Ron Paul on the Value of Money

Venue: Joint Economic Committee Hearing
Date: 10/22/2009


Ron Paul: Thank you, Madam Chairman and welcome, Dr. Brummer. I appreciate this opportunity to attend this hearing. I’m sorry I have to leave shortly to do some votes, but I did want to make a couple of points and maybe you can follow upon this later on.

In the several years that I have been here I have never met anybody that is not for a sound economy, everybody is for the economy. Everybody debates the issues and what we should do. We have a Federal Reserve that dictates the money supply and what the interest rates should be. And they want a sound economy and then the Congress rates the regulations. We have regulating agencies that are supposed to give us a sound economy, and yet we have probably real unemployment close to 20% and still a lot of problems.

Although I find that everybody wants a sound economy, nobody talks about a sound dollar. And I know you’re interested and have worked in the monetary field. But we don’t talk about what sound money is, and I don’t know how you can have a sound economy without a sound dollar. As a matter of fact, we talk too often about a weak dollar. We allow the Fed to devalue the dollar by printing too much money to accommodate the Congress. At the same time, we say that the secretary of treasury has the job of maintaining a strong a dollar, at the same time the dollar keeps going down.

And this has a lot to do without our imbalance of payments and all the problems that we face. But a lot of people say this is great, you know, a weak dollar is good for exports. Well, you know if you look at it from an individual level and you’re a saver, who wants a weak dollar? Who wants to have their dollar lose their purchasing power? And yet we actually say “Yeah, we should”. And I hear comments that come across that say, “Well, it’s okay to have a weaker dollar as long as it’s orderly”. Well, if a weak dollar is bad, if it goes down suddenly or orderly, you’re still hurt and you’re paralyzed. There should be no […] in economics that argues the case it is good to have a weakening dollar and see your purchasing power dried up.

So my concern is that we don’t talk about the value of money. On the books still, and the Constitution still say that there is a definition for a dollar in terms of a weight for something that governments can’t create… precious metals. But at the same time, under the law… and the laws says that the Federal Reserve notes are legal tender and everybody has to obey all he laws doing it, because a Federal Reserve note is a dollar. If you’re asking, “What is a dollar?”. Well, we don’t know what a dollar is, but there is nothing on the books that says that a Federal Reserve note is a dollar. This is like building a building with a measuring rod that constantly changes. I cannot see how you can ever have a sound economy without a sound dollar and getting back to defining what a dollar really is. Our founders knew about this, they advised us and we have ignored it and we’re in a mess.

I yield back.

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  • I aplaud you Ron Paul and other political representive Congress , Senate or other wise. Tim Geithner is just another one protecting the devil in the details. Take that little bull by the horns and you know what to do. Take back our constitution article #1 sec.#8 first amendment states: Congress shall have the right to coin , create the value of the dollar thereof; get rid of the federal reserve corp. and bring back the almost exstint department of weights and measures created from the coinage act of 1792 and manufacture our dollar and coins then distibute it interest & debt free again.


  • Dfens

    Sure, we borrow paper from the Chinese and pay them back with gold. That makes sense – to the Chinese. When are you people going to stop selling out your own country?

    • Nate Y

      We better start mining the moon! Because as everyone knows, money is wealth!

  • Perception

    Recently China ,Russia,Brazil and India have had talks about a new trading currency.They know the reality of the collapsing $ US .

    China and Russia are working on joint infrastructure projects and realise that just two coutries on the planet [China & India]have over 1/3 of the planet’s pop.These countries are going to develop the real economy,unlike the Fed who are too busy propping up their ponzy trading scammers.Guess who will be the ultimate victors?

    Russia and China could end the Fed’s reign just by revealing their role in many unsavoury events,but they will let them drag the US/Western economies into the quagmire of depression.

    The Fed is a self serving dinosaur that is destroying both itself and Western economies.When will we wake up?

  • Dfens

    Ok, dumbass, let’s look at section 10 – again.

    Article 1, Section 10. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make anything 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.

    What part of the word “state” do you people not understand? Are you retarded?

    • Nate Y

      Just as expected. Keep reading.

    • Dfens

      The section of the US Constitution I just quoted draws an obvious distinction between “coin money” and “gold and silver coin”. It is obvious from this section of the Constitution that they aren’t the same thing. How can anyone possibly be so stupid as to think this means the federal govenrment can only use money backed by gold and silver, when it obviously means the exact opposite of that? Seriously, are you people all moRons?

      • Nate Y

        And here come the mental/written gymnastics!

        • sean

          haha whatever nate.. you argue for the government to take control of the money and then you argue for the government to get away from money. You have contradicting point of views.

          • Nate Y

            I have never argued for the government to take control of the money power. That is precisely what we have at present and it has constantly distorted and wrecked the economy. But let’s have liberty reign shall we? You claim to be for liberty. Well, let’s have it in money/economics.

