought to tighten their belts, pay off debt, and save. In a free market, this would lower market interest rates to once again make investments attractive. The confusing aspect of today’s economy is that consumers and even businesses continue profligate borrowing, in spite of problems on the horizon. Interest rates, instead of rising, are pushed dramatically downward by the Federal Reserve, creating massive amounts of new credit.
Federal Reserve
Stimulating The Economy
February 7, 2002 2002 Ron Paul 5:27
Very few in Washington, however, recognize the dire consequences to economic prosperity that welfarism, warfarism, and inflationism cause. Most believe that the occasional recession can be easily handled by government programs and a Federal Reserve policy designed to stimulate growth. It’s happened many times already, and almost everyone believes that in a few months our economy and stock market will be roaring once again.
Federal Reserve
Stimulating The Economy
February 7, 2002 2002 Ron Paul 5:41
What they fail to recognize, once they lose interest in shrinking the size of government, is that government borrowing always takes money from productive enterprises, while placing these funds in the hands of politicians whose prime job is to serve special interests. Deficits are a political expedience that also forces the Federal Reserve to inflate the currency while reducing in real terms the debt owed by the government by depreciating the value of the currency.
Federal Reserve
Stimulating The Economy
February 7, 2002 2002 Ron Paul 5:65
11. The economic ramifications of our war on terrorism are difficult to ascertain but could be quite significant. Although the recession was obviously not caused by the attacks, the additional money spent and the effect of all the new regulations cannot help the recovery. When one adds up the domestic costs, the military costs and the costs of new regulations, we can be certain that deficits are going to grow significantly, and the Federal Reserve will be further pressured to pursue a dangerous monetary inflation. This policy will result in higher rather than lower interest rates, a weak dollar and certainly rising prices. The danger of our economy spinning out of control should not be lightly dismissed.
Federal Reserve
Introduction of the Monetary Freedom and Accountability Act
February 13, 2002 2002 Ron Paul 8:4
While the Treasury denies it is dealing in gold, the Gold Anti-Trust Action Committee (GATA) has uncovered evidence suggesting that the Federal Reserve and the Treasury, operating through the Exchange-Stabilization Fund and in cooperation with major banks and the International Monetary Fund, have been interfering in the gold market with the goal of lowering the price of gold. The purpose of this policy has been to disguise the true effects of the monetary bubble responsible for the artificial prosperity of the 1990s, and to protect the politically-powerful banks that are heavy invested in gold derivatives. GATA believes federal actions to drive down the price of gold help protect the profits of these banks at the expense of investors, consumers, and taxpayers around the world.
Federal Reserve
Introduction of the Monetary Freedom and Accountability Act
February 13, 2002 2002 Ron Paul 8:18
Bill Murphy, chairman of the Gold Anti-Trust Action Committee, a nonprofit organization that researches and studies what he calls the “gold cartel” (J.P. Morgan Chase, Deutsche Bank, Citigroup, Goldman Sachs, Bank for International Settlements (BIS), the U.S. Treasury, and the Federal Reserve), and owner of www.LeMetropoleCafe.com, tells Insight that “Morgan Chase and other bullion banks are another Enron waiting to happen.” Murphy says, “Enron occurred because the nature of their business was obscured, there was no oversight and someone was cooking the books. Enron was deceiving everyone about their business operations C and the same thing is happening with the gold and bullion banks.”
Federal Reserve
Introduction of the Monetary Freedom and Accountability Act
February 13, 2002 2002 Ron Paul 8:20
In December 2000, attorney Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, which reports on gold, filed a lawsuit in the U.S. District Court in Boston. Named as defendants were J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank, Lawrence Summers (former secretary of the Treasury), William McDonough (president of the Federal Reserve Bank of New York), Alan Greenspan (chairman of the Board of Governors of the Federal Reserve System), and the BIS.
Federal Reserve
Statement Opposing Military Conscription
March 20, 2002 2002 Ron Paul 20:9
President Reagan and Daniel Webster are not the only prominent Americans to oppose conscription. In fact, throughout American history the draft has been opposed by Americans from across the political spectrum, from Henry David Thoreau to Barry Goldwater to Bill Bradley to Jesse Ventura. Organizations opposed to conscription range from the American Civil Liberties Union to the United Methodist Church General Board of Church and Society, and from the National Taxpayers Union to the Conservative Caucus. Other major figures opposing conscription include current Federal Reserve Chairman Alan Greenspan and Nobel Laureate Milton Friedman.
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Corporate and Auditing Accountability, Responsibility, And Transparency Act of 2002 (CARTA)
24 April 2002 2002 Ron Paul 24:14
Congress should also examine the role the Federal Reserve played in the Enron situation. Few in Congress seem to understand how the Federal Reserve system artificially inflates stock prices and causes financial bubbles. Yet, what other explanation can there be when a company goes from a market value of more than $75 billion to virtually nothing in just a few months? The obvious truth is that Enron was never really worth anything near $75 billion, but the media focuses only on the possibility of deceptive practices by management, ignoring the primary cause of stock overvaluations: Fed expansion of money and credit.
Federal Reserve
Predictions
24 April 2002 2002 Ron Paul 25:15
Federal Reserve policy will continue at an expanding rate, with massive credit expansion, which will make the dollar crisis worse. Gold will be seen as an alternative to paper money as it returns to its historic role as money.
Federal Reserve
Statement Opposing Export-Import Bank Subsidies
May 1, 2002 2002 Ron Paul 30:5
Mr. Chairman, there is a market allocation of credit and there is credit allocation by politicians, and that is what we are talking about here. We have credit allocation, and we have mal-investment and over capacity which causes the conditions to exist for the recession. Of course, a lot of this comes from what the Federal Reserve does in artificially lowering interest rates; but this is a compounding problem when government gets in and allocates credit at lower rates. It causes more distortions. This is why allocations to companies like Enron contributes to the bubble that ends up in a major correction.
Federal Reserve
Say No to Conscription
May 9, 2002 2002 Ron Paul 35:3
Webster was among the first of a long line of prominent Americans, including former President Ronald Reagan and Federal Reserve Chairman Alan Greenspan, to recognize that a draft violates the fundamental principles of liberty this country was founded upon.
Federal Reserve
Don’t Expand Federal Deposit Insurance
May 22, 2002 2002 Ron Paul 47:7
Finally, I would remind my colleagues that the federal deposit insurance program lacks constitutional authority. Congress’ only mandate in the area of money and banking is to maintain the value of the money. Unfortunately, Congress abdicated its responsibility over monetary policy with the passage of the Federal Reserve Act of 1913, which allows the federal government to erode the value of the currency at the will of the central bank. Congress’ embrace of fiat money is directly responsible for the instability in the banking system that created the justification for deposit insurance.
Federal Reserve
AN OPEN LETTER TO TREASURY SECRETARY O’NEILL AND FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN
May 31, 2002 2002 Ron Paul 51:2
(Congressman Ron Paul sent this letter to both the Treasury and the Federal Reserve Bank in April. Neither has responded)
Federal Reserve
AN OPEN LETTER TO TREASURY SECRETARY O’NEILL AND FEDERAL RESERVE CHAIRMAN ALAN GREENSPAN
May 31, 2002 2002 Ron Paul 51:4
I would greatly appreciate an explanation from both the Treasury and the Federal Reserve of the reasons the United States has continued to acquiesce in this misguided policy. Please contact Mr. Norman Singleton, my legislative director, if you require any further information regarding this request. Thank you for your cooperation in this matter.
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Beware Dollar Weakness
June 5, 2002 2002 Ron Paul 52:9
Misplaced confidence in a currency can lead money managers and investors astray, but eventually the piper must be paid. Last year’s record interest rate drop by the Federal Reserve was like pouring gasoline on a fire. Now the policy of the past decade is being recognized as being weak for the dollar; and trust and confidence in it is justifiably being questioned.
Federal Reserve
Beware Dollar Weakness
June 5, 2002 2002 Ron Paul 52:11
Now it is back to reality. This is serious business, and the correction that must come to adjust for the Federal Reserve’s mischief of the past 30 years has only begun. Congress must soon consider significant changes in our monetary system.
Federal Reserve
Beware Dollar Weakness
June 5, 2002 2002 Ron Paul 52:12
Congress must soon consider significant changes in our monetary system if we hope to preserve a system of sound growth and wealth preservation. Paper money managed by the Federal Reserve System cannot accomplish this. In fact, it does the opposite.
Federal Reserve
Has Capitalism Failed?
July 9, 2002 2002 Ron Paul 66:15
But now we know that’s just not so. Speculative bubbles and all that we’ve been witnessing are a consequence of huge amounts of easy credit, created out of thin air by the Federal Reserve. We’ve had essentially no savings, which is one of the most significant driving forces in capitalism. The illusion created by low interest rates perpetuates the bubble and all the bad stuff that goes along with it. And that’s not a fault of capitalism. We are dealing with a system of inflationism and interventionism that always produces a bubble economy that must end badly.
Federal Reserve
Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:3
The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase the debt of housing-related GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
Federal Reserve
Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:6
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
Federal Reserve
Free Housing Market Enhancement Act
July 16, 2002 2002 Ron Paul 70:7
No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.
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Hard Questions for Federal Reserve Chairman Greenspan
July 17, 2002 2002 Ron Paul 71:2
"I have for quite a few years now expressed concern about the value of the dollar which I think we neglect here in the Congress, here in the committee and I do not think that the Federal Reserve has done a good job in protecting the value of the dollar. And it seems that maybe others are coming around to this viewpoint because I see that the head of the IMF this week, Mr. Koehler has expressed a concern and made a suggestion that all the central bankers of the world need to lay plans in the near future to possibly prop up the dollar. So others have this same concern.
Federal Reserve
Hard Questions for Federal Reserve Chairman Greenspan
July 17, 2002 2002 Ron Paul 71:3
"You have in your testimony expressed concern about the greed factor which obviously is there. And you implied that this has come out from the excessive capitalization/excessive valuations, which may be true. But I believe where you have come up short is in failing to explain why we have financial bubbles. I think when you have fiat money and excessive credit you create financial bubbles and you also undermine the value of the dollar and now we are facing that consequence. We see the disintegration of some of these markets. At the same time we have potential real depreciation of the value of our dollar. And we have pursued rampant inflation of the money supply. Since you have been Chairman of the Federal Reserve we have literally created $4.7 trillion worth of new money in M-3. Even in this last year with this tremendous burst of inflation of the money supply has gone up since last January over $1 trillion. You can’t have anything but lower value of that unit of account if you keep printing and creating new money.
Federal Reserve
25 July 2002
Monetary Practices 2002 Ron Paul 78:7
The metaphorical drinking age is set by — and periodically changed by — the Federal Reserve. In our Fed-centric mixed economy, the understanding that “the Fed sets interest rates” has become widely accepted as a simple institutional fact. But unlike an actual drinking age, which has an inherent degree of arbitrariness about it, the interest rate cannot simply be “set” by some extramarket authority. With market forces in play, it has a life of its own.
Federal Reserve
25 July 2002
Monetary Practices 2002 Ron Paul 78:13
In recent years money-supply figures have become clouded by institutional and technological change. But in our view, a tale-telling pattern is traced out by the MZM data reported by the Federal Reserve Bank of St. Louis. ZM standing for “zero maturity,” this monetary aggregate is a better indicator of credit conditions than are the more narrowly defined M’s.
Federal Reserve
25 July 2002
Monetary Practices 2002 Ron Paul 78:19
The business plans for many of the startups involved negative cash flows for the first 10 or 15 years, while they “built market share.” To keep the atmosphere festive, they needed the host to keep filling the punch bowl. But fears of inflation led to Federal Reserve tightening in late 1999, which helped bring MZM growth back into the single digits (8.5% for the 1999–2000 period). As the punch bowl emptied, the hangover — and the dot-com bloodbath — began. According to research from Webmergers.com, at least 582 Internet companies closed their doors between May 2000 and July of this year. The plunge in share price of many of those still alive has been gut wrenching. The NASDAQ retraced two years of gains in a little over a year.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:1
Mr. PAUL. Mr. Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. I also ask unanimous consent to insert the attached article by Lew Rockwell, president of the Ludwig Von Mises Institute, which explains the benefits of abolishing the Fed and restoring the gold standard, into the RECORD.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:2
Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:3
From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:5
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:6
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the Federal Government to erode Americans’ living standard via an inflationary monetary policy.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:7
In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our Nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.
Federal Reserve
Abolishing The Federal Reserve
10 September 2002 2002 Ron Paul 86:8
In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
Federal Reserve
Republic Versus Democracy
29 January 2003 2003 Ron Paul 6:40
It was no accident in 1913 when the dramatic shift toward democracy became pronounced that the Federal Reserve was established. A personal income tax was imposed as well. At the same time, popular election of Senators was instituted, and our foreign policy became aggressively interventionist. Even with an income tax, the planners for war and welfare knew that it would become necessary to eliminate restraints on the printing of money. Private counterfeiting was a heinous crime, but government counterfeiting and fractional reserve banking were required to seductively pay for the majority’s demands.
Federal Reserve
Oppose the Federal Welfare State
February 13, 2003 2003 Ron Paul 22:10
Today, government welfare programs have supplemented the old-style private programs. One major reason for this is that the policies of high taxes and inflationary Federal Reserve money imposed on the American people in order to finance the welfare state have reduced the income available for charitable giving. Many over-taxed Americans take the attitude toward private charity that “I give at the (tax) office.”
Federal Reserve
The Financial Services Committee’s Terrible Blueprint for 2004
February 28, 2003 2003 Ron Paul 27:7
Perhaps the most disappointing omission from the committee’s views is the failure to address monetary policy. This is especially troubling given that many Americans have lost their jobs, while millions of others have seen severe declines in their net worth, because of the Federal Reserve’s continuing boom and bust monetary policy. It is long past time for Congress to examine seriously the need for reform of the system of fiat currency that is responsible for the cycle of booms and busts that plague the American economy. Until this committee addresses those issues, I am afraid the American economy may suffer more recessions or even depressions in the future.
Federal Reserve
The Wisdom Of Tax Cuts
6 May 2003 2003 Ron Paul 56:3
The truth is, government officials cannot know what consumers and investors will do if they get a tax cut. Plugging tax cut data into a computer and expecting an accurate projection of the economic outcome is about as reliable as asking Congress to project government surpluses. Two important points are purposely ignored: first, the money people earn is their own, and they have a moral right to keep as much of it as possible. It is not Congress’ money to spend. Government spending is the problem. Taking a big chunk of the people’s earnings out of the economy, whether through taxes or borrowing, is always harmful. Taxation is more honest and direct and the harm is less hidden. Borrowing, especially since the Federal Reserve creates credit out of thin air to loan to big spenders in Congress, is more deceitful. It hides the effects and delays the consequences. But over the long term, this method of financing is much more dangerous.
Federal Reserve
Medicare Funds For Prescription Drugs
26 June 2003 2003 Ron Paul 71:8
This new spending comes on top of recent increases in spending for “homeland security,” foreign aid, federal education programs, and new welfare initiatives, such as those transforming churches into agents of the welfare state. In addition we have launched a seemingly endless program of global reconstruction to spread “democratic capitalism.” The need to limit spending is never seriously discussed: it is simply assumed that Congress can spend whatever it wants and rely on the Federal Reserve to bail us out of trouble. This is a prescription for disaster.
Federal Reserve
Neo – CONNED !
July 10, 2003 2003 Ron Paul 73:6
When taxes are not raised to accommodate higher spending, the bills must be paid by either borrowing or “printing” new money. This is one reason why we conveniently have a generous Federal Reserve chairman who is willing to accommodate the Congress. With borrowing and inflating, the “tax” is delayed and distributed in a way that makes it difficult for those paying the tax to identify it. Like future generations and those on fixed incomes who suffer from rising prices, and those who lose jobs they certainly feel the consequences of economic dislocation that this process causes. Government spending is always a “tax” burden on the American people and is never equally or fairly distributed. The poor and low-middle income workers always suffer the most from the deceitful tax of inflation and borrowing.
Federal Reserve
Neo – CONNED !
July 10, 2003 2003 Ron Paul 73:79
We know those who lead us—both in the administration and in Congress—show no appetite to challenge the tax or monetary systems that do so much damage to our economy. The IRS and the Federal Reserve are off limits for criticism or reform. There’s no resistance to spending, either domestic or foreign. Debt is not seen as a problem. The supply-siders won on this issue, and now many conservatives readily endorse deficit spending.
Federal Reserve
Legislation To Prohibit The Federal Government From Imposing A “Carry Tax”
17 July 2003 2003 Ron Paul 78:2
Proposals to punish people if their economic behavior meets with the disapproval of government officials form the foundation of the type of central planning which caused so much misery in the last century. The carry tax proposal is obviously incompatible with a free market. This proposal is also a major threat to personal and financial privacy and thus individual liberty. In order to enforce the carry tax, the government would need a means of monitoring how long each piece of currency has been in circulation and how many hands it passed through before coming into the possession of the person on whom the tax is assessed. Thus, enforcing this tax would also give the government the power to monitor the transactions of individual Americans. The Federal Government should not abuse the authority granted it by our current monetary system and legal tender laws as a backdoor means of prying into the private economic transactions of American citizens. That is why my legislation also forbids the Federal Government from placing any information storage capacity on any Federal Reserve notes.
Federal Reserve
Legislation To Prohibit The Federal Government From Imposing A “Carry Tax”
17 July 2003 2003 Ron Paul 78:3
The carry tax was proposed as a measure to counteract the perceived risk of deflation. Yet, the problems this carry tax is intended to solve are caused by our government’s boomand- bust monetary policy. Any perceived deflation in the American economy is the result of the end of the inflationary period of the nineties that created the stock market bubble. When the bubble burst, there was the inevitable process of liquidating bad investments caused by the misallocation of credit as a result of the Federal Reserve monetary policy. In fact, this liquidation is necessary for the economy to recover from the economic misallocations caused by the Federal Reserve’s monetary policy.
Federal Reserve
Legislation To Prohibit The Federal Government From Imposing A “Carry Tax”
17 July 2003 2003 Ron Paul 78:4
Unfortunately, rather than finally putting an end to the boom-and-bust cycle, most in Washington are preparing to resume the cycle by calling on the Federal Reserve and the Treasury to flood the economy with new money. If Congress is not going to stabilize the American economy by reforming our unstable monetary policy, it should at least refrain from using this government failure as an excuse to further restrict the American people’s liberty through an odious carry tax. I therefore hope my colleagues will join me in supporting this legislation.
Federal Reserve
The Monetary Freedom And Accountability Act
17 July 2003 2003 Ron Paul 79:4
While the Treasury denies it is dealing in gold, the Gold Anti-Trust Action Committee (GATA) has uncovered evidence suggesting that the Federal Reserve and the Treasury, as detailed in the attached article. GATA alleges that the Treasury, operating through the Exchange- Stabilization Fund and in cooperation with major banks and the International Monetary Fund, has been interfering in the gold market with the goal of lowering the price of gold. The purpose of this policy has been to disguise the true effects of the monetary bubble responsible for the artificial prosperity of the 1990s, and to protect the politically-powerful banks that are heavy invested in gold derivatives. GATA believes federal actions to drive down the price of gold help protect the profits of these banks at the expense of investors, consumers, and taxpayers around the world.
Federal Reserve
The Monetary Freedom And Accountability Act
17 July 2003 2003 Ron Paul 79:10
The “lunatic fringe” long has argued that the price of gold was being manipulated by a “gold cartel” involving J.P. Morgan Chase, Citigroup, Deutsche Bank, Goldman Sachs, the Bank for International Settlements (BIS), the U.S. Treasury and the Federal Reserve, but that the manipulation had been sufficiently exposed to require that it be abandoned, producing the steady upward increase in the price of the shiny, yellow metal.
Federal Reserve
Bring Back Honest Money
17 July 2003 2003 Ron Paul 82:3
While fiat money is widely accepted thanks to legal tender laws, it does not maintain its purchasing power. This works to the disadvantage of ordinary people who lose the purchasing power of their savings, pensions, annuities, and other promises of future payment. Most importantly, because of the subsidies our present monetary system provides to banks, which, as Federal Reserve Chairman Alan Greenspan has stated, “induces” the financial sector to increase leverage, the Federal Reserve can create additional money, in Mr. Greenspan’s words, “ without limit .” For this reason, absent legal tender laws, many citizens would refuse to accept fiat irredeemable paper-ticket or electronic money.
