Ron Paul: Why Governments Hate Gold and Love Fiat Money

by Ron Paul

Last year the Chairman of the Federal Reserve told me that gold is not money, a position which central banks, governments, and mainstream economists have claimed is the consensus for decades. But lately there have been some high-profile defections from that consensus. As Forbes recently reported, the president of the Bundesbank (Germany’s central bank) and two highly-respected analysts at Deutsche Bank have praised gold as good money.

Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce – making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly $1800 an ounce after the Fed’s most recent round of quantitative easing because the people know that gold is money when fiat money fails.

Central bankers recognize this too, even if they officially deny it. Some analysts have speculated that the International Monetary Fund’s real clout is due to its large holdings of gold. And central banks around the world have increased their gold holdings over the last year, especially in emerging market economies trying to protect themselves from the collapse of Western fiat currencies.

Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow.

This is why it is so important to allow people the freedom to choose stable money. Earlier this Congress I introduced the Free Competition in Currency Act (H.R. 1098) to permit people to use gold as money again. By eliminating taxes on gold and other precious metals and repealing legal tender laws, people are given the option between using good money or fiat money. If the government persists in debasing the dollar – as money monopolists have always done – then the people would be able to protect themselves by using alternatives such as gold that are both sound and stable.

As the fiat money pyramid crumbles, gold retains its luster. Rather than being the barbarous relic Keynesians have tried to lead us to believe it is, gold is, as the Bundesbank president put it, “a timeless classic.” The defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government. Governments hate gold because the people cannot be fooled by it.

  • so happy I left the USA regime 13 years ago and chose a communist/socialist country VN as my home where gold is bought and sold at the banks. can be saved in the bank and can be debited against the same as a cash account.. can americans spell FREEDOM anymore?? take it back and kick the imperialist globalist OUT of DC. the VC did it to the French and then kicked the US the hell out. U can do the same guys,, kick em out or keep dancing to their tune.. good luck!!


  • Me too Gary….me too! <3

  • I think it is important to the Liberty Movement for Ron to officially give his blessing to Gary Johnson during this election. He was clearly not our first chice to run this late in the year but he is a third horse in this two horse race which will help keep our momentum alive. I also think Gary should in return officially announce where in his cabinet he would place Paul. In my opinion, this issue should be a priority. ~Cheers

  • The watching the “debate” gave me a bad headache. My head felt a lot better, however, after watching this video.

  • Why would I need to create a black market in a society that has embraced technology and abolished currencies? This society isn’t resource based, coexists with nature and doesn’t wake up to make money; it’s hobby based.

  • Lets just make him our president!

  • I wish Ron Paul was 15 years younger.

  • Ron Paul is the man , hey Paul if you have to u should run independent either way I’m writing in your name .

  • You do realize that for thousands of years when left to the free market, it has chosen gold, for many reasons. Competing currencies is great, abolish the legal tender laws and leave currency choice up to the market. But what currency is going to win out against a gold backed commodity standard? It would always be the safest store of wealth that served as a medium of exchange. Any paper standard is subject to manipulation and/or devaluation that could end in total loss, but not in gold standard.

  • It is depressing listening to people talk about whether they will vote for Romney or Obama and act as if either are good. How can anyone vote for such scum? Unfortunately, most people don’t know how terrible they both are and what they have actually done in office.

  • What about what Iceland did? Is that a good idea to do here?

  • I just like anything Ron Paul says, I’m STILL in love with him as a candidate!

  • What are you talking about? Gold standard, competing currencies, and fiat money are far from the same “shit”. You cannot abolish money. A black market system of money has and always will arise anywhere that silly idea would be tried. Have you heard of the coincidence of wants problem? All kinds of things have served as money because of this, shells, beads, salt, etc. Even in prison cigarettes serve as money. You either have the free market determine what money is or the gov’t impose it upon you.

  • What debates? ;p

  • Bless you Ron Paul!

  • let those two morons debate. i don’t care what either of them say. i will be watching none of the debates, and writing in Ron Paul on voting day.

  • You’re right 🙂
    Doesn’t seem fair that Romney had to cheat to get into the debate.
    Still can’t figure out why he has not been charged with a felony when he got foreign money giving to him for his campaign …Sad and corrupt stuff going on,and all it is doing is cheating the American people out of what is rightfully theirs…Peace 🙂

  • Ron Paul would have mopped the floor with Obama..Hands down.

  • Six out of ten really? I’d give him a three or four.

  • My respect ron paul but i’m sorry to say its over for america….