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.

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205 Comments:

  1. The federal reserve is not private. You don't know anything. You are parroting rubbish you heard on Ron Paul websites. From the FRB FAQ:

    "Who owns the Federal Reserve?

    The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution."

    Look it up stupid. The Fed is not a monopoly. You don't understand the economy. You are a silly child.

    Stop wasting your time responding. Idiot.

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  2. ben bernanke doesnt like this.

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  3. "You're obviously quite young." Just goes to show your illogical thinking of jumping to conclusions.. Wow such a failure how you can't understand that banks and corporations run the entire federal govt. Maybe you took my example a little to literally, but yes, they would spend 200 million if it meant they have a monopoly.. What Monopolies? Gee I don't know! Maybe the private the Federal Reserve that controls over 50% of the economy just to name one?

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  4. You're obviously quite young. Yes, the govt does pass laws that protect consumers, shareholders and the environment from corporate greed. Give a whole in your silly storyline? Why would a corporation bribe govt to pass laws that require them to hire 1000s of attorneys to circumvent? Hiring 1000 attorneys for one year at an average salary of 200K apiece would cost $200,000,000. Which corporation is a monopoly? Name them. You're an idiot. Stop embarrassing yourself.

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  5. Breaking News: Sheriff Arpaio Concludes Obama Birth Certificate is a Forgery!

    Share!!!

    http://www.youtube.com/watch?v=z6Ngv16UQAA

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  6. wow you are soooo ignorant. How much msnbc do you watch? You actually believe the state protects us from the evil corporations don't you?.... The corporations only exist because they use the government to create a monopoly. "There are so many wholes in your reasoning it's hard to believe you are serious and not trolling." Ya? name one thing genius. What, you don't think congressman and senators get paid millions by big banks and corporations to pass legislation to crush small business?

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  7. Hahahahaaha...you're a silly child. You're funny. You're very stupid but very funny. Did you read that in a novel or see it in a movie? The world does not work as you describe. Corporations lobby for deregulation. When they help write regulations, they are writing laws that make it easier for them to pollute, cheat and steal. They are not giving govt more power so govt can squash small business. There are so many wholes in your reasoning it's hard to believe you are serious and not trolling.

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  8. "They use regulations to avoid market discipline? " Ya no shit, genius. Its real simple. Maybe you can follow. Mega-Corporations write the regulations that make the cost of business more expensive. They then hire 1000 lawyers to get around that regulation. Their small business competitors cannot hire 1000 lawyers so they eventually get shut down. And the Mega-Corporations have no competition and therefore need no market discipline. Holy shit man this is so elementary! Did you mom drop you?

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  9. No your the one that's clueless. There would be no need for Glass-Steagall if the fed hadn't artificially lowered interest ratesto create a false boom. Bailouts are a Keynesian idea, genius. No Austrian supports bailouts. And even an Austrian wouldn't have been so stupid as to deregulate the financial sector without first ending the FED and allowing market level interest rates to kick in, and a repeal of the Affordable Housing Act. But the gods you worship at the Fed obviously did just that.

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  10. wow your "economics" is so backwater. Let me guess the great depression was caused by ppl undercutting each other lmao? Le's talk about basic economics. Inflation is the expansion of the money supply, not rising prices(although it can lead to that). Money in credit has expanded from 1 trillion in 1971 to over 50 trillion today. The dollar has lost over 95% of its value since 1913. LMFAO "annual rate of infaltion is 1.3%" Are you smoking crack? Do you have any idea how rigged the price indices r?

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  11. This is to happen...

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  12. Speak out against PROPOGANDA spin show on HBO called "Newsroom " Youtube is promoting clip which is ironically named "most honest 3 and 1/2 minutes ". A "Ron Paul type " character subtly suggests the fault of America's demise is ignorant college kids, pot users and Christians. NO mention of AIPAC, NDAA, SOPA,, OWS, Federal Reserve etc.... Very sneaky propaganda

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  13. Crybaby Dildo = Libertarian Loo-Hoo-Za-Her!,,,,,,,,,,,,,

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  14. So far as rising prices, prices rise because people have purchasing power. Prices fall because people do not have purchasing power. So rising prices are a sign of a healthy economy. Look at prices now. Monthly inflation in April = 0%, May -3% and June 0%. Annual rate of inflation as of June is 1.66%. Economy is weak so prices are not rising. Learn some basic economics. Stupid people typically think that deflation is good. They don't realize that it is caused by a decline in purchasing power.

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  15. They use regulations to avoid market discipline? hahahaaha...holy fuck you are stupid. You are parroting a corporate trade group talking point and you're too stupid to realize it. Banks and big corporations lobby for deregulation and they get schmucks like you to support deregulation. Bailouts were needed because banks were not regulated properly. There were no bailouts from 1950 to 1980. Deregulation started in 1980: S&L crisis, dot com bubble, housing bubble, etc etc.

    Get a clue you idiot.

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  16. IAMHEWHOAM = inbred retard.

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  17. 10 MILLION MAN MARCH FOR LIBERTY ! on DC and all 50 State Capitals, all on the same day!

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  18. libertarian is becoming the new republican and wee not going anywere but to washington!

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  19. Libertarian = Crybaby Loser.

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  20. Anything in the works by Ron Paul supporters to March on DC prior to Tampa?

    Would this be a good move, or concentrate on putting as many of us in Tampa --- hopefully millions?

    http://www.youtube.com/watch?v=j9oHyjOzE8o&feature=player_embedded

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