Ron Paul: How the Fed’s “Wise Gurus” Devastate America

by Ron Paul

One of the most enduring myths in the United States is that this country has a free market, when in reality, the market is merely the structural shell of formerly free institutions. Government pulls the strings behind the scenes. No better illustration of this can be found than in the Federal Reserve’s manipulation of interest rates.

The Fed has interfered with the proper function of interest rates for decades, but perhaps never as boldly as it has in the past few years through its policies of quantitative easing. In Chairman Bernanke’s most recent press conference he stated that the Fed wishes not only to drive down rates on Treasury debt, but also rates on mortgages, corporate bonds, and other important interest rates. Markets greeted this statement enthusiastically, as this means trillions more newly-created dollars flowing directly to Wall Street.

Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. Since demand for funds has increased, but the supply is not being increased, the only way to match the shortfall is to continue to create new credit. But this process cannot continue indefinitely. At some point the capital projects funded by the new credit are completed. Houses must be sold, mines must begin to produce ore, factories must begin to operate and produce consumer goods.

But because consumption patterns have either remained unchanged or have become more present-oriented, by the time these new capital projects are finished and begin to produce, the producers find no market for their goods. Because the coordination between savings and consumption was severed through the artificial lowering of the interest rate, both savers and borrowers have been signaled into unsustainable patterns of economic activity. Resources that would have been used in productive endeavors under a regime of market-determined interest rates are instead shuttled into endeavors that only after the fact are determined to be unprofitable. In order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into sectors in which they can be put to productive use.

Another effect of the injections of credit into the system is that prices rise. More money chasing the same amount of goods results in a rise in prices. Wall Street and the banking system gain the use of the new credit before prices rise. Main Street, however, sees the prices rise before they are able to take advantage of the newly-created credit. The purchasing power of the dollar is eroded and the standard of living of the American people drops.

We live today not in a free market economic system but in a “mixed economy”, marked by an uneasy mixture of corporatism; vestiges of free market capitalism; and outright central planning in some sectors. Each infusion of credit by the Fed distorts the structure of the economy, damages the important role that interest rates play in the market, and erodes the purchasing power of the dollar. Fed policymakers view themselves as wise gurus managing the economy, yet every action they take results in economic distortion and devastation.

Unless Congress gets serious about reining in the Federal Reserve and putting an end to its manipulation, the economic distortions the Fed has caused will not be liquidated; they will become more entrenched, keeping true economic recovery out of our grasp and sowing the seeds for future crisis.


  • i am really scared and afraid of this america New World Order and as someone who had to flee from a soviet like totalitarian regime i can tell you that right now you are experiencing the first steps into a totalitarian dictatorship a police state without any human rights,you have right now more people in prisons then any other country world wide, it is enough to smoke marijuana 3 times and you can say good bye to the free world .this is very well known everywhere here in europe we are not blind.

  • call me crazy but i know very well what kind of people pass such acts,laws and no one can tell me that this can´t be used against me,obama has only promised that HE would not use it against americans,what with the next president and what with people like me who are actually no americans , i have to be mad or suicidal to travel to the US and , we all know that obama has his personal hit list and no one knows for what reason you can get on that assassination list. is this your land of the free ?

  • the level of police brutality and crime ( it is a crime in every other country they would have been looked up ) is so unbelievable that you have to fear that they will kill you if your front or rear light does not work , i´ve seen live footage of such incidents , and i´ve made up my mind of the land of the free,thats a bad joke,so bad that you even can´t call it a joke it is a catastrophe , i am serious i really fear to travel to this dictatorship,they don´t even need to charge me with anything

  • i saw your police body slamming a 35 year old mother who dared to use her cellphone in a car ,her child was next to her ,the damage on her face was so devastating that it had to be blurred , but not enough after she was unconscious lying on the ground she had the joy of getting teaseled and this is only one thing i sw on youtube i could go ahead and would probably still talking about it next week , use is a totalitarian police state,it is enough to steal an apple 3 times and you get a lifetime

  • is it really necessary to tell you that no law on this planet is made for not using it ?can you imagine how many people here in germany fear to travel to the US only because they have black hair and have arabic or muslim roots? i personally got called mad by my family when i told them that i´ld like to travel to the US,you may see things different but we know very well how such laws are beeing used. i am no muslim but i think it´s enough what i´ve said here to arrest and lock me away for ever

  • i know that the germans are no bad people in fact we are right now the most tolerant nation world wide, but we are still considered a thread to the rest of the world and in fact we cannot do anything without the permission of the us americans , so , yes you are right not every german is a bad boy but where is the problem to end this ww2 and to give us a peace treaty? can you explain this to me? thanks for your wishes but i would prefer if you would get frank face the things like they really are

  • and yes PEACE TREATY you americans are calling us allies , but are we alies when we still have only ceasefire and no peace treaty , germany was never a souvereign nation after world war 2 that is a fact . germany is a non government org. not recognized by international law , that is a fact too. so you call us alies but you refuse to give us the status of an independent republic is this what you call friendship ?

