the printing presses for the bailouts run at full speed, those in
power are no longer even pretending that the new giveaways will
fix our problems. Now that we are used to rewarding failure with
taxpayer-funded bailouts, we are being told that this is “just
a start,” more funds will inevitably be needed for more industries,
and that things would be much worse had we done nothing.
total bailout commitments add up to over $8 trillion now. This translates
into a monetary base increase of 75 percent over the last two months.
This money does not come from some rainy day fund tucked away in
the budget somewhere — it is created from thin air, and devalues
every dollar in circulation. Dumping money on an economy, as they
have been doing, is not the same as dumping wealth. In fact, it
has quite the opposite effect.
One key attribute
that gives money value is scarcity. If something that is used as
money becomes too plentiful, it loses value. That is how inflation
and hyperinflation happens. Giving a central bank the power to create
fiat money out of thin air creates the tremendous risk of eventual
hyperinflation. Most of the founding fathers did not want a central
bank. Having just experienced the hyperinflation of the Continental
dollar, they understood the power and the temptations inherent in
that type of system. It gives one entity far too much power to control
and destabilize the economy.
bankers have had a tremendous amount of hubris over the years, believing
that they could actually manage a paper money system in such a way
as to replicate the behavior and benefits of a gold standard. In
fact, back in 2004 then Fed Chairman Alan Greenspan told me as much.
People talk about toxic assets, but the real toxicity in our economy
comes from the neo-alchemy practiced by the Federal Reserve System.
Just as alchemists of the past frequently poisoned themselves with
the lead or mercury they were trying to turn to gold, today’s
bankers are poisoning the economy with accelerated fiat money creation.
the ages, gold has stood the test of time as a consistently reliable
medium of exchange, and has frequently been referred to as “God’s
money,” as only God can make more of it. Seeking superhuman
power over money in the way alchemists did in ancient times caused
society to shun them as charlatans. In much the same way, free people
today should be sending the message that this power and control
over our money is no longer acceptable.
The irony is
that even had the ancient practice of alchemy been successful, and
gold was suddenly, magically made abundant, alchemists still would
have failed to create real wealth. Creating gold from lead would
have cheapened its status to that of rhinestones or cubic zirconia.
It is unnatural and dangerous for paper to be considered as precious
as a precious metal. Our fiat currency system is crumbling and coming
to an end, as all fiat currencies eventually do.
reject the central bank as a failure for its manipulations of money
that have brought our economy to its knees. I am hoping that in
the 111th Congress my legislation to abolish the Federal Reserve
System gains traction so that the central bank can no longer destroy
Paul is a Republican member of Congress from Texas.