Federal Reserve
Bring Back Honest Money
17 July 2003 2003 Ron Paul 82:6
While harming ordinary citizens, legal tender laws help expand the scope of government beyond that authorized under the Constitution. However, the primary beneficiaries of legal tender laws are financial institutions, especially banks, which have been improperly granted the special privilege of creating fiat irredeemable electronic money out of thin air through a process commonly called fractional reserve lending. According to the Federal Reserve, since 1950 these private companies (banks) have created almost $8 trillion out of nothing. This has been enormously advantageous to them.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:2
Mr. PAUL. Mr. Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. I also ask unanimous consent to insert the attached article “The Greatest Theft in History” by Professor Murray Sabrin, into the RECORD. Professor Sabrin provides an excellent summary of how the Federal Reserve is responsible for the nation’s current economic difficulties.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:3
Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:4
From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:6
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:7
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:8
In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:9
In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:14
The answer is simple: The Federal Reserve, the government created institution that was founded to “stabilize” the value of the dollar and “smooth” “out the business cycle”, which has the legal authority to create money out of thin air, is nothing more than the greatest manipulator of interest rates in the history of the world.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:21
The bottom line: While the economic debate in Washington DC centers around President Bush’s tax cut proposal, which should pass intact because less money in the federal government means more freedom and prosperity for the American people, the Federal Reserve continues to perpetuate the greatest theft in world history. By having the power to manipulate interest rates, the FED in effect has not only a license to print money but also can redistribute income form savers to borrowers.
Federal Reserve
Abolishing The Federal Reserve
17 July 2003 2003 Ron Paul 83:23
Thus, Federal Reserve policy aids and abets the legalized theft of hundreds of billions of dollars per year from low-and middle- income families to the economic elites of this country and profligate governments at all levels — all with the approval of the U.S. Congress and the Bush administration.
Federal Reserve
Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:2
Alan Greenspan, years before he became Federal Reserve Board Chairman in charge of flagrantly debasing the U.S. dollar, wrote about this connection between sound money, prosperity, and freedom. In his article “Gold and Economic Freedom” ( The Objectivist, July 1966), Greenspan starts by saying: “An almost hysterical antagonism toward the gold standard is an issue that unites statists of all persuasions. They seem to sense…that gold and economic freedom are inseparable.” Further he states that: “Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth.” Astoundingly, Mr. Greenspan’s analysis of the 1929 market crash, and how the Fed precipitated the crisis, directly parallels current conditions we are experiencing under his management of the Fed. Greenspan explains: “The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom.” And, “…By 1929 the speculative imbalances had become overwhelming and unmanageable by the Fed.” Greenspan concluded his article by stating: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.” He explains that the “shabby secret” of the proponents of big government and paper money is that deficit spending is simply nothing more than a “scheme for the hidden confiscation of wealth.” Yet here we are today with a purely fiat monetary system, managed almost exclusively by Alan Greenspan, who once so correctly denounced the Fed’s role in the Depression while recognizing the need for sound money.
Federal Reserve
Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:10
Though the need for sound money is currently not a pressing issue for Congress, it’s something that cannot be ignored because serious economic problems resulting from our paper money system are being forced upon us. As a matter of fact, we deal with the consequences on a daily basis, yet fail to see the connection between our economic problems and the mischief orchestrated by the Federal Reserve.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:12
Money is a moral, economic, and political issue. Since the monetary unit measures every economic transaction, from wages to prices, taxes, and interest rates, it is vitally important that its value is honestly established in the marketplace without bankers, government, politicians, or the Federal Reserve manipulating its value to serve special interests. Money As a Moral Issue
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:13
The moral issue regarding money should be the easiest to understand, but almost no one in Washington thinks of money in these terms. Although there is a growing and deserved distrust in government per se, trust in money and the Federal Reserve’s ability to manage it remains strong. No one would welcome a counterfeiter to town, yet this same authority is blindly given to our central bank without any serious oversight by the Congress.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:17
Fiat money is also immoral because it allows government to finance special interest legislation that otherwise would have to be paid for by direct taxation or by productive enterprise. This transfer of wealth occurs without directly taking the money out of someone’s pocket. Every dollar created dilutes the value of existing dollars in circulation. Those individuals who worked hard, paid their taxes, and saved some money for a rainy day are hit the hardest, with their dollars being depreciated in value while earning interest that is kept artificially low by the Federal Reserve easy-credit policy. The easy credit helps investors and consumers who have no qualms about going into debt and even declaring bankruptcy.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:19
Printing money, which is literally inflation, is nothing more than a sinister and evil form of hidden taxation. It’s unfair and deceptive, and accordingly strongly opposed by the authors of the Constitution. That is why there is no authority for Congress, the Federal Reserve, or the executive branch to operate the current system of money we have today. Money As a Political Issue
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:27
The 20 th Century was much less sympathetic to gold. Since 1913 central banking has been accepted in the United States without much debate, despite the many economic and political horrors caused or worsened by the Federal Reserve since its establishment. The ups and downs of the economy have all come as a consequence of Fed policies, from the Great Depression to the horrendous stagflation of the ‘70s, as well as the current ongoing economic crisis.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:31
We do hear some talk about monetary policy and criticism directed toward the Federal Reserve, but it falls far short of what I’m talking about. Big-spending welfarists constantly complain about Fed policy, usually demanding lower interest rates even when rates are at historic lows. Big-government conservatives promoting grand worldwide military operations, while arguing that “deficits don’t matter” as long as marginal tax rates are lowered, also constantly criticize the Fed for high interest rates and lack of liquidity. Coming from both the left and the right, these demands would not occur if money could not be created out of thin air at will. Both sides are asking for the same thing from the Fed for different reasons. They want the printing presses to run faster and create more credit, so that the economy will be healed like magic- or so they believe.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:35
There are also many conservatives who do not endorse central economic planning as those on the left do, but nevertheless concede this authority to the Federal Reserve to manipulate the economy through monetary policy. Only a small group of constitutionalists, libertarians, and Austrian free-market economists reject the notion that central planning, through interest-rate and money-supply manipulation, is a productive endeavor.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:42
Though generally accepted by most modern economists and politicians, there is little hesitancy in accepting the omnipotent wisdom of the Federal Reserve to know the “price” of money – the interest rate – and its proper supply. For decades, and especially during the 1990s – when Chairman Greenspan was held in such high esteem, and no one dared question his judgment or the wisdom of the system- this process was allowed to run unimpeded by political or market restraints. Just as we must eventually pay for our perpetual deficits, continuous manipulation of interest and credit will also extract a payment.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:43
Artificially low interest rates deceive investors into believing that rates are low because savings are high and represent funds not spent on consumption. When the Fed creates bank deposits out of thin air making loans available at below-market rates, mal-investment and overcapacity results, setting the stage for the next recession or depression. The easy credit policy is welcomed by many: stock-market investors, home builders, home buyers, congressional spendthrifts, bankers, and many other consumers who enjoy borrowing at low rates and not worrying about repayment. However, perpetual good times cannot come from a printing press or easy credit created by a Federal Reserve computer. The piper will demand payment, and the downturn in the business cycle will see to it. The downturn is locked into place by the artificial boom that everyone enjoys, despite the dreams that we have ushered in a “new economic era.” Let there be no doubt: the business cycle, the stagflation, the recessions, the depressions, and the inflations are not a result of capitalism and sound money, but rather are a direct result of paper money and a central bank that is incapable of managing it.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:60
Liberals foolishly believe that they can control the process and curtail the benefits going to corporations and banks by increasing the spending for welfare for the poor. But this never happens. Powerful financial special interests control the government spending process and throw only crumbs to the poor. The fallacy with this approach is that the advocates fail to see the harm done to the poor, with cost of living increases and job losses that are a natural consequence of monetary debasement. Therefore, even more liberal control over the spending process can never compensate for the great harm done to the economy and the poor by the Federal Reserve’s effort to manage an unmanageable fiat monetary system.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:62
Our current economic problems are directly related to the monetary excesses of three decades and the more recent efforts by the Federal Reserve to thwart the correction that the market is forcing upon us. Since 1998, there has been a sustained attack on corporate profits. Before that, profits and earnings were inflated and fictitious, with WorldCom and Enron being prime examples. In spite of the 13 rate cuts since 2001, economic growth has not been restored.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:71
The set of circumstances we face today are unique and quite different from all the other recessions the Federal Reserve has had to deal with. Generally, interest rates are raised to slow the economy and dampen price inflation. At the bottom of the cycle interest rates are lowered to stimulate the economy. But this time around, the recession came in spite of huge and significant interest rate reductions by the Fed. This aggressive policy did not prevent the recession as was hoped; so far it has not produced the desired recovery. Now we’re at the bottom of the cycle and interest rates not only can’t be lowered, they are rising. This is a unique and dangerous combination of events. This set of circumstances can only occur with fiat money and indicates that further manipulation of the money supply and interest rates by the Fed will have little if any effect.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:72
The odds aren’t very good that the Fed will adopt a policy of not inflating the money supply because of some very painful consequences that would result. Also there would be a need to remove the pressure on the Fed to accommodate the big spenders in Congress. Since there are essentially only two groups that have any influence on spending levels, big-government liberals and big- government conservatives, that’s not about to happen. Poverty is going to worsen due to our monetary and fiscal policies, so spending on the war on poverty will accelerate. Our obsession with policing the world, nation building, and pre-emptive war are not likely to soon go away, since both Republican and Democratic leaders endorse them. Instead, the cost of defending the American empire is going to accelerate. A country that is getting poorer cannot pay these bills with higher taxation nor can they find enough excess funds for the people to loan to the government. The only recourse is for the Federal Reserve to accommodate and monetize the federal debt, and that, of course, is inflation.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:77
Gold contracts are legal, but a settlement of any dispute is always in Federal Reserve notes. This makes gold contracts of limited value.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:78
For gold to be an alternative to Federal Reserve notes, taxes on any transactions in gold must be removed, both sales and capital gains.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:83
It’s no coincidence that during the period following the establishment of the Federal Reserve and the elimination of the gold standard, a huge growth in the size of the federal government and its debt occurred. Believers in big government, whether on the left or right, vociferously reject the constraints on government growth that gold demands. Liberty is virtually impossible to protect when the people allow their government to print money at will. Inevitably, the left will demand more economic interventionism, the right more militarism and empire building. Both sides, either inadvertently or deliberately, will foster corporatism. Those whose greatest interest is in liberty and self-reliance are lost in the shuffle. Though left and right have different goals and serve different special-interest groups, they are only too willing to compromise and support each other’s programs.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:85
The panicky effort of the Fed to stimulate economic growth does produce what it considers favorable economic reports, recently citing second quarter growth this year at 3.1%. But in the footnotes, we find that military spending—almost all of which is overseas- was up an astounding 46%. This, of course, represents deficit spending financed by the Federal Reserve’s printing press. In the same quarter, after-tax corporate profits fell 3.4%. This is hardly a reassuring report on the health of our economy and merely reflects the bankruptcy of current economic policy.
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Paper Money and Tyranny
September 5, 2003 2003 Ron Paul 93:86
Real economic growth won’t return until confidence in the entire system is restored. And that is impossible as long as it depends on the politicians not spending too much money and the Federal Reserve limiting its propensity to inflate our way to prosperity. Only sound money and limited government can do that.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:4
The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase GSE debt. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:8
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
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Fannie Mae and Freddie Mac Subsidies Distort the Housing Market
September 10, 2003 2003 Ron Paul 95:9
No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:3
The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase the debt of GSE. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetarize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:7
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing the GSE’s debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary, but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.
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Introducing Free Housing Market Enhancement Act
10 September 2003 2003 Ron Paul 96:8
No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mac and Freddie Mac.
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A Wise Consistency
February 11, 2004 2004 Ron Paul 2:13
Paper Money, Inflation, and Economic Pain : Paper money and inflation have never provided long-term economic growth, nor have they enhanced freedom. Yet the world, led by the United States, lives with a financial system awash with fiat currencies and historic debt as a consequence. No matter how serious the problems that come from central-bank monetary inflations — the depressions and inflation, unemployment, social chaos, and war — the only answer has been to inflate even more. Except for the Austrian free-market economists, the consensus is that the Great Depression was prolonged and exacerbated by the lack of monetary inflation. This view is held by Alan Greenspan, and reflected in his January 2001 response to the stock market slump and a slower economy — namely a record monetary stimulus and historically low interest rates. The unwillingness to blame the slumps on the Federal Reserve’s previous errors, though the evidence is clear, guarantees that greater problems for the United States and the world economy lie ahead. Though there is adequate information to understand the real cause of the business cycle, the truth and proper policy are not palatable. Closing down the engine of inflation at any point does cause short-term problems that are politically unacceptable. But the alternative is worse, in the long term. It is not unlike a drug addict demanding and getting a fix in order to avoid the withdrawal symptoms. Not getting rid of the addiction is a deadly mistake. While resorting to continued monetary stimulus through credit creation delays the pain and suffering, it inevitably makes the problems much worse. Debt continues to build in all areas — personal, business, and government. Inflated stock prices are propped up, waiting for another collapse. Mal-investment and overcapacity fail to correct. Insolvency proliferates without liquidation. These same errors have been prolonging the correction in Japan for 14 years, with billions of dollars of non-performing loans still on the books. Failure to admit and recognize that fiat money, mismanaged by central banks, gives us most of our economic problems, along with a greater likelihood for war, means we never learn from our mistakes. Our consistent response is to inflate faster and borrow more, which each downturn requires, to keep the economy afloat. Talk about a foolish consistency! It’s time for our leaders to admit the error of their ways, consider the wise consistency of following the advice of our Founders, and reject paper money and central bank inflationary policies.
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The Financial Services Committees “Views and Estimates for 2005”
February 26, 2004 2004 Ron Paul 7:15
Perhaps the most disappointing omission from the committee’s “Views and Estimates” is the failure to address monetary policy. This is especially so given the recent decline in the value of the dollar caused by the Federal Reserve’s continuing boom and bust monetary policy.
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The Financial Services Committees “Views and Estimates for 2005”
February 26, 2004 2004 Ron Paul 7:16
It is long past time for Congress to examine seriously the need to reform the fiat currency system. The committee also should examine how Federal Reserve policies encourage excessive public and private sector debt, and the threat that debt poses to the long-term health of the American economy. Additionally, the committee should examine how the American government and economy would be affected if the dollar lost its privileged status as the world’s reserve currency. After all, the main reason the United States government is able to run such large deficits without suffering hyperinflation is the willingness of foreign investors to hold US debt instruments. If, or when, the dollar’s weakness causes foreigners to become reluctant to invest in US debt instruments, the results could be cataclysmic for our economy.
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The Financial Services Committees “Views and Estimates for 2005”
February 26, 2004 2004 Ron Paul 7:17
In conclusion, the “Views and Estimates” report presented by the committee claims to endorse fiscal responsibility, yet also supports expanding international, corporate, and domestic spending. The report also endorses increasing the power of the federal police state. Perhaps most disturbingly, this document ignores the looming economic problems created by the Federal Reserve’s inflationary monetary polices and the resulting increase in private and public sector debt. I therefore urge my colleagues to reject this document and instead embrace an agenda of ending corporate welfare, protecting financial privacy, and reforming the fiat money system that is the root cause of America’s economic instability.
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The Lessons of 9/11
April 22, 2004 2004 Ron Paul 27:43
Huge deficits, financed by borrowing and Federal Reserve monetization, are an unsustainable policy and always lead to higher price inflation, higher interest rates, a continued erosion of the dollar’s value, and a faltering economy. Economic law dictates that the standard of living then must go down for all Americans—except for the privileged few who have an inside track on government largess—if this policy of profligate spending continues. Ultimately, the American people, especially the younger generation, will have to decide whether to languish with current policy or reject the notion that perpetual warfare and continued growth in entitlements should be pursued indefinitely.
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A Token Attempt to Reduce Government Spending
June 24, 2004 2004 Ron Paul 43:3
Congress already has made numerous attempts to restore fiscal discipline, and none of them has succeeded. Even the much-heralded “surpluses” of the nineties were due to the Federal Reserve creating an economic boom and Congress continuing to raid the social security trust fund. The surplus was not caused by a sudden outbreak of fiscal conservativism in Washington, DC.
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A Token Attempt to Reduce Government Spending
June 24, 2004 2004 Ron Paul 43:6
If Congress were serious about reining in government, it would also eliminate the Federal Reserve Board’s ability to inflate the currency. Federal Reserve policy enables excessive government spending by allowing the government to monitorize the debt, and hide the cost of big government through the hidden tax of inflation.
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Government Spending – A Tax on the Middle Class
July 8, 2004 2004 Ron Paul 52:3
Unfortunately no one in Washington, especially those who defend the poor and the middle class, cares about this subject. Instead, all we hear is that tax cuts for the rich are the source of every economic ill in the country. Anyone truly concerned about the middle class suffering from falling real wages, under-employment, a rising cost of living, and a decreasing standard of living should pay a lot more attention to monetary policy. Federal spending, deficits, and Federal Reserve mischief hurt the poor while transferring wealth to the already rich. This is the real problem, and raising taxes on those who produce wealth will only make conditions worse.
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Government Spending – A Tax on the Middle Class
July 8, 2004 2004 Ron Paul 52:9
All spending ultimately must be a tax, even when direct taxes and direct borrowing are avoided. The third option is for the Federal Reserve to create credit to pay the bills Congress runs up. Nobody objects, and most Members hope that deficits don’t really matter if the Fed accommodates Congress by creating more money. Besides, interest payments to the Fed are lower than they would be if funds were borrowed from the public, and payments can be delayed indefinitely merely by creating more credit out of thin air to buy U.S. treasuries. No need to soak the rich. A good deal, it seems, for everyone. But is it?
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Government Spending – A Tax on the Middle Class
July 8, 2004 2004 Ron Paul 52:10
Paying for government spending with Federal Reserve credit, instead of taxing or borrowing from the public, is anything but a good deal for everyone. In fact it is the most sinister seductive “tax” of them all. Initially it is unfair to some, but dangerous to everyone in the end. It is especially harmful to the middle class, including lower-income working people who are thought not to be paying taxes.
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Raising the Debt Limit: A Disgrace
November 18, 2004 2004 Ron Paul 79:7
Increasing the national debt sends a signal to investors that the government is not serious about reining in spending. This increases the risks that investors will be reluctant to buy government debt instruments. The effects on the American economy could be devastating. The only reason why we have been able to endure such large deficits without skyrocketing interest rates is the willingness of foreign nations to buy the federal government’s debt instruments. However, the recent fall in the value of the dollar and rise in the price of gold indicate that investors may be unwilling to continue to prop up our debt-ridden economy. Furthermore, increasing the national debt will provide more incentive for foreign investors to stop buying federal debt instruments at the current interest rates. Mr. Speaker, what will happen to our already fragile economy if the Federal Reserve must raise interest rates to levels unseen since the seventies to persuade foreigners to buy government debt instruments?
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Where To From Here?
November 20, 2004 2004 Ron Paul 81:12
Both supported our current monetary system, which permits the Federal Reserve to accommodate deficit spending by Congress through the dangerous process of debt monetization.
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The Deficit
16 March 2005 2005 Ron Paul 33:15
And that is why the gentleman from Pennsylvania is quite correct that we should be concerned about how the financial markets look at what we do. And hopefully we will be able to deal with this in a budgetary way and institute some restraints. But quite frankly I am a bit pessimistic about that. This program that we follow and this philosophy we followed prompted our Federal Reserve to create $620 billion in order to finance the system. That is the reason that the dollar becomes less valuable, because we just print too many to accommodate the politicians and the people who enjoy the excessive spending.
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Reject Taxpayer Bank Bailouts
May 4, 2005 2005 Ron Paul 46:7
Finally, I would remind my colleagues that the federal deposit insurance program lacks constitutional authority. Congress’ only mandate in the area of money, and banking is to maintain the value of the money. Unfortunately, Congress abdicated its responsibility over monetary policy with the passage of the Federal Reserve Act of 1913, which allows the federal government to erode the value of the currency at the will of the central bank. Congress’ embrace of fiat money is directly responsible for the instability in the banking system that created the justification for deposit insurance.
