|
|
|
central bank 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. central bank State Of The Republic 28 January 1998 1998 Ron Paul 2:74 But when push comes to shove, the markets always win out. Interest rates are less than one percent in Japan, but have not prompted borrowers to come forth nor bankers to lend. The proposed $25 billion injection by the Bank of Japan will not solve the problem either. Even central bankers cannot push on a string. central bank Don’t Bail Out Bankers 23 April 1998 1998 Ron Paul 38:4 Now, the Director of the IMF had an interesting proposal. He said this will not cost us anything because it is coming out of the Central Bank. central bank The Bubble 28 April 1998 1998 Ron Paul 39:14 A lot of foreign money has been used to buy our stocks, one of the consequences of computer-age financial technology and innovations. Our negative trade balance allows foreign governments to accumulate large amounts of our treasury debt. This serves to dampen the bad effect of our monetary inflation on domestic prices, while providing reserves for foreign central banks to further expand their own credit. central bank 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: central bank The Bubble 28 April 1998 1998 Ron Paul 39:37 The business cycle — the boom-bust cycle of history — has not been repealed. The psychological element of trust in the money, politicians, and central bankers can permit financial bubbles to last longer, but policies can vary as well as perceptions, both being unpredictable. central bank The Bubble 28 April 1998 1998 Ron Paul 39:38 CENTRAL BANKERS The goal of central bankers has always been to gain “benefit” from the inflation they create, while preventing deflation and prolonging the boom as long as possible — a formidable task indeed. The more sophisticated and successful the central bankers are as technicians, the larger the bubble they create. central bank The Bubble 28 April 1998 1998 Ron Paul 39:39 In recent years, central bankers have had greater “success” for several reasons. First, due to the age in which we live, internationalizing labor costs has been a great deal more convenient. It is much easier for companies to either shift labor from one country to another, or for the company itself to go to the area of the world that provides the cheapest labor. This has occurred with increased rapidity and ease over the past two decades. central bank The Bubble 28 April 1998 1998 Ron Paul 39:40 Central bankers have also become more sophisticated in the balancing act between inflation and deflation. They are great technicians and are quite capable of interpreting events and striking a balance between these two horrors. This does not cancel out the basic flaw of a fiat currency; central bankers cannot replace the marketplace for determining interest rates and the proper amount of credit the economy needs. central bank The Bubble 28 April 1998 1998 Ron Paul 39:41 Central bankers have also had the advantage of technological changes that increase productivity and also serve to keep down certain prices. It is true that we live in an information age, an age in which travel is done with ease and communication improvements are astounding. All of these events allow for a bigger bubble and a higher standards of living. Unfortunately this will not prove to be as sustainable as many hope. central bank The Bubble 28 April 1998 1998 Ron Paul 39:42 THE PRICE OF GOLD Another reason for the central bankers greater recent success is that they have been quite willing to cooperate with each other in propping up selected currency values and driving down others. They have cooperated vigorously in dumping or threatening to dump gold in order to keep the dollar price of gold in check. They are all very much aware that a soaring gold price would be a vote of no confidence for central-bank policy. central bank The Bubble 28 April 1998 1998 Ron Paul 39:44 Instead of making sure that policy is correct, central bankers are much more interested in seeing that the gold-price message reflects confidence in the paper money. Thus gold has remained in the doldrums despite significant rising prices for silver, platinum, and palladium. However, be assured that even central banks cannot “fix” the price of gold forever. They tried this in the 1960’s with the dumping of hundreds of millions of ounces of American gold in order to artificially prop up the dollar by keeping the gold price at $35/oz., but in August 1971 this effort was abandoned. central bank FDIC Problem 13 May 1998 1998 Ron Paul 51:3 Earlier, somebody quoted Hamilton as being opposed to an integration of commerce in banking. Well, of course, at that particular time in history we had the Jeffersonians, and they were strongly in support of the market and even against central banking. central bank The Indonesia Crisis 19 May 1998 1998 Ron Paul 52:2 ECONOMIC FALLACY Belief that an artificial boom, brought about by Central Bank credit creation, can last forever is equivalent to finding the philosopher’s stone. Wealth cannot be created out of thin air, and new money and credit, although it can on the short-term give an illusion of wealth creation, is destructive of wealth on the long run. This is what we are witnessing in Indonesia — the long run — and it’s a much more destructive scenario than the currently collapsing financial system in Japan. All monetary inflation, something all countries of the world are now participating in, must by their very nature lead to an economic slump. central bank The Indonesia Crisis 19 May 1998 1998 Ron Paul 52:7 A correction can be either deflationary or inflationary or have characteristics of both. Today, in Indonesia, the financial instruments and real estate are deflating in price, while consumer prices are escalating at the most rapid rate in 30 years due to the depreciation of the rupiah. Indonesia is in the early stages of an inflationary depression — a not unheard of result of sustained Central Bank inflationary policy. Many believe price inflation only occurs with rapid growth. This is not so. central bank The Indonesia Crisis 19 May 1998 1998 Ron Paul 52:8 Blame is misplaced. Rarely is the Central Bank and paper money blamed — unless a currency value goes to zero. In Indonesia the most vulnerable scapegoat has been the Chinese businessmen, now in threat of their lives and fleeing the country. central bank 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. central bank The Indonesia Crisis 19 May 1998 1998 Ron Paul 52:17 REFUSAL In the approximately 8 months since the crisis hit Indonesia there has been no serious look at the underlying cause — monetary inflation brought about by a central bank. Nor has any serious thought gone into the internationalization of credit as United States exports of billions of dollars, and thus our own inflation, to most nations of the world who hold these dollars in reserve and use them to further inflate their own currencies. Our huge negative trade balance and foreign debt is not considered by conventional wisdom to be relevant to the Asian currency problems, yet undoubtedly it is. True reform to deal with the growing worldwide crisis can only be accomplished by us first recognizing the underlying economic errors that caused the current crisis. central bank The Indonesia Crisis 22 May 1998 1998 Ron Paul 54:2 ECONOMIC FALLACY Belief that an artificial boom, brought about by Central Bank credit creation, can last forever is equivalent to finding the philosopher’s stone. Wealth cannot be created out of thin air. New money and credit, although it can on the short-term give an illusion of wealth creation, is destructive of wealth on the long run. This is what we are witnessing in Indonesia — the long run — and it’s a much more destructive scenario than the currently collapsing financial system in Japan. All monetary inflation, something nearly all countries of the world are now participating in, must by their very nature lead to an economic slump. central bank The Indonesia Crisis 22 May 1998 1998 Ron Paul 54:7 A correction can be either deflationary or inflationary or have characteristics of both. Today, in Indonesia, the financial instruments and real estate are deflating in price, while consumer prices are escalating at the most rapid rate in 30 years due to the depreciation of the rupiah. Indonesia is in the early stages of an inflationary depression — a not unheard of result of sustained Central Bank inflationary policy. Many believe price inflation only occurs with rapid growth. This is not so. central bank The Indonesia Crisis 22 May 1998 1998 Ron Paul 54:8 Blame is misplace. Rarely is the Central Bank and irredeemable paper money blamed — unless a currency value goes toward zero. In Indonesia the most vulnerable scapegoat has been the Chinese businessmen who are now in threat of their lives and fleeing the country. central bank 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. central bank The Indonesia Crisis 22 May 1998 1998 Ron Paul 54:17 REFUSAL In the approximately eight months since the crisis hit Indonesia, there has been no serious look at the underlying cause: monetary inflation brought about by a central bank. Nor has any serious thought gone into the internationalization of credit as United States exports of billions of dollars, and thus our own inflation, to most nations of the world which hold these dollars in reserve and use them to further inflate their own currencies. Our huge negative trade balance and foreign debt is not considered by conventional wisdom to be relevant to the Asian currency problems, yet undoubtedly it is. True reform to deal with the growing worldwide crisis can only be accomplished by us first recognizing the underlying economic errors that caused the current crisis. central bank Every Currency Crumbles 24 June 1998 1998 Ron Paul 65:7 It cannot undergird confidence that the monetary fires are becoming six- and seven-alarmers. Writing in 1993 about the crisis of the European Rate Mechanism (in which George Soros bested the Bank of England by correcting anticipating a devaluation of the pound), a central bankers’ organization commented: “Despite its geographical confinement to Europe, it is probably no exaggeration to say that the period from late 1991 to early 1993 witnessed the most severe and widespread foreign exchange market crisis since the breakdown of the Bretton Woods System 20 years ago.” But the European crisis has been handily eclipsed by the Asian one. central bank Worldwide Financial Crisis 10 September 1998 1998 Ron Paul 97:2 All financial bubbles are currency driven. When central banks generously create credit out of thin air speculation, debt, and malinvestment result. Early on the stimulative effect is welcomed and applauded as the boom part of the cycle progresses. But illusions of wealth brought about by artificial wealth creation end when the predictable correction arrives. Then we see the panic and disappointment as wealth is wiped off the books. central bank Worldwide Financial Crisis 10 September 1998 1998 Ron Paul 97:3 These events only occur when governments and central banks are given arbitrary authority to create money and credit out of thin air. Paper money systems are notoriously unstable; and the longer they last, the more vulnerable they are to sudden and sharp downturns. central bank Worldwide Financial Crisis 10 September 1998 1998 Ron Paul 97:8 All this could have been prevented by a sound monetary system, one without a central bank that has monopoly power over money and credit and pursues central economic planning. My concern is profound. The retirement and savings of millions of Americans are jeopardized. Economic growth could be reversed sharply and quickly as it already has in the Asian countries. Budget numbers will need to be sharply revised. central bank 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. central bank 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. central bank 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. central bank Revamping The Monetary System 24 September 1998 1998 Ron Paul 102:16 Well, I do not think the American people can afford it. We do have a financial bubble, but financial bubbles are caused by the creation of new credit