Date: May 11, 2010
Ron Paul: I rise to call attention to my colleagues of a vote that occurred in the other body today. Senator Vitter from Louisiana offered an amendment to the financial reform package in the Senate that was exactly the same as HR1207, which is the Audit the Fed bill. And there was a vote on this and unfortunately there were only 37 senators that voted in favor of this Audit the Fed bill. This is rather sad because it is already in the House version of the Financial Reform Bill, and in the House we have 319 co-sponsors of this bill. So it’s a very, very well accepted bill by a broad spectrum of both Republicans and Democrats.
But the reason why this is so disturbing is because of the current events going on in the financial markets. We are right now involved with bailing out Europe and especially bailing out Greece. And we’re doing this through the Federal Reserve. The Federal Reserve does this with currency swaps and they do this by literally giving loans and guarantees to other central banks and they can even give loans to governments. So this is placing the burden on the American tax payers, not by direct taxation, but by expanding the money supply. This is a tax on the American people because this will bring economic hardship to this country and because we have been doing this for so many years, the economic hardship is already here. We’ve been suffering from it.
But the problem comes that once you have a system of money where you can create it out of thin air, there is no restraint whatsoever on the spending in the Congress. And then the debt piles up and then they get into debt problems, as they are in Greece and other countries in Europe. And how do they want to bail them out? With more debt.
But what is so outrageous is that the Federal Reserve can literally deal in trillions of dollars. They don’t get the money authorized, they don’t get the money appropriated. They just create it and they get involved in bailing out their friends like they have been doing for the last 2 years and now they’re doing it in Europe.
So my contention is that they deserve oversight. Actually, they deserve to be reined in where they can’t do what they’re doing. But initially we have to have some oversight and this is why this vote of only 37 senators willing to audit the Federal Reserve in a thorough manner and hold them in check, which means that there were 62 senators that support the idea of maintaining a status quo with the Fed and that they will still be able to make these loans to these foreign central banks.
Now what has this led to? It’s led to tremendous pressure on the dollar. The dollar is the reserve currency of the world, we bail out all the banks and all the corporations; we’ve been doing this for the last couple of years to the tune of trillions of dollars. And even today it looks like the dollar is strong on the international exchange market. People are frightened about what’s happening throughout the world, and they’re buying Treasury bills and they’re buying dollars and holding dollars.
But the real truth is the dollar is very, very week. Because the only true measurement of the value of a currency is its relationship to gold. For 6000 years gold has been the best measurement of the value of a country’s currency. And in the 1970s we were very much aware of what was happening. Our dollar was depreciated to gold at 80% and it ushered in a whole decade of inflation, prices going up 15%, interest rates were up to 21%. And in the last 10 years our dollar has been devalued 80% in terms of gold. That means literally that we have just printed way too much money.
And right now we’re just hanging on, the world is hanging on to the fact that the dollar is still usable. But the whole problem is, our financial situation is no better in this country than around the world. There is just a greater trust in our dollar because we have a military machine and we have economic growth in this country which is greater than others. But quite frankly, it is quite weak. So we face a very serious crisis.
To me, it’s very unfortunate that we are not going to have this Audit the Fed Bill passed in the Senate. It has passed in the House, possibly we can salvage this in conference and make sure that this occurs.
But since the Federal Reserve is responsible for the business cycle, for the inflation and for all the problems that we have, it’s so vital that we stand up and say, “It’s time for us assume the responsibility”, because it is the Congress, under the Constitution, that has been authorized to be responsible for the value of the currency.
Matter of fact, the Constitution still says – it has not been amended, it has not been changed – that only gold and silver are supposed to be used as legal tender, not pieces of paper, not computer entries. This can’t work, it’s not working very well. The world is starting to recognize this and I am really concerned about what is going to happen, because a currency crisis is much worse than a financial crisis. We’ve just been through the financial crisis, we’re in the midst of it. But a currency crisis which is on our doorstep means that our dollar will challenged.