Let’s Give The Fed A Run For Its Money!

Location: Congress
Date: 01/20/2010


Ron Paul: I thank the speaker and I rise at this time to talk about a piece of legislation that I’ve recently introduced. That legislation is HR 4248, it’s called The Free Competition In Currency Act.

I believe that in the long-term this is a piece of legislation that will play an important role in the monetary reform that will be a necessity if we continue to do what we have been doing with our economy and our financial system.

We’re in the middle of a financial crisis today. Some people think we have turned the corner, but quite frankly I do not believe that has occurred. Recently, though, we have just had the opening bells of an inquiry into what the cause of the crisis has been. That’s the Financial Crisis Inquiry Commission, and this is a takeoff of the Pecora Commission that was established in the 1990s when the crash occurring then.

Of course, that commission met, they talked to people, they tried to figure what was the matter, and from my viewpoint, they came down with all the wrong conclusions. They said that the Federal Reserve was involved, but the Federal Reserve didn’t print enough money fast enough. They didn’t have a big enough bailout package, and they needed a lot more regulations.

So they did all those things for the first time in our history under the two administrations: the Hoover and the Roosevelt administration. And what happened was they prolonged the depression, they took a one year depression/recession and turned it into a 15 year depression.

So I believe what we’re going through right now is the same old song and dance. We’re doing the same thing again. We have this new enquiry, and the members of the commission are people who didn’t see it coming, didn’t explain it and didn’t anticipate it. And the people who are coming before the commission, as I can see so far, had no anticipation or were acting surprised that the crisis came, that there was a bubble. So I can hardly see any good results coming from this.

My position over the many years has been that the Federal Reserve is a dangerous organization because it creates the bubble. Our country would be better off without a strong central bank like the Federal Reserve. I argue from a moral, economic and a constitutional viewpoint that it has no right to exist and it’s very dangerous to us.

I am very pleased, though, that one piece of legislation I introduced, HR 1207 to audit the Federal Reserve, has met with a large amount of support. We have 316 co-sponsors of that bill. And I think that is a major step in the right direction: looking to the Federal Reserve for the cause of our problems. The easy money system, the easy credit system, the fixing of interest rates too low.

Now, the reason why I’m addressing this is I believe the correction has a long way to run and that eventually we’ll have to have monetary reform. Now, in spite of my position being that we don’t need the Federal Reserve, I’m not in favor of closing the Federal Reserve down in one day or two. But I do believe the monetary system will close down this government and the monetary system and the Federal Reserve and a lot of other things if we continue on our profligate ways of spending and borrowing and inflating the currency and regulating the currency and this will get much worse until we have a total collapse of the system.

So, what my bill does is it introduces competition; competition in currencies. The Federal Reserve System and the dollar standard are run by a cartel; a monopoly. They don’t allow competition because they know they can’t compete. Just as we have competition in the post office with FedEx and UPS, I think that the Federal Reserve deserves a little competition. The public school system has competition with private schools, it has competition with homeschooling. And there is no reason in the world why we can’t enforce the Constitution, legalize the Constitution, and say that we can have competition in currencies.

But there are three major things that we must do to do that, and the bill does this. We repeal legal tender laws and we remove the monopoly control of the Federal Reserve. We legalize private mints so that mints can mint coins, and they will be controlled by fraud laws and anti-counterfeit laws. Today, our government commits fraud and counterfeit by just printing money at will. If a private organization did that, they would be in prison for the fraud that they are causing.

But the other important reform that would have to occur for money to circulate and compete against the monopoly control of the Federal Reserve, would be to take taxes off money. And the Constitution said only gold and silver can be money and only that can be legal tender. So you can’t tax it and allow it to be competitive.

So, these three things could occur and if nobody wanted to use it, they wouldn’t have to and everybody could be happy with the Federal Reserve. But, if the conditions get so chaotic and the people are looking for an alternative, they can go over and start operating in another currency.

So this, to me, could provide a smooth transition, it would not be chaotic, it would be legalizing the Constitution, it would be good sound economics, and eventually, the most important thing it would do is it would restrain the spending of this Congress. Because as long as you have a Federal Reserve over there willing to print up the money, anytime we spend more money than we don’t have and we can’t borrow, then the Federal Reserve will accommodate us.

Therefore, I argue the case for competition in currencies and strictly limited government.