Ron Paul: We Must Stop the Fed from Causing More Harm

Later this month Congress will have an unprecedented opportunity to force the Federal Reserve to provide meaningful transparency to lawmakers and taxpayers. HR 459, my bill known as “Audit the Fed,” is scheduled for a vote before the full Congress in July. More than 270 of my colleagues cosponsored the bill, and it has the support of congressional leadership. But its passage in the House of Representatives is only the beginning of the battle, as many Senators and the President still don’t see the critical need to have a national discussion about monetary policy.

The American public now senses that the Fed’s actions, especially since 2008, are enormously inflationary and will cause great harm to the American economy in the long run. They are beginning to understand what so many economists still don’t understand, which is that inflation is a monetary phenomenon, and rising prices are merely a symptom of that phenomenon. Prices eventually rise when the supply of US dollars (paper or electronic) grows faster than the available goods and services being chased by those dollars.

This fundamental truth has been thoroughly explained by Milton Friedman and many others, so today’s Keynesian economists have no excuse for their claims that “inflation is under control.” Ordinary Americans don’t need a PhD simply to look at the Fed’s balance sheet and understand the staggering amount of money creation that has occurred in recent years. They know it will have harmful consequences for all of us eventually.

I’ve spoken at length about inflation, and how Fed money creation is effectively a tax. Every dollar created out of thin air dilutes the value of the dollars in your pocket and your savings in the bank. But the truth is that we are only beginning to see the results of the Fed’s dramatic increase in the money supply. As former Fed Chair Alan Greenspan himself explained last week to Larry Kudlow, most of the dollar deposits created by the Fed via successive rounds of “quantitative easing” remain on the balance sheet of Fed member banks. Because of very rational economic fears, banks are not lending, businesses are not expanding, and individuals are shedding debt. So, the trillions of dollars created by the Fed since 2008 remained largely undeployed. When those dollars eventually make their way into the world economy, prices across all sectors of the economy are likely to rise dramatically.

The true evil of inflation is that newly created money benefits politically favored financial interests, especially banks, on the front end. Over time, however, the net result of monetary inflation is always the devaluation of savings and purchasing power. This devaluation discourages saving, which is the key to capital accumulation and investment in a healthy economy. Inflation also tends to hurt seniors and those living on fixed incomes the most.

For decades the Fed has operated without any meaningful oversight whatsoever, resulting in the loss of savings, loss of purchasing power, and loss of quality of life for all Americans. It causes individuals and businesses to make bad decisions, misallocating their capital because market signals have been distorted. It causes financial ruin by engineering the inevitable boom and bust cycles that so many erroneously blame on capitalism. And it does all this in secrecy, to the benefit of the financial and political classes. It is time to Audit the Fed, as a first step toward ending its unchecked power over our money and economic fortunes.


  • douglas

    The harm is already done. What the private central bankers accomplished is to create a global unsustainable civilization of complete chaos. Now, they have to figure out how they will maintain control. Oh yea, they think they got it all figured out and have everything in place; all the laws and all the bought and paid for traders; all the bunkers and all the weapons in place. They have nothing and they are nothing. They will fail in all their ludicrous plans.

  • Surfisher

    If Ron Paul can accomplish to audit (which eventually will end) The Feds — this Act alone will declare him the Greatest Human Being of the 21st Century!

    Pay attention to this, and what it means. (In short: the tons of money created by the Feds, BUT NOT YET USED, will soon hit the fan —and when this happens in the very, very, near future, price will double and then triple and quadruple, and so on, in a very short span of time)!

    “…most of the dollar deposits created by the Fed via successive rounds of “quantitative easing” remain on the balance sheet of Fed member banks. Because of very rational economic fears, banks are not lending, businesses are not expanding, and individuals are shedding debt. So, the trillions of dollars created by the Fed since 2008 remained largely undeployed. When those dollars eventually make their way into the world economy, prices across all sectors of the economy are likely to rise dramatically.”

  • hookagold

    Ron Paul is right, we need to back the dollar whith gold.The USA has gold ! especially, here out west, but the so called environmentalists, have managed to shut down most, small scale miners, so we import most of the gold we use.