from central banks. Under a sound monetary system you have a commodity standard of money where politicians lose total control. Politicians do not have control and they do not instill trust into the paper money system. central bank Don’t Fast-Track Free Trade Deal 25 September 1998 1998 Ron Paul 103:9 Fast track is merely a procedure under which the United States can more quickly integrate and cartelize government in order to entrench the interventionist mixed economy. In Europe, this process culminated in the Maastricht Treaty, the attempt to impose a single currency and central bank and force relatively free economies to ratchet up their regulatory and welfare states. In the United States, it has instead taken the form of transferring legislative and judicial authority from states and localities and to the executive branch of the federal government. Thus, agreements negotiated under fast track authority (like NAFTA) are, in essence, the same alluring means by which the socialist Eurocrats have tried to get Europeans to surrender to the super-statism of the European community. And just as Brussels has forced low-tax European countries to raise their taxes to the European average or to expand their respective welfare states in the name of “fairness,” a “level playing field,” and “upward harmonization,” so too will the international trade governors and commissions be empowered to “upwardly harmonize,” internationalize, and otherwise usurp laws of American state governments. central bank 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. central bank New Global Economic Plan 9 October 1998 1998 Ron Paul 117:6 The proposal of the Group of 22 to regulate capital flows through a new “World Central Bank” prevents any effort to restore efficient market mechanisms and prevents any serious discussion for using gold as the money of choice. central bank Monetary Policy 16 October 1998 1998 Ron Paul 120:7 We must understand the serious flaw in the current system that is playing havoc with world markets. When license is given to central banks to inflate (debase) a currency, they eventually do so. Politicians love the central bank’s role as lender of last resort and their power to monetize the steady stream of public debt generated by the largesse that guarantees the politician’s reelection. central bank Monetary Policy 16 October 1998 1998 Ron Paul 120:11 But in time — and that time is now — it comes to an end. Even the beneficiaries suffer the inevitable consequences of a philosophy that teaches wealth comes from money creation and that central banks are acceptable central economic planners — even in countries such as the United States where many pay lip service to free markets and free trade. central bank Congress Relinquishing The Power To Wage War 2 February 1999 1999 Ron Paul 4:68 Credit expansion is the root cause of all financial bubbles. Fiat monetary systems inevitably cause unsustainable economic expansion that results in a recession and/or depression. A correction always results, with the degree and duration being determined by government fiscal policy and central bank monetary policy. If wages and prices are not allowed to adjust and the correction is thwarted by invigorated monetary expansion, new and sustained economic growth will be delayed or prevented. Financial dislocation caused by central banks in the various countries will differ from one to another due to political perceptions, military considerations, and reserve currency status. central bank 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. central bank Congress Relinquishing The Power To Wage War 2 February 1999 1999 Ron Paul 4:88 The Constitution is clear that the Congress has responsibility for guaranteeing the value of the currency, and no authority has ever been given to create a central bank. Creating money out of thin air is counterfeiting, even when done by a bank that the Congress tolerates. central bank Africa Growth And Opportunity Act 16 July 1999 1999 Ron Paul 77:11 Fast track is merely a procedure under which the United States can more quickly integrate an cartelize government in order to entrench the interventionist mixed economy. In Europe, this process culminated in the Maastricht Treaty, the attempt to impose a single currency and central bank and force relatively free economies to ratchet up their regulatory and welfare states. In the United States, it has instead taken the form of transferring legislative and judicial authority from states and localities and to the executive branch of the federal government. Thus, agreements negotiated under fast track authority (like NAFTA) are, in essence, the same alluring means by which the socialistic Eurocrats have tried to get Europeans to surrender to the super-statism of the European Union. And just as Brussels has forced low-tax European countries to raise their taxes to the European average or to expand their respective welfare states in the name of “fairness,” a “level playing field,” and “upward harmonization,” so too will the international trade governors and commissions be empowered to “upwardly harmonize,” internationalize, and otherwise usurp laws of American state governments. central bank A Republic, If You Can Keep It 31 January 2000 2000 Ron Paul 2:89 The U.S. monetary system. The U.S. monetary system during the 20th Century has dramatically changed from the one authorized by the Constitution. Only silver and gold were to be used in payment of debt, and no paper money was to be issued. In one of the few restrictions on the states, the Constitution prohibited them from issuing their own money, and they were to use only gold and silver in payment of debt. No Central Bank was authorized. central bank 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. central bank 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. central bank 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. central bank A Republic, If You Can Keep It 31 January 2000 2000 Ron Paul 2:100 The naive and uninformed fully endorse the current system because the benefits are readily available, while the disadvantages are hidden, delayed or not understood. The politicians, central bankers, commercial banks, big business borrowers, all believe their needs justify such a system. central bank A Republic, If You Can Keep It 31 January 2000 2000 Ron Paul 2:102 Likewise, financing the welfare state would have progressed much slower if our deficits could not have been financed by an accommodative Central Bank willing to inflate the money supply at will. central bank 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. central bank 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. central bank CONGRESS IGNORES ITS CONSTITUTIONAL RESPONSIBILITY REGARDING MONETARY POLICY October 11, 2000 2000 Ron Paul 84:2 Congress has certainly reneged on its responsibility in this area. We continue to grant authority to a central bank that designs monetary policy in complete secrecy, inflating the currency at will, thus stealing value from the already existing currency through a dilution effect. central bank 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. central bank ECONOMIC PROBLEMS AHEAD November 13, 2000 2000 Ron Paul 93:8 * Even in the midst of our great imaginary budgetary surpluses, there has been no effort to cut. Once the economy tends to slow and more problems are apparent, expenditures are going to soar not only because of future problems but because of the new programs recently initiated. A huge financial bubble has been created by the GSEs, such as Fannie Mae and Freddie Mac. The $33 billion of shareholder equities in these two organizations has been leveraged into $1.07 trillion worth of assets- a bubble waiting to be pricked. The Congress has reacted to all these events irresponsibly by increasing spending, increasing tax revenues, doing nothing to reduce regulations, and being totally apathetic toward the dollar and monetary policy. We in the Congress have a moral and constitutional obligation to protect the value of the dollar and to understand why it is so important to the economy that a central bank not be given the unbelievable power of inflating a currency at will and pretending that it knows how to find tune an economy through this counterfeit system of money. central bank 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. central bank ECONOMIC UPDATE December 4, 2000 2000 Ron Paul 97:33 * A major financial crisis is possible since the dollar is the reserve currency of the world, held in central banks as if it were gold itself. The current account deficit for the United States continues to deteriorate, warning us of danger ahead. Our foreign debt of $1.7 trillion continues to grow rapidly and it will eventually have to be paid. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:45 In an economic downturn, a large majority of our political leaders believe that the ill effects of recession can be greatly minimized by monetary and fiscal policy. Although cutting taxes is always beneficial, spending one’s way out of a recession is no panacea. Even if some help is gained by cutting taxes or temporary relief given by an increase in government spending, they distract from the real cause of the downturn: previously pursued faulty monetary policy. The consequences of interest-rate manipulation in a recession-along with tax and spending changes-are unpredictable and do not always produce the same results each time they’re used. This is why interest rates of less than 1% and massive spending programs have not revitalized Japan’s economy or her stock market. We may well be witnessing the beginning of a major worldwide economic downturn, making even more unpredictable the consequence of conventional western-style central bank tinkering. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:47 It’s important to understand how we got ourselves into this mess. The blind faith that wealth and capital can be created by the central bank’s creating money and credit out of thin air, using government debt as its collateral, along with fixing short-term interest rates, is a myth that must one day be dispelled. All the hopes of productivity increases in a dreamed-about new-era economy cannot repeal eternal economic laws. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:49 There is one remnant of the Bretton Woods gold-exchange standard that has aided US dominance over the past 30 years. Gold was once the reserve all central banks held to back up their currencies. After World War II, the world central banks were satisfied to hold dollars, still considered to be as good as gold since internationally the dollar could still be exchanged for gold at $35 an ounce. When the system broke down in 1971, and we defaulted on our promises to pay in gold, chaos broke out. By default the dollar maintained its status as the reserve currency of the world. central bank 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! central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:56 No one should be surprised when recessions hit or bewildered as to their cause or danger. The greater surprise should be the endurance of an economy fine-tuned by a manipulative central bank and a compulsively interventionist Congress. But the full payment for all past economic sins may now be required. Let’s hope we can keep the pain and suffering to a minimum. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:61 If gold prices reflected the true extent of the inflated dollar, confidence in the dollar specifically and in paper more generally would be undermined. It is a high priority of the FED and all central banks of the world for this not to happen. Revealing to the public the fraud associated with all paper money would cause loss of credibility of all central banks. This knowledge would jeopardize the central banks’ ability to perform the role of lender of last resort and to finance/monetize government debt. It is for this reason that the price of gold in their eyes must be held in check. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:62 From 1945 to 1971, the United States literally dumped nearly 500 million ounces of gold at $35 an ounce in an effort to do the same thing by continuing the policy of printing money at will, with the hopes that there would be no consequences to the value of the dollar. That all ended in 1971 when the markets overwhelmed the world central banks. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:63 A similar effort continues today, with central banks selling and loaning gold to keep the price in check. It’s working and does convey false confidence, but it can’t last. Most Americans are wise to the government’s statistics regarding prices and the “no-inflation” rhetoric. Everyone is aware that the prices of oil, gasoline, natural gas, medical care, repairs, houses, and entertainment have all been rapidly rising. The artificially low gold price has aided the government’s charade, but it has also allowed a bigger bubble to develop. This policy cannot continue. Economic law dictates a correction that most Americans will find distasteful and painful. Duration and severity of the liquidation phase of the business cycle can be limited by proper responses, but it cannot be avoided and could be made worse if the wrong course is chosen. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:65 Micromanaging an economy effectively for a long period of time, even with the power a central bank wields, is an impossible task. The good times are ephemeral and eventually must be paid for by contraction and renewed real savings. central bank 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. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:74 We must reassess the responsibility Congress has in maintaining a sound monetary system. In the 19th Century, the constitutionality of a central bank was questioned and challenged. Not until 1913 were the advocates of a strong federalist system able to foist a powerful central bank on us, while destroying the gold standard. This banking system, which now serves as the financial arm of Congress, has chosen to pursue massive welfare spending and a foreign policy that has caused us to be at war for much of the 20th Century. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:75 Without the central bank creating money out of thin air, our welfare state and worldwide imperialism would have been impossible to finance. Attempts at economic fine-tuning by monetary authorities would have been impossible without a powerful central bank. Propping up the stock market as it falters would be impossible as well. central bank CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001 2001 Ron Paul 7:142 Endless demands and economic corrections that come with the territory will always produce deficits. An accommodating central bank then is forced to steal wealth through the inflation tax by merely printing money and creating credit out of thin air. Even though these policies may work for a while, eventually they will fail. As wealth is diminished, recovery becomes more difficult in an economy operating with a fluctuating fiat currency and a marketplace overly burdened with regulation, taxes, and inflation. central bank POTENTIAL FOR WAR February 08, 2001 2001 Ron Paul 10:89 Endless demands and economic corrections that come with the territory will always produce deficits. An accommodating central bank then is forced to steal wealth through the inflation tax by merely printing money and creating credit out of thin air. Even though these policies may work for awhile, eventually they will fail. As wealth is diminished, recovery becomes more difficult in an economy operating with a fluctuating fiat currency and a marketplace overly burdened with regulation, taxes and inflation. central bank 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. central bank The Beginning of the End of Fiat Money March 13, 2001 2001 Ron Paul 18:19 It’s reasonable to assume a worldwide slump will ensue as a result of the worldwide monetary mischief our authorities have engaged in the past 30 years. Never before has the world gone so long without money having some tangible value attached to it. Trust in politicians and Central Bankers may have been a benefit in the inflationary part of the cycle but this trust will quickly dissipate in the corrected phase. Monetary heroes can quickly become villains as the price is paid for previous excesses and extravagance. central bank 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. central bank Manipulation Of Interest Rates Cause Economic Problems 20 March 2001 2001 Ron Paul 22:6 To lower interest rates, a central bank has to increase the money. That is debasement. That is devaluing the money deliberately. In the old days, when the king would do this, they would clip coins. Literally coin debasement, stealing value from coinage in the old days was a capital crime. Today, though, it is accepted practice in all economies of the world. We have had no linkage of any currency of the world in the last 30 years to anything of real value. central bank Manipulation Of Interest Rates Cause Economic Problems 20 March 2001 2001 Ron Paul 22:12 But the real problem with the inflation when one allows a central bank to destroy its money is twofold. One, it creates an overcapacity or overinvestment, excessive debt that always has to be wiped out and cleaned out of the situation, or economic growth cannot be resumed. Japan has not permitted this to happen, and economic growth has not resumed. That is the most important aspect because that causes the unemployment and that causes the harm to so many people. central bank Inflation Is Still With Us 3 May 2001 2001 Ron Paul 30:8 Mismanaging world fiat currencies and working to iron out the trade imbalances that result, through a worldwide managed trade organization, will not suffice. We must one day address the subject of sound money and free market interest rates, where interest rates are not set by the central banks of the world. central bank The US Dollar and the World Economy September 6, 2001 2001 Ron Paul 75:2 This responsibility was performed relatively well in the 19 th Century, despite the abuse the dollar suffered during the Civil War and despite repeated efforts to form a central bank. This policy served to maintain relatively stable prices, and the shortcomings came only when the rules of the gold standard were ignored or abused. central bank 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. central bank The US Dollar and the World Economy September 6, 2001 2001 Ron Paul 75:14 Modern-day globalism, since gold’s demise thirty years ago, has been based on a purely fiat US dollar, with all other currencies tied to the dollar. International redistribution and management of wealth through the IMF, the World Bank, and the WTO have promoted this new version of globalism. This type of globalism depends on trusting central bankers to maintain currency values and the international institutions to manage trade equitably, while bailing out weak economies with dollar inflation. This, of course, has only been possible because the dollar strength is perceived to be greater than it really is. central bank The US Dollar and the World Economy September 6, 2001 2001 Ron Paul 75:21 Economic growth can hide the ill effects of monetary inflation by holding some prices in check. But it can’t prevent the over-capacity and mal-investment which causes the economic downturn. Of course, the central bankers cling to the belief that they can somehow prevent the ugly corrections known as recessions. Economic growth, when artificially stimulated by monetary growth and low interest rates, generates the speculation we’ve seen in the stock, bond and real estate markets, along with excessive debt. Once the need for rectifying the over-capacity is recognized by the market, these imbalances are destined to be wiped out. Prolonging the correction phase with the Fed’s efforts to re-inflate by diligently working for a soft landing, or even to prevent a recession, only postpones the day the economy can return to sustained growth. This is a problem the United States had in the 1930s and one that Japan has experienced for more than a decade, with no end in sight. central bank 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. central bank Foolishness Of Fiat 31 October 2001 2001 Ron Paul 92:3 Fiat money works as long as trust in the currency lasts. But eventually trust is always withdrawn from paper money. Fiat money evolves out of sound money, which always originates in the market, but paper money inevitably fails no matter how hard the beneficiaries try to perpetuate the fraud. We are now witnessing the early stages of the demise of a worldwide financial system built on the fiction that wealth can come out of a printing press or a computer at our central banks. central bank Foolishness Of Fiat 31 October 2001 2001 Ron Paul 92:8 This policy reflects the central bank’s complete ignorance as to the cause of the problem: Credit creation and manipulation of interest rates. central bank Stimulating The Economy February 7, 2002 2002 Ron Paul 5:10 This new credit, according to economic law, must in time push the value of the dollar down and general prices up. When this happens and the dollar is threatened on exchange markets, the cost of living is pushed sharply upward. The central bank is then forced to raise interest rates, as they did in 1979 when the rates hit 21%. central bank Stimulating The Economy February 7, 2002 2002 Ron Paul 5:20 Instead of moving in that direction of freer markets, the more problems the western countries face, the more government programs are demanded. If one looks at Europe, the United States, or even Japan as their economies weaken, government involvement in the economy increases. But in China and Russia, the horrible conditions that communism causes, ironically, made these two countries move toward freer markets when they encountered serious troubles. Even the central banks of these two countries today are accumulating gold, while western central banks are selling. central bank Stimulating The Economy February 7, 2002 2002 Ron Paul 5:37 Ideas regarding the national debt have been transformed. Presidents Jefferson and Jackson despised government debt and warned against it. Likewise, both detested central banking, which they knew inevitably, would be used to liquidate the real debt through the mischievous process of monetary debasement. central bank Stimulating The Economy February 7, 2002 2002 Ron Paul 5:47 Wealth- the product of labor, investment and savings- can never be substituted by government spending or by a central bank that creates new money out of thin air. Governments can only give things they first take away from someone else. Printing money only diminishes the value of each monetary unit. Neither can create wealth; both can destroy it. central bank Introduction of the Monetary Freedom and Accountability Act February 13, 2002 2002 Ron Paul 8:5 GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government’s power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: “Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise .” [Emphasis added]. central bank Introduction of the Monetary Freedom and Accountability Act February 13, 2002 2002 Ron Paul 8:22 While all the defendants flatly deny participation in such a scheme, Howe’s case is being heard. Howe tells Insight he has provided the court with very compelling evidence to support his claim, including sworn testimony by Greenspan before the House Banking Committee in July 1998. Greenspan assured the committee, “Nor can private counterparties restrict supply of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise.” Howe and other “gold bugs” cite this as a virtual public announcement “that the price of gold had been and would continue to be controlled if necessary.” central bank Introduction of the Monetary Freedom and Accountability Act February 13, 2002 2002 Ron Paul 8:23 According to Howe, “There is a great deal of evidence, but this is a very complicated issue. The key, though, is the short position of the banks and their gold derivatives. The central banks have ‘leased’ gold for low returns to the bullion banks for the purpose of keeping the price of gold low. Greenspan’s remarks in 1998 explain how the price of gold has been suppressed at times when it looked like the price of gold was increasing.” central bank