Free Trade instead of Bombs and Bribes

Bombs and Bribes

by Ron Paul

What if tomorrow morning you woke up to headlines that yet another Chinese drone bombing on US soil killed several dozen ranchers in a rural community while they were sleeping? That a drone aircraft had come across the Canadian border in the middle of the night and carried out the latest of many attacks? What if it was claimed that many of the victims harbored anti-Chinese sentiments, but most of the dead were innocent women and children? And what if the Chinese administration, in an effort to improve its public image in the US, had approved an aid package to send funds to help with American roads and schools and promote Chinese values here?

Most Americans would not stand for it. Yet the above hypothetical events are similar to what our government is doing in Pakistan. Last week, Congress did approve an aid package for Pakistan for the stated purposes of improving our image and promoting democracy. I again made the point on the floor of the House that still no one seems to hear: What if this happened on US soil? What if innocent Americans were being killed in repeated drone attacks carried out by some foreign force who was trying to fix our problems for us? Would sending money help their image? If another nation committed this type of violence and destruction on our homeland, would we be at all interested in adopting their values?

Sadly, one thing that has entirely escaped modern American foreign policy is empathy. Without much humility or regard for human life, our foreign policy has been reduced to alternately bribing and bombing other nations, all with the stated goal of “promoting democracy”. But if a country democratically elects a leader who is not sufficiently pro-American, our government will refuse to recognize them, will impose sanctions on them, and will possibly even support covert efforts to remove them. Democracy is obviously not what we are interested in. It is more likely that our government is interested in imposing its will on other governments. This policy of endless intervention in the affairs of others is very damaging to American liberty and security.

If we were really interested in democracy, peace, prosperity and safety, we would pursue more free trade with other countries. Free and abundant trade is much more conducive to peace because it is generally bad business to kill your customers. When one’s livelihood is on the line, and the business agreements are mutually beneficial, it is in everyone’s best interests to maintain cooperative and friendly relations and not kill each other. But instead, to force other countries to bend to our will, we impose trade barriers and sanctions. If our government really wanted to promote freedom, Americans would be free to travel and trade with whoever they wished. And, if we would simply look at our own policies around the world through the eyes of others, we would understand how these actions make us more targeted and therefore less safe from terrorism. The only answer is get back to free trade with all and entangling alliances with none. It is our bombs and sanctions and condescending aid packages that isolate us.


  • Dfens

    Brad, are you from some other planet? Have you honestly never seen a coin that wasn’t made of gold or silver? I’ve got a pocket full of them right now. I’ll give you a quarter if that helps. Guess who decided how much it’s worth?

    As for NASA, yet again traitor Ron Paul votes in favor of the Chinese over his own people.

    A chief scientist with China’s Moon exploration programme, Ouyang Ziyuan, reportedly told the Beijing Morning Post: “Our long-term goal is to set up a base on the Moon and mine its riches for the benefit of humanity.”- BBC News

    But then moRon thinks ranchers from the Mid and Northwest are just like Al Qaeda terrorist, so it’s no surprise he’d side with the Chinese over us.

    • Brad Cable

      1) Once again, you are off base. You are arguing that because you have “coins” in your pocket that are not made of gold or silver, that therefore this was the intent of the Constitution. I submit to you that just because it is being done, this does not mean that it is what the Constitution calls for, which was your original argument.

      The Constitution itself and the Founding Fathers, in their writings, specifically address the “value” of the actual coin in your pocket. The government has gone for so long with its current ways that people have forgotten the purpose of the coin in the first place. The material that it is made from, should actually maintain the value that it represents. This requires a study of money and I don’t have the time to explain it here. That said, here is a brief idea:

      When you create something of value in a barter society you trade one thing for another. If I am a bread maker in a barter society and I make 100 loaves of bread, I eat some, and trade some away for other goods. If for some reason, I can’t barter all of my bread to others for the things that I need, my excess capacity goes to waste. Those extra loaves of bread can’t be saved because they will spoil. With money, I have the ability to trade my excess loaves of bread for something that will not spoil, and is a fair trade of value for value. This way, I can save my excess production over time, and those that need my bread but have nothing that I want to trade, can give me money instead. It is better for buyer and seller.

