Ron Paul: Giving Free Money to Banks Does NOT Stimulate the Economy!

84 Responses



by Ron Paul

The Federal Reserve’s interest rate price-setting board, the FOMC, met last week. They will continue to set the federal funds rate at well below 1%, and plan to keep it low until the end of 2014. That’s a year and half longer than they planned when they met just last month. Chairman Bernanke says they are keeping interest rates so low for so long because the economic outlook warrants it.

The fallacies in their reasoning would be amusing if they weren’t so dangerous. The Fed wants to keep the price of money at essentially zero – in other words “free” – to boost the economy. But the boost they are attempting won’t get here for another three years. That’s not a recovery. And we’ve already tried this tactic. That’s how we got into this mess in the first place: with interest rates artificially low for a very long time. Free money doesn’t stimulate growth, as Japan’s two lost decades clearly show. Artificially low interest rates only serve to punish saving, distort market signals, and cause further malinvestment. They also do nothing to address the only real solution to our economic woes: liquidation of the bad debt that hangs around the neck of the world’s economy, preventing recovery. Artificially low interest rates merely ensure that we remain a debt-financed consumer economy guaranteed to end up with a weaker economy and higher prices.

What baffles me even more is that two decades after the collapse of Soviet planning and decades more since the U.S. and economists purportedly rejected the idea of price setting, we find nothing wrong with the Fed setting the price of money. We all agree it is a bad idea to have a board saying the price of wheat should be $250 a ton today, or carpenters wages should be $25 an hour until the end of 2014. But we are perfectly comfortable with having a board set the price of one half of every transaction in our economy. And our markets are supposedly free.

The Fed policies of low interest rates, Operation Twist, and rounds of quantitative easing are all attempts to keep the economy alive artificially. But the 12 FOMC participants cannot manage the economy any better than the bureaucrats of the Soviet Union. The policies haven’t worked. They won’t work. Real economic recovery cannot come until we liquidate the bad debt, until we eradicate the poor decisions we made over the last decade, and start with a sound foundation. It is time we acknowledge the truth of the Fed’s activities: they are merely using fancy words for price setting.

Treasury Secretary Andrew Mellon was correct in the 1920s when he said “liquidate everything.” That’s what we did in the severe depression of 1920-21, and we recovered so quickly it is never even talked about. We didn’t take his advice after the 1929 crash, and ended up with the Great Depression. We are committing the same mistakes, destined to live in this Great Recession for a decade or more—it has already been four years, the Fed says it will be at least three more! It’s time we start rethinking what the Fed’s policies are really doing to our economy, because obviously, by their own admission, they haven’t helped.


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84 responses to “Ron Paul: Giving Free Money to Banks Does NOT Stimulate the Economy!”

  1. stamstuff .

    Money Does NOT Stimulate the Economy!

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  2. stamstuff

    Money Does NOT Stimulate the Economy!

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  3. Donald T DeFrance

    Ron Paul is our only hope…No more status-quo,,I want to live in America as it was before we trashed the Constitution..Amen

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  4. AMERICASMANRONPAUL

    Thank you Ron Paul for cutting through the fluff and FINALLY telling it like it really is. How refreshing to finally have one honest man running for office.

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  5. Daniel Garcia

    RON PAUL 2016 LOL

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  6. daniel2102007

    RON PAUL 2016 LOL

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  7. highandwired

    I’m not sure what you’re asking. You ask what option to stop the interest rates from dropping. Well, I don’t think the interest rates CAN drop any lower but if you get rid of the Fed, interest rates would be set by the market and would not be fixed by the FED. Don’t be fooled, you live in a centrally planned economy.

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  8. futer3669

    Their all Cubans. I don’t think there are any Americans left in this country.

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  9. JESBBable

    Thomas Jefferson and Andrew Jackson would do the same. Ron Paul 2012.

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  10. shizont

    What would liquidataion look like? Massive drop in prices of housing and education?