Introduction of the Monetary Freedom and Accountability Act February 13, 2002 2002 Ron Paul 8:25 taken down all the rest in their wake. Therefore, at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control, but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K. [United Kingdom].” central bank 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. central bank Beware Dollar Weakness June 5, 2002 2002 Ron Paul 52:4 Gold is history’s oldest and most stable currency. Central bankers and politicians hate gold because it restrains spending and denies them the power to create money and credit out of thin air. Those who promote big government, whether to wage war and promote foreign expansionism or to finance the welfare state here at home, cherish this power. central bank Beware Dollar Weakness June 5, 2002 2002 Ron Paul 52:6 In the past 2 years, gold has been the strongest currency throughout the world in spite of persistent central bank selling designed to suppress the gold price in hopes of hiding the evil caused by the inflationary policies that all central bankers follow. This type of depreciation only works for short periods; economic law always rules over the astounding power and influence of central bankers. central bank Beware Dollar Weakness June 5, 2002 2002 Ron Paul 52:10 Trust in paper is difficult to measure and anticipate, but long-term value in gold is dependable and more reliably assessed. Printing money and creating artificial credit may temporarily lower interest rates, but it also causes the distortions of malinvestment, overcapacity, excessive debt and speculation. These conditions cause instability, and market forces eventually overrule the intentions of the central bankers. That is when the apparent benefits of the easy money disappear, such as we dramatically have seen with the crash of the dot-coms and the Enrons and many other stocks. central bank Has Capitalism Failed? July 9, 2002 2002 Ron Paul 66:10 Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military- industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism! central bank 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. central bank Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002 2002 Ron Paul 71:6 "But gold has always had to be undermined if fiat money is to work and there has to be an illusion of trust for paper to work. And I think this has been happening for thousands of years. At one time the kings clipped coins. Then they debased the metals. Then we learned how to print money. Even as recently as the 1960’s for us to perpetuate a myth about our monetary system, we dumped 2/3 of our gold, or 500 million ounces of gold at $35 per ounce in order to try to convince people to trust the money. And even today, there is a fair amount of trading by central banks, the dumping of hundreds of tonnes of gold, loaning of gold for the sole purpose that this indicator of gold does not discredit the paper money and I think there is a definite concerted effort to do that. central bank Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002 2002 Ron Paul 71:7 "My questions are two fold relating to gold. One, I have been trying to desperately to find out the total amount of gold either dumped and sold on to the markets by all the central banks of the world or loaned by the central banks of the world. And this is in hundreds and hundreds of tons. But those figures are not available to me. Maybe you can help me find this. I think it would be important to know since all central banks still deal with and hold gold whether they are dumping, or loaning or buying for that matter. central bank Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002 2002 Ron Paul 71:9 Chairman Greenspan: "Well first of all, neither we nor the Treasury trade gold. And my impression is that were we to do so, we would announce it. It is certain the case that others do. There are data published monthly or quarterly which shows the reported gold holdings of central banks throughout the world, so you do know who holds what. The actual trading data, ah, I don’t think is available though the London gold exchange does show what its volume numbers are. And periodically, individual central banks do indicate when they are planning to sell gold. But they all report what they own. So it may well be the case that you can’t find specific transactions. I think what you can find is the net result of those transactions and they are published. But so far as the United States is concerned, we don’t do it." central bank The Price Of War 5 September 2002 2002 Ron Paul 83:42 A successful and prosperous society comes from such a policy and is impossible without a sound free-market economy, one not controlled by a central bank. Avoiding trade wars, devaluations, inflations, deflations, and disruption of free trade with protectionist legislation are impossible under a system of international trade dependent on fluctuating fiat currencies controlled by world central banks and influenced by powerful financial interests. Instability in trade is one of the prime causes of creating conditions leading to war. central bank 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. central bank Republic Versus Democracy 29 January 2003 2003 Ron Paul 6:42 Some of the planners of today clearly understand the process. And others, out of ignorance, view central bank money creation as a convenience with little danger. That is where they are wrong. Even though the wealthy and the bankers support paper money, believing they know how to protect against its ill effects, many of them are eventually dragged down in the economic downturns that always develop. It is not a new era that they have created for us today, but more of the same endured throughout history by so many other nations. central bank Republic Versus Democracy 29 January 2003 2003 Ron Paul 6:79 Paying for it can be quite complicated. The exact method is less consequential than the percent of the nation’s wealth the government commands. Borrowing and central bank credit creation are generally used and are less noticeable, but more deceitful, than direct taxation to pay as we go. central bank Republic Versus Democracy 29 January 2003 2003 Ron Paul 6:112 But there is also a problem with economic understanding. Economic ignorance about the shortcomings of central economic planning, excessive taxation and regulations, central bank manipulation of money, and credit and interest rates is pervasive in our Nation’s Capital. A large number of conservatives now forcefully argue that deficits do not matter. Spending programs never shrink no matter whether conservatives or liberals are in charge. Rhetoric favoring free trade is cancelled out by special interest protectionist measures. Support of international government agencies that manage trade such as the IMF, the World Bank, the WTO, and NAFTA politicizes international trade and eliminates any hope that free-trade capitalism will soon emerge. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:5 GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government’s power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: “Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:12 What the Bank of Portugal revealed in its 2001 annual report is that 433 tonnes [metric tons] of gold — some 70 percent of its gold reserve — either have been lent or swapped into the market. According to Bill Murphy, chairman of the Gold Anti-Trust Action Committee (GATA), a nonprofit organization that researches and studies the gold market and reports its findings at www.LeMetropoleCafe.com: “This gold is gone — and it lends support to our years of research that the central banks do not have the 32,000 tonnes of gold in reserve that they claim. The big question is: How many other central banks are in the same predicament as the Portuguese?” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:13 Murphy explains: “The essence of the rigging of the gold market is that the bullion banks borrowed central-bank gold from various vaults and flooded the market with supply, keeping the price down. The GATA camp has uncovered information that shows that around 15,000 to 16,000 tonnes of gold have left the central banks, leaving the centralbank reserves with about half of what is officially reported.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:14 This is why those who follow such arcana are predicting an explosion in the price of gold. According to Murphy, “The gold establishment says that the gold loans from the central banks are only 4,600 to 5,000 tonnes,” but his information is that these loans are more than three times that number, which means “they’re running out of physical gold to continue the scheme.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:15 According to Murphy, “The cartel has been able to get away with lying about the amount of gold in reserve because the International Monetary Fund [IMF] is the Arthur Andersen of the gold world.” He has provided to Insight documents from central banks confirming that the IMF instructed them to count both lent and swapped gold as a reserve. “In other words, the IMF told the central banks to deceive the investment and gold world[s]. Once this gold is lent [or] swapped, it’s gone until such time as it can be repurchased. And with the skyrocketing price of gold we’re now seeing, it would be incredibly expensive, let alone nearly physically impossible, to get it back.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:16 What is important to understand, says Murphy, “is that there is a mine and scrap supply deficit of 1,500 tonnes, which is an enormous deficit when yearly mine supply is only 2,500 tonnes and going down. On top of that, there are these under-reported gold loans and other derivatives that are on the short side. There is no way to pay this gold back to the central banks without the price of gold going up hundreds of dollars per ounce. So the peasants and women of the world will have to sell their jewelry at say $800 an ounce to bail out these short positions or someone is going to have to tell the world that they don’t have the gold that they have reported,” shaking the world’s financial system to its core. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:17 The gold bugs appear to be basing their identification of a world gold shortage on industry data, much of which has been summarized in two papers prepared by four different gold analysts at different times using separate methods. The first paper was written by governmental investment adviser Frank Veneroso and his associate, mining analyst Declan Costelloe. Titled Gold Derivatives, Gold Lending: Official Management of the Gold Price and the Current State of the Gold Market, it was presented at the 2002 International Gold Symposium in Lima, Peru, and estimates the gold deficit of the central banks at between 10,000 and 15,000 tonnes. The second paper, Gold Derivatives: Moving Towards Checkmate, by Mike Bolser, a retired businessman, and Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, estimates the alleged shortage of central-bank gold at between 15,000 and 16,000 tonnes — nearly a decade’s worth of mine production. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:18 George Milling-Stanley, manager of goldmarket analysis for the World Gold Council (WGC), a private organization made up of leading gold-mining companies that promotes the acquisition and retention of gold, is aware of these papers and shortage numbers but tells Insight that “there are no official [gold-reserve] reports.” That is, “The central banks are under no obligation to report what they lend into the market, what they place on deposit and what they do with their swaps, so there’s a conventional-wisdom view, and a couple of different bodies have done some fairly serious research in[to] this and have come up with a figure [of] around 4,500 to 5,000 tonnes.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:20 Those who believe the central banks to have misrepresented their actual gold holdings place much of the blame for the lack of transparency on the shoulders of the IMF, which presents itself as being responsible for ensuring the stability of the international financial system. Although the IMF would not respond to questions about its gold-loan/ swap requirements, what information has been made public appears to support GATA’s understanding of how central-bank reserves are reported. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:21 For example, in October 2001 the IMF responded to questions posed by GATA by saying it is not correct that the IMF insists members record swapped gold as an asset when a legal change in ownership has occurred. According to this response, “The IMF in fact recommends that swapped gold be excluded from reserve assets.” Nonetheless, says GATA, there is abundant evidence that this is not the case, citing as an example the Central Bank of the Philippines (BSP). central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:22 A footnote on the Website of the Central Bank of the Philippines (www.bsp.gov.ph) in fact directly contradicts the IMF’s claim: “Beginning January 2000, in compliance with the requirements of the IMF’s reserves and foreign-currency-liquidity template under the Special Data Dissemination Standard (SDDS), gold swaps undertaken by the BSP with noncentral banks shall be treated as collateralized loans. Thus gold under the swap arrangement remains to be part of reserves, and a liability is deemed incurred corresponding to the proceeds of the swap.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:23 The European Central Bank (ECB) also made it clear that the IMF policy is to include swaps and loans as reserves. The ECB responded to GATA: “Following the recommendations set out in the IMF operational guidelines of the ’Data Template on International Reserve and Foreign Currency Liquidity,’ which were developed in 1999, all reversible gold transactions, including gold swaps, are recorded as collateralized loans in balance of payments and international investment- position statistics. This treatment implies that the gold account would remain unchanged on the balance sheet.” The Bank of Finland and the Bank of Portugal also confirmed in writing that the swapped gold remains a reserve asset under IMF regulations. central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:26 “The fact is,” continues Embry, “a lot of this stuff is based on estimations. I do however believe that, based on the evidence dug up by Veneroso and Howe, they are presenting equally if not more credible numbers than the other side. I find the campaign to undermine their credence simply bizarre. I think these guys [GATA] are right and that the number put out by Gold Fields Mineral Services as the amount of gold loaned out by the central banks is definitely wrong. Now, whether it’s as much as 15,000 is up for interpretation. The recent release by the Bank of Portugal is important. When a central bank has 70 percent of its gold loaned or swapped, I don’t think it is operating independently, and I suspect there are an awful lot of them that have loaned out much more than has been reported.” central bank The Monetary Freedom And Accountability Act 17 July 2003 2003 Ron Paul 79:28 Whether the gold bugs are right about the reasons for the meteoric rise in the price of gold is uncertain, but, according to GATA’s Murphy: “It’s all the more reason to have the central banks come clean about the actual amount of gold that physically exists in their reserves. Either way, the price of gold will continue to rise because, as we already know and others are discovering, the gold is gone.” central bank 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. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:3 The Founders of this country, and a large majority of the American people up until the 1930s, disdained paper money, respected commodity money, and disapproved of a central bank’s monopoly control of money creation and interest rates. Ironically, it was the abuse of the gold standard, the Fed’s credit-creating habits of the 1920s, and its subsequent mischief in the 1930s, that not only gave us the Great Depression, but also prolonged it. Yet sound money was blamed for all the suffering. That’s why people hardly objected when Roosevelt and his statist friends confiscated gold and radically debased the currency, ushering in the age of worldwide fiat currencies with which the international economy struggles today. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:6 Our Founders thoroughly understood this issue, and warned us against the temptation to seek wealth and fortune without the work and savings that real prosperity requires. James Madison warned of “The pestilent effects of paper money,” as the Founders had vivid memories of the destructiveness of the Continental dollar. George Mason of Virginia said that he had a “Mortal hatred to paper money.” Constitutional Convention delegate Oliver Ellsworth from Connecticut thought the convention “A favorable moment to shut and bar the door against paper money.” This view of the evils of paper money was shared by almost all the delegates to the convention, and was the reason the Constitution limited congressional authority to deal with the issue and mandated that only gold and silver could be legal tender. Paper money was prohibited and no central bank was authorized. Over and above the economic reasons for honest money, however, Madison argued the moral case for such. Paper money, he explained, destroyed “The necessary confidence between man and man, on necessary confidence in public councils, on the industry and morals of people and on the character of republican government.” central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:9 If indeed our generation can make the case for paper money, issued by an unauthorized central bank, it behooves us to at least have enough respect for the Constitution to amend it in a proper fashion. Ignoring the Constitution in order to perform a pernicious act is detrimental in two ways. First, debasing the currency as a deliberate policy is economically destructive beyond measure. Second, doing it without consideration for the rule of law undermines the entire fabric of our Constitutional republic. central bank 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. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:23 Andrew Jackson, a strong proponent of gold and opponent of central banking (the Second Bank of the United States,) was a hero to the working class and was twice elected president. This issue was fully debated in his presidential campaigns. The people voted for gold over paper. central bank 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. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:28 A central bank and fiat money enable government to maintain an easy war policy that under strict monetary rules would not be achievable. In other words, countries with sound monetary policies would rarely go to war because they could not afford to, especially if they were not attacked. The people could not be taxed enough to support wars without destroying the economy. But by printing money, the cost can be delayed and hidden, sometimes for years if not decades. To be truly opposed to preemptive and unnecessary wars one must advocate sound money to prevent the promoters of war from financing their imperialism. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:36 Many sincere politicians, bureaucrats, and bankers endorse the current system, not out of malice or greed, but because it’s the only system they have know. The principles of sound money and free market banking are not taught in our universities. The overwhelming consensus in Washington, as well as around the world, is that commodity money without a central bank is no longer practical or necessary. Be assured, though, that certain individuals who greatly benefit from a paper money system know exactly why the restraints that a commodities standard would have are unacceptable. central bank 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. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:56 In the short run, the current system gives us a free ride, our paper buys cheap goods from overseas, and foreigners risk all by financing our extravagance. But in the long run, we will surely pay for living beyond our means. Debt will be paid for one way or another. An inflated currency always comes back to haunt those who enjoyed the “benefits” of inflation. Although this process is extremely dangerous, many economists and politicians do not see it as a currency problem and are only too willing to find a villain to attack. Surprisingly the villain is often the foreigner who foolishly takes our paper for useful goods and accommodates us by loaning the proceeds back to us. It’s true that the system encourages exportation of jobs as we buy more and more foreign goods. But nobody understands the Fed role in this, so the cries go out to punish the competition with tariffs. Protectionism is a predictable consequence of paper- money inflation, just as is the impoverishment of an entire middle class. It should surprise no one that even in the boom phase of the 1990s, there were still many people who became poorer. Yet all we hear are calls for more government mischief to correct the problems with tariffs, increased welfare for the poor, increased unemployment benefits, deficit spending, and special interest tax reduction, none of which can solve the problems ingrained in a system that operates with paper money and a central bank. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:58 The long-term philosophic problem with this is that the central bank and the fiat monetary system are not blamed; instead free market capitalism is. This is what happened in the 1930s. The Keynesians, who grew to dominate economic thinking at the time, erroneously blamed the gold standard, balanced budgets, and capitalism instead of tax increases, tariffs, and Fed policy. This country cannot afford another attack on economic liberty similar to what followed the 1929 crash that ushered in the economic interventionism and inflationism which we have been saddled with ever since. These policies have brought us to the brink of another colossal economic downturn and we need to be prepared. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:59 Big business and banking deserve our harsh criticism, but not because they are big or because they make a lot of money. Our criticism should come because of the special benefits they receive from a monetary system designed to assist the business class at the expense of the working class. Labor leader Samuel Gompers understood this and feared paper money and a central bank while arguing the case for gold. Since the monetary system is used to finance deficits that come from war expenditures, the military industrial complex is a strong supporter of the current monetary system. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:64 The world central bankers are concerned with the lack of response to low interest rates and they have joined in a concerted effort to rescue the world economy through a policy of protecting the dollar’s role in the world economy, denying that inflation exists, and justifying unlimited expansion of the dollar money supply. To maintain confidence in the dollar, gold prices must be held in check. In the 1960s our government didn’t want a vote of no confidence in the dollar, and for a couple of decades, the price of gold was artificially held at $35 per ounce. That, of course, did not last. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:65 In recent years, there has been a coordinated effort by the world central bankers to keep the gold price in check by dumping part of their large horde of gold into the market. This has worked to a degree, but just as it could not be sustained in the 1960s, until Nixon declared the Bretton Woods agreement dead in 1971, this effort will fail as well. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:67 Monetary policy today is designed to demonetize gold and guarantee for the first time that paper can serve as an adequate substitute in the hands of wise central bankers. Trust, then, has to be transferred from gold to the politicians and bureaucrats who are in charge of our monetary system. This fails to recognize the obvious reason that market participants throughout history have always preferred to deal with real assets, real money, rather than government paper. This contest between paper and honest money is of much greater significance than many realize. We should know the outcome of this struggle within the next decade. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:68 Alan Greenspan, although once a strong advocate for the gold standard, now believes he knows what the outcome of this battle will be. Is it just wishful thinking on his part? In an answer to a question I asked before the Financial Services Committee in February 2003, Chairman Greenspan made an effort to convince me that paper money now works as well as gold: “I have been quite surprised, and I must say pleased, by the fact that central banks have been able to effectively simulate many of the characteristics of the gold standard by constraining the degree of finance in a manner which effectively brought down the general price levels.” Earlier, in December 2002, Mr. Greenspan spoke before the Economic Club of New York and addressed the same subject: “The record of the past 20 years appears to underscore the observation that, although pressures for excess issuance of fiat money are chronic, a prudent monetary policy maintained over a protracted period of time can contain the forces of inflation.” There are several problems with this optimistic assessment. First, efficient central bankers will never replace the invisible hand of a commodity monetary standard. Second, using government price indexes to measure the success of a managed fiat currency should not be reassuring. These indexes can be arbitrarily altered to imply a successful monetary policy. Also, price increases of consumer goods are not a litmus test for measuring the harm done by the money managers at the Fed. The development of overcapacity, excessive debt, and speculation still occur, even when prices happen to remain reasonably stable due to increases in productivity and technology. Chairman Greenspan makes his argument because he hopes he’s right that sound money is no longer necessary, and also because it’s an excuse to keep the inflation of the money supply going for as long as possible, hoping a miracle will restore sound growth to the economy. But that’s only a dream. central bank Paper Money and Tyranny September 5, 2003 2003 Ron Paul 93:84 If unchecked, the economic and political chaos that comes from currency destruction inevitably leads to tyranny- a consequence of which the Founders were well aware. For 90 years we have lived with a central bank, with the last 32 years absent of any restraint on money creation. The longer the process lasts, the faster the printing presses have to run in an effort to maintain stability. They are currently running at record rate. It was predictable and is understandable that our national debt is now expanding at a record rate. central bank 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. central bank The Constitution 23 September 2004 2004 Ron Paul 70:3 Early on the supporters of strong centralized government promoted central banking, easy credit, protectionism, mercantilism and subsidies for corporate interests. central bank Where To From Here? November 20, 2004 2004 Ron Paul 81:34 There are even more reasons to believe the current government status quo is unsustainable. As a nation dependent on the willingness of foreigners to loan us the money to finance our extravagance, we now are consuming 80% of the world’s savings. Though the Fed does its part in supplying funds by purchasing Treasury debt, foreign central banks and investors have loaned us nearly twice what the Fed has, to the tune of $1.3 trillion. The daily borrowing needed to support our spending habits cannot last. It can be argued that even the financing of the Iraq war cannot be accomplished without the willingness of countries like China and Japan to loan us the necessary funds. Any shift, even minor, in this sentiment will send chills through the world financial markets. It will not go unnoticed, and every American consumer will be affected. central bank Where To From Here? November 20, 2004 2004 Ron Paul 81:36 Few in Washington comprehend the nature of the crisis. But liberal Lawrence Summers, Clinton’s Secretary of the Treasury and now president of Harvard, perceptively warns of the danger that is fast approaching. He talks of, “A kind of global balance of financial terror” that we should be concerned about. He goes on to say: “there is surely something off about the world’s greatest power being the world’s greatest debtor. In order to finance prevailing levels of consumption and investment, must the United States be as dependent as it is on the discretionary acts of what are inevitably political entities in other countries?” An economist from the American Enterprise Institute also expressed concern by saying that foreign central banks “now have considerable ability to disrupt U.S. financial markets by simply deciding to refrain from buying further U.S. government paper.” central bank 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. central bank The Hidden Cost of War June 14, 2005 2005 Ron Paul 58:28 Americans have an especially unique ability to finance our war efforts while minimizing the immediate effect. As the issuer of the world’s reserve currency, we are able to finance our extravagance through inflating our dollars. We have the special privilege of printing that which the world accepts as money in lieu of gold. This is an invitation to economic disaster, permitting an ill-founded foreign policy that sets the stage for problems for years to come. A system of money that politicians and central bankers could not manipulate would restrain those with grandiose ideas of empire. central bank The Hidden Cost of War June 14, 2005 2005 Ron Paul 58:30 Being the issuer of the world’s premier currency allows for a lot more abuse than a country would have otherwise. World businesses, governments, and central banks accept our dollars as if they are as good as gold. This is a remnant of a time when the dollar was as good as gold. That is no longer the case. The trust is still there, but it’s a misplaced trust. Since the dollar is simply a paper currency without real value, someday confidence will be lost and our goose will no longer be able to lay the golden egg. That’s when reality will set in and the real cost of our extravagance, both domestic and foreign, will be felt by all Americans. We will no longer be able to finance our war machine through willing foreigners, who now gladly take our newly printed dollars for their newly produced goods and then loan them back to us at below market interest rates to support our standard of living and our war effort. central bank The Hidden Cost of War June 14, 2005 2005 Ron Paul 58:34 Centuries ago the notion of money introduced the world to trade and the principle of division of labor, ushering in for the first time a level of economic existence above mere subsistence. Modern fiat money with electronic transactions has given an additional boost to that prosperity. But unlike sound commodity money, fiat money, with easy credit and artificially low interest rates, causes distortions and mal-investments that require corrections. The modernization of electronic global transfers, which with sound money would be beneficial, has allowed for greater distortion and debt to be accumulated-- setting the stage for a much more serious period of adjustment requiring an economic downturn, liquidation of debt, and reallocation of resources that must come from savings rather than a central bank printing press. central bank The End Of Dollar Hegemony 15 February 2006 2006 Ron Paul 3:28 Once again, the dollar was rescued, and this ushered in the age of true dollar hegemony, lasting from the early 1980s to the present. With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold. central bank The End Of Dollar Hegemony 15 February 2006 2006 Ron Paul 3:29 Federal Chairman Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money, that is the dollar system, to respond as if it were gold. Each time I strongly disagreed and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this. central bank The End Of Dollar Hegemony 15 February 2006 2006 Ron Paul 3:30 In recent years, central banks and various financial institutions, all with vested interest in maintaining a workable fiat dollar standard, were not secretive about selling and maintaining large amounts of gold to the market, even while decreasing gold prices raised serious questions about the wisdom of such a policy. They never admitted to gold price fixing, but the evidence is abundant that they believed that if the gold price fell, it would convey a sense of confidence to the market, confidence that they, indeed, had achieved amazing success in turning paper into gold. central bank The End Of Dollar Hegemony 15 February 2006 2006 Ron Paul 3:39 Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF will surely do everything conceivable to soak up the dollars in hope of restoring stability. Eventually, they will fail. central bank 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. central bank Debt Addiction 1 March 2006 2006 Ron Paul 6:10 Second, foreign entities, mostly central banks, own $1.5 trillion of our debt. They purchased over $200 billion in just the last 12 months, increasing their holdings by 15 percent. This is a consequence of our current account deficit and the outsourcing of more and more American manufacturing jobs. Few economists argue that this arrangement can continue much longer. central bank 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. central bank 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. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:13 Not only that, paper money has worked surprisingly well in the past 35 years, the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these decades have gained the knowledge necessary to make paper money respond as if it were gold. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:14 This, they argue, removes the problem of obtaining gold to back the currency and hence frees the politician from the rigid discipline a gold standard imposes. Many central bankers in the last 15 years became so confident they had achieved this milestone that they sold off large hordes of their gold reserves. At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing the market price of gold. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:15 This recent deception failed just as it did in the 1960s when our government tried to hold gold artificially low at $35 an ounce. But since they could not truly repeal the economic laws regarding money, just as many central bankers sold, others bought. It is fascinating that the European central banks sold gold while the Asian central banks bought it over the last several years. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:23 The incentive for central bankers to create new money out of thin air is two-fold. One is to practice central planning through the manipulation of interest rates. The second is to monetize the escalated Federal debt politicians create and thrive on. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:27 Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply. Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting monetary aggregates known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us, and Congress makes no demands to receive it. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:28 Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed’s inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments and other central bankers will act accordingly. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:31 A soaring gold price is a vote of no confidence in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of this Congress and the administration to rein in runaway spending. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:58 Though runaway inflation is injurious to almost everyone, it is more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear that tax is regressive in nature, penalizing the poor and the middle class more than the rich and the politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:75 Interest rate manipulation by central banks helps the rich, the banks, the government, and the politicians. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:78 Paper money encourages economic and political chaos, which subsequently causes a search for scapegoats rather than blaming the central bank. central bank Gold And The U.S. Dollar 25 April 2006 2006 Ron Paul 23:91 If we care about the financial system, the tax system, and the monumental debt we are accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money: money the government and central banks absolutely cannot create out of thin air. central bank 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. central bank 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. central bank 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. central bank 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. central bank Opening Statement Committee on Financial Services Paulson Hearing 20 June 2007 2007 Ron Paul 71:15 All meetings and decision and actions by the Presidents Working Group on Financial Markets must be fully open to public scrutiny. If our government is artificially propping up the dollar by directly manipulating gold prices, or colluding with other central banks, it is information that belongs in the public domain. The same is true about any interference in the stock, bond, or commodity markets. central bank Statement: “Something Big is Happening” 9 July 2008 2008 Ron Paul 42:8 There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. Instead of using globalism in a positive fashion, it’s been used to globalize all of the mistakes of the politicians, bureaucrats and central bankers. central bank 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. central bank Statement: “Something Big is Happening” 9 July 2008 2008 Ron Paul 42:16 But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country — and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central banks’ willingness to monetize our debt. central bank Statement: “Something Big is Happening” 9 July 2008 2008 Ron Paul 42:18 This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to “monetize” U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone — especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this “gift” to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever. central bank The Austrians Are Right November 20, 2008 2008 Ron Paul 71:3 Today, a major economic crisis is unfolding. New government programs are started daily, and future plans are being made for even more. All are based on the belief that we’re in this mess because free-market capitalism and sound money failed. The obsession is with more spending, bailouts of bad investments, more debt, and further dollar debasement. Many are saying we need an international answer to our problems with the establishment of a world central bank and a single fiat reserve currency. These suggestions are merely more of the same policies that created our mess and are doomed to fail. central bank The Austrians Are Right November 20, 2008 2008 Ron Paul 71:15 The basic problem is that proponents of big government require a central bank in order to surreptitiously pay bills without direct taxation. Printing needed money delays the payment. Raising taxes would reveal the true cost of big government, and the people would revolt. But the piper will be paid, and that’s what this crisis is all about. central bank The Austrians Are Right November 20, 2008 2008 Ron Paul 71:16 There are limits. A country cannot forever depend on a central bank to keep the economy afloat and the currency functionable through constant acceleration of money supply growth. Eventually the laws of economics will overrule the politicians, the bureaucrats and the central bankers. The system will fail to respond unless the excess debt and mal-investment is liquidated. If it goes too far and the wild extravagance is not arrested, runaway inflation will result, and an entirely new currency will be required to restore growth and reasonable political stability. central bank 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. Its called malinvestments, and weve been doing it for a long time. It causes financial bubbles, and they have to be corrected. central bank LIVING BENEATH OUR MEANS January 21, 2009 2009 Ron Paul 10:8 Central bank cooperation in the scheme will not make it work. Pretending the dollar is maintaining real value by manipulating the price of gold – the historic mechanism for measuring a currencys value – will work no better than the effort of the 1960s to keep gold at $35 an ounce. Nevertheless, Bretton Woods failed in 1971, as was predicted by the free market economists, despite these efforts. central bank 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. central bank FEDERAL RESERVE IS THE CULPRIT February 25, 2009 2009 Ron Paul 17:3 The market rate of interest is crucial information for the smooth operation of the economy. A central bank setting interest rates is price fixing and is a form of central economic planning. Price fixing is a tool of socialists and destroys production. central bank FEDERAL RESERVE IS THE CULPRIT February 25, 2009 2009 Ron Paul 17:4 Central bankers, politicians and bureaucrats cant know what the proper rate should be. They lack the knowledge and are deceived by their aggrandizement. Manipulating the money supply and interest rates rejects all the principles of the free market. central bank FEDERAL RESERVE IS THE CULPRIT February 25, 2009 2009 Ron Paul 17:9 The economic chaos that results from a policy of central bank inflation inevitably leads to political instability and violence. It is an ancient tool of all authoritarians. central bank 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 Feds 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. central bank CURRENT CONDITIONS OR JUST A BAD DREAM May 19, 2009 2009 Ron Paul 56:4 A central bank that deliberately destroys the value of the currency in secrecy, without restraint, without nary a whimper. Yet, cheered on by the pseudo-capitalists of Wall Street, the military industrial complex, and Detroit. central bank MISTAKES: JUST A FEW! June 3, 2009 2009 Ron Paul 63:18 Pretending that politicians, central bankers and regulators have the knowledge to centrally plan the economy and police the world only makes things worse. Realizing this provides the necessary first step to salvage our economy and liberty. central bank 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 Nixons 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 Nixons program of wage and price controls, the same year; but I guess thats 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, whats the problem? central bank 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 markets 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. central bank 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 Feds secret operations. This position is not surprising and has been typical of all central bank chairmen. Bernankes stated goal is to design a system of financial oversight that will provide a robust framework for preventing future crises. central bank 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. Todays 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. central bank TRANSPARENCY AT THE FEDERAL RESERVE December 1, 2009 2009 Ron Paul 100:3 Since the Fed is the source of all economic downturns, its 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. central bank TRANSPARENCY AT THE FEDERAL RESERVE December 1, 2009 2009 Ron Paul 100:9 My bill, H.R. 1207, has nothing to do with interference with monetary policy. This was explicitly stated in the amendment voted on in the Financial Services Committee. Bernankes argument for protecting the independence of the Fed is his argument for protecting the secrecy of the Fed. Chairman Bernanke concludes that America needs a strong – think cartel – nonpolitical – think Goldman Sachs – and independent – think secret – central bank with the tools to promote financial stability, in the midst of a horrendous financial crisis, and to help steer our economy to recovery without inflation. central bank Deceptive economic euphoria 17 August 1998 Texas Straight Talk 17 August 1998 verse 10 ... Cached First, we're not doing as well as claimed and most Americans know it. Second, we're doing well because we benefit, as all countries do for a limited periods of time, from central bank credit creation - i.e., free money flowing into the banking system keeping interest rates artificially low. A $5.6 trillion debt and growing allows government expenditures to continue despite the nonsense about a balanced budget all the Washington pundits are bragging about. central bank Deceptive economic euphoria 17 August 1998 Texas Straight Talk 17 August 1998 verse 11 ... Cached But most importantly, our trade deficit, and the willingness of foreigners and foreign central banks to take our inflated dollars and hold them gives us a free ride for now and for as long as they see fit to accept our greatest export: our inflation and debt. central bank The problem is the currency 21 September 1998 Texas Straight Talk 21 September 1998 verse 10 ... Cached Foreign Central Banks for years have been willing holders of our dollars, helping to finance our big-spending ways, by buying more dollars than our own central bank. Foreign central banks, however, have begun dumping American dollars, and as this accelerates, pressure will increase on our economy. central bank Economic crisis looms 19 October 1998 Texas Straight Talk 19 October 1998 verse 8 ... Cached We must understand the serious flaw in the current system that is playing havoc with world markets. When license is given to central banks to inflate a currency, they eventually do so. Money can be inflated for only so long until serious problems arise. central bank Economic crisis looms 19 October 1998 Texas Straight Talk 19 October 1998 verse 11 ... Cached But in time the free ride comes to an end. Even the beneficiaries suffer the inevitable consequences of a philosophy that teaches wealth comes from money creation and that central banks are acceptable central economic planners -- even in countries such as the United States where many pay lip service to free markets and free trade. central bank Greenspan Nominated to a Fourth Term 17 January 2000 Texas Straight Talk 17 January 2000 verse 13 ... Cached Likewise, the world central banks have for years sold and loaned gold to keep the gold price artificially low. A rise in gold price is a vote of no confidence in paper. And it's in the interest of all central banks to keep this from happening. Their credibility is at stake. But we must remember through the 50s and the 60s, gold was "fixed" at $35 an ounce and in the 70s the markets overruled the powerful Fed and the US Treasury and vetoed this price. central bank The Fed Cannot Create Prosperity 03 September 2001 Texas Straight Talk 03 September 2001 verse 5 ... Cached The Japanese economy provides a vivid example of the futility of manipulating interest rates. Japan's central bank began cutting rates more than a decade ago, but the country remains mired in a stagnant economy. Ultimately, interest rates were cut to zero, where they have remained for several years. This rate-cutting has failed to stimulate the economy, however. The Nikkei stock market index remains at 1980s levels, while Japanese unemployment recently reached 5%, the highest rate in decades. The Japanese experience should tell us that prosperity cannot be created out of thin air by a central bank. central bank The Fed Cannot Create Prosperity 03 September 2001 Texas Straight Talk 03 September 2001 verse 8 ... Cached In a truly free society, interest rates should be set by the market. The laws of supply and demand work better than any government bureaucrat in determining the correct cost of money, and without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution. The turbulent period we are entering may serve to remind Americans that the Fed cannot suspend the laws of economics. The key to lasting prosperity is a return to true private banking, where interest rates are set