It’s Time To Abolish The Fed And The SEC




On January 5, Ron Paul addressed the House Financial Services Committee’s hearing on the Madoff Ponzi scandal. He pointed out that Bernard Madoff was operating under the supervision of the SEC, that more regulation will only make the job of cunning fraudsters easier because they can claim to be approved by the government, and that two of the biggest government-run Ponzi schemes are the Social Security system and even the monetary system itself. These scams create a climate of fraud that sucks in the people and teaches them to imitate the government. This outrage must be stopped and it can be done by abolishing the Federal Reserve and the SEC, and returning to an honest monetary system based on gold and/or free competition in currencies.

Ron Paul: “For a good many years now, since the 1930s, every time a problem like this comes up, like in the Depression, we think that it is a lack of regulation, so we introduce regulatory agencies like the SEC, and, like after Enron, that was a major problem so we appropriate more money, and hire more people… that doesn’t do any good.

But this circumstance I think really makes my point, that the approach is completely wrong. [The approach] that the regulatory agencies are preempting people from doing bad things, just doesn’t work. There are millions and millions and millions of transactions. You can’t do it. All they do is give a false sense of security.

This is a perfect example of it. The SEC was involved with Madoff over the last decade. And that sort of gives the stamp of approval and says, “oh, must be okay”. So everybody’s guard is let down. This creates the moral hazard that allows people to make these mistakes and not to assume responsibility for themselves.

Does that mean we should ignore the problem? No! The problem comes because people commit fraud. And fraud laws are on the books. All the people involved with Enron were prosecuted under state laws of fraud, and the market took care of the stocks. But just adding on new regulations and spending millions and millions if not billions of dollars on regulating enterprise doesn’t do any good. It contributes to it. It is the problem.

We should look more to how the atmosphere is created by the Congress. If you look at the principle of fractional reserve banking, that in a way is a Ponzi scheme. This gets people doing things and building a mountain of debt… debt on debt, in this manner.

Also, if you really want to look at a big Ponzi scheme, and it is said too often that people end up doing what governments to, if we set examples, and believe me, everybody knows the Social Security system is a Ponzi scheme.

So yes, 50 billion dollars is horrendous, but what about an 8 trillion dollar loss in the stock market? So what do we do? We rush and pump in 8 trillion dollars. Where do we get the money? We create it out of thin air, furthering this whole idea of moral hazard and believing that we can create an unmanageable system.

It’s not the fault of the individuals at the SEC. They have an impossible job and they have to pretend they’re doing something to feel relevant the same way we do here in the Congress. We have to feel relevant we need the market to work, we need to get rid of the bad policies, the monetary system, and these mountains of debt. We say, well we’re relevant because we’re gonna hire more bureaucrats and we’re gonna appropriate more money we don’t have. And we’re gonna solve all our problems.

We’ve been doing this for 78 years, and we’ll do it again, but believe me, this will not solve our problems. We need to think about eliminating this whole regulatory process. And actually, we don’t need the SEC at all, and we could thrive even better and we would dwell on self-reliance, self-policing and the idea that people can’t commit fraud, but the government should not commit fraud either. We should not set an example.”



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147 Comments:

  1. i guess my post is fault-proof. no one can debunk my line of reasoning. hilarious.

    humans trip me out.

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  2. http://www.questionsquestions.net/docs04/peakoil1.html

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  3. Actually you can have a fiat currency,if you have written with your constitution that only more currency is allowed to be produced to equal that of your GDP.This means that loans by the Fed Res to both the Govt and the retail banks is determined by a precise mathematical formula which limits their excesses.It can be done.

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  4. does anyone care to try to respond to my prior message and tell me how I am wrong?

    if gold supply was constant? why would that even matter? don't you want your value of measurement(currency value) to be as constant as the 1 centimeter or 1 inch markings on a ruler?

    come on guys, respond to my post. show me where my line of reasoning is faulty.

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    • gold supply is not constant. it is becomming more and more scarce. That is why most countries got away from the gold standard. gold mines are becomming harder and harder to find. U should check out this months issue of national geographic. They explain everything in there.

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      • Hey Dave,
        Cite your article :)

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      • Please. If you are going to say gold is going up. Say when, and why? As a republican hippie from humboldt i'd like to see.

