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=IvanMockba Ivan Mockba

    Unemployment is over 25% and that is a fact they don’t want people to know.

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

    I disagree!

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

    Gary is our only hope now. Ron knows write-ins wont work.

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

    No One But Ron Paul! NOT Gary Johnson!

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

    Watch the video: Still Report #41

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

    Gary Johnson is a WAR MONGER!

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

    Ron Paul as an Independent for President in 2012 along with Bill Still as Vice President in 2012!

    Thanks a lot Jesse Ventura for selling out to the neoconservative war monger Gary Johnson!

    ronpaul2012 . net

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

    Ron Paul as an Independent for President in 2012 along with Bill Still as Vice President in 2012!

    Thanks a lot Jesse Ventura for selling out to the neoconservative war monger Gary Johnson!

    ronpaul2012 . net

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  • http://www.vehiclewrapssf.com/ Vehicle Wraps SF

    It’s insane to me that this sort of rhetoric isn’t heard/seen on mainstream media outlets. Let Ron Paul be heard on CNN, Fox News, and (let’s be honest – where half of the younger generation gets their news) Comedy Central’s The Daily Show.

    Even if these sorts of changes can’t be made yet, we need to lay the ground work for future politicians to present logical and fact-based arguments which can revitalize this country’s spirit and economy.

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

    Go suck a bag of chopped up dicks, you insignificant little faggot.

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  • robin

    This video is banned in the US, Israel and Europe and we all know why.
    http://www.youtube.com/watch?v=bCw-oWp1wf8&feature=youtu.be
    How many Americans know that upwards of 50,000 Jews live peacefully in Iran and have for a very long time. When they were offered free passage to Israel they declined and said why would they want to do this when they are respected, well=treated and can practice their religious beliefs.

    French Canadian and Surfisher,
    Have you listened to Merlin Miller who is running for President on the third party ticket? As far as Ron Paul or Doug Weed advising people how to vote, I think we have to decide for ourselves. I can not vote for Gary Johnson for so many reasons. He does not have the same moral compass that Ron Paul has and his stand on many issues is wishy washy-immigration(North American Union), foreign policy. I like what I’ve heard from Merlin Miller so far, but plan to look at him more closely.

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    • French Canadian

      Robin,

      I know this about the Jews in Iran. The problem is that the Irael government is as corrupted as the American government. Which in no way means that Jews or Americans citizens are corrupted.

      I did answer you on Merlin Miller’s video. But, you wont like my response…lol.

      Here is what I wrote:

      Robin,

      When I saw Miller, I thought it was Gary Jonhson, they look a lot alike (that was without my glasses…lol). After putting my glasses on, I saw a bit of a difference between them.

      But I can understand why people are saying he is a racist… I also feel the same way. When I hear the word Zionist (that’s the signal)… I know right away that the guy has to be a racist. And the women with her scarf is also one.

      I am more like Ron paul, Gary Jonhson and Alex Jones. I believe in Israel sovereingty, I want the Jewish people to have a land. It doesn’t matter if it was the Americans who created the UN to give them a country so Americans could have an ally in this region of the World. They now have one and should be allowed to keep it.

      Do you really think that USA and Canada did any better? Stealing the lands from the Natives, killing them and putting them in Reserves? I don’t. But is it your fault or mine what our ancestors did? No, it isn’t. And now that we we’re born and live in our respectful countries, we should be alowed to keep the sovereignty of our countries.

      Americans cannot face the truth, this is what I’m realizing everyday that passes by. Instead of speaking of the corrupted Foreing Banksters, they say the Jewish Banksters or worse, the Zionist Banksters. Giving the impression that alll JEWS are evil, when in fact it is only this small group of Banksters (6 major banks in America). And who allowed them to run your banks and country? Americans did. Face the facts and stop looking for scapegoats. So they control your medias… who give then that right? Americans did. Wake-up folks!

      How can this Miller point out to Israel on 9/11 when there is absolutely NO proof of that so far, just speculation? A true investigation was never done. The few facts we have so far points out to America, Saudi Arabia, Britain and Israel… in that order. But the first guilty one is AMERICA (CIA) who allowed it to happen.

      I see people on this site linking to things Zionists wrote to make them look bad, like I saw on neoconservative sites, people linking to things Islamist’s wrote to also make them look bad. All these people a true racists in my book and are trying to reject the fault on either the Zionists or the Islamists. NONE of them ever blames America… lol. I guest when you are too close to a tree, you cannot see the forest.

      Conclusion: In my book Merlin Miller is a true racist. And he ain’t going anywhere. Unless he takes his blinders off and sees America for what it really is. But it is unlikely he ever will. We do not need people like him trying to divide us more. We need to unite.

      Evil comes from every country and the Globalists scums are from all Nations. Till we understand this, there is NO hope for this world.

      Sorry Robin, but I don’t like this Miller.

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  • http://www.youtube.com/profile?user=iTroII1 iTroII1

    Stop trolling around the internet, you low life moron.

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  • http://www.youtube.com/profile?user=iTroII1 iTroII1

    Stop trolling around the internet, you low life moron.

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

    Blah blah blah….Fuck you, weirdo.
    Even Chicken Little though he knew the truth. You’re just another fuckin’ weirdo.

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  • robin

    Hello French Canadian…Just moved my son to the big city to finish college, so I’ve been busy. Ben Swann has been doing some great Reality Checks if you haven’t seen them. I will watch your videos as soon as I have some time. Back in the homeschooling mode, so busy and my son is working on his speech for that Voice of Democracy contest. We brought both our children up to be independent thinkers, so we’ve had some lively discussions because he has a different opinion on a few things. Surfisher, Plan to get Plato’s Republic for him to read=good to show the NWO agenda and JS Mills Liberty. He’s been studying up on the Constitution and listened to the judge. So much going on right now, but I was glad there was no false flag attack on Yom Kipper which some people thought would happen. Did you watch the video interview I posted on Merlin Miller who is running for president?

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    • French Canadian

      Robin,

      I see you have been quite busy. Welcome back.

      Here is another great interview today with David Icke:

      It starts at: 1:10:09

      Alex Jones Show: Thursday (9-27-12) David Icke
      http://blogdogcicle.blogspot.ca/2012/09/alex-jones-show-thursday-9-27-12-david.html

      Yes, I always watch Ben Swann’s interviews. I like the way he works. No speculation, just facts. These people , like Ben and Alex have credibility because they only work with facts.

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  • Citizen

    Obama says he has a 5 point plan to improve the economy….

    WHAT!!
    Are you going to believe him or your lying eyes and ears?

    Don’t forget, the Totalitarian State wants you to be obedient…
    Silence… I kill you!

    p.s.
    As for IAMHEWHOAM
    he/she/it is a total Sociaopath without moral compass.

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

    Democrat or Republican, makes no difference. USA badly needs a 3rd & 4th option, a serious grassroots movement. Democrats and Republicans are the SAME, they’re both EVIL, does not matter which is lesser, evil is evil. Candidates of Libertarian & Green parties should be allowed into the debates, as well as major independent candidates.

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

    ……..and you paultards are the PUNCHLINE!

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

    wRONg Paul is a batshit crazy, old, egg sucking wannabe. wRONg Paul is a fucking JOKE!

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

    Most every major empire, including the Roman Empire and early 20th century Germany, have followed the same exact steps that led to economic collapse.

    For America, this problem began with the Federal Reserve, and by removing the gold standard. We are on a fiat currency, and not one fiat currency in history has ever survived. We are currently in the middle of inflation and a major wealth transfer, which will be far larger than the Great Depression. The housing collapse was only the beginning.

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