      The coin that I receive in exchange for the excess production of my loaves of bread, should equal the value of that bread in a fair exchange transaction. Ron Paul’s, and many economist’s point, is that just because you say a dollar is worth a dollar, it is not an objective standard of value. The truth is, it is not worth anywhere near what it is supposed to be worth. Those coins in your pocket, are only worth what you say they are worth because the Fed and the treasury say so. Yet, each day they continue to print more money to pay for whatever purpose they choose, and the value of a dollar is decreasing over time. If you had a precious metal such as gold or silver in your pocket, it would maintain its value and actually increase over time. As time progressed, you would be able to purchase more and more things with the dollar instead of less. What you have now is a dollar that was worth a dollar a century or so ago and now is only worth 4 cents. If you did the homework on this one, you would be pissed off to find out the the government has stolen your work and your products for a century. This is not a matter of opinion, but is a proven fact.

      2) Your argument on China makes no sense to me. Just how did he support China over “his own people”? I read your article and don’t see the connection between what you are talking about and the article above. Please explain.

      • Dfens

        Yap, yap, yap. I need neither you, nor Ron Paul, nor the Supreme Court to “interpret” the US Constitution for me. What it says is very plain. What it doesn’t say is equally plain. You and your moRon friend say it says we must use a gold standard. You are both liars. It’s that simple.

  • JB

    “Dfens says:
    This kind of mercantilist crap is what got us where we are today. Did moRon Paul write this, or was it John McCain? Funny how protectionism helped China’s economy grow in double digits for a decade or more, but if we do the very thing that made this country the industrial power it once was, then it will cause irreparable harm? Yeah, right. Vote for moRon Paul, the Manchurian candidate!”

    Dfens, does your boss know you spend all day online writing blogs? Or maybe you own your own business, now that would be funny, eh? Or maybe it’s your day off and instead of relaxing you are working on a major heart attack, getting worked up over a congressman who has said the same thing since 1976.
    Or maybe you are unemployed like 20% of Americans and you are frustrated because you can’t get a job, so you spend your days blogging because there is not much else to do.

    I really hope you have a job and if you do I hope your bosses don’t track your net habbits. I hope you don’t own your own business, because that would make your comments on free trade worthless, and you may be burning up time that you could be spending selling goods and services. I hope your not unemployed because that really sucks, I’ve been there and it is a hard time.

    Loosen up brother.

    By the way before you rush to judge, I’m a fiscal conservative and a social liberal. And a big proponent of Free Trade. Who buys art in a communist country? The same people that buy art in a Facist country! The wealthy 1%. Can’t get away from them, they are on the right and the left.

  • Brad Cable

    Dfens, your point is not backed up by facts. There are several problems:

    1) The problem that you are having with respect to the Constitution is that you are misunderstanding the document. First of all, the document was created being the sole expression of what the government could do. Whatever was not specifically given as permission, was not permitted. With that in mind, please take a look at the words that you posted from the constitution regarding the Congress being given the power to “coin” money. To “coin” money is by definition based on making metal coins. If you look this term up in any dictionary you will find where it talks about making money from “metal”. You will not be able to find an example where it speaks of “printing” or of anything to do with paper money. If that is not enough, I refer you to Article I, Section 10 of the Constitution where it references the powers prohibited of sates. It says:

    “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

    There it specifically addresses the point of only “gold and silver” coin. Now you might say that well it only says that of the states and not the government. Once again, I refer you to the Article I, Section 8, where it specifically says, “coin”

    There are many places in literature about the Constitutional Convention where there was discussion of paper money and how the Founders were opposed to it, which is why they left that out. It was purposeful.