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The Hidden Cost of War
June 14, 2005 2005 Ron Paul 58:29
The Federal Reserve was created in 1913, and shortly thereafter the Fed accommodated the Wilsonians bent on entering WWI by inflating and deficit financing that ill-begotten involvement. Though it produced the 1921 depression and many other problems since, the process subsequently has become institutionalized in financing our militarism in the 20 th Century and already in the 21 st . Without the Fed’s ability to create money out of thin air, our government would be severely handicapped in waging wars that do not serve our interests. The money issue and the ability of our government to wage war are intricately related. Anyone interested in curtailing wartime spending and our militarism abroad is obligated to study the monetary system, through which our government seductively and surreptitiously finances foreign adventurism without the responsibility of informing the public of its cost or collecting the revenues required to finance the effort.
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The Coming Category 5 Financial Hurricane
September 15, 2005 2005 Ron Paul 98:3
Congress reacted to Katrina in the expected irresponsible manner. It immediately appropriated over $60 billion with little planning or debate. Taxes won’t be raised to pay the bill-- fortunately. There will be no offsets or spending reductions to pay the bill. Welfare and entitlement spending is sacrosanct. Spending for the war in Iraq and the military-industrial complex is sacrosanct. There is no guarantee that gracious foreign lenders will step forward, especially without raising interest rates. This means the Federal Reserve and Treasury will print the money needed to pay the bills. The sad truth is that monetary debasement hurts poor people the most-- the very people we saw on TV after Katrina. Inflating our currency hurts the poor and destroys the middle class, while transferring wealth to the ruling class. This occurs in spite of good intentions and misplaced compassion.
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The Coming Category 5 Financial Hurricane
September 15, 2005 2005 Ron Paul 98:5
Runaway inflation is a well-known phenomenon. It leads to political and economic chaos of the kind we witnessed in New Orleans. Hopefully we’ll come to our senses and not allow that to happen. But we’re vulnerable and we have only ourselves to blame. The flawed paper money system in existence since 1971 has allowed for the irresponsible spending of the past 30 years. Without a linkage to gold, Washington politicians and the Federal Reserve have no restraints placed on their power to devalue our money by merely printing more to pay the bills run up by the welfare-warfare state.
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The Coming Category 5 Financial Hurricane
September 15, 2005 2005 Ron Paul 98:11
My suggestion to my colleagues: Any new expenditures must have offsets greater in amount than the new programs. Foreign military and foreign aid expenditures must be the first target. The Federal Reserve must stop inflating the currency merely for the purpose of artificially lowering interest rates to perpetuate a financial bubble. This policy allows government and consumer debt to grow beyond sustainable levels, while undermining incentives to save. This in turn undermines capital investment while exaggerating consumption. If this policy doesn’t change, the dollar must fall and the current account deficit will play havoc until the house of cards collapses.
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Government Sponsored Enterprises
26 October 2005 2005 Ron Paul 108:2
One of the major privileges the Federal Government grants to the GSEs is a line of credit from the United States Treasury. According to some estimates, the line of credit may be worth over two billion dollars. GSEs also benefit from an explicit grant of legal authority given to the Federal Reserve to purchase the debt of the GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
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Government Sponsored Enterprises
26 October 2005 2005 Ron Paul 108:5
Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs makes investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Although he has endorsed many of the regulatory “solutions” being considered here today, Chairman Greenspan has implicitly admitted the subsidies are the true source of the problems with Fannie and Freddie.
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Government Sponsored Enterprises
26 October 2005 2005 Ron Paul 108:15
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing the GSEs’ debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary and painful market corrections will only deepen the inevitable fall. The more people are invested in the market, the greater the effects across the economy when the bubble bursts.
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Amendment No. 6 Offered By Mr. Paul — Part 1
26 October 2005 2005 Ron Paul 109:4
I think Members can see there is a problem with our GSEs. The debt is horrendous. Today, the administration sent a letter around and said that the debt of the GSEs totals $2.5 trillion, and they also guarantee in addition $2.4 trillion. That adds up to more money than the Federal Government has borrowed. So it is a tremendous amount of money and credit that is in the system; and people have become frightened about this, including chairman of the Federal Reserve Board, Alan Greenspan.
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The End Of Dollar Hegemony
15 February 2006 2006 Ron Paul 3:17
This transition only could have occurred with a dramatic change in monetary policy and the nature of the dollar itself. Congress created the Federal Reserve system in 1913. Between then and 1971, the principle of sound money was systematically undermined. Between 1913 and 1971, the Federal Reserve found it much easier to expand the money supply at will for financing war or manipulating an economy with little resistance from Congress while benefiting the special interests that influence Congress.
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The End Of Dollar Hegemony
15 February 2006 2006 Ron Paul 3:33
Once again, the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful. In the past 5 years, the dollar has been devalued in terms of gold by more than 50 percent. You just cannot fool all the people all the time, even with the power of the mighty printing press and the money-creating system of the Federal Reserve.
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The End Of Dollar Hegemony
15 February 2006 2006 Ron Paul 3:97
But if the Federal Reserve did not pick up the slack and create huge amounts of new credit and money out of thin air, interest rates would rise and call a halt to the charade. The people who suffer from a depreciated dollar don’t understand why they suffer, while the people who benefit promote the corrupt system. The wealthy clean up on Wall Street and the unsophisticated buy in at the market tops. Wealth is transferred from one group to another, and it is all related to the system that allows politicians and the central banks to create money out of thin air. It is literally legalized counterfeiting.
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The End Of Dollar Hegemony
15 February 2006 2006 Ron Paul 3:111
Counterfeiting money never creates wealth. It only steals wealth from the unsuspecting. The Federal Reserve creation of money is exactly the same. Increasing the dollars in circulation can only diminish the value of each existing dollar. Only production and jobs can make a country wealthy in the long run. Today, it is obvious our country is becoming poorer and more uneasy as our jobs and capital go overseas.
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Debt Addiction
1 March 2006 2006 Ron Paul 6:9
Two vehicles are used to fund this wild spending. First, the Federal Reserve creates dollars out of thin air and purchases Treasury bills without limit, a very nice convenience.
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Debt Addiction
1 March 2006 2006 Ron Paul 6:11
Excessive spending, a rapidly growing national debt, the Federal Reserve inflation machine, and foreign borrowing all put pressure on the dollar. Unless we treat our addiction to debt, it will play havoc with the dollar, undermine our economic well-being, and destroy our liberties. It is time for us to get our house in order.
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Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:1
Mr. PAUL. Mr. Speaker, I rise to introduce the Sunshine in Monetary Policy Act, which requires the Federal Reserve to resume reporting the monetary measure known as M3. M3 consists of M1 (M1 is currency in circulation plus travelers’ checks, demand deposits, Negotiable Order of Withdrawal (NOW) accounts, and similar interest-earning checking account balances) plus M2 (M2 is M1 plus household holdings of savings deposits, small time deposits, and retail money market mutual funds balances except for balances held in IRA and Keogh accounts) plus institutional money market mutual fund balances and managed liabilities of deposits consisting of large time deposits, repurchase agreements, and Eurodollars.
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Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:2
The Federal Reserve Board has recently announced it will stop reporting M3, thus depriving Congress and the American people of the most comprehensive measure of the money supply. The cessation of Federal Reserve’s weekly M3 report will make it more difficult for policymakers, economists, investors, and the general public to learn the true rate of inflation. As Nobel laureate Milton Friedman famously said, “inflation is always and everywhere a monetary phenomenon.” Therefore, having access to a comprehensive measure of the money supply like M3 is a vital tool for those seeking to track inflation. Thorsten Polleit, honorary professor at HfB-Business School of Finance and Management, in his article “Why Money Supply Matters” posted on the Ludwig von Mises Institute’s website mises.org, examined the relationship between changes in the money supply and inflation and concluded that “money supply signals might actually be far more important for inflation — even in the short-term — than current central bank practice suggests,” thus demonstrating the importance of the M3 aggregate.
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Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:3
The Federal Reserve Board has claimed neither policymakers nor the Federal Reserve staff closely track M3. Even if M3 is not used by Federal Reserve Board economists or legislators, many financial services professionals whose livelihoods depend on their ability to obtain accurate information about the money supply rely on M3. For example, my office has been contacted by a professional money manger complaining that the Federal Reserve Board’s discontinuing M3 reports will make it difficult for him to do his job.
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Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:4
Whatever lack of interest policymakers are currently displaying in M3 is no doubt related to the mistaken perception that the Federal Reserve Board has finally figured out how to effectively manage a fiat currency. This illusion exists largely because the effects of the Fed’s inflationary polices are concentrated in malinvestments in specific sectors of the economy, leading to “bubbles” such as the one that occurred in the stock market in the late nineties and the bubble that many believe is occurring in the current real estate market. When monetary inflation is reflected in sector- specific bubbles, it is easier to pretend that the bubbles are caused by problems specific to those sectors, instead of reflecting the problems inherent in a fiat currency system. Once the damage to our economy done by our reliance on fiat currency becomes clear, I am certain that policymakers will once again take more interest in M3.
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Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:5
Economists and others who are following M3 have become increasingly concerned about inflation because last year the rate of M3 rose almost twice as fast as other monetary aggregates. This suggests that the inflation picture is not as rosy as the Federal Reserve would like Congress and the American people to believe. Discontinuing reporting the monetary aggregate that provides the best evidence that the Federal Reserve Board has not conquered inflation suggests to many people that the government is trying to conceal information about the true state of the economy from the American people. Brad Conrad, a professor of investing who has also worked with IBM, CDC, and Amdahl, spoke for many when he said, “It [the discontinuance of M3] is unsettling. It detracts from the transparency the Fed preaches and adds to the suspicion that the Fed wants to hide anything showing money growth high enough to fuel inflation...” Discontinuing reporting M3 will only save 0.00000699% of the Federal Reserve Board’s yearly budget. This savings hardly seems to justify depriving the American people of an important measurement of money supply, especially since Congress has tasked the Federal Reserve Board with reporting on monetary aggregates.
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:6
Discontinuing reporting M3 may not be a violation of the letter of the Federal Reserve Board’s statutory duty, but it is a violation of the spirit of the congressional command that the Federal Reserve Board ensure the American public is fully informed about the effects of monetary policy.
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
7 March 2006 2006 Ron Paul 10:7
Mr. Speaker, knowledge of the money supply is one of the keys to understanding the state of the economy. The least the American people should expect from the Federal Reserve Board is complete and accurate information regarding the money supply. I urge my colleagues to ensure that the American people can obtain that information by cosponsoring the Sunshine in Monetary Policy Act.
Federal Reserve
Iran, The Next Neocon Target
5 April 2006 2006 Ron Paul 21:52
Excessive spending to finance the war causes deficits to explode. There are never enough tax dollars available to pay the bills, and since there are not enough willing lenders and dollars available, the Federal Reserve must create new money out of thin air and new credit for buying Treasury bills to prevent interest rates from rising too rapidly. Rising rates would tip off everyone that there are not enough savings or taxes to finance the war.
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Gold And The U.S. Dollar
25 April 2006 2006 Ron Paul 23:11
Though our inflation, that is the depreciation of the U.S. dollar, has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only 4 cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and to our political system.
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Gold And The U.S. Dollar
25 April 2006 2006 Ron Paul 23:20
The number of dollars created by the Federal Reserve and through the fractional reserve banking system is crucial in determining how the market assesses the relationship of the dollar and gold.
Federal Reserve
Gold And The U.S. Dollar
25 April 2006 2006 Ron Paul 23:67
A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil prices higher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.
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What To Do About Soaring Oil Prices
2 May 2006 2006 Ron Paul 32:7
Third, we must remember that prices of all things go up because of inflation. Inflation, by definition, is an increase in the money supply. The money supply is controlled by the Federal Reserve and responds to the deficits Congress creates. When deficits are excessive, as they are today, the Fed creates new dollars out of thin air to buy Treasury bills and keeps interest rates artificially low. But when new money is created out of nothing, the money already in circulation loses value.
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Milton Friedman
6 December 2006 2006 Ron Paul 100:2
Milton Friedman’s most notable contributions to economic theory where in the area of monetary policy. His 1963 work A Monetary History of the United States 1857–1960, coauthored with Anna Schwartz, was among the first works to emphasize the role Federal Reserve policy played in causing the Great Depression. As Friedman said, “The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.”
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Milton Friedman
6 December 2006 2006 Ron Paul 100:3
Friedman’s work showed that inflation is not a result of markets but is, as he memorably put it, “always and everywhere a monetary phenomenon.” Friedman was the major originator and theoretician of monetarism. Friedman recommended restricting the Federal Reserve’s authority to increasing the quantity of money by a fixed yearly amount. While monetarism is far from the ideal free-market monetary system, Milton Friedman deserves credit for focusing the attention of economists on the Federal Reserve’s responsibility for inflation.
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Statement for Hearing before the House Financial Services Committee, “Monetary Policy and the State of the Economy”
15 February 2007 2007 Ron Paul 32:1
Transparency in monetary policy is a goal we should all support. I’ve often wondered why Congress so willingly has given up its prerogative over monetary policy. Astonishingly, Congress in essence has ceded total control over the value of our money to a secretive central bank. Congress created the Federal Reserve, yet it had no constitutional authority to do so. We forget that those powers not explicitly granted to Congress by the Constitution are inherently denied to Congress-- and thus the authority to establish a central bank never was given. Of course Jefferson and Hamilton had that debate early on, a debate seemingly settled in 1913.
Federal Reserve
Statement for Hearing before the House Financial Services Committee, “Monetary Policy and the State of the Economy”
15 February 2007 2007 Ron Paul 32:2
But transparency and oversight are something else, and they’re worth considering. Congress, although not by law, essentially has given up all its oversight responsibility over the Federal Reserve. There are no true audits, and Congress knows nothing of the conversations, plans, and actions taken in concert with other central banks. We get less and less information regarding the money supply each year, especially now that M3 is no longer reported.
Federal Reserve
Statement for Hearing before the House Financial Services Committee, “Monetary Policy and the State of the Economy”
15 February 2007 2007 Ron Paul 32:3
The role the Fed plays in the President’s secretive Working Group on Financial Markets goes unnoticed by members of Congress. The Federal Reserve shows no willingness to inform Congress voluntarily about how often the Working Group meets, what actions it takes that affect the financial markets, or why it takes those actions. But these actions, directed by the Federal Reserve, alter the purchasing power of our money. And that purchasing power is always reduced. The dollar today is worth only four cents compared to the dollar in 1913, when the Federal Reserve started. This has profound consequences for our economy and our political stability. All paper currencies are vulnerable to collapse, and history is replete with examples of great suffering caused by such collapses, especially to a nation’s poor and middle class. This leads to political turmoil.
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Statement for Hearing before the House Financial Services Committee, “Monetary Policy and the State of the Economy”
15 February 2007 2007 Ron Paul 32:13
For starters, the Federal Reserve should:
Federal Reserve
Statement for Hearing before the House Financial Services Committee, “Monetary Policy and the State of the Economy”
15 February 2007 2007 Ron Paul 32:19
We need more transparency in how the Federal Reserve carries out monetary policy, and we need it soon.
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Shareholder Vote On Executive Compensation Act
18 April 2007 2007 Ron Paul 43:12
In addition to repealing laws that prevent shareholders from exercising control over corporations, Congress should also examine United States monetary policy’s effects on income inequality. When the Federal Reserve Board injects credit into the economy, the result is at least a temporary rise in incomes. However, those incomes do not rise equally. People who first receive the new credit — who in most instances are those already at the top of the economic pyramid — receive the most benefit from the Fed’s inflationist polices. By the time those at the lower end of the income scale experience a nominal rise in incomes, they must also contend with price inflation that has eroded their standard of living. Except for the lucky few who take advantage of the new credit first, the negative effects of inflation likely more than outweigh any temporary gains in nominal income from the Federal Reserve’s expansionist polices.
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Shareholder Vote On Executive Compensation Act
18 April 2007 2007 Ron Paul 43:14
Explosions in CEO salaries can be a sign of a Federal credit bubble, which occurs when Federal Reserve Board-created credit flows into certain sectors such as the stock market or the housing market. Far from being a sign of the health of capitalism, excessive CEO salaries in these areas often signal that a bubble is about to burst. When a bubble bursts, people at the bottom of the economic ladder bear the brunt of the bust.
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:1
Mr. PAUL. Mr. Chairman, H.R. 1427 fails to address the core problems with the Government Sponsored Enterprises, GSEs. Furthermore, since this legislation creates new government programs that will further artificially increase the demand for housing, H.R. 1427 increases the economic damage that will occur from the bursting of the housing bubble. The main problem with the GSEs is the special privileges the Federal Government gives the GSEs. According to the Congressional Budget Office, the housing-related GSEs received almost 20 billion dollars worth of indirect Federal subsidies in fiscal year 2004 alone, while Wayne Passmore of the Federal Reserve estimates the value of the GSE’s Federal subsides to be between $122 and $182 billion dollars.
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:2
One of the major privileges the Federal Government grants to the GSEs is a line of credit from the United States Treasury. According to some estimates, the line of credit may be worth over 2 billion dollars. GSEs also benefit from an explicit grant of legal authority given to the Federal Reserve to purchase the debt of the GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors.
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:5
Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs makes investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Although he has endorsed many of the regulatory “solutions” being considered here today, Chairman Greenspan has implicitly admitted the subsidies are the true source of the problems with Fannie and Freddie.
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Federal Housing Finance Reform Act Of 2007
17 May 2007 2007 Ron Paul 52:15
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing the GSEs’ debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary and painful market corrections will only deepen the inevitable fall. The more people are invested in the market, the greater the effects across the economy when the bubble bursts.
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In The Name Of Patriotism (Who Are The Patriots?)
22 May 2007 2007 Ron Paul 55:20
A free society rejects all notions of involuntary servitude, whether by draft or the confiscation of the fruits of our labor through the personal income tax. A more sophisticated and less well-known technique for enhancing the state is the manipulation and transfer of wealth through the fiat monetary system operated by the secretive Federal Reserve.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:1
Mr. PAUL. Madam Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle-and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:2
From the Great Depression, to the stagflation of the 70s, to the burst of the dotcom bubble, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:4
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of special interests and their own appetite for big government.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:5
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the Federal Government to erode the American standard of living via an inflationary monetary policy.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:6
In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our Nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.
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Introduction Of The Federal reserve Board Abolition Act
15 June 2007 2007 Ron Paul 65:7
In conclusion, Madam Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
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Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:1
Mr. PAUL. Madam Speaker, I rise to introduce the Sunshine in Monetary Policy Act, which requires the Federal Reserve to resume reporting the monetary measure known as M3. M3 consists of M1, M1 is currency in circulation plus travelers’ checks, demand deposits, Negotiable Order of Withdrawal, NOW, accounts, and similar interest-earning checking account balances; M2, M2 is M1 plus household holdings of savings deposits, small time deposits, and retail money market mutual funds balances except for balances held in IRA and Keogh accounts, plus institutional money market mutual fund balances and managed liabilities of deposits consisting of large time deposits, repurchase agreements, and Eurodollars.
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Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:2
The Federal Reserve Board ceased reporting M3 on March 22, 2006, thus depriving Congress and the American people of the most comprehensive measure of the money supply. The cessation of the Federal Reserve’s weekly M3 report will make it more difficult for policymakers, economists, investors, and the general public to learn the true rate of inflation. As Nobel laureate Milton Friedman famously said, “inflation is always and everywhere a monetary phenomenon.” Therefore, having access to a comprehensive measure of the money supply like M3 is a vital tool for those seeking to track inflation. Thorsten Polleit, honorary professor at HfB-Business School of Finance and Management, in his article “Why Money Supply Matters” posted on the Ludwig von Mises Institute’s Web site mises.org, examined the relationship between changes in the money supply and inflation and concluded that “money supply signals might actually be far more important for inflation — even in the short-term — than current central bank practice suggests,” thus demonstrating the importance of the M3 aggregate.
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:3
The Federal Reserve Board has claimed neither policymakers nor the Federal Reserve staff closely tracked M3. Even if M3 was not used by Federal Reserve Board economists or legislators, many financial services professionals whose livelihoods depend on their ability to obtain accurate information about the money supply relied on M3. For example, my office has been contacted by a professional money manger complaining that the Federal Reserve Board’s discontinuing M3 reports would make it difficult for him to do his job.