by the free market and dollars are backed by gold. central bank 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. central bank Gold, Dollars, and Federal Reserve Mischief 10 June 2002 Texas Straight Talk 10 June 2002 verse 4 ... Cached Gold is history’s oldest and most stable currency. Central bankers and politicians don’t want a gold-backed currency system, because it denies them the power to create money out of thin air. Governments by their very nature want to expand, whether to finance military intervention abroad or a welfare state at home. This expansion costs money, and the big-government politicians don’t want spending limited to the amounts they can tax or borrow. This is precisely why central banks now produce all of the world’s major currencies. central bank Gold, Dollars, and Federal Reserve Mischief 10 June 2002 Texas Straight Talk 10 June 2002 verse 5 ... Cached Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. So even though central banks try to mask their inflationary policies and suppress the price of gold by surreptitiously selling it, the gold markets always cut through the smokescreen eventually. Rising gold prices like we see today historically signify trouble for paper currencies, and the dollar is no exception. Should the dollar continue to decline in value, America will find itself struggling to service our already massive debt load even as our foreign creditors become less interested in our dollars. central bank Federal Reserve Inflation Punishes Saving 21 July 2003 Texas Straight Talk 21 July 2003 verse 8 ... Cached Yet even as the Chairman warned about the supposed danger of deflation, he also discussed his view that rising natural gas prices pose a serious threat to the U.S. economy. There seems to be no coherent message coming from Mr. Greenspan: we’re warned about “irrational exuberance” even as the Fed cuts interest rates and wildly inflates the money supply; we’re told there is no inflation, yet housing prices skyrocket; we’re told that only our central bank planners have the wisdom to determine proper monetary policies, yet the Chairman himself seems to equivocate constantly and provide only the fuzziest answers to straightforward questions. central bank Greenspan's Black Magic 23 February 2004 Texas Straight Talk 23 February 2004 verse 8 ... Cached The end may come when foreign central banks realize the dollars they receive are worthless, or when they find other places to turn for income. When that day comes, interest rates will rise, perhaps dramatically. At that point not even Mr. Greenspan will be able to save the economy from the painful correction necessitated by his easy credit, easy money policies. central bank 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.” central bank 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. central bank The Federal Reserve Debt Engine 26 April 2004 Texas Straight Talk 26 April 2004 verse 7 ... Cached It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution. central bank Government Debt- The Greatest Threat to National Security 25 October 2004 Texas Straight Talk 25 October 2004 verse 7 ... Cached The federal government issues U.S. Treasury bonds to finance its deficit spending. The largest holders of those Treasury notes-- our largest creditors-- are foreign governments and foreign individuals. Asian central banks and investors in particular, especially China, have been happy to buy U.S. dollars over the past decade. But foreign governments will not prop up our spending habits forever. Already, Asian central banks are favoring Euro-denominated assets over U.S. dollars, reflecting their belief that the American economy is headed for trouble. It’s akin to a credit-card company cutting off a borrower who has exceeded his credit limit one too many times. central bank Government Debt- The Greatest Threat to National Security 25 October 2004 Texas Straight Talk 25 October 2004 verse 8 ... Cached Debt destroys U.S. sovereignty, because the American economy now depends on the actions of foreign governments. While we brag about our role as world superpower in international affairs, we are in truth the world’s greatest debtor. Like all debtors, we are not truly free. China and other foreign government creditors could in essence wage economic war against us simply by dumping their huge holdings of U.S. dollars, driving the value of those dollars sharply downward and severely damaging our economy. Desmond Lachman, an economist at the American Enterprise Institute, states that foreign central banks “Now have considerable ability to disrupt U.S. financial markets by simply deciding to refrain from buying further U.S. government paper.” Former Treasury secretary Lawrence Summers warns about “A kind of global balance of financial terror,” noting our dependency on “the discretionary acts of what are inevitably political entities in other countries.” central bank Gold Exposes the Dollar 06 December 2004 Texas Straight Talk 06 December 2004 verse 7 ... Cached The world financial markets are betting against the dollar. Our creditors, particularly Asian central banks, are losing their appetite for U.S. Treasuries. Our federal government’s huge debt and voracious appetite for deficit spending make our economy dependent on the actions of foreign governments and central bankers. Yet few Americans realize the extent to which their own government has sold out American sovereignty by borrowing money overseas. central bank The Maestro Changes his Tune 21 February 2005 Texas Straight Talk 21 February 2005 verse 9 ... Cached It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution. central bank Deficits Make You Poorer 14 March 2005 Texas Straight Talk 14 March 2005 verse 9 ... Cached Deficits mean more borrowing overseas, which threatens U.S. sovereignty. Never before has the American economy depended so much on the actions of foreign governments and central banks. China and other foreign creditors could in essence wage economic war against us simply by dumping their huge holdings of U.S. dollars, driving the value of those dollars sharply downward and severely damaging our economy. Every dollar the federal government borrows makes us less secure as a nation, by making America beholden to interests outside our borders. central bank 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. central bank Borrowing, Spending, Counterfeiting 22 August 2005 Texas Straight Talk 22 August 2005 verse 8 ... Cached Finally, we face a reordering of the entire world economy. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks are increasingly reluctant to hold more U.S. dollars, understanding that American leaders do not have the discipline to maintain a stable currency. When the rest of the world finally abandons the dollar as the global reserve currency, both Congress and American consumers will find borrowing money a more expensive proposition. central bank 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? central bank More of the Same at the Federal Reserve 28 November 2005 Texas Straight Talk 28 November 2005 verse 8 ... Cached The fundamental question is whether a central bank can manage the supply of money and credit better than the free market otherwise would. We shouldn't kid ourselves about the true nature of the Fed, which is inherently incompatible with real free market capitalism. Centralized planning of the money supply is a form of economic control that significantly affects prices, wages, and production levels. Remember how market economists once criticized central planning of prices, wages, and production levels in the former Soviet Union? central bank What do Rising Gold Prices Mean? 05 December 2005 Texas Straight Talk 05 December 2005 verse 5 ... Cached Gold is history’s oldest and most stable currency. Central bankers and politicians don’t want a gold-backed currency system, because it denies them the power to create money out of thin air. Governments by their very nature want to expand, whether to finance military intervention abroad or a welfare state at home. Expansion costs money, and politicians don’t want spending limited to the amounts they can tax or borrow. This is precisely why central banks now manage all of the world’s major currencies. central bank What do Rising Gold Prices Mean? 05 December 2005 Texas Straight Talk 05 December 2005 verse 6 ... Cached Yet while politicians favor central bank control of money, history and the laws of economics are on the side of gold. Even though central banks try to mask their inflationary policies and suppress the price of gold by surreptitiously selling it, the gold markets always cut through the smokescreen eventually. Rising gold prices like we see today historically signify trouble for paper currencies, and the dollar is no exception. central bank 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! central bank The Real Washington Scandal 06 February 2006 Texas Straight Talk 06 February 2006 verse 9 ... Cached As economist Addison Wiggin states, however, "The Grand Experiment with paper money is running its inevitable course. Bernanke's biggest challenge is the challenge of central banking itself: You can control some things, but not everything. In the Fed's case, it can control the quantity of money or the quality of it, but not both at the same time." central bank The Declining Dollar Erodes Personal Savings 15 May 2006 Texas Straight Talk 15 May 2006 verse 8 ... Cached The world financial markets are betting against the dollar and against Mr. Bernanke’s chances of correcting the imbalances caused by Alan Greenspan. Our creditors, particularly Asian central banks, are losing their appetite for U.S. Treasuries. Our federal government’s huge debt and voracious appetite for deficit spending make our economy dependent on the actions of foreign governments and central bankers. Yet few Americans realize the extent to which their own government has sold out American sovereignty by borrowing money overseas. central bank Monetary Inflation is the Problem 04 December 2006 Texas Straight Talk 04 December 2006 verse 3 ... Cached The financial press reported last week that the value of the U.S. dollar plummeted to a 14-year low against the British pound, and weakened against the Euro and Yen. Many financial analysts predict continued rough times for the dollar in 2007, given reduced expectations for economic growth at home and less enthusiasm among foreign central banks for holding U.S. debt. central bank 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. central bank The World's Reserve Currency 01 January 2007 Texas Straight Talk 01 January 2007 verse 6 ... Cached More importantly, our greatest benefactors for the last twenty years-- Asian central banks-- have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency. When the rest of the world finally abandons the dollar as the global reserve currency, both Congress and American consumers will find borrowing money a more expensive proposition. central bank Monetary Policy is Critically Important 19 February 2007 Texas Straight Talk 19 February 2007 verse 5 ... Cached 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. central bank 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. central bank Rising Energy Prices and the Falling Dollar 09 June 2008 Texas Straight Talk 09 June 2008 verse 6 ... Cached Governments need to get out of the way and let the people get back to work so that we can get our economy back on stable footing. Our destructive regulatory environment, confiscatory tax policies, and managed, rather than free trade have chased many businesses overseas. The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work. The important thing now is to get the diagnosis absolutely correct so we can administer the appropriate treatment and move on to a healthier economic future. To do this it is absolutely necessary to address the subjects of central banking and fiat money. 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. Pauls Congressional website and is not included in this Concordance. Remember, not everything in the concordance is Ron Pauls words. Some things he quoted, and he added some newspaper and magazine articles to the Congressional Record. Check the original speech to see. |