    2) We are in “debt up to our eyeballs” because we have been spending more than we are taking in. Period. This has very little to do with the factors that you mentioned. If you read Ron Paul’s recent book, “End the Fed” you will see the explanation of how this works, why the situation is what it is, and the factual documentation to back it up. It is not based on partisan attacks such as yours, but hard data and facts from economies since the beginning of time. The data on the benefits of using a gold standard are out there. Please let me know and I will refer you to the proof. One good place to start researching “sound money” is to look at the respected Austrian economists, They have predicted all of the issues that we face economically with the utmost clarity for decades.

    3) He wants to get rid of NASA because he doesn’t feel that government has the right to force a free human being to turn over their money to the government to do with as they please. The government’s purpose when created was simple, to protect the rights of citizens of the US, not to force them into slavery for whatever whim they see fit to force him to pay for. You can insert virtually any government agency in for NASA if you wish. He believes in space exploration, just not in some blue collar worker being forced to work extra hours to pay for it.

    4) Unfortunately, you provide no facts to validate your claims that “the history of our industrial might that was laid on the foundation of tariffs”. Once again, I request that you study economics and what actually happens when tariffs are implemented. Tariffs and price controls do not work because they assume that an individual or entity can successfully control the free market over time. I defy you to show me an example where this has been tried and was successful over the long term. In all of the examples that I have seen of tariffs being used, it has resulted in inferior products, less competition, and an unsustainable economics related to the product or service that is being protected. In the end, tariffs actually hurt the same people they are designed to protect.

    In the future, perhaps you should backup your hyperbolic statements with facts. You would do everyone a much bigger favor by having an educated dialogue instead of just throwing around a bunch of unfounded overblown rhetoric. You also might learn something.

    • sean

      You are wrong. We are in debt to our eyeballs because of comparative advantage. Because of free trade, it has become cheaper to produce elsewhere. Money flows to the source of production. That’s why people in the manufacturing business make more money than doctors.. We have had a transfer of wealth due to trade policies.

      If you think we can just pay back debt with gold, than you have no common sense whatsoever.

      HAHA! we had tariffs all throughout the 19 century. We became the wealthiest country in the world when we had tariffs, with the strongest economy. We surpassed the Britains.

      • sean

        The income tax replaced tariffs. I guess you would rather the government take money away from the fruits of your labor, rather than the crap you buy overseas.

        Instead paying higher prices for goods, you have to pay taxes, therefore you cannot buy as many goods.

        Instead of taking money from the major corporations that ship in goods, they are taking money away from hard working Americans. YOU HAVE A GREAT WAY OF THINKING! LETS ENCOURAGE FREE TRADE AND GLOBALIZATION!

    • Nate Y

      Well said sir.

  • Dfens

    Section 8 – The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    To borrow money on the credit of the United States;

    To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

    To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

    To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

    Hopefully some of you recognize this as part of the US Constitution. Now please, tell me where it says we can use only gold or silver as the basis for our currency? That’s a bald face lie! We are in debt up to our eyeballs ever since we began this “free trade” game under the first Bush administration. Our trade deficit with China is up to $7 or $8 trillion and they hold a huge amount of our federal government debt. Now, all the sudden, we need to go to a gold standard? We borrowed paper but now we need to pay it off with all our gold reserves? And we can’t do anything to protect our strategically important industries or resources because we might offend the Communist Chinese?

    I want to know why it is that Ron Paul’s ideology and the interests of the Communist Chinese line up so exactly. I want to know why he is so busy representing their interests and not ours? He wants to get rid of NASA. He wants to throw open our borders to any nation who wants to toss us some trinkets and beads to buy our land, our resources, our industrial might, our jobs. He wants us to pay back our lenders with gold when they gave us paper. All of Ron Paul’s enemies are Americans. He’s pursued by “black helicopters” and agents of the evil Fed, but the Communist Red Chinese are our friends? When does Ron Paul start being an American? When does he start representing our interests? When does he stop lying about our Constitution that authorizes and encourages the government to collect tariffs? When does he stop lying about the history of our industrial might that was laid on the foundation of tariffs?