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Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:4
Whatever lack of interest policymakers are currently displaying, in M3 is no doubt related to the mistaken perception that the Federal Reserve Board has finally figured out how to effectively manage a fiat currency. This illusion exists largely because the effects of the Fed’s inflationary polices are concentrated in malinvestments in specific sectors of the economy, leading to “bubbles” such as the one that occurred in the stock market in the late nineties and the bubble that many believe is occurring in the current real estate market. When monetary inflation is reflected in sector- specific bubbles, it is easier to pretend that the bubbles are caused by problems specific to those sectors, instead of reflecting the problems inherent in a fiat currency system. Once the damage to our economy done by our reliance on fiat currency becomes clear, I am certain that policymakers will once again take more interest in M3.
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:5
Economists and others who are following M3 have become increasingly concerned about inflation because in 2005 the rate of M3 rose almost twice as fast as other monetary aggregates. This suggests that the inflation picture is not as rosy as the Federal Reserve would like Congress and the American people to believe. Discontinuing reporting the monetary aggregate that provides the best evidence that the Federal Reserve Board has not conquered inflation suggested to many people that the government was trying to conceal information about the true state of the economy from the American people. Brad Conrad, a professor of investing who has also worked with IBM, CDC, and Amdahl, spoke for many when he said, “It [the discontinuance of M3] is unsettling. It detracts from the transparency the Fed preaches and adds to the suspicion that the Fed wants to hide anything showing money growth high enough to fuel inflation . . .”
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:6
Discontinuing reporting M3 was only expected to save 0.00000699 percent of the Federal Reserve Board’s yearly budget. This savings hardly seems to justify depriving the American people of an important measurement of money supply, especially since Congress has tasked the Federal Reserve Board with reporting on monetary aggregates. Discontinuing reporting M3 may not be a violation of the letter of the Federal Reserve Board’s statutory duty, but it is a violation of the spirit of the congressional command that the Federal Reserve Board ensure the American public is fully informed about the effects of monetary policy.
Federal Reserve
Introduction Of The Sunshine In Monetary Policy Act
15 June 2007 2007 Ron Paul 66:7
Madam Speaker, knowledge of the money supply is one of the keys to understanding the state of the economy. The least the American people should expect from the Federal Reserve Board is complete and accurate information regarding the money supply. I urge my colleagues to ensure that the American people can obtain that information by cosponsoring the Sunshine in Monetary Policy Act.
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Remembering Dr. Hans Sennholz
27 June 2007 2007 Ron Paul 72:5
I first met Dr. Sennholz in the early 1970s during the campaign to legalize the private ownership of gold. He was a tremendous influence on me and introduced me to other eminent economists of the Austrian School. Dr. Sennholz consistently taught the beneficial effects of the gold standard and was a tireless opponent of inflation. He never ceased to persist in pointing out the problems of fiat currency, the evils of inflation, and the perils of the Federal Reserve’s loose monetary policy.
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Statement before the Financial Services Committee – Humphrey Hawkins Prequel Hearing
17 July 2007 2007 Ron Paul 76:1
During the 30 th year of the Humphrey-Hawkins hearings, it would be helpful for Congress to reassess the usefulness of the Humphrey-Hawkins mandate. The dual mandate calls for full employment and stable prices. Humphrey-Hawkins assumes that the Federal Reserve has unique insights into the United States economy that no one else possesses, that the Federal Reserve knows what prices should be and how much unemployment there should be. Full employment which is brought about through rising inflation will eventually lead to a stagnant economy which will lead to more unemployment. 30+ years after the stagflation era, I would hope that Phillips curves are one of those barbarous relics of the past that have been sent to their graves, along with wage and price controls and bans on the private ownership of gold.
Federal Reserve
Statement before the Financial Services Committee – Humphrey Hawkins Prequel Hearing
17 July 2007 2007 Ron Paul 76:4
Price stability attempts to disadvantage consumers by keeping prices stable, rather than allowing them to take their natural course of decline. This policy comes from two misguided notions: that lower prices lead to lower profits, and that lower prices lead to deflation. In its effort to ensure price stability, the Federal Reserve resorts to inflation targeting, using the federal funds rate and open market operations to increase the money supply at an ostensible low rate, introducing a subtle but pernicious inflation into the monetary system. Inflation benefits the government and the well-off, the first users of the new money, but harms those who receive the new money last, those who are predominantly poor and middle class.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:1
Mr. Chairman, the situation facing us now in the mortgage industry has its roots in the Federal Reserve's inflationary monetary policy. Without addressing the roots of the current crisis, any measures undertaken to improve the situation will be doomed to fail.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:2
As with asset bubbles and investment manias in past history, the fuel for the current housing bubble had its origins in monetary manipulation. The housing boom was caused by the Federal Reserve's policy resulting in artificially low interest rates. Consumers, misled by low interest rates, were looking to consume, while homebuilders saw the low interest rates as a signal to build, and build they did.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:3
One of the primary means the Federal Reserve uses to stimulate the economy is manipulation of the federal funds rate and the discount rates, which are used as benchmark rates throughout the economy. The interest rate is the price of time, as the value of a dollar today and the value of a dollar one year from now are not the same. Just like any price in the market, interest rates have an important informational signaling purpose. Government price fixing of the interest rate has the same deleterious effects as price controls in other areas.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:5
The Federal Reserve continued and still continues to increase the money supply. After ceasing the publication of M3 last February, private economists have calculated that M3 has risen at an annual rate of almost 12%, which is faster than we have seen since the 1970's.
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Statement before the Financial Services Committee
20 September 2007 2007 Ron Paul 93:7
Further regulation of the banking sector, of mortgage brokers, mortgage lenders, or credit rating agencies will fail to improve the current situation, and will do nothing to prevent future real estate bubbles. Any proposed solutions which fail to take into account the economic intervention that laid the ground for the bubble are merely window dressing, and will not ease the suffering of millions of American homeowners. I urge my colleagues to strike at the root of the problem and address the Federal Reserve's inflationary monetary policy.
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Statement Before the Joint Economic Committee
8 November 2007 2007 Ron Paul 103:6
Finally, the Federal Reserve's loose monetary policy and lowering of interest rates were a major spur to the housing boom. Low interest rates influence marginal buyers, those who are sitting on the fence, and encourage them to take on a mortgage that they otherwise would not. Even when interest rates are raised, no one expects them to stay high for long, as there is always pressure from politicians and investors to keep rates low, as no one wants the cheap credit to end.
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Introduction Of The Make No Cents Until It Makes Sense Act
8 November 2007 2007 Ron Paul 104:2
I find it hard to believe that with this many pennies having been minted, we still have a shortage of pennies. My bill would prohibit the minting of pennies until the Treasury and Federal Reserve certify that there is no surplus of pennies. If there is a surplus of pennies, it makes no sense for the Mint to continue to coin them if each penny costs more than one cent to produce. If there really were a shortage, the onus would be on the Treasury and Federal Reserve to conduct their survey in a timely fashion in order to facilitate further penny production.
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Introducing The Free Competition In Currency Act
13 December 2007 2007 Ron Paul 110:3
Due to nearly a century of inflationary monetary policy on the part of the Federal Reserve, the U.S. dollar stands at historically low levels. Investors around the world are shunning the dollar, and millions of Americans see their salaries, savings accounts, and pensions eroded away by rising inflation. We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar.
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Introducing The Free Competition In Currency Act
13 December 2007 2007 Ron Paul 110:4
As a proponent of competition in currencies, I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the Government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency. As monopolists, however, the Federal Reserve and the Mint fear competition, and would rather force competitors out using the federal court system and the threat of asset forfeiture than compete in the market.
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Statement of Ron Paul on H.R. 5140
29 January 2008 2008 Ron Paul 2:7
Tax cuts by themselves will not restore long-term economic health unless and until this body finally addresses the fundamental cause of our economic instability, which is monetary policy. The inflationary policies of the Federal Reserve are the root of the boom-and-bust cycle that has plagued the American economy for almost 75 years. The Federal Reserve’s inflationary polices are also at the root of the steady decline in the American people’s standard of living. A good step toward monetary reform would be for Congress to pass my HR 2576, which repeals the federal legal tender laws. This would allow people to use alternatives to government-issued fiat money and thus protect themselves from Federal Reserve-created inflation.
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Statement on Competing Currencies
February 13, 2008 2008 Ron Paul 4:7
The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.
Federal Reserve
Statement on Competing Currencies
February 13, 2008 2008 Ron Paul 4:14
Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4% per year. Sales taxes in many states can take away 8% or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver.
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“Monetary Policy and the State of the Economy”
February 26, 2008 2008 Ron Paul 8:3
By setting the federal funds rate, the rate at which banks in the Federal Reserve System loan funds to each other, the Federal Reserve inhibits the actions of market participants coming together to determine a market interest rate. The Federal Reserve and the federal government do not deign to interfere in setting the price of houses, the interest rate on mortgages, or the prices of wood and steel. The Fed’s actions in setting the federal funds rate however, because it reflects the price of money to a borrower and thus affects demand for money, affects prices throughout the economy in a manner less pervasive but just as damaging as direct price controls.
Federal Reserve
“Monetary Policy and the State of the Economy”
February 26, 2008 2008 Ron Paul 8:4
The example of the Soviet Union should have taught us that no one person, no group of people, no matter how scientifically trained, can arbitrarily set prices and not expect economic havoc. Only the spontaneous interaction of market participants can lead to the development of a functioning price system that allows the needs and wants of all participants to be met. The sense I get from reading much of the punditry is that the federal funds rate is set often by the whims of the Federal Reserve governors. Even mechanistic explanations such as the Taylor Rule rely on inputs that are often left up to the discretion of the Fed policymakers: what is the potential GDP, do we use CPI or PCE, overall CPI versus CPI less energy and food, etc.
Federal Reserve
“Monetary Policy and the State of the Economy”
February 26, 2008 2008 Ron Paul 8:6
This setting of the interest rate introduces the business cycle into the economy. Until we understand the results these Federal Reserve actions have, we will be doomed to repeat these periods of boom and bust. I urge my colleagues to study this matter, and to resist the urge for greater Federal Reserve intervention in the market.
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Foreign Government Investment in the U.S. Economy and Financial Sector
March 5, 2008 2008 Ron Paul 11:5
I have always been a staunch advocate of abandoning our loose monetary policy and facing the consequences now, rather than continuing easy money in the hopes of never having to face a recession. Now that it is clear that decades of Federal Reserve monetary manipulation have led to a severe recession, the thought of sovereign wealth funds investing in the financial sector holds far more appeal than that of a complete collapse of major industry players which would cause catastrophic effects throughout the economy.
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Statement on Coinage
March 11, 2008 2008 Ron Paul 12:4
Congress’ unconstitutional delegation of monetary policy to the Federal Reserve and its reluctance to exercise oversight in that arena have led to a massive devaluation of the dollar. If we fail to end this devaluation, we will undoubtedly hold future hearings as the metal value of our coins continues to outstrip the face value.
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Hearing on “The Economic Outlook”
April 2, 2008 2008 Ron Paul 18:3
What we in Washington should be discussing is increased regulation and scrutiny of public sector regulatory and oversight agencies such as the Federal Reserve Board, the SEC, and others. The Federal Reserve’s actions got us into at least one depression in the last century, and have led to continued cyclical difficulties, including the current economic slowdown.
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Hearing on “The Economic Outlook”
April 2, 2008 2008 Ron Paul 18:6
The latest regulatory plan from the Treasury Department, with the potential to turn the Federal Reserve into a super-regulator overseeing state-chartered banks, bank holding companies, and acting as a guarantor of market stability, is another in a long line of half-baked government responses to financial difficulty. Recession after recession has not impressed upon government leaders the reality that the Federal Reserve’s monetary policy activities are what lead to market instability.
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DO NOT BELIEVE THE U.S. FEAR FACTOR PROPAGANDA AS IT RELATES TO OUR FOREIGN POLICY
26 June 2008 2008 Ron Paul 40:2
We do know that there is a supply and demand, there’s a lot of demand for oil. The supplies may be dwindling. But there are other reasons for high costs of energy. One is inflation. For instance, to pay for the war that has been going on and the domestic spending, we have been spending a lot more money than we have. So what do we do? We send the bills over to the Federal Reserve to create new money. In the last 3 years, our government, through the Federal Reserve and our banking system, created $4 trillion of new money. That is one of the main reasons why we have this high cost of energy in $4 gallon gasoline.
Federal Reserve
Statement: “Something Big is Happening”
9 July 2008 2008 Ron Paul 42:12
There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare.
Federal Reserve
Statement: “Something Big is Happening”
9 July 2008 2008 Ron Paul 42:17
Printing dollars over long periods of time may not immediately push prices up — yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at “drill, drill, drill” as a solution to the dollar crisis and high gasoline prices. Its okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans.
Federal Reserve
Statement: “Something Big is Happening”
9 July 2008 2008 Ron Paul 42:19
This time — since there are so many dollars and so many countries involved — the Fed has been able to “paper” over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest.
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Humphrey Hawkins Hearing on Monetary Policy
July 16, 2008 2008 Ron Paul 46:3
At the heart of this economic malaise is the Fed’s poor stewardship of the dollar. The cause of the dollar’s demise is not the result of a purely psychological response to public statements on US dollar policy, but is rather a reaction to a massive increase in the money supply brought about by the Federal Reserve’s loose monetary policy. The policies that led to hemorrhaging of gold during the 1960’s and the eventual closing of the gold standard are the same policies that are leading to the dollar’s decline in international currency markets today. Foreign governments no longer wish to hold depreciating dollars, and would prefer to hold stronger currencies such as the euro. Foreign investors no longer wish to hold underperforming dollars, and seek to hold better-performing assets such as ports and beer companies.
Federal Reserve
Humphrey Hawkins Hearing on Monetary Policy
July 16, 2008 2008 Ron Paul 46:4
Every government bailout or promise thereof leads to moral hazard, the likelihood that market actors will take ever riskier actions with the belief that the federal government will bail them out. Bear Stearns was bailed out, Fannie and Freddie will be bailed out, but where will the line be drawn? The precedent has been established and the taxpayers will end up footing the bill in these cases, but the federal government and the Federal Reserve lack the resources to bail out every firm that is deemed “too big to fail.” Decades of loose monetary policy will lead to a financial day of reckoning, and bailouts, liquidity injections, and lowering of the federal funds rate will only delay the inevitable and ensure that the final correction will be longer and more severe than it otherwise would. For the sake of the economy, I urge my colleagues to resist the temptation to give in to political expediency, and to oppose loose monetary policy and any further bailouts.
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UNTITLED
23 July 2008 2008 Ron Paul 47:1
Mr. PAUL. Mr. Speaker, if I had had a chance to name this bill, I might have suggested that we could call it the mother of all bailouts. But on second thought I decided that wouldn’t be appropriate because it isn’t nearly as big as the bailout that the Federal Reserve has been engaged in in this very industry.
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UNTITLED
23 July 2008 2008 Ron Paul 47:2
The Federal Reserve has already invested hundreds of billions of dollars, probably close to $300 billion to bail out this industry. And of course the Fed has no money. But when we open the doors in an unlimited amount, and no restraint on what the Treasury might do in buying up these securities, we have to talk about the budget. And, of course, that is why this bill increases the national debt by $800 billion, so I guess they are expecting to buy a whole lot of mortgage securities. But that won’t solve the problem. We have to find out why this problem has existed.
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Statement on HR 3221
July 24, 2008 2008 Ron Paul 48:5
Finally, HR 3221 increases the federal debt limit by $800 billion. We are told that CBO has scored this bill at a cost of $25 billion, but this debt limit increase belies that. The Federal Reserve has already propped up the housing and financial markets to the tune of over $300 billion, and this raise of the debt limit indicates that the cost of this newest bailout will likely be even more costly. I am dismayed that my colleagues have not learned the lessons of the Patriot Act and Sarbanes-Oxley. Massive bills passed in knee-jerk reaction to crisis events will always be poorly written, burdensome and expensive to taxpayers, and destructive of liberty.
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Full Committee Hearing on “Implications of a Weaker Dollar for Oil Prices and the U.S. Economy”
July 24, 2008 2008 Ron Paul 50:2
The root of our current economic malaise, the weak dollar, the high price of oil, and the collapse of the housing market, comes about because almost no one understands what inflation is. Inflation is an increase in the money supply, which occurs by various methods, the printing of currency, low reserve requirements, Federal Reserve open market operations, etc.
Federal Reserve
Full Committee Hearing on “Implications of a Weaker Dollar for Oil Prices and the U.S. Economy”
July 24, 2008 2008 Ron Paul 50:5
Until the cause of inflation is understood, no effective strategy can be undertaken to combat it. The problem, however, is that the government does not want inflation to be done away with. Inflation benefits debtors and harms creditors, and the United States government is the biggest debtor of all. The United States government, the banking monopoly under the Federal Reserve System, and politically-connected firms and industries are the first entities to take advantage of new money injected into the system, before prices increase. As the increased supply of money begins to chase the same number of goods, prices rise, and the average American suffers. Poor and middle class Americans are always the hardest hit by inflation, as the weakening dollar makes the imported goods that many Americans depend on more expensive.
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HOUSING AND ECONOMIC RECOVERY ACT OF 2008
25 July 2008 2008 Ron Paul 52:5
Finally, H.R. 3221 increases the Federal debt limit by $800 billion. We are told that CBO has scored this bill at a cost of $25 billion, but this debt limit increase belies that. The Federal Reserve has already propped up the housing and financial markets to the tune of over $300 billion, and this raise of the debt limit indicates that the cost of this newest bailout will likely be even more costly. I am dismayed that my colleagues have not learned the lessons of the PATRIOT Act and Sarbanes- Oxley. Massive bills passed in knee- jerk reaction to crisis events will always be poorly written, burdensome and expensive to taxpayers, and destructive of liberty.
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Statement on Sovereign Wealth Funds
September 10, 2008 2008 Ron Paul 58:4
Debtors cannot continue building debts forever, and we now face strong indications that our creditors are eager to begin collecting what is owed them. It is not too late to correct our mistakes, but we must act now and cannot dally. We must drastically reduce government spending, end wasteful and disastrous interventions into financial markets, and rein in the Federal Reserve’s inflationary monetary policy. Failing to do so will ensure a descent into financial catastrophe.
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“The Future of Financial Services: Exploring Solutions for the Market Crisis”
September 24, 2008 2008 Ron Paul 59:5
The only viable solution to this financial crisis is to keep the government from intervening any further. The Federal Reserve has already loaned hundreds of billions of dollars through its numerous lending facilities, and the Congress has passed legislation authorizing further hundreds of billions of dollars to bail out Fannie and Freddie, yet each successive crisis event seems to be advertised as larger and more severe than the previous one. It is time that this Congress put its foot down, reject the administration’s proposal, and allow the bust to work itself out so that our economic hangover is not as severe as it might otherwise be.
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“The Bailout”
September 29, 2008 2008 Ron Paul 65:1
Mr. PAUL. Madam Speaker, I rise in strong opposition to this bill. This is only going to make the problem that much worse. The problem came about because we spent too much; we borrowed too much, and we printed too much money; we inflated too much, and we overregulated. This is all that this bill is about is more of the same. So you can’t solve the problem. We are looking at a symptom. We are looking at the collapsing of a market that was unstable. It was unstable because of the way it came about. It came about because of a monopoly control of money and credit by the Federal Reserve System, and that is a natural consequence of what happens when a Federal Reserve System creates too much credit.
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“The Bailout”
September 29, 2008 2008 Ron Paul 65:5
We need to get our house in order. We need more oversight—that is a certainty —but we need oversight of the Federal Reserve System, of the Exchange Stabilization Fund and of the President’s Working Group on Financial Markets. Find out what they’re doing. How much have they been meddling in the market?
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“The Bailout”
September 29, 2008 2008 Ron Paul 65:15
But what politicians are willing to say that the financial “skyscraper”—the global financial and monetary system-is a house of cards. It is not going to happen at this juncture. They’re not even talking about this. They talk only of bailouts, more monetary inflation, more special interest spending, more debt, and more regulations. There is almost no talk of the relationship of the Community Reinvestment Act, HUD, and government assisted loans to the housing bubble. And there is no talk of the oversight that is desperately needed for the Federal Reserve, the Exchange Stabilization Fund, and all the activities of the President’s Working Group on financial markets. When these actions are taken we will at last know that Congress is serious about the reforms that are really needed.
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Statement on HR 1424
October 3, 2008 2008 Ron Paul 67:2
The Federal Reserve has already injected hundreds of billions of dollars into US and world credit markets. The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks. Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse. This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails.
