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.

  • http://www.youtube.com/profile?user=Spedskate Spedskate

    Ron Paul is out Gary Johnson is your only option. WHO IS GARY JOHNSON?!? LET HIM DEBATE!

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  • Surfisher

    Ron Paul’s senior adviser, Doug Wead, received this message from me today!
    (let me know your take)
    ——————————————————

    Doug, are you still Ron Paul’s senior adviser?

    If so, please, have a conversation with Dr Paul, and then inform us what his intentions are. We spent too much effort trying to get him elected, to be left now with just silence on your and his part. We, his supporters, have been left in limbo!

    If he is to utilize the Liberty Movement, that has grown exponentially in numbers, to endorse Gary Johnson (or have us Write In Ron Paul as protest vote)— it needs to be announced ASAP! With only 39 days left, it is negligent to the extreme to allow an election that goes unchallenged by a Third Party with all the support that has been garnered so far in opposition to the BO and the Mitt.

    Awaiting an announcement by end of week!
    ————————————————————–———————-

    Doug Wead, if you are no longer Ron Paul’s adviser, let us now — so we can decide what should be done without adhering to your blog’s intent.

    Thank you in advance,

    Surfisher

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    • Surfisher

      MUST WATCH this 6 minute video!

      12 year-old Canadian girl (who’s IQ is probably higher than the combined IQs of the Barrack and the Mitt) slams the International Banksters!
      Canada has their own Private Banking Cartel — mirroring our Federal Reserve Board — whose goals are the destruction of the Value of our Money !

      Share and make it viral!

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  • French Canadian

    Robin,

    I have news concerning Dr Steve Pieczenik. Alex said he invited him last week, but he doesn’t want to come right now, maybe later. If you want to hear him saying this, I have to put you in context, so start listening at: 02:33:49 to 02:46: 40

    Alex Jones Show: Wednesday (9-26-12) Paul Craig Roberts & Dr. David Schnare
    http://blogdogcicle.blogspot.ca/2012/09/alex-jones-show-wednesday-9-26-12-paul.html

    Now, if you want to know what was the video he was talking about in the passage I’ve just linked you to… here is the video:

    Breaking!! Israel Lobbyist – We Need a False Flag to Start War with Iran!
    http://www.youtube.com/watch?v=PfoaLbbAix0&feature=player_embedded

    ——————-

    By the way, on today’s show, Dr Craig Roberts really gave a powerful interview. If you want to listen to it, it starts at: 1:01:18

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    • Surfisher

      French Canadian — one of your own makes monkeys out of the BO and the Mitt, and more!

      MUST WATCH this 6 minute video!

      12 year-old Canadian girl (who’s IQ is probably higher than the combined IQs of the Barrack and the Mitt) slams the International Banksters!
      Canada has their own Private Banking Cartel — mirroring our Federal Reserve Board — whose goals are the destruction of the Value of our Money !

      Share and make it viral!

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      • Surfisher

        LOL — youTube block it!

        Try this one:

        http://www.youtube.com/watch?v=Cktqks_HL2Q

        (share, before this one is gone, too)!

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      • French Canadian

        Surfisher,

        This 12 years old girl is one smart cookie! She explained it simply with few words.
        But if you want to learn about how it happened, watch this very interesting video that I’ve been spreading to everyone I know in Canada for years::

        The Crime of the Canadian Banking System 1/4

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  • http://www.youtube.com/profile?user=IAMHEWHOAM IAMHEWHOAM

    Fearful of what? You people are just too fuckin’ goofy to know fantasy from reality. You’re all living in the “Twilight Zone”!
    Next thing ya know, you’ll be telling me how you believe in Bigfoot and flying saucers, you dumb fuckin’ wack-jobs!

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  • http://www.youtube.com/profile?user=TheOneartist TheOneartist

    He has a point. You sound incredibly fearful.

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  • http://www.youtube.com/profile?user=IAMHEWHOAM IAMHEWHOAM

    Go fuck your mother, you pathetic crackpot.

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  • http://www.youtube.com/profile?user=TommyJackets Tommy Jackets

    You’re the kind of person that is going to be saying everything is alright… One day you’ll be breaking down your dining room table into firewood and you’ll be saying to your family and yourself… “Everything is going to be ok… it’s getting better… the unemployment is down to 8.1% now!!!”