    If your day job is to be a Representative of the United States and your agenda is to look after the interests of Communist China, then you’re a traitor, pure and simple. I’m calling Ron Paul out. I’m calling him what he is, a traitor!

  • Ross Johnson

    Now I don’t agree with verything that Ron espouses.I think that the phrase free trade should be replaced with fair trade.Why should any country on the planet run trade deficits? Every house hold balances budgets domestically,yet nationally the cheaper wages of 3rd world countries alawys win out.

    How can anyone in western nations compete with $1.00 per hr in China,with none of the BS extras that Govts imposes upon us.It is impossible,unless we all live like the Chinese.Now this is a reality that the free market purists refuse to address.Every country on this planet in the name of fairness should be allowed to balance income with expenditure,since deficits ensalves us with debt.

    If we look at the standard of living most Americans enjoyed in the 60’s,it is far better than what many enjoy now even with computers and cheaper cars.Why?

    Now that does not make Ron a lesser being,since he believes in true democracy and freedom of expression.Does the Fed give us this latitude?

    • Nate Y

      Fair according to whom? Fair according to what standard?

      As long as trade is absent of coercion and fraud, free trade is fair trade.

      • sean

        The goal of fair trade is to increase the wages of producers in exporting countries.

        If we had more fair trade, than we would have a more balanced trade. If producers in other countries made a somewhat decent wage, than they could in return by goods from us. Most people hardly get by with the money they make. It’s more than less a form of slavery. They work hard to please us, with no pleasure for themselves other than the ability to survive, with bare minimum pay. We’ve outsourced the new age negro.

        • Nate Y

          Indeed. The free trade that would enrich the masses and “ordinary” people in this country and around the world has been corrupted by government coercion and fraud in combination with the special interests of big businesses and their lobbyists (which big government encourages). And now you think the solution is to get government further involved in order to determine what is fair? Again, fair according to whom? Why not let the producers and consumers (the market) determine what the fair price is? Why get the bully of government further involved to set the “fair” price? If you think we’ve had free markets and free trade over these past decades, you have fallen victim to government/corporate doublespeak.

          Let’s say you have something I want to buy and you’re looking to sell. Let’s say the item in question is a leather jacket. Would you want a third party (government) to step in, determine what the price should be, and take a cut? Or would you rather you and I negotiate and come to the free and fair price ourselves?

          • sean

            Fair trade isn’t about price fixing, it’s about wage fixing. Without a minimum wage in these countries, they are taken advantage of for our benefit, and the benefit of their masters. It is morally wrong, its bad for our economy in so many ways, and it leaves us totally dependent.

            What if you were starving and you were trying to sell a 1000 dollar leather jacket so you could get some food, and then I give you a quarter, take your jacket and tell you “too bad” while I flip you off on my way out. Thats pretty much what we are doing, except the chinese are the ones giving them quarter while we are flipping them off.

          • sean

            I strongly believe in limited government, but I also believe in the need of government to intervene when major problems arise that the general public cannot fix.

            I believe there should be justice in China, and if not we shouldn’t encourage the opposite.

          • sean

            Or what if you were starving and tried to sell a 1000 dollar jacket, and china gave you a quarter, and then sold it to me for 800 dollars..

          • sean

            Seriously, how do you expect free trade to work when one country is growing and the other one isn’t. If the people can’t make enough money to save, how is it supposed to grow? We can’t just buy goods forever and not expect to sell any. We need other countries buying our goods. That defeats the whole purpose of free trade. Countries are supposed to trade with each other, not be servitudes for one another. We don’t have the money to do this. I don’t get you. Not only is it morally right, it is also a necessity so our world can have real money with real value.

        • sean

          And, in case you weren’t sure, Ron Paul is the only GOP candidate (and only one of two in the entire two-party field) to have a 100% fair trade voting record.