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      • Hey Sean,

        Cite your source, please?

        - Matt

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        • check out this months issue of national geographic..
          Gold is becoming more and more scarce. The only new reserves are only found in “fragile remote places of the world.” - National Geographic. There are 100 million people who mine for gold. Thats a 1/3 of our population and a majority of them are slaves.. Guess how much waste comes from mining? A company had to pay 600 million dollars for proper disposal. It takes 15 tons of rocks to make one wedding ring worth of gold and there are a million people a year getting married in India.

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      • Dear Sean,

        The idea of Peak Oil (i.e., that the world's in situ oil supplies are running out quickly) fosters fear in politicians, the public and so-called (but non-technical) experts who don't know any better. Some do know better but may have economic/political motives to foster the fear. What is true is that the easily extracted oil is decreasing. What this means is that this easily extractable oil is being depleted faster than the same type (i.e., easily extractable) is being found. This is not the same as saying that we are running out of oil. It has been estimated (American Petroleum Institute) that only about 30% of the oil in a reservoir can be economically extracted by pumping. See above weblink. Where is the 50-70% that can't be extracted by pumping? Yep, it is still in the ground, waiting for some bright engineer to figure out a way to recover it. If that estimate is correct, then we still have as much oil as has ever been used, apart from reserves and new discoveries, if we can extract it. Other energy producing technologies may become cost effective before we can develop methods to better optimize oil recovery. The problem is there has been little economic incentive to optimize oil recovery during times of low oil prices.

        Peak Oil theory doesn't take into consideration the discovery of oil in places that were not expected to have significant oil potential in the past. New oil discoveries are being made frequently (e.g., a 150 million barrel resource discovered in central Utah a few years ago - new discoveries occurring frequently), but they are harder to find, deeper, and are less newsworthy than the spectacular deposits of the past and the scare-news of climate change and other political issues which take center stage. These deposits will not be explored for, or discovered, as long as petroleum prices are down.

        The same is true of any commodity, including gold. The easily discovered gold deposits (at the earth's surface) have been found and are being mined. This doesn't mean we are running out of gold, but it is harder to locate new deposits (which are deeper) and the extraction process is capital intensive. The South African mines are deep and the gold is expensive to mine. Does that mean that gold is "running out"? Not at all. In addition, much gold is produced as a byproduct to the mining of oither mineral commodities (like copper), and when production at those mines are scaled back because of lower copper prices (for example) gold production is also scaled back as a result.

        If the price of gold rises, more companies will find it economically feasible to extract the gold and you will surprisingly discover that there is plenty of gold to be mined (in many countries for that matter - even in the good old USA). For example, several gold deposits have been discovered in Montana, but the ban on cyanide processing means that it can't be economically recovered with present technology, while the ban in place. What this means is that because the demand for gold remains high, the gold comes from elsewhere, often at the human cost (and greater environmental cost) you referred to in another post. Thus, the hypocrisy of the "not-in-my-backyard" attitude is manifested.

        Mining companies frequently reprocess mine tailings (i.e., waste) from the past operations to recover gold (any process, even present technology, is/was never 100% efficient). I could go on about this, but hopefully you get the point. If there is a demand for gold (or copper, or any other natural resource) as soon as the price satisfies the economics of extraction, new mines will come into production and more gold deposits will be discovered (even where you don't expect them - not all the gold in the earth is in South Africa). What economic incentive does a company have to explore if they can't profit from it (i.e., present situation with commodities)? You'd be surprised at how well endowed in mineral wealth the earth is. However, there should be an ethical stewardship about its extraction and use.

        It may appear that gold/oil is running out, but that is only considering resources we know about. However, no one knows where all the resources are and they definitely haven't all been identified, and even those which are reported to be exhausted still contain gold (yes, even in the USA). Many mines are put on standby during price drops, and start up again when gold rises (even after 100 years!).

        None of the above is intended to minimize the social/political/environmental costs of oil consumption by the USA. It is intended simply to indicate that "we aren't running out of oil". Because of these other considerations it would be much better for the USA to become energy independent.