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UNTITLED
3 October 2008 2008 Ron Paul 68:1
Mr. PAUL. Madam Speaker, I rise in strong opposition to this bill because it won’t solve our problem. It is said that we are in a liquidity crisis and a credit crunch and all we need is more credit. The Federal Reserve has already injected over a trillion dollars worth of credit and it doesn’t seem to have helped a whole lot. Injecting another 600 to $700 billion will not solve the problem.
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UNTITLED
3 October 2008 2008 Ron Paul 68:2
I think one of the reasons why we are floundering around here is that we don’t understand the problem because instead of it being a credit crunch, I think it is a lot more serious than that. That is, I think what is happening in the market today is signaling something much more draconian because it is probably telling us that our government is insolvent, that we are on the verge of bankruptcy and big things are starting to happen. And we don’t quite understand it, so we fall back on the old cliches that what we need is more appropriations, more spending, more debt, and more credit in the market. That means more inflation by the Federal Reserve system. And yet, that is what caused the trouble.
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UNTITLED
3 October 2008 2008 Ron Paul 68:6
This idea that there is not enough regulation is completely wrong. There is too much regulation, and lack of regulation of the Federal Reserve system and the exchange of stabilization.
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The Austrians Are Right
November 20, 2008 2008 Ron Paul 71:4
At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve. It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form. Congress added fuel to the fire by various programs and institutions like the Community Reinvestment Act, Fannie Mae and Freddie Mac, FDIC, and HUD mandates, which were all backed up by aggressive court rulings.
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The Austrians Are Right
November 20, 2008 2008 Ron Paul 71:5
The Fed has now doled out close to $2 trillion in subsidized loans to troubled banks and other financial institutions. The Federal Reserve and Treasury constantly brag about the need for “transparency” and “oversight,” but it’s all just talk — they want none of it. They want secrecy while the privileged are rescued at the expense of the middle class.
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The Austrians Are Right
November 20, 2008 2008 Ron Paul 71:7
The Federal Reserve created our problem, yet it manages to gain even more power in the socialization of the entire financial system. The whole bailout process this past year was characterized by no oversight, no limits, no concerns, no understanding, and no common sense.
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The Austrians Are Right
November 20, 2008 2008 Ron Paul 71:12
Over and above this are those who understand that political power is controlled by those who control the money supply. Liberals and conservatives, Republicans and Democrats came to believe, as they were taught in our universities, that deficits don’t matter and that Federal Reserve accommodation by monetizing debt is legitimate and never harmful. The truth is otherwise. Central economic planning is always harmful. Inflating the money supply and purposely devaluing the dollar is always painful and dangerous.
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The Austrians Are Right
November 20, 2008 2008 Ron Paul 71:17
The choice we face is ominous: We either accept world-wide authoritarian government holding together a flawed system, OR we restore the principles of the Constitution, limit government power, restore commodity money without a Federal Reserve system, reject world government, and promote the cause of peace by protecting liberty equally for all persons. Freedom is the answer.
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UNTITLED
10 December 2008 2008 Ron Paul 72:5
The big thing is the big bailout, the $8 trillion, the unlimited amount the Federal Reserve has invested and what we’ve been doing for the past 6 months. We are on the road to nationalization. In many ways, we’re in the midst of nationalization without a whimper.
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UNTITLED
10 December 2008 2008 Ron Paul 73:4
The Federal Reserve has literally created over $2 trillion here in the last several months, at least in obligations, and that is outside the realm of the Congress. We don’t even audit the Federal Reserve. They create this money, and when the Fed Chairman comes before our committee and we ask, well, where did you dispose of this $2 trillion that you have created recently, he says well, it is not your business. That is not necessary. Under the law, he doesn’t even have to tell us.
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UNTITLED
10 December 2008 2008 Ron Paul 73:6
We are dealing with only finding victims. We cannot get rid of the debt, whether it is our national debt or whether it is corporate debt, but we have to put it on somebody else. We need to look at the cause of these bubbles, and it has to do with monetary policy and the Federal Reserve system.
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Bailout
January 14, 2009 2009 Ron Paul 8:2
There has been a lot of money involved and a lot of money spent. There have been appropriations that we’ve made here in the Congress as well as the trillions of dollars the Federal Reserve has used to try to bail out the financial industry, and nothing seems to be working.
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Bailout
January 14, 2009 2009 Ron Paul 8:5
I do want to address the subject more specifically about moral hazard and why the system was so deeply flawed. That is, when a Federal Reserve system and a central bank create easy money and easy credit and they have interest rates lower than they should be, businesspeople do the wrong things. They make mistakes. It’s called malinvestments, and we’ve been doing it for a long time. It causes financial bubbles, and they have to be corrected.
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Bailout
January 14, 2009 2009 Ron Paul 8:6
Actually, the recession is therapy for all of the mistakes, but the mistakes come, basically, from a Federal Reserve system that’s causing too many people to make mistakes. It causes savers to make mistakes. Interest rates are lower than they should be, so they don’t save. In capitalism, capital comes from savings, but for decades now, capital has come from the printing press, and nobody has saved.
Federal Reserve
Bailout
January 14, 2009 2009 Ron Paul 8:7
That contributes to what we call “moral hazard” as well as the system of the Fannie Mae and Freddie Mac system. It always had a line of credit. It never had to use it, but the assumption was, if we ever got into any trouble, the Treasury would be there, and the Federal Reserve would back them up. That existed for a long time, causing specifically the housing bubble to develop.
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LIVING BENEATH OUR MEANS
January 21, 2009 2009 Ron Paul 10:5
Today’s middle class and poor are suffering and the elite are being bailed out, and all the while the Federal Reserve refuses to tell the Congress exactly who has benefitted by its largesse. The beneficial corrections that come with a recession, of debt liquidation and removing the malinvestment, are delayed by government bailouts. This strategy proved in the late 1930s to transform a recession into a Great Depression and will surely do so again.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:1
Mr. PAUL. Madam Speaker, I rise to introduce legislation to restore financial stability to America’s economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:2
From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial “boom” followed by a recession or depression when the Fed-created bubble bursts.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:4
Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of special interests and their own appetite for big government.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:5
Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:6
In fact, Congress’ constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation’s founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.
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FEDERAL RESERVE BOARD ABOLITION ACT
February 3, 2009 2009 Ron Paul 14:7
In conclusion, Madam Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans’ standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.
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FEDERAL RESERVE IS THE CULPRIT
February 25, 2009 2009 Ron Paul 17:1
Mr. PAUL. Mr. Speaker, the Federal Reserve is the culprit; it has delivered this crisis to us. The Federal Reserve’s low interest rate policy is a big mistake; it is not a panacea.
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FEDERAL RESERVE IS THE CULPRIT
February 25, 2009 2009 Ron Paul 17:6
The Congress, by conceding this authority, conveys extraordinary economic powers to the elite few. This is a power that has been abused throughout history. Only the Federal Reserve can inflate the currency, creating new money and credit out of thin area, in secrecy, without oversight or supervision.
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Humphrey-Hawkins Hearing Statement
February 25, 2009 2009 Ron Paul 18:2
We find ourselves mired in the deepest economic crisis to afflict this country since the Great Depression. Yet, despite the failure of all the interventionist efforts to date to do anything to improve the economy, each week seems to bring new proposals for yet more bailouts, more funding facilities, and more of the same discredited Keynesian ideas. There are still relatively few policymakers who understand the roots of the current crisis in the Federal Reserve’s monetary policy. No one in government is willing to take the blame, instead we transfer it onto others. We blame the crisis on greedy bankers and mortgage lenders, on the Chinese for being too thrifty and providing us with capital, or on consumers who aren’t spending as much as the government thinks they should.
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Humphrey-Hawkins Hearing Statement
February 25, 2009 2009 Ron Paul 18:4
When banking giants are reimbursed for their losses through redistribution of taxpayer money, what lesson do we expect them to learn? Can anyone in Washington say with a straight face that these banks will shape up their business practices when they are almost guaranteed billions of dollars in taxpayer funds? Even if this does provide a temporary lifeline, it only delays the inevitable collapse of a banking system built on an unsustainable model. Fractional-reserve banking is completely dependent on faith in the banks’ abilities to repay depositors, and when that ability is thrown into doubt, the house of cards comes crashing down. The Federal Reserve may be able to manage public confidence, but confidence only goes so far. When banks are required to hold a maximum of ten percent of their deposits on reserve, the system is fundamentally insolvent. Such a system cannot be propped up or bailed out, except at the cost of massive creation of money and credit, which would result in a hyperinflation that would completely destroy our economy.
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Humphrey-Hawkins Hearing Statement
February 25, 2009 2009 Ron Paul 18:6
If banks begin to lend their increased reserves, we will see the first steps towards hyperinflation. Now that the Fed has increased the monetary base, it finds itself under pressure to withdraw these funds at some point. The question, however, is when? If it withdraws too soon, banks’ balance sheets collapse, if too late, massive inflation will ensue. As in previous crises, the Fed’s inflationary actions leave it compelled to take action that will severely harm the economy through either deflation or hyperinflation. Had the Fed not begun interfering 18 months ago, we might have already seen a recovery in the economy by now. Bad debts would have been liquidated, inefficient firms sold off and their resources put to better use elsewhere. As it is, I believe any temporary uptick in economic indicators nowadays will likely be misinterpreted as economic recovery rather than the result of Federal Reserve credit creation. Until we learn the lesson that government intervention cannot heal the economy, and can only do harm, we will never stabilize the economy or get on the road to true recovery.
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The Federal Reserve Transparency Act
February 26, 2009 2009 Ron Paul 20:1
Mr. PAUL. Madam Speaker, I rise to introduce the Federal Reserve Transparency Act. Throughout its nearly 100-year history, the Federal Reserve has presided over the near- complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? Only big-spending politicians and politically favored bankers benefit from inflation.
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The Federal Reserve Transparency Act
February 26, 2009 2009 Ron Paul 20:2
Serious discussion of proposals to oversee the Federal Reserve is long overdue. I have been a longtime proponent of more effective oversight and auditing of the Fed, but I was far from the first Congressman to advocate these types of proposals. Esteemed former members of the Banking Committee such as Chairmen Wright Patman and Henry B. Gonzales were outspoken critics of the Fed and its lack of transparency.
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The Federal Reserve Transparency Act
February 26, 2009 2009 Ron Paul 20:3
Since its inception, the Federal Reserve has always operated in the shadows, without sufficient scrutiny or oversight of its operations. While the conventional excuse is that this is intended to reduce the Fed’s susceptibility to political pressures, the reality is that the Fed acts as a foil for the government. Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests.
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The Federal Reserve Transparency Act
February 26, 2009 2009 Ron Paul 20:4
The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight? Particularly when hundreds of billions of dollars of currency swaps have been announced and implemented, the Fed’s negotiations with the European Central Bank, the Bank of International Settlements, and other institutions should face increased scrutiny, most especially because of their significant effect on foreign policy. If the State Department were able to do this, it would be characterized as a rogue agency and brought to heel, and if a private individual did this he might face prosecution under the Logan Act, yet the Fed avoids both fates.
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The Federal Reserve Transparency Act
February 26, 2009 2009 Ron Paul 20:6
The Federal Reserve Transparency Act would eliminate restrictions on GAO audits of the Federal Reserve and open Fed operations to enhanced scrutiny. We hear officials constantly lauding the benefits of transparency and especially bemoaning the opacity of the Fed, its monetary policy, and its funding facilities. By opening all Fed operations to a GAO audit and calling for such an audit to be completed by the end of 2010, the Federal Reserve Transparency Act would achieve much- needed transparency of the Federal Reserve. I urge my colleagues to support this bill.
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THE END IS NOT NEAR
March 4, 2009 2009 Ron Paul 21:10
This crisis demands that we quickly come to our senses and reject the foreign policy of interventionism. Neither credit coming from a Federal Reserve computer nor dollars coming from a printing press can bail us out of this mess. Only the rule of law, commodity money and liberty can do that.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:11
Ultimately, where we really need some supervision and some earmarks are the trillions of dollars spent by the Federal Reserve. They get to create their money out of thin air, and spend it. They have no responsibility to tell us anything. Under the law, they are excluded from telling us where and what they do.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:12
So, we neglect telling the Treasury how to spend TARP money, and then we complain about how they do it. But just think literally; the Treasury is miniscule compared to what the Federal Reserve does.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:13
The Treasury gets hundreds of billions, which is huge, of course, and then we neglect to talk about the Federal Reserve, where they are creating money out of thin air, and supporting all their friends and taking care of certain banks and certain corporations. This, to me, has to be addressed.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:14
I have introduced a bill, it’s called H.R. 1207, and this would remove the restriction on us to find out what the Federal Reserve is doing. Today, the Federal Reserve under the law is not required to tell us anything. So all my bill does is remove this restriction and say, Look, Federal Reserve, you have a lot of power. You have too much power. You’re spending a lot of money. You’re taking care of people that we have no idea what you’re doing. We, in the Congress, have a responsibility to know exactly what you’re doing.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:15
This bill, H.R. 1207, will allow us for once and for all to have some supervision of the Federal Reserve. They are exempt from telling us anything, and they have stiffed us already. There have been lawsuits filed over the Freedom of Information Act. Believe me, they are not going to work, because the law protects the Federal Reserve.
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EARMARKS
March 10, 2009 2009 Ron Paul 24:16
The Constitution doesn’t protect the Federal Reserve. The Constitution protects the people to know exactly what is going on. We should enforce the Constitution. We should not enforce these laws that protect a secret bank that gets to create this money out of thin air.
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Blame Congress For Results
March 19, 2009 2009 Ron Paul 34:3
Yesterday, for instance, the Federal Reserve met and they came out and announced that they would create new money to the tune of $1.25 trillion. The dollar promptly went down 3 percent, and today it went down another 1.5 percent. And today on emergency legislation, we’re going to deal with $165 million worth of bonuses, which obviously should have never been given. But who’s responsible for this? It’s the Congress and the President, who signed this.
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Blame Congress For Results
March 19, 2009 2009 Ron Paul 34:8
So it’s about time we have an open book about the Federal Reserve and solve some of these problems.
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Blame Congress For Bonuses
March 19, 2009 2009 Ron Paul 35:4
The real outrage, I think, is the lack of monitoring of what we do; we give out money, we have no strings attached, we give out hundreds of billions of dollars, and we totally ignore what the Federal Reserve does by issuing literally trillions of dollars. And yet, this is the emergency legislation.
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Federal Reserve Monetizes Debt
April 1, 2009 2009 Ron Paul 41:12
Now, if an individual or a company goes into debt, it can be liquidated in the old-fashioned way of bankruptcies. Countries don’t go bankrupt. What they do is they default on a debt. That doesn’t mean they won’t pay it. They pay it off in bad money. And literally, that is the purpose of the Federal Reserve right now is to lower the real debt. So if you destroy 50 percent of the value of the dollar in the next year or two, the real debt has gone down 50 percent.
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Federal Reserve Monetizes Debt
April 1, 2009 2009 Ron Paul 41:13
Literally, the Federal Reserve board is praying for, encouraging inflation to lower the real debt because it can’t be sustained.
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TRIBUTE TO BURT BLUMERT
April 2, 2009 2009 Ron Paul 49:2
As the founder and manager of Camino Coins in Burlingame, CA, Burt was one of the nation’s leading dealers in gold and silver coins. A student of Ludwig von Mises and the Austrian school of economics, Burt understood the important role precious metals played in protecting ordinary citizens from the damage wrought by fiat money and inflation. Thus, he regarded his work as a coin dealer not just as a business, but as an opportunity to help people by providing with some protection from the Federal Reserve’s inflation tax.
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MISTAKES: JUST A FEW!
June 3, 2009 2009 Ron Paul 63:4
A massive single-year debt increase of $2 trillion and a $9 trillion stimulus by Congress and the Federal Reserve verges on madness.
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Statement at Financial Services Committee Hearing
July 21, 2009 2009 Ron Paul 82:1
The Federal Reserve in collaboration with the giant banks has created the greatest financial crisis the world has ever seen. The foolish notion that unlimited amounts of money and credit, created out of thin air, can provide sustained economic growth has delivered this crisis to us. Instead of economic growth and stable prices it has given us a system of government and finance that now threatens the world financial and political institutions.
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Statement at Financial Services Committee Hearing
July 21, 2009 2009 Ron Paul 82:3
Expanding debt when it was a principal cause of the crisis is foolhardy. Excessive government and private debt is a consequence of a loose Federal Reserve monetary policy. Once a debt crisis hits, the solution must be paying it off or liquidating it. We are doing neither. Net US debt is now 372% of GDP. In the crisis of the 1930s it peaked at 301%. Household debt services requires 14% of the disposable income – an historic high. Between 2000 and 2007 credit debt expanded five times as fast as gross domestic product.
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THE BIG GUNS HAVE LINED UP AGAINST H.R. 1207
July 30, 2009 2009 Ron Paul 88:1
Mr. PAUL. Mr. Speaker, the big guns have lined up against H.R. 1207, the bill to audit the Federal Reserve. What is it that they are so concerned about? What information are they hiding from the American people? The screed is: “Transparency is okay – except for those things they don’t want to be transparent.”
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THE BIG GUNS HAVE LINED UP AGAINST H.R. 1207
July 30, 2009 2009 Ron Paul 88:2
Federal Reserve Chairman Ben Bernanke argues that H.R. 1207, the legislation to audit the Federal Reserve, would politicize monetary policy. He claims that monetary policy must remain “independent,” that is, secret. He ignores history, because chairmen of the Federal Reserve in the past, especially when up for reappointment, do their best to accommodate the President with politically driven low interest rates and a bubble economy.
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THE BIG GUNS HAVE LINED UP AGAINST H.R. 1207
July 30, 2009 2009 Ron Paul 88:3
Former Federal Reserve Board Chairman Arthur Burns, when asked about all the inflation he brought about in 1971, before Nixon’s re-election, said that the Fed has to do what the President wants it to do, or it would “lose its independence.” That about tells you everything. Not by accident, Chairman Burns strongly supported Nixon’s program of wage and price controls, the same year; but I guess that’s not political. Is not making secret deals with the likes of Goldman Sachs, international financial institutions, foreign governments and foreign central banks, politicizing monetary policy? Bernanke argues that the knowledge that their discussions and decisions will one day be scrutinized will compromise the freedom of the Open Market Committee to pursue sound policy. If it is sound and honest, and serves no special interest, what’s the problem?
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THE BIG GUNS HAVE LINED UP AGAINST H.R. 1207
July 30, 2009 2009 Ron Paul 88:5
Fed sychophants argue that an audit would destroy the financial market’s faith in the Fed. They say this in the midst of the greatest financial crisis in history, brought on by none other than the Federal Reserve. In fact, Chairman Bernanke stated on November 14, 2007, that “a considerable amount of evidence indicates that central bank transparency increases the effectiveness of monetary policy and enhances economic and financial performance.”
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THE BIG GUNS HAVE LINED UP AGAINST H.R. 1207
July 30, 2009 2009 Ron Paul 88:7
Fed supporters claim that they want to protect the public’s interest with their secrecy. But the banks and Wall Street are the opponents of 1207, and the people are for it. Just who best represents the “public’s” interest? The real question is, why are Wall Street and the Feds so hysterically opposed to 1207? Just what information are they so anxious to keep secret? Only an audit of the Federal Reserve will answer these questions.
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H.R. 3269
July 31, 2009 2009 Ron Paul 89:5
In order to understand the reasons behind excessive executive compensation, we need to take a look at the root causes. The salaries and bonuses raising the most ire are those from the financial sector, the sector which directly benefits from the Federal Reserve’s loose monetary policy. Loose monetary policy leads to speculative bubbles which drive up stock prices and enrich executives who cash in their stock options. It makes debt cheaper, which encourages reckless business expansion. And it shuttles money from industries that produce valuable products and services to industries that are favored by the federal government. H.R. 3269 is a well-intended but misguided piece of legislation. Until we strike at the root of the problem, we will never get our financial system back on a firm footing.
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:1
Mr. PAUL. Mr. Speaker, Federal Reserve Chairman Ben Bernanke does not want us to know any the details of the Fed’s secret operations. This position is not surprising and has been typical of all central bank chairmen. Bernanke’s stated goal is “to design a system of financial oversight that will provide a robust framework for preventing future crises.”