          • Nate Y

            “Fair trade isn’t about price fixing, it’s about wage fixing”

            Wages are prices. They are the prices paid by employers in exchange for the services of labor. Conversely, wages are the prices accepted by labor in exchange for their services.

            Way to completely dodge my hypothetical question and miss the point at the same time. In free trade, neither the seller nor buyer is obligated to take action. If one side does not feel the other side is being fair about the price, he/she can leave and look to do business elsewhere with a different buyer/seller.

          • sean

            haha okay. So you think that major corporations will find somewhere else to go if they think China’s laborers are being treated unfairly? ya right, get real.

            Wages are not prices. Prices are determined by the market where as wages are determined by the business owners.. Just because wages go up doesn’t mean that prices will go up. Prices are determined by what the market will pay. YOU IDIOT!

            Higher wages would come out of the profit of major corporations. I guess you are for corporatism and you want to give china all of our gold.. hahaha! what a joke.

            I guess this is one thing you and Ron Paul don’t agree on.

          • sean

            I think you are just arguing to argue. Get a life, that is ridiculous.

            A country can have both free trade and fair trade. Ron Paul would agree.

            You don’t even know what fair trade is. It’s not about the government dictating prices or wages.

          • sean

            Fair trade is about eliminating the middle man, so there is competition on both sides of the spectrum so it is “fair” for both countries.

          • Nate Y

            Who’s the middle man?

          • sean

            Big corporations.

          • Nate Y

            So we need the government to eliminate big corporations?

          • sean

            “Fair trade advocates typically espouse a number of guidelines. The movement intends to provide market access to otherwise marginalized producers, connecting them to customers and allowing access with fewer middlemen. It aims to provide higher wages than typically paid to producers as well as helping producers develop knowledge, skills and resources to improve their lives.”

  • Dfens

    Ron Paul wants to legalize drugs too. I bet we can run up a hell of a trade deficit with Pakistan then, buying their heroine while having no manufactured products of our own to sell to anyone, and being too strung out to give a damn. I think I now see Ron Paul’s vision, right there in that cloud of opium smoke.

    • JC

      Are you a fan of Mao?

  • sean

    The only goods Afghanistan has is opium. They don’t have any money so they aren’t going to buy goods from us, unless the world bank lends them money putting them in debt.. Free-trade just wont help in this case, sorry.

    Just to be fair, they mayy have oil but what good would that do for their people including the terrorist? Either the rich will benefit and the terrorist will be enraged, or the terrorist will get a hold of some of that oil money and buy weapons to kill their own people like in Saudi Arabia but a thousand times worse…

    A country must have an economy before it can think about trading.

    • sean

      The terrorist hate us because we support Israel. Maybe we should just stop meddling in other peoples affairs, period.

      • Dfens

        The single biggest reason the terrorists hate us is because we are Christian infidels. Maybe we should change religions too? There’s a reason why everyone isn’t a terrorist. Terrorism doesn’t work. It only pisses people off to the point that they want to eradicate the terrorists, and typically that has been their fate throughout history. Sometimes it takes a little longer than other times, but the fact is terrorism always loses. It’s a tactic that’s been tried by more than just Muslims. Even if you give in to them here or there, the success of their tactics only causes them to continue to do more of the same. At some point it always goes to far.

        • AM

          What???? The terrorists don’t give a damn about your religion. You must really be brainwashed by these neocons. The terrorists hate us because we have destroyed their countries. I admit they are extremists and I certainly do NOT support them. But at the same time, I am willing to admit that we have brought much of this upon us ourselves. I suggest that you go and READ about the history of that region and about our foreign policies. I gotta feeling you just sit and watch TV to be enlightened.

