Book Review: Ron Paul's End the Fed Condenses a Lifetime of Wisdom and Experience

Ron Paul is now retired from professional politics, leaving a need for at least one Congressperson who you feel isn’t fundamentally BS-ing you. Oddly, he found a lot of political support for his unfashionably libertarian plain-speaking. People apparently found it more appealing than the usual favors-for-votes propositions upon which most politicians base their careers. In the end, he basically had to fire himself, declining another run for office at age 77.

Much of his extraordinary term in office revolved around the topic of money, which itself is remarkable. As Paul recounts in his 2009 book End the Fed:

“I have for years sensed a total disinterest in monetary policy by members of Congress as well as members of the Financial Services Committee. … What the Fed and paper money have done for Congress is lead legislators to believe that there are no limits on what they can spend, on what they can propose, and what they can accomplish. They really do behave like college students on spring break who are using their parents’ credit cards with no limit. They don’t think about the money. they don’t think about who or what is paying the bills. The ability to do what they want is just taken for granted. They aren’t even interested in looking into the accounting books. But they would hit the roof if the card were ever declined.”[amazon asin=0446549177&template=*lrc ad (right)]

This attitude is reflected in statistics: with the advent of floating fiat currencies in 1971, not only the U.S. but most developed world governments started running deficits in peacetime for the first time. At some basic level, politicians figured that the “central bank would bail them out” with some kind of money-printing. It was all funny-money in the end. It took a while, but Paul says the era of reckoning is upon us now, and indeed the Fed and other central banks are quite busy today either propping up sovereign bond markets that freely-acting investors had abandoned (Europe), or rather forthrightly engaging in printing-press finance (U.S. and especially Japan).

Paul even traces this trend back to World War I, which followed soon after the introduction of the Federal Reserve in 1913 and similar central banks worldwide patterned on the Bank of England. The centralization and monopolization of currency issuance in the late 19th century allowed governments to finance the war at least in part via the printing press, with this process led by Britain, the U.S., Germany, France and others. Paul thinks that fact was one cause of World War I to begin with. Governments thought that, with the printing press on their side, they could attempt another round of Imperial land-grabs.

End the Fed is a personal account, with chapters on “My Intellectual Influences,” “The Gold Commission” (which Paul participated in during 1981-1982), “My Conversations with Greenspan,” and “My Conversations with Bernanke.” His daily exposure to the sausage-factory of Congressional policymaking has given him some insights that I think are particularly interesting.

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