Ron Paul: Fiat Money Experiment Will End Badly




Transcript

Chairman: At this time, Mr. Paul is recognized for three minutes; your thorn in the flesh.

Ron Paul: Thank you, Mr. Chairman, and welcome, Chairman Bernanke. You know, I guess over the past 30 or 40 years, I have criticized the Fed on occasion, but the Congress deserves some criticism, too. The Federal Reserve is a creature of the Congress, and if we don’t know what the Fed is doing, we have the authority and we certainly have the authority to pursue a lot more oversight, which I would like to see. So although the Fed is on the receiving end, and I think rightfully so when you look at the record; I mean, the Fed has been around for 99 years, almost a few years before you took it over, and 99%, 98% of the dollar value is gone from the 1913 dollar. So that’s not really a very good record, and I think what we’re witnessing today is the end-stages of a grand experiment, a philosophic experiment on total fiat money. Yes, they’ve been debasing currencies for hundreds, if not thousands, of years, and they always end badly, they always return to market-based money, which is commodity money, gold and silver.

But this experiment is something different than we’ve ever had before, and it started in 1971 when we were actually given an opportunity in many ways to be the issuer of the fiat currency, and we had way too many benefits from that than people realized. But it’s gone on for 40 years and people keep arguing from the other side of this argument that it’s working, it’s doing well. And yet, from my viewpoint, and the viewpoint of the free market economist, all it’s doing is building a bigger and bigger bubble. And the free market economist are the ones who predicted the NASDAQ bubbles, the housing bubbles, but we never hear from the Keynesian liberal economist and the central bankers saying, “Watch out, there’s a bubble out there, there’s too much credit, too many problems there. There’s a housing bubble, we have to deal with it.” Usually we get reassurances from the Fed on that. But I believe there’s a logical reason for this, because the Federal Reserve is given responsibility to protect the value of the dollar, that’s what stable prices are all about. But we don’t even have a definition of a dollar.

You know, we ask about the definition of a dollar, and they say, “It’s whatever it buys”. Well, every single day, it buys less than the previous day. To me, it’s sort of like building the economy and having economic planning like a builder has a yardstick that changes value every single day, just think of the kind of the building we would have. This is why we have this imbalance in our economic system. But it was a system designed to permit debt, we have a debt-based system. The more debt we have, and the more they debt the Federal Reserve buys, the more currency they can print. And they monetize this debt, and no wonder we’re in a debt crisis. It’s worldwide, I think it’s something that we’ve never experienced before. And I think the conclusion will be a vindication either for sound money, or you win the argument and say, “Yes, we are great managers, we know how to do it, we want the credit for the good times and we want the credit for getting us out of the bad times.” I think within a few years we’re going to know. Of course, I’m betting that the market is smarter, commodity money is smarter, nobody is smart enough to have central economic planning. So I’m anxiously waiting for the conclusion, because reforms have to come. When you see Robert Zoellick talking about monetary reforms and talking about gold, our time has come for serious discussion on monetary reform. Thank you, Mr. Chairman.

This is a rush transcript. If you notice any errors please report them using the “Help improve this post” link at the bottom of this post.

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213 Comments:

  1. Ha at 2:38 he got that guy behind him to crack up.

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  2. Ron Paul Supporter

    The quran told us this 1400 years ago. Real Money is Gold and Silver. It tells us that the only way to economic success is through free markets.

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  3. that girls a hottie

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  4. The only way to prevent voter fraud is to get a receipt.

    When I invest into a product — buying a steak at the supermarket per say — they give me a receipt for my investment (shows the item code# and the date and time of my investment (purchasing in good faith, upon accountability by vendor, that I received the right product))!

    Elections MUST be held to at least the same standard, as buying a steak — when people invest into their Right To Vote, give them a VALID receipt for their investment!

    If States can issue millions of Lottery Tickets weekly, that cannot be forged — why not be FORCED to do the same during the rare elections?!

    Without a RECEIPT, what government assurance do you have that your VOTE actually COUNTED...?!

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  5. I am sorry for all the comments on your video - but I feel strongly about solving the paradox of money & the misconception folks have about what money is - this is why we have economic-political conflicts that cause wars, genocide & slavery - these are problems our species must solve if we are to be apt to survive. - I will be making a video from these comments on my channel.