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  • http://www.youtube.com/profile?user=mdreiger mdreiger

    I’ll put this on my public access TV show

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  • http://www.youtube.com/profile?user=loghmon loghmon

    Iran is a self sustaining industrialised nation, the legality of its nuclear program is meet accordingly with the international atomic energy agencies protocol.  Pakistan is not a member of the IAEA, yet no word of its nuclear program’s legitimacy is questioned.

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  • http://www.youtube.com/profile?user=loghmon loghmon

    Iran is a self sustaining industrialised nation, the legality of its nuclear program is meet accordingly with the international atomic energy agencies protocol.  Pakistan is not a member of the IAEA, yet no word of its nuclear program’s legitimacy is questioned.

    Like or Dislike: Thumb up 1 Thumb down 0

  • French Canadian

    Great interview with Carl Mayer.
    It starts at: 0:56:30

    Alex Jones Show: Tuesday (9-25-12) Carl Mayer
    http://blogdogcicle.blogspot.ca/2012/09/alex-jones-show-tuesday-9-25-12-carl.html

    “Carl Mayer, the attorney representing American Pulitzer Prize-winning journalist Chris Hedges in his legal battle to keep President Obama’s power to send US citizens to military prisons without right to trial or attorney, or NDAA privilege, at bay

    ————————-

    Last night I had a friend phone me up after listening to the beginning of the Show till Carl Mayers interview at (0:56:30)
    It was the first time he was listening to the Alex Jones Show. A friend gave him the link. I had never bothered giving him the link I thought he was too misinformed… lol. I believed it was a waste of time. Anyway he phoned me up to tell me to listen to this SHOW…lol.
    WOW! Only 56 minutes listening to the show and he woke-up. This is how you wake-up people. NO ONE can wake-up people as fast as Alex Jones.

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  • French Canadian

    Do you want to wake-up people? Do you really want to wake them up? Well this is how you do it. People wake -up by identifying themselves with ordinary people.
    Islamist or Zionist bull wont do it, you will only be called a racist. But ordinary event with ordinary people will wake them up faster than you wished.

    See this great interview with this brave Amy Larson who was arrested and jailed for Sidewalk chalking: “Youtube Building 7″

    The interview of Amy Larson starts at 0: 45:37

    Infowars Nightly News: Tuesday (9-25-12) Amy Larson
    http://www.youtube.com/watch?v=U7SLU2xffeI&feature=player_embedded#!

    You can also watch this short clip:

    Infowars Reporters Encounter Jackboots at The Alamo
    http://www.infowars.com/infowars-reporters-encounter-jackboots-at-the-alamo/

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  • http://www.youtube.com/profile?user=H3llionCinema H3llionCinema

    “Connect with your community.”

    Mark that line people, it is very important or at least your families if something does go wrong. As they say, strength in numbers.

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  • http://www.youtube.com/profile?user=amdramatic amdramatic

    RON PAUL 2012
    OBAMA AND ROMNEY CAN GO SCREW THERE SELFS…

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  • http://www.youtube.com/profile?user=MrJoycepaul MrJoycepaul

    I’m sad he will not run 3rd Party. I wish Ireland had such a good politician. We have plenty of bent politicians already, so you can keep Obama and “Mitt”

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  • http://www.youtube.com/profile?user=IAMHEWHOAM IAMHEWHOAM

    You are completely insane! Get psychiatric help before you hurt yourself or someone who gives a shit.

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  • http://www.youtube.com/profile?user=IAMHEWHOAM IAMHEWHOAM

    You’re nuts!

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  • http://www.youtube.com/profile?user=rangers2721 rangers2721

    as a “paultard” i can only say… i hope you’re right. I really hope you’re right

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  • http://www.youtube.com/profile?user=briteness briteness

    I doubt that Ron Paul would advocate writing his name in, but I do not know. I strongly supported his candidacy, but now I plan to vote for Gary Johnson.

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  • http://www.youtube.com/profile?user=IAMHEWHOAM IAMHEWHOAM

    You fuckin’ paultards are just a bunch of Sicko,Psycho, crybaby, losers!
    YOU NEED TO BE COMMITED TO THE FUNNY FARM!

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