          Our hawkish policies are exactly what the terrorists want. Those policies make it so much easier for the terrorists to recruit. All they have to do is say: “I told you so. I told you Americans want to kills us. Now let’s go, its payback time.” By the way, unfortunately and at times fortunately, there have been instances where terrorism has worked … of course you wouldn’t know it. You know where terrorism worked? In Palestine. Terrorist acts committed by groups that wanted to create the state of israel. Go look up groups like the Stern Gang and the Irgun. They used to bomb bazaars, buses and kill innocent Palestinians to scare and drive them out of Palestine so they could more easily make their case to the UK (which of course wanted the jews out of its own country). Actually, Rahm Israel Emanuel’s (Obama’s chief of staff) father was an Irgun member … a TERRORIST. We live in a HYPOCRITICAL world, in which we dominate. Unfortunately, that could come back and bit us you know where. Imperialism doesn’t have much of a success rate throughout history. You can go and read about that too.

          • sean

            You obviously don’t know anything about religious wars. The Muslims and Jews have been fighting for hundreds of years. The Muslims hate us because we support the Jews. We give them weapons which they use to fight with. What if you were getting into a fight with some jerk off and I gave him a bat to hit you with. Wouldn’t you eventually come after me?

            Free trade is the backbone to neo-cons ideology. Free trade is the backbone to globalization. We aren’t accomplishing globalization through our military, but through our economy.

  • Dfens

    Nice touch comparing US ranchers to Al Qaeda terrorists living in the mountains of Pakistan. I heard the Communist Chinese killed them because they were planning to fly commercial airplanes into the Petronas twin towers in Indonesia, killing thousands of innocent Muslims. Because you know what a blood thirsty bunch those Protestant Christians are! Now someone pass me the Koolaide.

  • Dfens

    This kind of mercantilist crap is what got us where we are today. Did moRon Paul write this, or was it John McCain? Funny how protectionism helped China’s economy grow in double digits for a decade or more, but if we do the very thing that made this country the industrial power it once was, then it will cause irreparable harm? Yeah, right. Vote for moRon Paul, the Manchurian candidate!

  • Todd

    Mr Paul, I can’t say enough to thank you for your voice of reason. You truly are a Statesman and a Hero for your tireless work. I’m praying that your words can penetrate the hearts and minds of others in Washington.

    God Speed to you Mr Paul

  • sean

    Conditions that maximize comparative advantage do not automatically resolve trade deficits. In fact, in many real world examples where comparative advantage is attainable may in fact require a trade deficit. For example, the amount of goods produced can be maximized, yet it may involve a net transfer of wealth from one country to the other, often because economic agents have widely different rates of saving.
    As the markets change over time, the ratio of goods produced by one country versus another variously changes while maintaining the benefits of comparative advantage. This can cause national currencies to accumulate into bank deposits in foreign countries where a separate currency is used.
    Macroeconomic monetary policy is often adapted to address the depletion of a nation’s currency from domestic hands by the issuance of more money, leading to a wide range of historical successes and failures.

    • Nate Y

      Hmm…this doesn’t read at all like one of your posts. Off to google…oh…it’s from wikipedia. I guess that makes sense.

      In other wiki news, the Austrian Economics page has been revamped and is much better. The internet will continue to help spread the knowledge.

      • sean

        I usually tend to come up with a lot of things I talk about on my own and then I discover it later on in Wikiworld, such as the removal of the gold standard. I knew the reason before I discovered it on Wikipedia from reading various charts.. I became real interested in it when gas prices got so high. You have to wonder where all that money goes. The more money big oil companies make, the less that is available for use. Before that I periodically wrote a good number of blogs on sound money and Austrian economics, but then my perspective totally changed when I found all of this out. The removal of the gold standard was more than less inevitable with the current structure we had. It was not sustainable for the necessity of oil. I believe everything the government has done since then to improve the situation has made it worse. We need to just get away from oil and stop inflating the currency.. They have cars in France that run on compressed air. Why can’t we? People always say that our addiction to foreign oil is bad for the economy, but I don’t think they have a clue on how deep the rabbit hole gets.. I wish we could spread the message, but I get shut out by most people on this site. I’m just trying to make sense of things. We can always ignore the problem and the government can tinker with the economy all they want, but it will never get fixed unless we fix the source to our troubles.