  • sorry but bankers and corporations are the natural power holders, the rothschilds gained immense power through their buisiness of private central banking and as a result they are the the man on the top of the totem pole, as nature intended. its just natural life that they rich take control over politics, there seem to be millions of people on youtube who resent the establishment but for no good reason if you ask me.

  • I have no problem with proper, decent world government, as long as it’s not by the scum that run the US with its bankers, corporations etc…

  • vote governor johnson

  • “one world government is a foregone conclusion. ;)” Your either an insider profiting off this world government(for now) or your a very delusional yuppie. Absolute power corrupts absolutely. A 1 world government is going to be a nightmarish hellhole for 99.9% of humans. How sickening and pathetic that you actually are excited about it.

  • one world government is a foregone conclusion. 😉

  • I think you need to get your head checked if you think the ends justify the means, and if you think the federal reserve loves you. The standard of living has only increased for westerners b/c the global elite need a strong arm (mostly Great Britain and now the US) to take over countries that can’t be subverted into accepting global governance (like Iran and Cuba and formerly Iraq and Libya). And right now the standard of living is decreasing b/c westerner’s usefulness is almost up.

  • youve been listening to to much alex jones, people who fall for his shit need to get their heads checked.

  • look at the standard of living and how its gotten better over time, civillization seems to be on the right track.

  • So the ends justify the means correct? Thats what your saying isn’t it? Oh and the ends is a loving utopia right? Wow you have a bad case of Stockholm Syndrome. The power elite are here to rob us blind, rape women and children and set up child sacrificing ceremonies. They want to live like gods while we live in squalor. Read history. Thats what they do. If you actually believe these devils are here to help people, well then there’s no hope in trying to convince someone like you of the truth.

  • It makes sense to me that the power elite would use economic suppression. In order to mold a more equal society you must first be in control so you have the power to effect change, societal engineering is an age old & ongoing process and sometimes the means do not reflect the desired end result, its like fighing wars to bring about peace, sometimes you have to do the oppoisite of what you want to achieve your goal.

  • Right because the big banks and the corporations don’t benefit from all the easy money; and they don’t use the regulations to avoid market discipline and eliminate their small business competition; and they don’t receive billions in bailouts and subsidies and protectionism; they don’t hire 30 tax lawyers to avoid taxes (while small businesses have to pay taxes). Oh and poor people just love rising prices in education, oil, food and healthcare! You are so disillusioned to reality aren’t you?!

  • Our current system is only benefiting the rich who enjoy the newly printed money first. Keynes loved the poor. lol

  • The Austrian school does not want to prevent people from being poor. It wants to transfer wealth from those who have a negative net worth to those who have a positive net worth. The richer you are, the more you benefit from Austrian policies of deflation and tight money. Poor people typically have a negative net worth. Deflation increases the real value of their debt and makes them poorer. It makes it harder for them to dig themselves out of a hole. You know nothing. Ya dumb ass.

  • your doing a shitty job at it as long as you buy stuff and support the rich with your life styles then there still winning.

  • First off your name calling is very juvenile and pointless. No your right Austrian School doesn’t want to help the poor. It just wants to prevent people from being poor. Its sad that you can’t see how printing the reserve currency of the world helps the rich at the expense of the poor.

  • Hahahaahaha…the Austrian School of Economics does not prescribe policies that help the poor. You are a fool. Hayek sought to transfer wealth upwards from the bottom to the top. His policies favored the wealthy industrialists which is why the Koch Bros brought him over to the US and got him a job at the University of Chicago. Ron Paul is not looking out for the poor. He is looking out for the rich. You’re too stupid to understand that. Pathetic.

  • Its the global governance cabal that exploits poor and weaker countries. The IMF, the UN and the Federal Reserve(which holds the reserve currency of the world) are the ones harming poorer countries. The Federal Reserve’s ability to print the reserve currency of the world, helps the insider bankers and corporations at the expense of the poor, especially the poor outside the US. Ron Paul and fellow libertarians and constitutionalists want to return to a fair system for all.