  • and i am not going to dsicuss with you the obama nazi laws because if you take your time and translate the so called german enabling act of adolf hitler an compare it with the patriot act I and II and specially the NDAA section 1031 you will see how close your obama is to this monster adolf hitler . my familly has suffered a lot from both sides ,the russians killed my grandfather and the german nazis stormed our homeland , i have no sympathies for nazis and no sympathies for soviets.

  • listen, i am a bulgarian whose grandfather was a general under the Zar ( king ) he refused to go into exile and 4 years later the russians took him , my mother was 4 years old and he vanished , we do not know what exactly happened to him, AND we bulgarians did not hand over a single jew or anyone else , the germans had to get along with it , i am no german but i like the germans because now it is my homeland and i would fight for germany if it is necessary , same with bulgaria and croatia

  • A peace treaty? I take it from your profile you’re German? Not sure under what authority the obummer would kill you. I find it shocking how you lump all Americans with obummer. That’s like saying all Germans are bad because of Hitler. You should know that there were many Germans who hated Hitler during WWII and risked their lives to save Jews. Just because one person or a government is bad doesn’t mean all the citizens are bad. Good luck to you.

  • and since your obama has passed the worst nazi laws and acts i have seen so far i have to ask myself if it is not too dangerous for me to speak this things out , your president has allowed himself to kill who ever and where ever he wants . thats why i say bye bye america see you in next live , you never cared for us , why should we care for you , you did not even offer us a peace treaty we are still in war we have only ceasefire, mind your business i´ll mind my one , that´s it , CU

  • and only to say we are not all that way, isn´t enough you´ve done too much damage , now is the time to do something,you missed the chance with ron paul ( by the way i doubt that he meant it for real ) , you have guns and amu , you have the clues and the russian intelligence has said it clear the us army will not be able to stop a revolution , so what are you waiting for ? i know this will be a horror trip but guess how much worst it will get if you don t take action .it´s up to you not our prob

  • we have only one problem germany is still a nation under siege of the ww2 allies so we are no friends and right now many germans are waking up to that fact.
    germany does not need america , america has to keep germany on a low level because they fear our power and ability,but this thing will not last for ever and one day the whole truth will come out.germans are very patient people before they protest a lot of things have to happen but if the boiling point is reached then watch it.
    you missed it

  • every population gets the leaders or the government it has deserved so if your politicians are corrupt you the people are responsible for it.
    if you think they are the root cause of your problems , then you have enough weapons to solve the problem , my patience is over , i have supported ron paul until i saw that he is playing a false game for the sake of his son , like we use to say blood is thicker then water .
    if you really think so go and do something , why should get your freedom as a gift?

  • do you really believe that ? do you really believe that we are dependent on a country which is taking its last breaths ? are you really so arrogant and ignorant not to see what is going on , we have very good relationships to china , russia and all these countries you hate so much and let me tell you what russia for example has no debt , and i could go ahead,china is your bank if they switch off the money supply you will vanish in chaos,by the way you are already on that way.

  • it is late here and i get tired to hold the mirror in your face , but tomorrow i will go ahead there is a lot more to say , thank you for your provocation , now i will not hold back anything , just for you to know what is coming to you specially when you dare o visit europe, if you do that , go learn german because i refuse to talk in your language here in germany , when you are here know that we look down to you and your idiotic language which is in every way inferior to all of our languages

  • without our scientists you would still not have rockets and you would still dream of a space program,you´ve stolen everything from us , you call yourself the land of the free but in fact you have the most prisoners world wide, your officials are corrupt and criminal.
    and your satanistic meetings at the boohemian grove are world wide very well known , you imbeciles are slaves to the israeli zionists,not even one president gets elected before he had not made his trip to Yad Vashem and bow down

  • Lighten up Francis. You think all US citizens agree with what’s happening to our country? If so, you need to get your head out of the toilet and start doing taking a representative sample. Most US citizens are against our continual warring and would like our troops home. The problem is that our government is out of control. It’s so corrupt that they basically cheated Ron Paul being the Republican nomination. I wouldn’t wish USA misfortune. When our economy tanks SO WILL YOURS.

  • hitlers book “mein kampf “was inspired by USA and his idea of eugenics is an US idea and it´s still alive,by foundations like this from miss gates,you with your god damn Zionist NWO,we know very well that the intern. zionnists have declared total war on germany before on it if you wouldn´t have your allies US would be called germany in today times,you´re weak cowards only able to beat the weaker one but first you have to assure yourself that your opponent is weak enough ,damn cowards

  • I was going to vote for Ron Paul at the election (write in vote). Does he want people to do this or has he given up? Should I be voting for Gary Johnson (libertarian candidate)?