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:2
During its 96 years of existence, the Federal Reserve has played havoc with our economy and brought great suffering to millions through unemployment and price escalation. And it has achieved what only a central bank can: A steady depreciation of our currency. Today’s dollar is now worth 4 cents, compared to the dollar entrusted to the Federal Reserve in 1913. Ninety-six years should have been plenty of time for the Fed to come up with a plan for preventing economic crises.
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:3
Since the Fed is the source of all economic downturns, it’s impossible for any central banker to regulate in such a manner to prevent the problems that are predictable consequences of his own monetary management. The Federal Reserve fixes interest rates at levels inevitably lower than those demanded by the market. This manipulation is a form of price control through credit expansion, and is the ultimate cause of business cycles and so many of our economic problems, generating the mal- investment, excessive debt, stock, bond, commodity, and housing bubbles.
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:4
The Federal Reserve’s monetary inflation, indeed, does push the CPI upward, but concentrating on the government’s reports of the CPI and the PPI is nothing more than the distraction from the other harm done by the Federal Reserve’s effort at central economic planning through secret monetary policy operations. Real inflation, the expansion of our money supply, is greatly undercounted by these indices. In response to our latest financial crisis, the Federal Reserve turned on its printing press and literally doubled the monetary base. This staggering creation of dollars has yet to be reflected in many consumer prices, but will ultimately hit the middle class and poor with a cruel devaluation of their savings and real earnings.
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:7
What he does not recognize – nor does he want to admit – is that he is talking about symptoms while ignoring the source of the crisis: the Federal Reserve itself. More regulations will never compensate for all the distortion and excesses caused by monetary inflation and artificially low interest rates. Regulation distracts from the real cause while further interfering with the market forces, thus guaranteeing that the recession will become much deeper and prolonged.
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TRANSPARENCY AT THE FEDERAL RESERVE
December 1, 2009 2009 Ron Paul 100:10
This belief is a dream that one day will become a nightmare for all Americans unless we come to our senses, stop our wild spending, runaway deficits, printing press money, massive bureaucratic regulations, and our unnecessary world empire. A crucial step towards fixing these problems will be transparency of the Federal Reserve.
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INTRODUCING THE FREE COMPETITION IN CURRENCY ACT
December 9, 2009 2009 Ron Paul 102:6
The first step consists of eliminating legal tender laws. Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of U.S. Code, 31 U.S.C. 5103, that purports to establish U.S. coins and currency, including Federal Reserve notes, as legal tender.
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INTRODUCING THE FREE COMPETITION IN CURRENCY ACT
December 9, 2009 2009 Ron Paul 102:13
Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many States. Imagine having to pay sales tax at the bank every time you change a $10 bill for a roll of quarters to do laundry. Inflation is a pernicious tax on the value of money, but even the official numbers, which are massaged downwards, are only on the order of 4 percent per year. Sales taxes in many states can take away 8 percent or more on every single transaction in which consumers wish to convert their Federal Reserve Notes into gold or silver.
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- Congress has finished for the year, but fast-track is not dead
17 November 1997 Texas Straight Talk 17 November 1997 verse 11 ... Cached
Second, the fast-track backers claimed to be the defenders of free-trade, yet they have no history of ever promoting free market economics and sound money. Instead they prefer to manage a welfare state and use the mechanisms of the Export-Import Bank, the World Bank, foreign aid, and the federal reserve system to benefit their corporate friends.
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The problem is the currency
21 September 1998 Texas Straight Talk 21 September 1998 verse 11 ... Cached
What can we expect from our Federal Reserve? Just as difficult as it is for an addict to cut back on drugs, economic planners refuse to cut back the credit creation to which they have become addicted. Long life may be dependent on sound medical advice and drug abstinence, but feeling good on the short run drives the addict. Likewise, an economy feels good by perpetuating for as long as possible the easy credit that brought good times, while the long life of the currency, the economy and the political system gets little concern.
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Economic crisis looms
19 October 1998 Texas Straight Talk 19 October 1998 verse 14 ... Cached
First, the Federal Reserve should be denied the power to fix interest rates and buy government debt. It should not be a central economic planner through manipulation of money and credit.
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Economic crisis looms
19 October 1998 Texas Straight Talk 19 October 1998 verse 16 ... Cached
Third, we must abandon the tradition of bailing out bad debtors, foreign and domestic. No International Monetary Fund and related institution funding to prop up bankrupt countries, and no Federal Reserve-orchestrated bailouts such as Long Term Capital Management LP. Liquidation of bad debt and investments must be permitted.
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A New Pandora's Box
25 January 1999 Texas Straight Talk 25 January 1999 verse 14 ... Cached
While Federal Reserve chairman Alan Greenspan and I are often at odds on issues of monetary policy, he perhaps best described the president's plan. "Let me just say it's not so much a trade-off of benefits versus costs. I'm frankly just hard-pressed to find any benefits there are in doing it."
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Orwellian rules face major opposition
01 February 1999 Texas Straight Talk 01 February 1999 verse 6 ... Cached
Almost three months ago I first reported on the proposed regulations brought forward by the Federal Reserve, the FDIC and other regulatory agencies. These regs would turn bank tellers from reluctant information-gathers to unwilling investigators for the federal government's ongoing War-on-Everything -- which obviously includes the privacy of ordinary Americans.
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Victory should be call to action
08 March 1999 Texas Straight Talk 08 March 1999 verse 7 ... Cached
More than 140,000 people wrote in opposition to the Federal Deposit Insurance Corporation, the Federal Reserve and the other agencies promulgating these regulations. Those same agencies -- with no small degree of bewilderment -- recorded less than 100 comments in support of the massive privacy grab.
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This Year's Successes
22 November 1999 Texas Straight Talk 22 November 1999 verse 5 ... Cached
Early this year we focused much attention on defeating the proposed "Know Your Customer" federal banking regulation. This regulation proposed by the Federal Reserve and others would have given banks a broad mandate to spy on their customers and report any unusual transactions.
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Greenspan Nominated to a Fourth Term
17 January 2000 Texas Straight Talk 17 January 2000 verse 4 ... Cached
President Clinton's nomination of Alan Greenspan to a fourth term as Federal Reserve Board Chairman has been met with nearly unanimous praise. From Congressional leaders to Wall Street gurus, the announcement brought a sigh of relief that good times will continue. The only reservation I noticed was written by economist Mark Weisbrot, who worried that Greenspan might not inflate the currency fast enough. Otherwise, everyone seemed delighted with the nomination.
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Greenspan Nominated to a Fourth Term
17 January 2000 Texas Straight Talk 17 January 2000 verse 8 ... Cached
Greenspan has already supervised one serious recession in the early 1990s. No matter how astute a chairman of the Federal Reserve Board is, it's impossible to avoid recessions when managing a fiat monetary system. Alan Greenspan has been quite generous when it comes to creating new money. Since 1987 when Greenspan took over, high-powered money, as measured by the monetary base, has increased by 138%. This has resulted in an increase of nearly $3 trillion of bank deposits as measured by M3. This new money creation keeps interest rates lower than they otherwise would be, making the banks and Wall Street happy. It also pleases the spendthrift politicians who during Greenspan's term have increased the national debt by $32 trillion. Almost the entire increase in the national debt since 1987 has been monetized or paid for by Greenspan printing new money.
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Greenspan Nominated to a Fourth Term
17 January 2000 Texas Straight Talk 17 January 2000 verse 9 ... Cached
Of course, any of us would "thrive" if we could increase our wealth at that rate with borrowing and counterfeiting - but for us it's illegal. For now, foreigners' willingness to soak up our inflated dollars, while selling us goods at discount, makes us feel wealthier. But that will eventually end with higher interest rates, a weak dollar and CPI type price inflation. When this takes place, any increase in Federal Reserve credit will only accelerate the painful correction.
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Greenspan Nominated to a Fourth Term
17 January 2000 Texas Straight Talk 17 January 2000 verse 12 ... Cached
The Federal Reserve will always want to avert a collapse of the stock market, just as it did publicly with Long Term Capital Management. But it can only do that for a limited period of time. The markets will eventually rule. They always do.
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Greenspan Nominated to a Fourth Term
17 January 2000 Texas Straight Talk 17 January 2000 verse 14 ... Cached
Alan Greenspan was at one time a free market adherent and gold standard advocate. Read what he had to say about the Federal Reserve Board policy of the 1920s and the subsequent depression. The experts in the 20s had also declared a New Era economic growth without price inflation resulting from technological advances and wise monetary management. Greenspan explains: "The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late. By 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a constant demoralizing of business confidence." (Gold and Economic Freedom, 1966)
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Spending, Tax Cuts, or Debt Reduction?
25 September 2000 Texas Straight Talk 25 September 2000 verse 6 ... Cached
First and foremost, we cannot forget that our nation remains nearly $6 trillion in debt. This debt is the result of one very simple but enormous problem: over the years, Congress has spent more than the Treasury has collected in taxes. Note that Congress, rather than any particular administration, is responsible for creating this debt. Congress alone determines how much is spent when it passes appropriations bills each year. When Congress spends more than it has, it must (like any family or business) borrow money. Eventually we all pay for this fiscal irresponsibility, as more and more of the government's annual budget is spent on interest payments. Even worse, this debt has caused the Federal Reserve to authorize the printing of more and more money during past decades, creating price inflation and making your dollars worth less.
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"Privatization" of Social Security Poses Risks
02 October 2000 Texas Straight Talk 02 October 2000 verse 8 ... Cached
However, I believe government-managed investment of Social Security funds poses undue risks for our nation's seniors. Although the stock market has done well in recent years, market investments never are completely safe (especially with the Federal Reserve's risky inflationary policies). Our nation's seniors could lose their benefits if the U.S. stock market (or markets worldwide) experience a severe downturn. Remember that Social Security payments were promised to our seniors, and they paid for them during their working lives. Congress cannot risk breaking the Social Security promise, because it cannot risk the well being of millions of our nation's seniors.
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Economic Woes and the Federal Reserve
19 March 2001 Texas Straight Talk 19 March 2001 verse 2 ... Cached
Economic Woes and the Federal Reserve
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Economic Woes and the Federal Reserve
19 March 2001 Texas Straight Talk 19 March 2001 verse 7 ... Cached
The Federal Reserve did two things to artificially expand the economy over the last decade. First, it relentlessly lowered interest rates whenever growth slowed. Interest rates should be set by the free market, with the availability of capital (i.e. savings) determining the cost of borrowing money. In a healthy market economy, more saving equals lower interest rates. When savings rates are low, capital dries up and the cost of borrowing increases. When interest rates are set by the market, individuals and businesses make good spending decisions, because they pay an accurate interest rate for their debts. However, when the Fed set rates artificially low, the cost of borrowing becomes cheap. Individuals incur greater amounts of debt (evidenced by the record number of personal bankruptcies), while businesses overextend themselves and grow without real gains in productivity. The bubble bursts quickly once the credit dries up and the bills cannot be paid.
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The Fed Cannot Create Prosperity
03 September 2001 Texas Straight Talk 03 September 2001 verse 3 ... Cached
Last week Federal Reserve chairman Alan Greenspan discussed the state of the US economy during a conference held in Wyoming. He was quite candid in his admission that the economic outlook remains gloomy, especially given the sobering numbers recently released in the media. Economic growth, measured by GDP, has fallen to .2%, the lowest in 8 years- meaning the economy is nearly in a recession. The Dow and Nasdaq averages suffered losses throughout August. Consumer spending, supposedly the one bright spot in the outlook, is also wavering. American families undoubtedly know first-hand that the job market is very shaky, and it was only a matter of time until purchases of new houses, cars, and retail goods declined. A tumble in the real estate markets may be the last straw that sends the economy into a tailspin.
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Enron, Bankruptcy, and Easy Credit
17 December 2001 Texas Straight Talk 17 December 2001 verse 7 ... Cached
Few in Congress seem to understand how the Federal Reserve system artificially inflates stock prices and causes financial bubbles. Yet what other explanation can there be when a company goes from a market value of more than $75 billion to virtually nothing in just a few months? The obvious truth is that Enron was never really worth anything near $75 billion, but the media focuses only on the possibility of deceptive practices by management, ignoring the primary cause of stock overvaluations: Fed expansion of money and credit.
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Optimism or Pessimism for the Future of Liberty?
11 February 2002 Texas Straight Talk 11 February 2002 verse 7 ... Cached
The economic ramifications of our war on terrorism are also quite serious. Although the recession certainly cannot be blamed solely on the September 11th attacks, the huge increases in federal spending and the effects of all the new regulations cannot help the recovery. When one adds up the domestic costs, the military costs, and the costs of new regulations, it is certain that deficits will grow significantly. The Federal Reserve will remain under great pressure to continue its dangerous monetary inflation by printing dollars and expanding credit. This policy will result in higher rather than lower interest rates, a weak dollar, and rising prices. The danger of our economy spinning out of control cannot be dismissed.
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The Truth about Government Debt
11 March 2002 Texas Straight Talk 11 March 2002 verse 6 ... Cached
Federal Reserve chairman Greenspan recently endorsed a political trick to make the debt seem smaller simply by redefining those IOUs. The current law treats certain government obligations such as Social Security payments and veteran pensions as debts, meaning they must be included within the permitted debt ceiling. Of course they are debts, just like any other bill that will have to be paid in the future. Greenspan would have us redefine these obligations as "intergovernment accounts," which magically changes them from debts to "accrued liabilities." This semantic shift would free up lots of room under the debt ceiling for more borrowing. Congress could even use this approach to lower the ceiling and claim a victory for fiscal responsibility while still borrowing more! The reality, of course, is that those old debts will still exist, but we won't have to think about them for a few more years.
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Predictions for an Unwritten Future
29 April 2002 Texas Straight Talk 29 April 2002 verse 20 ... Cached
Inflationary Federal Reserve policies will accelerate, with massive credit creation worsening the dollar crisis. Gold will be seen as an alternative to paper money as it returns to its historic monetary role.
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Gold, Dollars, and Federal Reserve Mischief
10 June 2002 Texas Straight Talk 10 June 2002 verse 2 ... Cached
Gold, Dollars, and Federal Reserve Mischief
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Gold, Dollars, and Federal Reserve Mischief
10 June 2002 Texas Straight Talk 10 June 2002 verse 3 ... Cached
The mainstream financial press is now reporting the weakening of the U.S. dollar as measured against other currencies. This is unsettling news, as a relatively strong dollar was considered a hallmark of the economic boom of the 1990s- a boom that had far more to do with rapid credit expansion than real increases in productivity. The value of the dollar is down 18% this year compared to gold, which acts as a bellwether for the health of paper money. Gold prices historically rise when faith in paper currencies erodes, as investors seek the intrinsic value of gold to protect themselves from the arbitrary actions of the world’s central banks, including our own Federal Reserve.
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What About Government Accountability?
15 July 2002 Texas Straight Talk 15 July 2002 verse 6 ... Cached
So why is there not more outrage about government financial accountability? Of course we read the occasional news article lamenting $400 hammers at the Pentagon, but for the most part Congress gets a free pass on its own fiscal mismanagement. What we hear instead are calls for more regulation of our already heavily regulated mixed economy. Few suggest that federal interference in the market, especially Federal Reserve expansion of credit, creates the distortions that make it possible for corporations to become so overvalued in the first place. No one mentions that market forces ultimately cut through the distortions, causing the stock prices of fraudulent corporations to plummet. Instead we hear denunciations of the free market, and calls for more regulations from the very career politicians who are so completely unfit to manage anything.
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Government Policy and False Prosperity
27 January 2003 Texas Straight Talk 27 January 2003 verse 3 ... Cached
President Bush’s plan to end the double taxation of stock dividends, which I support, has been both lauded and denounced by the usual factions in Washington. Some of the President’s supporters, however, make the argument that a dividend tax cut will boost stock prices. While tax cuts are always good for the economy, it’s dangerous to promote the idea that government can create value in the financial markets. The collapse of stock prices in the last two years provides stark evidence that the Federal Reserve’s monetary policies of the 1990s did not create lasting prosperity, and we should understand that tax policy is no different. Centralized planning via tax policy is every bit as harmful as centralized planning in monetary policy.
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The 2003 Spending Orgy
03 March 2003 Texas Straight Talk 03 March 2003 verse 4 ... Cached
This practice is akin to getting a pay cut at work, then immediately buying a bigger house with a higher mortgage payment. No sensible individual would spend more when his income drops, but Congress operates without any shred of common sense or restraint at budget time. When members of Congress consider the various spending bills, the money- hundreds of billions of dollars- hardly seems real. What’s another 10 million dollars, they reason, for a pet project or favor to a lobbyist? Unlike a family facing the loss of income, Congress can raise taxes, borrow from foreign governments, or spend money newly printed by the Federal Reserve. Spending cuts are simply not considered. In fact, the federal budget grows every year without exception, and the previous year’s spending is treated only as a baseline. How long could your family survive if it spent five or ten percent more money each and every year?
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The 2003 Spending Orgy
03 March 2003 Texas Straight Talk 03 March 2003 verse 6 ... Cached
Meanwhile, Federal Reserve Chairman Greenspan recently suggested before a congressional committee that billions could be saved if the Treasury used lower inflation estimates. In other words, if we say inflation is lower than the Consumer Price Index and other barometers indicate, Congress won’t have to spend as much on cost-of-living adjustments for programs like Social Security. This amounts to lying to the American people about our monetary policies, by hiding the true rate of inflation caused by printing too many dollars and keeping interest rates artificially low.
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The Federal Debt Spiral
02 June 2003 Texas Straight Talk 02 June 2003 verse 6 ... Cached
The House managed to avoid a direct vote on raising the debt limit, instead burying a series of automatic debt increases in the terrible 2004 budget passed in April. The Senate, by contrast, at least held an up-or-down vote on the issue. Yet only one Republican Senator voted against saddling the American people with nearly another trillion dollars of debt. Both parties in Congress clearly now view the debt ceiling law as purely symbolic at best. Privately, most members probably view it as an unnecessary obstacle that should be eliminated, an opinion shared by Federal Reserve Chairman Greenspan.
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Declining Dollar, Declining Fortunes
23 June 2003 Texas Straight Talk 23 June 2003 verse 2 ... Cached
I recently had an opportunity to hear testimony by Federal Reserve Chairman Alan Greenspan at a hearing of the Joint Economic committee. I always relish the opportunity to question Mr. Greenspan at such hearings, because I disagree so strongly with Fed policies. Mr. Greenspan is a remarkable man, with a background as a devotee of novelist Ayn Rand, a supporter of the gold standard, and a fervent advocate of capitalism. So I’m at a loss to explain his metamorphosis into a believer in fiat currency and centralized economic planning.
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Declining Dollar, Declining Fortunes
23 June 2003 Texas Straight Talk 23 June 2003 verse 4 ... Cached
Mr. Greenspan declined to answer my question about the tumbling value of the dollar, citing a kind of gentlemen’s agreement between him and the Treasury department not to discuss dollar policy. This is preposterous, of course, because he is unquestionably the one man on earth most responsible for the value of the U.S. dollar. If a member of Congress cannot ask the Federal Reserve Chairman a straightforward question about dollar policy, how can we expect the American public to have the faintest idea about what the Fed really does? The answer is that very few Americans pay any attention to the Fed, which has successfully insulated itself as a “nonpolitical” entity.
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Declining Dollar, Declining Fortunes
23 June 2003 Texas Straight Talk 23 June 2003 verse 8 ... Cached
Mr. Greenspan certainly basked in the glow of admiration during the 1990s, when money and credit seemed limitless. He was deemed a genius by both the financial press and a general public eager to let the good times roll. Even today, with the nation mired in the inevitable bust following the Fed’s artificially-created boom, his detractors are few. In fact, President Bush plans to offer Mr. Greenspan another term as Fed chief. If our economic woes continue, however, the nation someday may regret not taking a closer look at the Federal Reserve and its manipulation of our financial fortunes.
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Federal Reserve Inflation Punishes Saving
21 July 2003 Texas Straight Talk 21 July 2003 verse 1 ... Cached
Federal Reserve Inflation Punishes Saving
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Federal Reserve Inflation Punishes Saving
21 July 2003 Texas Straight Talk 21 July 2003 verse 2 ... Cached
During testimony before the House Financial Services committee last week, Federal Reserve Chairman Alan Greenspan indicated that he is prepared to maintain low interest rates for “as long as it takes” to energize the listless economy. Unfortunately, this will only prolong the painful economic consequences of his own easy money, easy credit policies.