        • Nate Y

          It wasn’t inevitable. It was a choice.

          Keep trying to make sense of it. You have yet to identify the source.

          • sean

            The source to our oil problems is the fed?

            Where do our oil problems come into play?

            I’m pretty sure I have found 3 different sources backing up what I say. It is common sense! Even my sister understood.

            So i guess if you had the choice, you would give saudi arabia all of our gold. Good to know who’s side you are on.

        • Tom in Western NC

          Don’t forget that other countries have to use dollars to buy their oil. Where do they get those dollars? They have to trade for them. These countries have to sell the United States a bunch of Chinese goods, Japanese TV’s and German BMW’s to get their dollars. Those countries can then buy the oil using those dollars acquired through trade. OPEC deposits those dollars from the sales of oil into its account at the Federal Reserve Bank. (Remember! When a bank takes in deposits, they are then allowed to issue credit. An example would be a mortgage. Your mortgage is a fraction of the checking accounts, savings accounts and certificates of deposits of the bank’s customers. The rest of the money comes from the Federal Reserve! I skipped a couple of steps but, it originates from the Federal Reserve. This is the basic concept of credit)
          So therefore, the federal reserve constantly has dollars deposited from oil sales and then issues more and more credit to the US government (Fannie Mae, Freddie Mac, GSA’s, and other government entities, etc). Of Course the Federal Reserve charges interest too. So now, anyone can see that this recycling of the dollar represents the Fed’s giant money tree that is growing larger and larger and larger. This phenomenon is called Petrodollar Recycling.
          So consider this. When Iraq began to trading its oil in Euro’s back in 2000-2001, it became a huge threat to the US Economy, a financial weapon of mass destruction. The US and President Bush knew it had to stop Iraq. The Iraq war was truly about oil or should I say how oil is traded
          Countries who want to trade oil in other currencies, know that this action would be the equivalent of dropping a Weapon of Mass Destruction on the US economy. Petrodollar Recycling is a huge part of the Federal Reserve Bank’s method of Credit Creation for the US Government. The Fed prints Dollars (Fiat Currency) at its discretion, oil is bought with those dollars, those dollars are then deposited in an account with the Fed (fed res. Bank of New York), and then the Fed creates more credit… US borrows more dollars, buys more oil, more dollars are deposited in the Fed Reserve Bank account…more credit created….Follow the yellow brick road…follow the yellow brick road…..all the way to Ben Bernanke and the Federal Reserve. HR 1207-AUDIT THE FED will show the truth.

          • sean

            The reason why we have such a large trade deficit has nothing to do with oil. These other countries don’t force us to buy their goods. And we don’t just trade with china, we trade with hundreds of third world countries that don’t use oil.

            haha you did skip a couple of steps.. Yes other countries do purchase dollars to buy oil, and yes they do this from the federal reserve, but that money does not turn into bank credit.

            Lets say I have a hundred dollars and Canada purchases it from me so they can buy oil. Now instead of having a hundred dollars, I have a hundred Canadian dollars. There was no increase the money supply. This is where the IMF comes into play. The IMF will in return exchange those 100 Canadian dollars for 100 American dollars, which is to be exchanged again.

            Bank credit comes from the government in the form of Treasury Bonds, not from other countries currencies. IF you actually knew something about our economy, we are running dry on bank credit so the SHADOW banking system has been growing larger. They make up 60% of bank loans.. They get their money from pension funds and investors..

          • sean

            Well other countries do purchase treasury bonds which is used for bank credit, but that has nothing to do with oil. You can’t buy oil with treasury bonds..

          • sean

            The IMF plays a huge role in the oil business for exchanging dollars.

  • Saboor Khan

    Mr. Ron Paul,

    I truly wish you were the President of American!

    You are the only politician who shows humanity!