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.

  • Only when the last tree has been cut down
    Only when the last river has been poisoned
    Only when the last fish has been caught
    Only then will you find that money cannot be eaten.

    personally, i love Ron Paul’s “Freedom/Liberty Message” but i dont think gold is the answer to any of our problems.


  • Such a future will never exist, person’s labor or resources will always be of value to another person.

  • thank you Mr. Paul.. i appreciate your time and effort…

  • that’s the goal , to replace most jobs with machines. That’s why civilization progresses. People do not need ‘jobs’ just for the sake of having a job, they need products and services. If the machine can provide them, that’s perfect. We wouldn’t be better of by having no youtube and this message board, even though if we both rode our horse-carriages to a bibliotheque and have a discussion there, it would create more jobs. Fuck Modern Luddism !

  • I’m speaking entirely in the future where you wouldn’t need to “barter or exchange”

  • What do you mean by “abolishing money” ?

    Isn’t money just a medium of exchange/barter. Wouldn’t money always be necessary to barter and exchange within your community?

  • “Actually most jobs can’t be done by machines”
    Pffthaha. Let me give you a 2 second google search example and see what it gives me, oh look: ‘Machines will 80 percent of doctors”

    “Machines can’t think for themselves”
    Captain obvious over here.

    “Jobs will forever be apart of human society”
    Incorrect. Can you tell me the purpose of technology in the first place so you disprove yourself lol…


  • Actually most jobs can’t be done by machines, and machines always needs maintenance. Machines can’t think for themselves they only do as they were designed or programmed. Jobs will forever be apart of human society, maybe you should get one.

  • Ron Paul will be on the ballet, when I write his name in on the ballet ! 😛

  • you didn’t miss much to be honest, the same old crap that we’ve been hearing from both the parties for decades now and nothing will change.

  • is ron paul going to be on the ballot?

  • I wish you would stop putting words in my mouth and strawmanning me. Most jobs in America can be replaced by machines. Jobs are obsolete.


  • Gold is a raw resource and is mildly useful, and most importantly, is not perishable. This means that you can always get a fair price because you can just sell it later. This means the price is set by the seller and not the buyer. It is a garunteed profit if you buy gold (or silver, copper, or any other non perishable element or mineral.)

  • He is using a telephone. Texas Straight Talk is just an epic answering machine service.

  • I watched the debate… I think I lost brain cells. 🙁

  • Hmm. Currency issues were the main thing I’d been thinking about for a couple days and this right here is the answer.

  • Vote Gary Johnson

  • So you’re saying everyone should just be slaves then? When people work you’re supposed to compensate them for their time and effort. Normal compensation is what we call money. Slavery isn’t the answer!