            The Fed gov/reserve can go ahead an keep issuing their worthless fiat paper. But no money is to enjoy the privledged status granted by legal tender laws. Let market monies (and Constitutional monies like gold/silver) compete freely and fairly with Federal Reserve issued paper. Let’s see which money best serves the needs of the people.

    • Perception

      Dfens ,The Constitution says that only Congress should have the power to issue currency.You used to be a Ron Paul supporter.What happened?

      Just look at what Russia and China are doing.Russia has energy/resources and China the oldest civilisation on the planet has the man power, intelligence and drive.China is working furiously to secure energy supplies.They are virtually the world’s factory.

      Western countries including Japan have invested $ billions if not $ trillions in setting up companies there.China,when it gets it’s energy and resources secure,could very easily nationalise all Western assets and then where would we be? It takes decades to revitalise manufacturing.

      Once the US $ loses it’s authority,the center of power shifts from the USA to currencies backed by substance.

      We are on a very dangerous course with possible confrontations with China and Russia.USA and the West need serious leaders who are able to see beyond the selfish egos who have created this debacle.

      We are all in this together and money will not save anyone,if this insanity continues.

      • Dfens

        If the value of our money collapses internationally, then we will be forced to live within our means and buy goods produced here instead of abroad. Big deal. We should be living within our means anyway. We should not be exporting jobs or importing crap from the communist Chinese that kills our children, pollutes our planet or our homes to the point where we can no longer live here. All Ron Paul offers is a band aid to allow this farce to continue. When it comes to the real problem, our trade deficit, he is all in favor of it continuing until we are living in a 3rd world hell hole with children working in factories that poison our land. I’m not for that. Are you?

    • Dfens

      The US Constitution clearly gives the federal government, the Congress specifically, control of our money. If you disagree with that, then there is a way to change the Constitution. Use it. Don’t lie about what the Constitution says and pretend it says whatever you want it to say. Hell, how are you better than what we’ve currently got sitting on the Supreme Court if that’s all you’re going to do. They pull new “constitutional rights” out of their asses all the time. Ron Paul claims to be above that sort of thing, but clearly he isn’t, or he’s too stupid to read what’s there. Which is worse? Then he comes up with this crap about how we don’t really need to use gold or silver, but some commodity to back up our money with? Which orifice did he pull that out of? None of this is Constitutional. It’s not even smart. You’re all traitors to your country and the Constitution!

  • PH

    Read Article 1, Section 10. It’s not that long of a document. Read it for yourself. You can also read what the Founders wrote to determine their intent. It’s pretty obvious they weren’t in favor of fiat money otherwise there would be an authorization for a central bank in the Constitution.

  • Dfens

    Article 1, 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;

    What part of the US Constitution does Ron Paul not understand? It does not say anything about regulating the value of our money against the value of gold or any commodity. That is pure fiction made up over and over again by Ron Paul. It is a lie. It may be the monetary system he favors. It may have been favored by some of those who wrote the US Constitution, but that’s not what the Constitution says. It’s not that long of a document. Read it for yourself. He’s lying.

    • Nate Y

      Yeah it’s not too long a document. Keep reading. You’ll get to the part where it states that only gold and silver are to be a legal tender in the payment of debts. Now, you’ll probably do as most everyone determined to misrepresent the Constitution does (and as you have done and continue to do). You’ll likely say “Article I section 10 only applies to the States! Can’t you read? It doesn’t say that the Central Government can’t issue paper money. It doesn’t state that the money issued by the Central government has to be gold/silver”. So let’s do as you advise and keep reading. Wouldn’t you know it? We’ve happened upon the 10th amendment! The 10th amendment makes it very clear that the powers not granted to the United States (central government) by the Constitution or prohibited by it to the states, are reserved to the states respectively, or to the people. That is, if the Constitution doesn’t say that the Central Government can take an action, then the Central Government is prohibited from taking that action. This is when people who don’t understand(or wish to abuse) the Constitution engage in all types of not so impressive mental/verbal/written gymnastics. Have at it!

      Since we’ve now established that, under the Constitution, money is to be gold and silver, we can now make sense of “To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”. “To coin money” means the US can mint gold/silver into coins to be used as money. “Regulate the value thereof, and of foreign coin, and fix the standards of weights and measures” means a dollar = some specific weight of silver/gold, a pound = some specific weight of silver/gold, a franc = some specific weight of silver/gold, etc.

      This is the source of Ron Paul’s “we’re using a measuring rod that constantly changes” argument. Since there is no standard definition of what a dollar is and the value of the dollar is in a state of constant and often dramatic flux as a result, we are doomed to continually make mistakes. Just like an architect would be guaranteed to produce a crappy building if his ruler/protractor was constantly changing in size.

      • sean

        The constitution says that the government can borrow money on the credit of the united states. That is why the supreme court allows us to have credit money. That is a separate power from “coining money”.. dumbass sheep..

        • Nate Y

          Very impressive that you can get so much wrong factually and conceptually in such a short post.