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  11. williamfan210

    Ron Paul :
    — How will we stop the fake paper money? i know you will replace it by stopping the taxes but at the moment its still going on, if your not elected but have only 1 err be let one option you can choose of want to make up to balence ,
    ,,, What Option would you stop the intrestion rates from dropping even more or gain even more less.?

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  12. mepizzasmangled

    ▬▬▬▬▬▬▬▬▬▬▬▬▬ஜ۩۞۩ஜ▬▬▬▬▬▬▬▬▬▬▬▬­▬▬▬
    _________________-=RON PAUL 2012=-__________________
    ▬▬▬▬▬▬▬▬▬▬▬▬▬ஜ۩۞۩ஜ▬▬▬▬▬▬▬▬▬▬▬▬­▬▬▬

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  13. jampitts

    I deplore democrats, however, were Ron Paul to be the nominee I am voting for the scumbag Obama.Paul is a nutcase. A libertarian posing as a conservative with his liberal, left-wing, social policies and insane, pacifist, foreign policy.

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  14. pirateguy6

    RON PAUL.! If you aren’t for him you simply haven’t studied him. RON PAUL.!

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  15. BreezyDaSwagMan

    Thanks to everyone who thumbed my comment up. I made a video on how I felt about the primary today and how more people my age need to get involved in politics.

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  16. pirateguy6

    Florida doesnt want positive change, Wake Up

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  17. carp1844

    It looks like Ron Paul will get 7% in Florida. This means that 93% of Florida has no business singing the National Anthem or calling themselves a patriot.

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  18. John Cruz

    “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

    - Louis T. McFadden (1876-1936), US Congressman (R-PA) Poisoned in 1936

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  19. John Cruz

    “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

    - Louis T. McFadden (1876-1936), US Congressman (R-PA) Poisoned in 1936

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  20. TooFreshForYa

    “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

    - Louis T. McFadden (1876-1936), US Congressman (R-PA) Poisoned in 1936

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  21. TooFreshForYa

    “The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

    - Louis T. McFadden (1876-1936), US Congressman (R-PA) Poisoned in 1936

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  22. Bubba James

    Ive had time to simmer down.I had watched about 20 videos in a row I was pretty fired up,I guess my real frustration is with the system its self,im tired of politics,im fed up with the whole damn thing,im already give out on the system and Im in my mid 30s,my generation was already robbed under Dubya,everybody else under Obama.this is so country messed up,even Ron Paul wouldnt make a dent in it.im afraid the only thing that will work is a major revolution ,im talking 1776,kinda thing

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  23. BorderCityBandit

    Ive had time to simmer down.I had watched about 20 videos in a row I was pretty fired up,I guess my real frustration is with the system its self,im tired of politics,im fed up with the whole damn thing,im already give out on the system and Im in my mid 30s,my generation was already robbed under Dubya,everybody else under Obama.this is so country messed up,even Ron Paul wouldnt make a dent in it.im afraid the only thing that will work is a major revolution ,im talking 1776,kinda thing

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  24. Kelly Kirk

    JESUS

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  25. kelly3697

    JESUS

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  26. Kelly Kirk

    Agreed, Ron Paul 2012!!!WRITING his name in!!Ron Paul is ELECTABLE, Check his website!

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  27. Kelly Kirk

    Ron Paul 2012!!!! WRITING his name in!!!!

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  28. InfectedInHD

    youtube: the place of ron paul trolls

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  29. iHipHopVEVO

    Ron Paul got 4th place in Florida :( and they like Shitt Money? why?

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  30. PolishAmericanDC

    In Europe they do the same ECP offers money to Euro Banksters at 0% term and they charge small business 14% in EU

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  31. applemorgan

    2012 Peace = PRESIDENT DR RON PAUL

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  32. 1nav

    dang that was a good one

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  33. tenderserena

    Why do I see nothing about Ron Paul except online!!!!

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  34. ronpaul2012robust

    Ron, become better at analogys to be able to break these things down to lamen levels witch would be especially good for your debates.

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  35. linvann69

    FREEDOM RON PAUL 2012

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