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        • 150 million barrels? big discovery? America consumes 20 million barrels a day and thats 25% of the worlds consumption, so that big reserve would last 2 days... Gold is becoming more and more scarce. The only new reserves are only found in "fragile remote places of the world." There are 100 million people who mine for gold. Thats a 1/3 of our population and a majority of them are slaves.. Do you know how much waste comes from mining? A company had to pay 600 million dollars for proper disposal. It takes 15 tons of rocks to make one wedding ring worth of gold and there are a million people a year getting married in India.

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  5. Its funny how some worship gold like it has mythological powers. I would rather have a car and house than a small brick of gold. I'm pretty sure they make better investments also.

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    • I mean.. food, a home and car has value. gold and money's only value, which is the same (spending power), is used to obtain these things..

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  6. Actually, gold mines are becoming more and more scarce. Now it takes 250 tons of rock to move just to find one wedding rings worth.. We are running out of gold!

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    • Do you really believe so Sean?

      Before we jump to any monetary conclusions, lets keep a global eye on the the most valuable, most minerable, most treasurable, regions on this planet. Do we close our eyes to the third-world regions which have been extorted of their minerals and precious metals and now are forced to labor in toil of worthless paper money? (To this date, and time, Zimbabwe 50 billion dollars = 2 loaves of bread, that is also the same as Zimbabwe 50 billion dollars = 5 American Dollars. Refer to exchange rate).

      By applying the basic economical fact that a dollar (legal tender) is supposed to represent x amount of oz of gold, not "all debts, public and private." So when we can compare those numbers, with what we already know, then we know that we have a more gold "backed" by our dollars (insufficient knowledge as to presenting gold as payment was outlawed in 1933, House Joint Resoultion # 192).

      Now why is there not an adequate account amount of valuable resource, nevertheless commodity, to make up for the surplus of paper notes that they supposedly represent? Only because they are being held, to take control of supply and demand(of anything because paper backs virtually nothing, yet believed to be the opposite), and therefore controlling the market.

      People cash there gold in for dollars, but cannot spend their gold, which has theoretically true value, in stores of commerce. There is a inverse reaction to this system and the way people behave in such.

      Charity, goodwill, and humanistic wealth is the way to go. Pride is the root of all evils.

      Anon,
      In response to Sean

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      • you can't have an interchanging variable if your going to base money off it.. There has to be a fixed rate to gold. That means that we would have to mine more gold to print more money. Thats the whole point to it. Thats the way it was and has to be.. You should check out this months issue of national geographic to get the whole concept of mining gold because i'm not sure if your resources are very valuable.

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  7. You should go to the store and buy this months issue of national geographic and read about the slavery and death cost for your shiny metal

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  8. Sean
    I read the first 4 lines of your 2nd post above and then I noticed many post thereafter. Sean you would do well to go to the library and learn something about the "nature of the issue of money".

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  9. Read 'Black Gold Stranglehold'

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    • That book got horrible reviews and is seen as a joke! You should read the 1 star reviews instead of the 5 star next time you buy a book or anything else in that matter...

      http://www.amazon.com/review/product/1581824890/ref=cm_cr_pr_hist_1?%5Fencoding=UTF8&showViewpoints=0&filterBy=addOneStar

      or just go to this website... peakoil.net

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      • OK Sean, so you only read that which follows your own belief system.
        You have zero argument against what I posted, so you tell me 'the reviews were horrible'. Even if that were true, is that your complete counterpoint? It does seem to be your MO.

        Since you love to post, post some links for the horrible reviews. Please, make the links from those who do not have a dog in the hunt.

        Other than that, keep your responses directed to any others left here that would waste their time dancing with you .... not me.

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  10. Someone asked me (a student) "if the government doesn't bail out mortgage companies, does that mean all the people who had their mortgages would be homeless?"

    I wasn't sure how to answer that. I told them that I did not know what would happen, but for example, if you purchased a computer at a major chain on a payment plan and then that chain went out of business, the business would either sell the debt to someone else and now they would own your payment, or that you would by default not owe anything on your computer if they did not sell your loan.

    Though I had no idea to answer, the question made me wonder if people had been misinformed to the point that they thought they would become homeless.

    I can do chemistry forwards and back, but I don't know how to answer questions like that... go figure.

