The Fed's Money Monopoly

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Last week,
in the name of protecting the little guy from Wall Street, the House
passed HR 4173 to increase the little guy’s false sense of
security in the financial system. This mammoth piece of legislation
would massively increase government regulation and oversight in
the banking industry under the misguided reasoning that more government
could have stopped faulty lending practices, when in actuality it
caused them. This bill would also greatly increase the powers of
the Federal Reserve, which too many in Congress still see as savior
rather than perpetrator in this mess.

One silver
lining is that the amendment to audit the Fed is still attached
to the bill, and if it survives the Senate, the Fed will no longer
operate in secrecy. If any version of HR 4173 becomes law, the Fed
will be intervening and bailing out more rather than less, as it
will gain enormous new powers in addition to those it already has.
Whatever happens, the Fed and its defenders have seen that people
are becoming very wary of its methods of operation, and many are
downright angry at its very existence. Never again will the Fed
be immune from the scrutiny of its critics. This is very positive.

Because of
legal tender laws that force acceptance of the dollar, the Fed has
absolute power over the currency. This absolute power is leading
to the absolute corruption of our currency. The money supply has
doubled in the last year or so, which is extremely dangerous. The
banks seem to be hoarding liquidity now but once these dollars make
their way into the economy, hyperinflation and economic chaos will
be a real possibility.

Every time
hyperinflation rips through an economy, the middle class gets completely
wiped out. It is very alarming to watch the purchasing power of
an entire life savings reduced to that of a few pennies. Those savings
represent years of real labor, real time, effort and sacrifice exchanged
for corruptible pieces of paper that politicians and bankers can
destroy at whim.

Legal tender
laws force the people to become subject to this risk for the benefit
of the rulers. Artificial demand for currency allows the authorities
to create arbitrary amounts of it to pay for wasteful projects,
like frivolous wars and an ever-expanding public sector. This saps
the private economy of jobs and purchasing power, yet the temptation
proves too great for politicians, time and time again. Our government
is no different. Although our dollar has taken nearly a century
to lose 98% of its purchasing power, the fact that we are all obliged
to participate in this slow burn of the economy on pain of imprisonment
is anathema to the principles of liberty.

I introduced
the Free Competition in Currency Act last week to free the people
from these governmental threats. HR 4248 would repeal legal tender
laws, prohibit taxation on certain coins and bullion, and repeal
certain laws related to coinage. The prospect of people turning
away from the dollar towards alternate currencies should provide
incentive for Congress to regain control of the dollar and halt
its downward spiral. Restoring soundness to the dollar will remove
the government’s ability and incentive to inflate the currency and
keep us from launching unconstitutional wars that burden our economy
to excess. With a sound currency, everyone is better off, not just
those who control the monetary system.

See
the Ron Paul File

December
15, 2009

Dr. Ron
Paul is a Republican member of Congress from Texas.

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