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Federal Reserve Inflation Punishes Saving
21 July 2003 Texas Straight Talk 21 July 2003 verse 9 ... Cached
Centralized planning is as disastrous in monetary affairs as in economic affairs. Just as Russian commissars could not determine prices or production levels in the absence of a free market, the Federal Reserve Board cannot determine the “proper” level for interest rates or the money supply. Our fiat currency and artificially low interest rates can only result in the deterioration of the U.S. dollar through inflation, which in the end will cause interest rates to rise no matter what the Fed says or does. Older Americans especially stand to suffer most from Mr. Greenspan’s easy money policies.
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The Tyranny of Paper Money
08 September 2003 Texas Straight Talk 08 September 2003 verse 2 ... Cached
In an article entitled “Gold and Economic Freedom,” Federal Reserve Chairman Alan Greenspan wrote that “The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom…The speculative imbalances had become overwhelming and unmanageable by the Fed… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.” The irony is that Mr. Greenspan’s words, written in 1966 to describe the era leading up to the Great Depression, could easily have been written in 2003 to describe the consequences of his own Fed policies during the 1990s.
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The Tyranny of Paper Money
08 September 2003 Texas Straight Talk 08 September 2003 verse 6 ... Cached
Most Americans are oblivious to the entire issue of monetary policy. We all deal with the consequences of our fiat money system, however. Every dollar created dilutes the value of existing dollars in circulation. Those individuals who worked hard, paid their taxes, and saved some money for a rainy day are hit the hardest. Their dollars depreciate in value while earning interest that is kept artificially low by the Federal Reserve easy-credit policy. The poor and those dependent on fixed incomes can’t keep up with the rising cost of living.
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The Tyranny of Paper Money
08 September 2003 Texas Straight Talk 08 September 2003 verse 7 ... Cached
We do hear some minor criticism directed toward the Federal Reserve, but the validity of the fiat system is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic- or so they believe.
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Lessons from the California Recall
13 October 2003 Texas Straight Talk 13 October 2003 verse 6 ... Cached
The crisis in Sacramento should serve as a cautionary tale for all Americans. Legislators in statehouses across the country and in Washington lack the political will to cut spending. They consistently spend more each year, without regard to revenues. If the process goes on too long, government becomes insolvent, unable to tax or borrow enough to satisfy its voracious appetite. It could happen in your state, and it is happening in Washington. It’s worse in DC, however, because Federal Reserve printing presses help our national politicians temporarily evade reality. If Congress continues to spend and print dollars at the pace of recent years, however, the devaluation of our currency will make all of us poorer for decades to come.
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Economic Woes Begin at Home
03 November 2003 Texas Straight Talk 03 November 2003 verse 2 ... Cached
Many in Washington are concerned about the loss of jobs in our nation’s manufacturing sector, but few seem to understand the role Federal Reserve currency manipulation plays in that loss. The economic problems currently facing this country are the direct result of a boom-and-bust cycle caused by inflationary Fed policies. An open debate on monetary issues therefore is long overdue.
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The Disappearing Dollar
08 December 2003 Texas Straight Talk 08 December 2003 verse 2 ... Cached
Those who follow financial markets may be familiar with the term “strong-dollar policy,” which is used by Bush administration officials and Federal Reserve Chairman Alan Greenspan himself. One might assume that such a policy entailed a course of action designed to strengthen the value of the U.S. dollar. However, if we judge Fed policy by Mr. Greenspan’s actions rather than his words, it appears we have a weak-dollar policy, a policy that erodes the value of your personal savings. The “strong-dollar policy” is nothing more than an empty political slogan.
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Greenspan's Black Magic
23 February 2004 Texas Straight Talk 23 February 2004 verse 2 ... Cached
In testimony before the House Financial Services Committee last week, Federal Reserve Chairman Alan Greenspan painted a rosy picture of the U.S. economy. In his eyes, the Fed’s aggressive expansion of the money supply and suppression of interest rates have strengthened the financial condition of American households and industries. If this is true, however, our nation’s "prosperity" is merely a temporary illusion based on smoke and mirrors. True wealth cannot be created simply by printing money; families and businesses cannot prosper by getting deeper in debt.
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Inflation- Alive and Well
08 March 2004 Texas Straight Talk 08 March 2004 verse 2 ... Cached
For years, the central planners at the Federal Reserve have assured us that inflation is dormant, if not dead. Federal Reserve Governor Ben Bernanke, during a recent speech in Washington, took pains to emphasize that inflation is “Under very good control.” But considering the relentless increase in the money supply engineered by the Fed over the last decade, one wonders whether Mr. Bernanke, Chairman Greenspan, and company protest too much.
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Inflation- Alive and Well
08 March 2004 Texas Straight Talk 08 March 2004 verse 4 ... Cached
Lew Rockwell, president of the Ludwig von Mises Institute, explains that Federal Reserve governors are incapable of telling us the truth about inflation for a very simple reason- they’re the ones causing it:
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Inflation- Alive and Well
08 March 2004 Texas Straight Talk 08 March 2004 verse 5 ... Cached
“The Federal Reserve always promises that it’s working to bring down inflation, but as Murray N. Rothbard shows in The Case Against the Fed, it never does. Since the Fed came into being, the dollar’s value has plummeted to less than a penny, and even at a 3% inflation rate, prices will tend to double every 25 years… The Fed wants to cover its crimes by appearing more successful at ‘battling inflation.’ What the Fed doesn’t want to talk about is the real cause of inflation: not greedy consumers, avaricious workers, or price-gouging corporations, but the central bank itself, and its power and practice of creating money out of thin air.”
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The Federal Reserve Debt Engine
26 April 2004 Texas Straight Talk 26 April 2004 verse 1 ... Cached
The Federal Reserve Debt Engine
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The Federal Reserve Debt Engine
26 April 2004 Texas Straight Talk 26 April 2004 verse 2 ... Cached
Federal Reserve Chairman Alan Greenspan testifies for both US House and Senate committees several times each year, and last week appeared before the Joint Economic committee on which I serve. These appearances by Mr. Greenspan always cause quite a stir on Capitol Hill. Often the stock markets react within hours of his pronouncements regarding the health of the economy and the future of interest rates.
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The Federal Reserve Debt Engine
26 April 2004 Texas Straight Talk 26 April 2004 verse 3 ... Cached
Congress and the financial press treat Mr. Greenspan as an all-knowing sage, seeking his wisdom on political and even social issues that have nothing to do with monetary policy. During last week’s hearing Mr. Greenspan was asked his opinion on topics such as Social Security, tax cuts, federal spending, corporate accounting rules, the congressional budget process, and even immigration. It seems bizarre that a credulous Congress and public are willing to accept the judgment of on unelected, virtually unaccountable central banker while knowing little or nothing about the Federal Reserve itself.
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Zero Down for the American Dream
21 June 2004 Texas Straight Talk 21 June 2004 verse 7 ... Cached
Despite the congressional rhetoric about helping the poor, federal housing policies often harm poor people by pushing them into houses they may not be ready to buy. Given the realities of insurance, property taxes, maintenance, and repairs, many low-income buyers lose their homes and destroy their credit ratings. Easy credit and low interest rates, courtesy of the Federal Reserve, have dramatically increased housing demand and artificially increased prices. Zero down payment schemes do the same thing by pushing renters into the housing market. This increased demand actually serves to price many poor Americans out of the housing market indefinitely.
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A Texas Platform for the GOP
30 August 2004 Texas Straight Talk 30 August 2004 verse 5 ... Cached
The Texas GOP platform also calls for a congressional audit of the Federal Reserve Bank, and demands full public access to the written minutes from Fed board meetings. Such an audit could at the very least serve to educate the American people about Fed inflation and the dangers of fiat currency. In Washington, the Federal Reserve system is virtually never discussed by Congress or the administration, despite its enormous impact on our economic well-being. Monetary policy is simply off the table as a political and policy matter for both national parties, but the Texas GOP recognizes the importance of sound money.
Federal Reserve
Raising the Debt Limit: A Disgrace
22 November 2004 Texas Straight Talk 22 November 2004 verse 7 ... Cached
Increasing the national debt sends a signal to investors that the government is not serious about reining in spending. This increases the risks that investors will be reluctant to buy government debt instruments. The effects on the American economy could be devastating. The only reason we have been able to endure such large deficits without skyrocketing interest rates is the willingness of foreign nations to buy the federal government’s debt instruments. However, the recent fall in the value of the dollar and rise in the price of gold indicate that investors may be unwilling to continue to prop up our debt-ridden economy. Furthermore, increasing the national debt will provide more incentive for foreign investors to stop buying federal debt at current interest rates. What will happen to our already fragile economy if the Federal Reserve must raise interest rates to levels unseen since the seventies to persuade foreigners to buy our debts?
Federal Reserve
Gold Exposes the Dollar
06 December 2004 Texas Straight Talk 06 December 2004 verse 9 ... Cached
The consequences of a rapidly declining dollar are not yet obvious to the American public. A trip to Europe costs more than it did a few years ago, but most Americans still don’t sense they are becoming poorer as the dollar falls. The long-term significance has not yet begun to sink in. However, our relative wealth as a nation is measured in dollars, and the steady erosion of the value of those dollars means we will all be poorer in the future. Federal Reserve chairman Alan Greenspan has relentlessly increased the money supply throughout his tenure, ostensibly to keep the economy expanding. But this artificial stimulation through cheap money comes with a price. When dollars are abundant, they are worth less. This is the reality facing Americans today, especially older Americans who rely on savings to finance their retirement years.
Federal Reserve
The Maestro Changes his Tune
21 February 2005 Texas Straight Talk 21 February 2005 verse 3 ... Cached
Nearly 40 years ago, Federal Reserve chair Alan Greenspan wrote persuasively in favor of a gold monetary standard in an essay entitled Gold and Economic Freedom. In that essay he neatly summarized the fundamental problem with fiat currency in a few short sentences: “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value… Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
Federal Reserve
The Maestro Changes his Tune
21 February 2005 Texas Straight Talk 21 February 2005 verse 5 ... Cached
I had an opportunity to ask him about his change of heart when he appeared before the House Financial Services committee last week. Although Mr. Greenspan is a master of evasion, he was surprisingly forthright in his responses to me. In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control. He even made the preposterous assertion that the Fed does not facilitate government expansion and deficit spending. In other words, he utterly repudiated the arguments he made 40 years ago. Yet this begs the question: If he was so wrong in the past, why should we listen to him now?
Federal Reserve
The Maestro Changes his Tune
21 February 2005 Texas Straight Talk 21 February 2005 verse 6 ... Cached
First, the Federal Reserve does not mimic a gold standard by any measure. The clearest example of this lies in our current account deficit, which our fiat currency encourages. Under a gold standard we would not have exchange rate distortions between the Chinese renminbi and the U.S. dollar, for example. True currency stability is impossible when fiat dollars can be produced at will and foreign lenders bankroll our deficits.
Federal Reserve
Tax Reform is a Shell Game
07 March 2005 Texas Straight Talk 07 March 2005 verse 4 ... Cached
One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s.
Federal Reserve
Deficits Make You Poorer
14 March 2005 Texas Straight Talk 14 March 2005 verse 8 ... Cached
Deficits mean more monetary inflation. Deficit spending necessitates the creation of more fiat dollars by the Federal Reserve to keep the government afloat. Congress knows it can always fall back on the Fed money machine, which of course encourages more deficit spending. It’s a vicious cycle that ultimately makes every dollar you have worth less.
Federal Reserve
Congress and the Federal Reserve Erode Your Dollars
23 May 2005 Texas Straight Talk 23 May 2005 verse 1 ... Cached
Congress and the Federal Reserve Erode Your Dollars
Federal Reserve
Congress and the Federal Reserve Erode Your Dollars
23 May 2005 Texas Straight Talk 23 May 2005 verse 4 ... Cached
This kind of bluster may serve political interests, but in reality we have nobody to blame but ourselves for the sharp decline in the US dollar. Congress and the Federal Reserve, not China, are the real culprits in the erosion of your personal savings and buying power. Congress relentlessly spends more than the Treasury collects in taxes each year, which means the US government must either borrow or print money to operate- both of which cause the value of the dollar to drop. When we borrow a billion dollars every day simply to run the government, and when the Federal Reserve increases the money supply by trillions of dollars in just 15 years, we hardly can expect our dollars to increase in value.
Federal Reserve
Congress and the Federal Reserve Erode Your Dollars
23 May 2005 Texas Straight Talk 23 May 2005 verse 6 ... Cached
The root of the problem is the Federal Reserve and our fiat monetary system itself. Since US dollars and other major currencies are not backed by gold, they have no inherent value. Their relative values are subject to political events, and fluctuate constantly in highly volatile currency markets. A fiat system means every dollar you have can be eroded into nothing by the actions of politicians and central bankers. In essence, paper currencies like the US dollar operate as articles of faith-- faith in the policies of the governments and central banks that issue them. When it comes to a government as deeply indebted as our own, that faith is sorely lacking among investors worldwide. Politicians often manage to fool voters and the media, but they rarely fool financial markets over time. The precipitous drop in the US dollar over the past few years is proof that investors around the globe are very concerned about American deficits and debt. When investors lack faith in the U.S. dollar, they really lack faith in the economic policies of the U.S. government.
Federal Reserve
Borrowing, Spending, Counterfeiting
22 August 2005 Texas Straight Talk 22 August 2005 verse 3 ... Cached
Few Americans truly understand how our Federal Reserve system enables Congress to spend far beyond its means, but the cycle of spending and printing money affects all of us. Simply put, the more money our Treasury prints, the less every dollar is worth. Our pure fiat money system, in place since the last vestiges of a gold standard were eliminated in the early 1970s, has reduced the value of your savings by 80%. Disregard the government’s Consumer Price Index, which substantially underreports price inflation. Monetary inflation is true inflation, and we only need to look at the cost of homes, cars, energy, and medical care to recognize that a dollar buys far less today than ever.
Federal Reserve
Borrowing, Spending, Counterfeiting
22 August 2005 Texas Straight Talk 22 August 2005 verse 6 ... Cached
Second, federal entitlement programs like Social Security and Medicare will not be “fixed” by politicians who are unwilling to make hard choices and admit mistakes. Demographic trends will force tax increases and greater deficit spending to maintain benefits for millions of older Americans who are dependent on the federal government. Faced with uncomfortable financial realities, Congress will seek to avoid the day of reckoning by the most expedient means available-- and the Federal Reserve undoubtedly will accommodate Washington by printing more dollars to pay the bills.
Federal Reserve
Borrowing, Spending, Counterfeiting
22 August 2005 Texas Straight Talk 22 August 2005 verse 10 ... Cached
The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch-- Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference-- that threatens to impoverish us by further destroying the value of our dollars.
Federal Reserve
Deficit Spending and Katrina
19 September 2005 Texas Straight Talk 19 September 2005 verse 7 ... Cached
Congress reacted to Katrina in the expected irresponsible manner. It immediately appropriated over $60 billion with little planning or debate. As with all rapid government expenditures, the amount of waste and mismanagement will be staggering. Congress knows it won’t need to raise taxes to pay the bill, because the Federal Reserve will accommodate reckless deficit spending.
Federal Reserve
Too Little, Too Late
14 November 2005 Texas Straight Talk 14 November 2005 verse 11 ... Cached
Congress is running out of options in its game of buy now, pay later. Foreign central banks are less interested in loaning us money. Treasury printing presses are worn out from the unprecedented increase in dollars ordered by the Federal Reserve Bank over the past 15 years. Taxpayers are tapped out. Where will the money for Big Government conservatism come from?
Federal Reserve
More of the Same at the Federal Reserve
28 November 2005 Texas Straight Talk 28 November 2005 verse 1 ... Cached
More of the Same at the Federal Reserve
Federal Reserve
More of the Same at the Federal Reserve
28 November 2005 Texas Straight Talk 28 November 2005 verse 3 ... Cached
Benjamin Bernanke, a former member of the Board of Governors at the Federal Reserve, is all but certain to be confirmed by the Senate as the next Chairman of that institution. He may find that the adulation given to Mr. Greenspan does not carry over into his tenure so easily, especially if he continues to help Congress run up huge deficits.
Federal Reserve
More of the Same at the Federal Reserve
28 November 2005 Texas Straight Talk 28 November 2005 verse 5 ... Cached
What I mean is that Mr. Bernanke appears to have embraced the idea that the Federal Reserve can create prosperity more than Mr. Greenspan ever did. Like his predecessor, Mr. Bernanke views our system of fiat currency as a tool for creating wealth out of thin air by producing more dollars, whether paper or electronic. But he seems to take things further than Greenspan by refusing even to consider the destructive consequences of monetary expansion. In fact, he earned dubious notoriety for this quote in a 2002 speech discussing the supposed threat of deflation in the American economy: "The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost."
Federal Reserve
More of the Same at the Federal Reserve
28 November 2005 Texas Straight Talk 28 November 2005 verse 9 ... Cached
I encourage all Americans to learn more about the Federal Reserve system and what it means for our economic future. An excellent resource is economist Murray Rothbard's book "What Has Government Done to our Money," which provides a brief yet devastating critique of centralized banking and the reckless government spending it enables. We need to demystify the Federal Reserve to understand the enormous political and economic impact of a system that essentially allows government to print money at will to pay its bills.
Federal Reserve
What do Rising Gold Prices Mean?
05 December 2005 Texas Straight Talk 05 December 2005 verse 7 ... Cached
President Nixon finally severed the last tenuous links between the dollar and gold in 1971. Since 1971, the Federal Reserve and U.S. Treasury have employed a pure fiat money system, meaning government can create money whenever it decrees simply by printing more dollars. The "value" of each newly minted dollar is determined by the faith of the public, the money supply, and the financial markets. In other words, fiat dollars have no intrinsic value.
Federal Reserve
The Real Washington Scandal
06 February 2006 Texas Straight Talk 06 February 2006 verse 5 ... Cached
New Federal Reserve Chairman Ben Bernanke faces a difficult dilemma. Our overseas creditors, particularly Asian central banks, already hold billions of U.S. dollars and are losing their appetite for lending us more money. They are wary of our enormous federal deficits and reckless economic policies. Ask yourself a simple question: would you loan the U.S. government money, given its spending habits? It's clear we can't go on borrowing $1.8 billion every day to finance the government!
Federal Reserve
The Real Washington Scandal
06 February 2006 Texas Straight Talk 06 February 2006 verse 7 ... Cached
For years the Federal Reserve Bank and Congress have maintained a cozy relationship. The Fed, by pumping more and more money into the economy, has allowed Congress to spend wildly beyond the amount collected each year by the Treasury. Congress loves deficit spending, because new programs are always politically popular and tax hikes are always unpopular. In return, Congress has maintained a completely hands-off approach toward the Fed system, allowing Mr. Greenspan free reign to "run the economy" with tremendous deference from both the public and the press.
Federal Reserve
How Government Debt Grows
13 March 2006 Texas Straight Talk 13 March 2006 verse 5 ... Cached
Former Federal Reserve Chairman Alan Greenspan made it easier for Congress to obscure the extent of federal debt. He endorsed a change in the law that redefined Social Security and veterans pensions. In reality those obligations are debts, just like any other bill that must be paid in the future. But Mr. Greenspan urged renaming these obligations “intergovernment accounts,” which magically changed them from debts to “accrued liabilities.” This semantic shift frees up lots of room under the debt ceiling for more borrowing.
Federal Reserve
Another "Emergency" Spending Bill
20 March 2006 Texas Straight Talk 20 March 2006 verse 9 ... Cached
The real emergency is in Washington, where Congress is spending and borrowing America into a perfect storm. As economist James Turk explains, the federal government now relies upon debt to finance 20% of its spending. Low interest rates during the 1990s and early 2000s kept interest payments on government debts- Treasury Bonds and Treasury Bills- somewhat manageable. During the same period, however, the Federal Reserve greatly increased the money supply, which has caught up to us in the form of price inflation. The Fed now must raise rates to combat this inflation, but higher interest rates will chill economic growth and slow tax revenue. To quote Mr. Turk, “The federal government faces a potentially toxic mix of constrained revenues, soaring expenditures, ballooning debt, and rising interest rates.”
