Chairman: Dr. Paul?
Ron Paul: Thank you, Mr. Chairman. Mr. Bernanke, if you don’t mind, would you tell me whether or not you do your own shopping at the grocery store?
Ben Bernanke: Yes, I do.
Ron Paul: Okay, so you’re aware of the prices. You know, nobody believes this argument about the prices going up by about 2%. The old CPI says prices are going up at 9%, they believe this. The people are really hurting, the middle class are really hurting, because their inflation rate is very much higher than the government tries to tell them, and that’s why they lose trust in government. But this whole idea about prices and the debasement of currency, if you loan me $100 and in 2 years from now I gave you $90 back, you’d be pretty upset. But we pan bad money back, and it’s worth 10% or 15% or 20% less, and nobody seems to be able to do anything about it, and it’s very upsetting. But it’s theft, if I don’t give you your $100 back if you loan me a $100, I’m stealing $10 from you. So somebody is stealing wealth, and this is very upsetting.
But in January, in one of your press conferences, you sort of poked a little bit of fun at people to downplay the 2% inflation rate. But if you say it’s 2% and I say it’s 9%, let’s compromise for the sake of argument that it’s 5%. You said that it doesn’t hurt you unless you’re one of those people who stick their money in the mattress. But where are you going to put it, are you going to put it in a CD and not make any money at all? So this doesn’t make any sense, it doesn’t encourage savings and it just discourages people. But I do want to make a point about prices, because when prices go up, that to me, is not the inflation; it is one of the bad consequences of the inflation which comes from the increase in the money supply and that’s one of the bad affects. But you took over the Fed in 2006. I have a silver ounce here, and this ounce of silver back in 2006 would buy over  gallons of gasoline. Today, it will buy almost 11 gallons of gasoline; that’s preservation of value, and that’s what the market has always said should be money. Money comes into effect in a natural way, not in an edict, not by fiat or by governments declaring it is money. But why is it that the two of us can’t consider an option? You allow paper money, I think money should be honest, constitutional, (it’s still in the books), gold and silver legal tender. Why don’t we use it? But why don’t we allow currencies to run parallel, they do it around the world? One of my options, as much as I’d like to do something with the Fed, I say, “The Fed is going to self destruct eventually anyway when the money is gone”. But why wouldn’t we legalize competing currencies, why can’t people save and put this in the mattress and get 4, 5 times as much of the value in a few years? So the record of what you’ve done in the last 6 years is destroying the value of paper money, and, at the same time, real money is preserved. But, as for a competing currency, we already have a silver eager, it’s legal tender for a dollar, and some people say, “Well, it’s legal tender, it’s a dollar, it’s on the books”, and if they use it, they get into being trouble. The government comes and closes them down and they can get arrested for that. But what would be wrong with talking about parallel currencies, competing currencies? This is something that Hayek talked about, something that I think would be a compromise and we could work along those views.
Ben Bernanke: First of all, good to see you again, Congressman Paul. Just one word on the inflation, of course, those numbers constructed by the Bureau of Labor Statistics, not by the Fed, they’re independently constructed and I think they’re done in a very serious and thoughtful way. On alternative currencies, nobody prevents you from holding the silver of gold if you want to, it’s perfectly legal to do that. And it’s also perfectly fine to hold other currencies; Euros or Yen or whatever else. So, in that respect, you can do that, and I’d be happy to talk to you about …
Ron Paul: But, Mr. Chairman, that’s not money. I mean, when you pay taxes to buy a coin, or you have a capital gains tax. If you have to settle a lawsuit, it’s always settled in depreciating Federal Reserve notes, it’s never settled in the real contract. So that’s nobody near money when it’s illegal to use it. But to do it, you’d have to repeal the legal tender laws, you would have to legalize this, you’d have to get rid of the sales taxes, you’d have to get rid of capitals gains taxes. Even in Mexico they’re talking about this, they’re trying to have competing currencies, they’ve been wiped out too many times with inflation wiping out the middle class. They’re allowing people to start to save in a silver currency. So I hope we move along in that direction, because there shouldn’t be any overwhelming changes all of a sudden. There could be a transition and you could vote on it, maybe they’ll give up on a Federal Reserve note and vote for real money.
Ben Bernanke: I’d be very happy to talk to you about it.
Ron Paul: Thank you very much.
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