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  11. It is a demonstration of how useless our elected officials have become when one man can speak in simple terms about such subjects as foreign policy and the economy and sound so refreshingly original and eloquent. The real crisis in this county today is the lack of real statesmanship. Instead, career bureaucrats that must uphold the ponzi schemes of government to insure reelection serve us. These pyramid schemes need to add new suckers in escalating numbers to keep up the pretense of success. In this way, our elected officials are passing on the fallout of the current pyramid onto future generations.
    I recently heard an economic analyst say that Nostradamus could not have foreseen the implosion of the housing market. I am just a dumb carpenter from the south side of Chicago, and I have no education in economics, but I saw the collapse and the resulting domino effect coming years in advance. This whole economy, and all of its major players, is participating in a huge hoax that must be perpetuated or else face total collapse.

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  12. Three relevant articles for improving economic policy. Please feel free to share.

    The recognition of facts, even when in plain sight, is challenging. Res ipsa loquitur, the facts do speak for themselves, but getting people to notice may not be easy. The first article makes the point: Joshua Bell, one of the world’s elite violinists whose CDs Romance of the Violin sold over 5 million copies, played for 45 minutes at an entrance to a Washington, D.C. subway during rush hour. Hardly anyone stopped. The reporting of this phenomenon by Washington Post writer Gene Weingarten won a Pulitzer. People didn’t recognize the brilliance of Bell’s music due to competing facts, relevant to our work with monetary reform:
    1. They’re busy; it’s difficult to compete with peoples’ immediate concerns even with brilliance.
    2. People pay attention to “platforms,” an office title, stage, or previous history.
    3. People would have to see through a kind of lie; with monetary reform this acknowledgment has consequences of asking and answering questions that evoke cognitive dissonance such as why they were lied to, what else are lies, and what the total damage might be.
    Feel free to use the quotes at the end of my paper to demonstrate that well-known people (with platforms) have supported monetary reform (quotes and background on monetary reform: Heart of Economics: http://classlink.lcusd.net/classlink/viewfiles.php?pid=4096 ). Washington Post article with video: http://www.washingtonpost.com/wp-dyn/content/article/2007/04/04/AR2007040401721.html .

    Peter Dale Scott helped expose the lies of the Vietnam War with his book The War Conspiracy. He calls the phenomenon of peoples’ rejection of painful facts that will raise further painful questions “deep politics.” His following article quickly summarizes the reprehensible facts of the so-called “bailout:” no independent expert testimony through hearings, a rush to vote under threat of martial law (not widely reported and documented in the article), and having no accountability how the money is being used. Scott then points to the possibility that this is an engineered collapse of our economy that includes the use of martial law. While dangerous, this also obviously opens the door to public motivation to embrace monetary reform. http://911truth.org/article.php?story=20090108233407311 .

    The last article is from Paul Craig Roberts, former editor of the Wall Street Journal and Assistant Secretary to the Treasury under President Reagan. Roberts’ title: Will there be a recovery? Again, serious in its description of a possible future, but important to be prepared to respond with policy of monetary reform: http://www.counterpunch.org/roberts01052009.html .

    Carl Herman
    Carl_Herman@post.harvard.edu

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  13. There is plenty of energy on the planet.Every time someone comes up with an alternate technology,the oil corporates buy them out.

    They don't like solar energy since it cannot be monopolised and Govts are less able to tax it.All that needs be done is to put far more R&D into to solar energy.Solar can also produce hydrogen energy which is clean and efficient.Many are pushing for nuclear energy since this can be monopolised.They are trying stifle solar development since this moves the balance of power back to the consumer.

    The US has vast quantities of shale oil.There is no shortage of energy.Oil is monopolised by the likes of OPEC who are currently reducing supply.

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    • All good points.

      I was told by a professor that the electric car had existed for about twenty years (back in the late 90's), but we didn't see them because Exxon held the patent, and that we would start seeing them soon because patent was due to soon expire. Sure enough, electric hybrids were just around the corner from then.

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    • There is not enough energy on the planet.. When we run out of oil, we will need 20,000 new nuclear plants or solar panals covering half of california to replace the energy. We only have 1.6 Km of solar panals in the world to date...
      You should look up peak oil bc even the optimists say that we have about 40 or 50 years till we run out of oil.
      The IEA or International Energy Agency predict we will peak oil 2020 or sooner.