    All the best

    David

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  6. Part 8) conclusion - This thus solves the paradox as it is a system that relies on the talents and hard work of individuals and the national-society-community working as a co-operative network - developing socia information connections between everyone so that imperfect & secret knowledge becomes a disadvantage - the strength of a matrix of co-operatives is that they promote aptness to survival via reward for worker-share holders responsibility & investment in effort & R&D as profits r invested

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  7. Part 8) This co-operative model of Central Banking with an index of all the worth of utility from goods & services which included via the use of co-operative model firm's share prices mean that currency price signals, asset & investment vales will converge - thus keeping the currency & money expansion rate in harmony with technological change's extraction of utility from total known resources.

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  8. Part 7 - So while I support Ron Paul's main idea that the US constitution is the US's highest law & should be followed via the consent of the national-community (with rights & equality in balance under the rule of law) by amendments & elections. In economic terms the model he proposes does not provide a total solution. The Co-operative model (where all a firms shares are owned by its work force) in this example the National Central Bank's share performance as a co-operative is reflected.

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  9. Part 6 continued) so money is both a totality but real money volumes can grow as technology allows utility to grow - so this signal could be reflected in currency based on a complete index of good & services.
    The only way you are going to solve the paradox of cheap credit fiat currency vs inflated asset prices which are distorting price signals via manipulation by banks (anyone who lends short & invests long) - is to have national-communities like US or EU to own central banks as co-operatives.

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  10. Part 6) So if we have commodity gold money - this would be another distortion just like the petro-dollar as it still relies on the manipulation of price signals of all commodities based a single commodity that is held - yet again by enemies of the west rather than the definition of real money (all goods& services = utility defined by the exploitation of total resources by technology) - continued

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    • Mitt Romney = Judas Goat

      If not aware of this olden days' meaning — here it is:

      When sheep are led to be slaughtered, they instinctively feel something is wrong. So, mill around and bleat, but won't enter the gate leading to the one waiting to smash their heads with a sledge hammer. So, a Judas goat is placed in the pen. The Judas goat is trained to associate with sheep or cattle, leading them through the gate, and passing it safely — while its own life is spared, the ones flowing get their brains bashed!!

      Mitt will lead us — and at the end of the gate, Bama will wield the sledge hammer….

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  11. Part 6) So if we have commodity gold money - this would be another distortion just like the petro-dollar as it still relies on the manipulation of price signals of all commodities based a single commodity that is held - yet again by enemies of the west rather than the definition of real money (all goods & services = utility defined by the exploitation of total resources by technology) - continued

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  12. Part 5) So free-markets & Marxist models from a western rationalist empirical point of view should be treated as totalitarian ideas (if the proponents are intent on implementing those models) or conceptually flawed memes. What we have in US Central banking is a drive to reduce the true value of oil revenues that the US's enemies being oil (commodities producers) get & vice versa - so the present system is the worst of both fractional reserve banking & commodity money = petro-dollar. Its a Trap!

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  13. Part 4) However Free-market economist, like Marxists (& other within systems based on manipulations of capital - machines that produce other machines - i,e dominance of commodities & materials over human motivations, talent information, free-will & the citizenship model =nation) give no empirical model based on individual or collective social interest of the National community to produce this balance in market forces which would create a more equitable positive out-come for all economic agents.

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  14. Part 3) 3rd Concept is investments & assets which means you want to increase the value of these assets (commodities or housing stocks etc) to get a return on the utility you fore go by investing in that activity rather than using money for other purposes - free-market economist believe such contradictory ideas can balance with each other in equilibrium - see next part.

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  15. Part 2) continued - so the true value of money is not qualitatively known & so the true required quantity of currency to produce a true signal of the value of money is not known (as the application of technology to resources in totality is not known & as we exact uttility from the resources we can use means we are constantly changing the context & thus value of money within what we know) - so real money's value must reflect this change of reality.

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  16. Part 2) continued - so the true value of money is not qualitatively known & so the true required quantity of currency to produce a true signal of the value of money is not known (as the application of technology to resources in totality is not known & as we exact uttility from the resources we can use means we are constantly changing the context & thus value of money within what we know) - so real money's value must reflect this change of reality.

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  17. Part 1) The Paradox of "money" as a concept is that it has 3 rival ideas, currency (unit of exchange, either data or physical objects that convey price signals - so you obviously want the least amount of value so the cost of or limits of currency is not effecting the exchange of information which you are using to get useful commodities like food or water) on the other hand real money (unit of value effected by the utility which effects it via the application of technology to resources)

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  18. Like a Boss!

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  19. We're still on the gold standard. Don't be fooled by definitions.

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  20. If Paul gets the nomination, I could actually consider the GOP voters as thinking.

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