Federal Reserve
The Perils of Economic Ignorance
27 March 2006 Texas Straight Talk 27 March 2006 verse 6 ... Cached
I certainly have seen firsthand a great deal of economic ignorance in Congress over the years. Few members pay any attention whatsoever to the Federal Reserve Bank, despite the tremendous impact Fed policy has on their constituents. Even many members of the banking and finance committees have little or no knowledge of monetary policy. Perhaps this is why so many in Congress seem to believe we can all become rich by printing new dollars, or that we can make 2+2=5 by taking money from some people and giving it to others.
Federal Reserve
Foreign Policy, Monetary Policy, and Gas Prices
08 May 2006 Texas Straight Talk 08 May 2006 verse 9 ... Cached
We also must understand the effect monetary policy has on gas prices. The price of gas, like the price of all things, goes up because of inflation. And inflation by definition is an increase in the money supply. The money supply is controlled by the Federal Reserve Bank, and responds to the deficits Congress creates. When deficits are excessive, as they are today, the Fed creates new dollars out of thin air to buy Treasury bills and keep interest rates artificially low. But when new money is created out of nothing, the money already in circulation loses value. Once this is recognized, prices rise-- some more rapidly than others. That’s what we see today with the cost of energy.
Federal Reserve
The Declining Dollar Erodes Personal Savings
15 May 2006 Texas Straight Talk 15 May 2006 verse 5 ... Cached
Remember, gold is static. Gold isn’t going up, the dollar is going down. And it’s going to continue until the American people demand an end to deficit spending by Congress and unrestrained creation of new dollars by the Federal Reserve and Treasury department.
Federal Reserve
The Declining Dollar Erodes Personal Savings
15 May 2006 Texas Straight Talk 15 May 2006 verse 7 ... Cached
As Mr. Mehring suggests, the Federal Reserve may have no choice but to raise interest rates to maintain foreign enthusiasm for our dollar. It’s a serious problem that new Fed Chair Benjamin Bernanke must address sooner or later: propping up the dollar with higher interest rates without killing the U.S. economy in the process.
Federal Reserve
Federal Reserve Policy Destroys the Value of Your Savings
10 July 2006 Texas Straight Talk 10 July 2006 verse 1 ... Cached
Federal Reserve Policy Destroys the Value of Your Savings
Federal Reserve
Federal Reserve Policy Destroys the Value of Your Savings
10 July 2006 Texas Straight Talk 10 July 2006 verse 3 ... Cached
For years officials at the Federal Reserve Bank, including Chairman Bernanke himself, have assured us that inflation is under control and not a problem-- even as the price of housing, energy, medical care, school tuition, gold, and other commodities skyrockets.
Federal Reserve
Federal Reserve Policy Destroys the Value of Your Savings
10 July 2006 Texas Straight Talk 10 July 2006 verse 5 ... Cached
When the Federal Reserve increases the supply of dollars in circulation, both paper and electronic, prices must rise eventually. What other result it possible? The supply of dollars has risen much faster than the supply of goods and services being chased by those dollars. Fed policy makers have more than doubled the money supply in less than ten years. While Treasury printing presses can print unlimited dollars, there are natural limits to economic growth. This flood of newly minted US currency can only increase consumer prices in the long term.
Federal Reserve
Federal Reserve Policy Destroys the Value of Your Savings
10 July 2006 Texas Straight Talk 10 July 2006 verse 8 ... Cached
Faced with uncomfortable financial realities, Congress will seek to avoid the day of reckoning by the most expedient means available-- and the Federal Reserve undoubtedly will accommodate Washington by printing more dollars to pay the bills. The Fed is the enabler for the spending addicts in Congress, who would rather spend new fiat money than face the political consequences of raising taxes or borrowing more abroad.
Federal Reserve
Federal Reserve Policy Destroys the Value of Your Savings
10 July 2006 Texas Straight Talk 10 July 2006 verse 9 ... Cached
The irony is that many of the Fed’s biggest cheerleaders are the same supposed capitalists who denounced centralized economic planning when practiced by the former Soviet Union. Large banks and Wall Street firms love the Fed’s easy money policy, because they profit at the front end from the resulting loan boom and artificially high equity prices. It’s the little guy who loses when the inflated dollars finally trickle down to him and erode his buying power. Someday Americans will understand that Federal Reserve bankers have no magic ability-- and certainly no legal or moral right-- to decide how much money should exist and what the cost of borrowing money should be.
Federal Reserve
What Congress Can Do About High Gas Prices
31 July 2006 Texas Straight Talk 31 July 2006 verse 7 ... Cached
Third: We must remember that prices of all things go up because of inflation. Inflation by definition is an increase in the money supply. The money supply is controlled by the Federal Reserve Bank, and responds to the deficits Congress creates. When deficits are excessive, as they are today, the Fed creates new dollars out of thin air to buy Treasury bills and keep interest rates artificially low. But when new money is created out of nothing, the money already in circulation loses value. Once this is recognized, prices rise-- some more rapidly than others. That’s what we see today with the cost of energy.
Federal Reserve
Deficit Spending and Social Security
09 October 2006 Texas Straight Talk 09 October 2006 verse 3 ... Cached
During a speech in Washington last week, Federal Reserve Chairman Ben Bernanke warned that the coming retirement of the Baby Boomer generation will place tremendous strains on the nation’s budget and economy. He stresses that Social Security and Medicare must be reformed sooner rather than later, because demographic trends make the current system unsustainable over time. In future decades there will be too many retirees and not enough younger taxpayers.
Federal Reserve
Monetary Inflation is the Problem
04 December 2006 Texas Straight Talk 04 December 2006 verse 4 ... Cached
This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply. Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic-- which means the value of every existing dollar goes down.
Federal Reserve
Monetary Inflation is the Problem
04 December 2006 Texas Straight Talk 04 December 2006 verse 5 ... Cached
Federal Reserve Chairman Ben Bernanke faces two basic ongoing choices: raise interest rates to prop up the dollar, but risk pushing the economy into a recession; or lower interest rates to stimulate the economy, but risk further declines in the dollar. This unfortunate dilemma is inherent with a fiat currency, however.
Federal Reserve
Monetary Inflation is the Problem
04 December 2006 Texas Straight Talk 04 December 2006 verse 6 ... Cached
Of course Mr. Bernanke inherited this tightrope act from his predecessor Alan Greenspan. The Federal Reserve did two things to artificially expand the economy during the Greenspan era. First, it relentlessly lowered interest rates whenever growth slowed. Interest rates should be set by the free market, with the availability of savings determining the cost of borrowing money. In a healthy market economy, more savings equals lower interest rates. When savings rates are low, capital dries up and the cost of borrowing increases.
Federal Reserve
The World's Reserve Currency
01 January 2007 Texas Straight Talk 01 January 2007 verse 4 ... Cached
This alone is not necessarily troubling, as the dollar remains the world’s most important reserve currency. About 65% of foreign central bank exchange reserves are still held in dollars, versus only about 25% in euros. And the European Central Bank faces the same inflationary pressures that our own Federal Reserve Bank Governors face, including a growing entitlement burden that threatens economic ruin as both societies age. European politicians want to spend money just as badly as American politicians, and undoubtedly will clamor to inflate-- and thus devalue-- the euro to fund their creaky social welfare systems.
Federal Reserve
The World's Reserve Currency
01 January 2007 Texas Straight Talk 01 January 2007 verse 8 ... Cached
At some point Americans must realize that Congress, and the Federal Reserve system that permits the creation of new money by fiat, are the real culprits in the erosion of your personal savings and buying power. Congress relentlessly spends more than the Treasury collects in taxes each year, which means the U.S. government must either borrow or print money to operate-- both of which cause the value of the dollar to drop. When we borrow a billion dollars every day simply to run the government, and when the Federal Reserve increases the money supply by trillions of dollars in just 15 years, we hardly can expect our dollars to increase in value.
Federal Reserve
Inflation and War Finance
29 January 2007 Texas Straight Talk 29 January 2007 verse 6 ... Cached
Congress and the Federal Reserve Bank have a cozy, unspoken arrangement that makes war easier to finance. Congress has an insatiable appetite for new spending, but raising taxes is politically unpopular. The Federal Reserve, however, is happy to accommodate deficit spending by creating new money through the Treasury Department. In exchange, Congress leaves the Fed alone to operate free of pesky oversight and free of political scrutiny. Monetary policy is utterly ignored in Washington, even though the Federal Reserve system is a creation of Congress.
Federal Reserve
Inflation and War Finance
29 January 2007 Texas Straight Talk 29 January 2007 verse 8 ... Cached
Economist Lawrence Parks has explained how the creation of the Federal Reserve Bank in 1913 made possible our involvement in World War I. Without the ability to create new money, the federal government never could have afforded the enormous mobilization of men and material. Prior to that, American wars were financed through taxes and borrowing, both of which have limits. But government printing presses, at least in theory, have no limits. That’s why the money supply has nearly tripled just since 1990.
Federal Reserve
Monetary Policy is Critically Important
19 February 2007 Texas Straight Talk 19 February 2007 verse 3 ... Cached
Federal Reserve Chairman Ben Bernanke testifies twice every year before the congressional Financial Services committee, and I look forward to these opportunities to raise questions about monetary policy. I believe monetary policy is critically important yet overlooked in Washington. Money is the lifeblood of any economy, and control over a nation's currency means control over its economic well being. Fed bankers quite literally determine the value of our money, by controlling the supply of dollars and establishing interest rates. Their actions can make you richer or poorer overnight, in terms of the value of your savings and the buying power of your paycheck. So I urge all Americans to educate themselves about monetary policy, and better understand how a small group of unelected individuals at the Federal Reserve and Treasury department wield tremendous power over our lives.
Federal Reserve
Monetary Policy is Critically Important
19 February 2007 Texas Straight Talk 19 February 2007 verse 6 ... Cached
Congress, although not by law, essentially has given up all its oversight responsibility over the Federal Reserve. There are no true audits, and Congress knows nothing of the conversations, plans, and actions taken in concert with other central banks. We get less and less information regarding the money supply each year, especially now that M3 is no longer reported.
Federal Reserve
Monetary Policy is Critically Important
19 February 2007 Texas Straight Talk 19 February 2007 verse 7 ... Cached
The role the Fed plays in the President's secretive Working Group on Financial Markets goes unnoticed by members of Congress. The Federal Reserve shows no willingness to inform Congress voluntarily about how often the Working Group meets, what actions it takes that affect the financial markets, or why it takes those actions.
Federal Reserve
Monetary Policy is Critically Important
19 February 2007 Texas Straight Talk 19 February 2007 verse 8 ... Cached
But these actions, directed by the Federal Reserve, alter the purchasing power of our money. And that purchasing power is always reduced. The dollar today is worth only four cents compared to the dollar in 1913, when the Federal Reserve started. This has profound consequences for our economy and our political stability. All paper currencies are vulnerable to collapse, and history is replete with examples of great suffering caused by such collapses, especially to a nation's poor and middle class. This leads to political turmoil.
Federal Reserve
Monetary Policy is Critically Important
19 February 2007 Texas Straight Talk 19 February 2007 verse 14 ... Cached
We need more transparency in how the Federal Reserve carries out monetary policy, and we need it soon.
Federal Reserve
Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 5 ... Cached
But capitalism is not to blame for the housing bubble, the Federal Reserve is. Specifically, Fed intervention in the economy-- through the manipulation of interest rates and the creation of money-- caused the artificial boom in mortgage lending.
Federal Reserve
Don't Blame the Market for Housing Bubble
19 March 2007 Texas Straight Talk 19 March 2007 verse 10 ... Cached
The Federal Reserve provides the mother’s milk for the booms and busts wrongly associated with a mythical “business cycle.” Imagine a Brinks truck driving down a busy street with the doors wide open, and money flying out everywhere, and you’ll have a pretty good analogy for Fed policies over the last two decades. Unless and until we get the Federal Reserve out of the business of creating money at will and setting interest rates, we will remain vulnerable to market bubbles and painful corrections. If housing prices plummet and millions of Americans find themselves owing more than their homes are worth, the blame lies squarely with Alan Greenspan and Ben Bernanke.
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 1 ... Cached
The Federal Reserve Monopoly over Money
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 3 ... Cached
Recently I had the opportunity to question Federal Reserve Chairman Ben Bernanke when he appeared before the congressional Joint Economic committee. The topic that morning was the state of the American economy, and many of my colleagues raised questions about how the Fed might better "regulate" things to ease fears of an economic downturn. The tenor of my colleagues' questions suggested that Mr. Bernanke's job is nothing less than to run the U.S. economy, like some kind of Soviet central planner.
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 4 ... Cached
Certainly it’s true that Mr. Bernanke can drastically affect the economy at the drop of a hat, simply by making decisions about the money supply and interest rates. But why do members of Congress assume this is good? Why do we accept without objection that a small group of people on the Federal Reserve Board wields so much power over our economic well-being? Is centralized, monopoly control over our money even compatible with a supposedly free-market economy?
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 5 ... Cached
Few Americans give much thought to the Federal Reserve System or monetary policy in general. But even as they strive to earn a living, and hopefully save or invest for the future, Congress and the Federal Reserve Bank are working insidiously against them. Day by day, every dollar you have is being devalued.
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 6 ... Cached
The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch-- Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference-- that threatens to impoverish us by further destroying the value of our dollars.
Federal Reserve
The Federal Reserve Monopoly over Money
09 April 2007 Texas Straight Talk 09 April 2007 verse 8 ... Cached
The financial press sometimes criticizes Federal Reserve policy, but the validity of the fiat system itself is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic- or so they believe.
Federal Reserve
High Risk Credit
20 August 2007 Texas Straight Talk 20 August 2007 verse 3 ... Cached
As markets went on a rollercoaster ride last week, our economy is coming close to a day of reckoning for loose credit policies being followed by the Federal Reserve Bank. Simply, foreign banks we have been relying on to buy our debt are waking up to the reality of much higher default rates than predicted, and many mortgage backed securities have been reduced to “junk” ratings. Wall Street fears the possibility of tightening credit and the tightening of America’s belts. Why, they say, “if Americans spend only what they can afford, think of the ripple effects throughout the economy!” This is the cry, as the call comes for the fed to cut rates and bail out companies in trouble.
Federal Reserve
The Money Has to Come From Somewhere
23 September 2007 Texas Straight Talk 23 September 2007 verse 2 ... Cached
After the current turmoil in the markets, I was hoping that new Federal Reserve Chairman Ben Bernanke would see the big picture and act judiciously. Instead he signaled, with an aggressive rate cut, that we can expect a continuation of the monetary policies that got us here to begin with. Alan Greenspan released his memoir this week explaining his policies and decisions in the wake of the irrational exuberance they fueled. His successor should see that it is now time for a change of policy that addresses the root of our troubles. But instead of seeing an inflation problem, the Federal Reserve sees a liquidity problem, which is a little like extinguishing a forest fire with gasoline. In the wake of the rate cut, the Dow jumped and brokers cheered. Behind the headlines, however, the dollar quietly fell and was abandoned by more of the world in favor of more solid stores of wealth.
Federal Reserve
Tax Reform Promises Treats, Delivers Tricks
04 November 2007 Texas Straight Talk 04 November 2007 verse 5 ... Cached
With the leadership in Congress calling for this massive tax hike, spending levels promising to absorb all that and then some (thanks to our ambitiously misguided foreign policy), as well as the Federal Reserve's again cheapening the dollar, American taxpayers are wondering where their purchasing power went. We are working harder than ever before, as our standard of living falls.
Federal Reserve
The Importance of Fiscal Responsibility
16 December 2007 Texas Straight Talk 16 December 2007 verse 6 ... Cached
The difference now is that our printing presses at the Federal Reserve are getting worn out as we have expanded our money supply to the breaking point with yet another rate cut this week. As the dollar falls, it is losing its reserve currency status as many countries are shifting to the Euro or the Chinese yuan or other currencies. The more that trend continues, the weaker we become on the world stage. Those foreign governments and entities that enabled us to spend so much for so long are wearing thin and cutting us off.
Federal Reserve
Legislative Forecast for 2008
13 January 2008 Texas Straight Talk 13 January 2008 verse 4 ... Cached
This leads me to my next forecast of more federal bailouts for the housing sector. Efforts by the Federal Reserve to stave off recession will have the net effect of only blowing the bubble bigger, making the crash that much more painful when it inevitably comes. The malinvestments caused by easy credit in the housing industry will be prolonged by more easy credit. New programs and laws will be enacted to prop up housing, all with a falling dollar, devalued by continued foreign interventions. The crisis in the housing market will spread and I’m afraid we are in for some rough economic times.
Federal Reserve
On Money, Inflation and Government
30 March 2008 Texas Straight Talk 30 March 2008 verse 6 ... Cached
The Federal Reserve, a quasi-government entity, should not be creating money or determining interest rates, as this causes malinvestment and excessive debt to accumulate. Centrally planned, government manipulated economies always fail eventually. The collapse of communism and the failure of socialism should have made this apparent. Even the most educated, well-intentioned central planners cannot plan the market better than the market itself. Those that understand economics best, understand this reality.
Federal Reserve
Bailing Out Banks
13 April 2008 Texas Straight Talk 13 April 2008 verse 2 ... Cached
There has been a lot of talk in the news recently about the Federal Reserve and the actions it has taken over the past few months. Many media pundits have been bending over backwards to praise the Fed for supposedly restoring stability to the market. This interpretation of the Fed's actions couldn't be further from the truth.
Federal Reserve
Bailing Out Banks
13 April 2008 Texas Straight Talk 13 April 2008 verse 3 ... Cached
The current market crisis began because of Federal Reserve monetary policy during the early 2000s in which the Fed lowered the interest rate to a below-market rate. The artificially low rates led to overinvestment in housing and other malinvestments. When the first indications of market trouble began back in August of 2007, instead of holding back and allowing bad decision-makers to suffer the consequences of their actions, the Federal Reserve took aggressive, inflationary action to ensure that large Wall Street firms would not lose money. It began by lowering the discount rates, the rates of interest charged to banks who borrow directly from the Fed, and lengthening the terms of such loans. This eliminated much of the stigma from discount window borrowing and enabled troubled banks to come to the Fed directly for funding, pay only a slightly higher interest rate but also secure these loans for a period longer than just overnight.
Federal Reserve
Bailing Out Banks
13 April 2008 Texas Straight Talk 13 April 2008 verse 7 ... Cached
Worst of all, the Treasury Department has recently proposed that the Federal Reserve, which was responsible for the housing bubble and subprime crisis in the first place, be rewarded for all its intervention by being turned into a super-regulator. The Treasury foresees the Fed as the guarantor of market stability, with oversight over any financial institution that could pose a threat to the financial system. Rewarding poor performing financial institutions is bad enough, but rewarding the institution that enabled the current economic crisis is unconscionable.
Federal Reserve
Big Government Responsible for Housing Bubble
11 May 2008 Texas Straight Talk 11 May 2008 verse 3 ... Cached
However, many in Washington fail to realize it was government intervention that brought on the current economic malaise in the first place. The Federal Reserve’s artificially low interest rates created the loose, easy credit that ignited a voracious appetite in the banks for borrowers. People made these lending and buying decisions based on market conditions that were wildly manipulated by government. But part of sound financial management should be recognizing untenable or falsified economic conditions and adjusting risk accordingly. Many banks failed to do that and are now looking to taxpayers to pick up the pieces. This is wrong-headed and unfair, but Congress is attempting to do it anyway.
Federal Reserve
Rising Energy Prices and the Falling Dollar
09 June 2008 Texas Straight Talk 09 June 2008 verse 3 ... Cached
Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System. The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool. When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars. They must invest this money quickly and aggressively before it loses value. This causes certain sectors to expand beyond what would naturally occur in the free market. Eventually the sector overheats and the bubble bursts. Overinvestment in dotcoms eventually led to a collapse of the NASDAQ. Next we had the housing bubble, and now we are seeing the price of oil being bid up in the creation of another new bubble. Investors are now looking to commodities like oil, for stability and growth as they pull capital out of real estate. This increased demand for investment vehicles related to oil contributes to driving up the price of the actual product.
Texas Straight Talk from 20 December 1996 to 23 June 2008 (573 editions) are included in this Concordance. Texas Straight Talk after 23 June 2008 is in blog form on Rep. Paul’s Congressional website and is not included in this Concordance.
Remember, not everything in the concordance is Ron Paul’s words. Some things he quoted, and he added some newspaper and magazine articles to the Congressional Record. Check the original speech to see.