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    • It is a known fact that peak oil has occured in over 30 countries.. I guess god must have blessed the middle east to have infinate oil. You should check out the ASPO website at peakoil.net

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  14. jacob frankerton

    couldn't pricing structures just change on a gold standard to accommodate growth of an economy? I understand that dropping prices is considered deflationary by some of you, and thus bad. But, if the purchasing power stays the same with deflationary prices, there is no difference whatesoever.

    i guess it would be hard to do business 50 years down the road using decimal points? so, solution: change the notation or deal with it.

    fiat money has always failed. Rome went to a floating currency and their currency eventually collapsed. What happened next? The dark ages; where fuedal systems surfaced and economic progress was a thing of the past. Bammm! Then the return to a bimetallic standard by the Bank of England preceded the industrial revolution.

    Point is: You don't want to use a value of measurement for your currency that can change drastically in supply: from excess printing or from speculation. Currencies are a value of measurement, that is all.

    Here is the problem and why we will never have an ideal government and economic policy to support an empire that can last for thousands of years: It is human nature to be greedy. Simple as that. A return to gold standard will no doubt happen after all of these fiat experiments ultimately fail. I won't be alive to see it happen, but it will.

    Also, a gold standard would limit expansion of credit and thus could make economic expansion and slower. But, the expansion would be very REAL.

    But, oh i forgot, The current plan is to overpopulate the world and use up natural resources. This of course all occurring before humans have figured out how to create self-renewing energy and self-renewing tissues. Basically, before humans figure out how to efficiently use matter. In other words, mass in = mass out. Humans will not have enough time to figure out how to slowly capture the mass out side of the equation and reinput it into another system and so on and so forth.

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  15. actually, oil production decreased the mid 70's causing the problem and we did not peak until 1995 but now we are running out.

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  16. Since we were running out of oil, we tapped into alaska in the mid late 1970's but could not refine the crude before the recession hit. As soon as 1988 oil production in Alaska peaked and now they are running out as well.

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  17. Actually, it is the country that has oil which has the power and the harsh reality is that the world will run out of oil.. For a hundred years we were the largest oil producers. We were the Saudi Arabia of the past. Thats how we grew such a large millitary and had the wealth to build massive sky scrappers just like Venezuela's growth in the past. We peaked oil in the 50's and ran out around 1980 causing a major recession. Saudi Arabia is expected to peak at any time. Thats why we took control of Iraq just as Germany took over Buku and North Dafur removed the people from the south. We are working on a world market now and there is an extreem demand for oil because of the growth that is associated with it. Thats why gas became so expensive this past summer until September when 30 countries tapped into Iraq. The reason the Federal Reserve raises intterest rates is to try to prolong growth and oil consumption because we are going to run out in as little as 20 years. The world consumes 220 million barrels of oil a day and that number is climbing at a dangerous accelerated rate.. Without oil a society like ours cannot survive. Everything is made using oil, especially food. There is not a biomass that can replace oil either. Electric plants will fail and there is not a technology in grap reach that can add up to the equivalence of power. This poses the greastest threat of all time. The ones who survive will learn what its like to be amish.

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  18. Having a privately owned Federal Reserve Bank is legalised theft.Looking beyond their inflationary influence which has destroyed the US economy,they the Res,are stealing the increase in GDP that the US people produce annually.When you have a real increase in GDP of say 3.5%,there needs to be more money put into the system to equal that GDP.The Res by virtue of owning the US currency owns this new GDP.

    To add insult to injury,they then loan this money to the US Govt and thus the US people are taxed and charged interest on their own productivity.

    The only difference between slavery of the past and debt slavery,is that the modern slaves of debt,house and feed themselves under the delusion of democracy,whilst being entertained by the idiot box believing that they are free.

    It is the Corporates who have that real power and our Govts pander to their every need.

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  19. haha, i just looked at the back of my ten dollar bill and it says in print, "who is ron paul?"

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  20. in fact, before the bailouts, we would have needed an extra 1.2 trillion dollar national deficit in order to have an even balance of money. Thats 1.2 trillion dollars in loans that needed to be passed out. We would have needed that much more growth in homes/cars/businesses to have be well off. This was impossible bc of high interest rates due to rising fuel and steel costs.

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