- I just discovered that Ron Paul doesn't understand the
Fed, doesn't understand the problem of the monopoly of credit in this
country.
-
- The Fed is not "printing money" to make up
the deficit -- it is buying bonds which it pays for with credit, creating
bank deposits the government can draw on -- this is not the same as
injecting new purchasing power -- they money has to be paid back at interest.
-
- When the Fed creates new credit it does so in the securities
market - not with the printing press. And the credit goes to corporations
-- for investments in capital goods, not consumer goods -- and these
investments are largely being made in China.
-
- The people are starved for credit, for purchasing power.
The big corporations have little desire in discovering the "demand"
of consumers -- so much easier to start a war and have the government
as a captive buyer -- the government having the credit to buy (which
the people no longer have) -- the government is always able to tax to
make its debt payments. Industry, always investing with the credit they
get from the banking system -- invests abroad. -- invests where labor
is cheapest, invests where pollution is not costed to the polluter, etc.
-
- The problem is not fiat currency -- it is that money
expansion through the Fed is by loans at interest. The government has
to pay compound interest on that debt. What is wrong with the system
is that there is a monopoly by a small grroup of people on credit in
- this country. If populists responsible to government
regulation ran the Fed it would work fine -- in fact nationalizing the
Fed would not necessarily solve problems like many reformers think it
would.
-
- Remember how the government is controlled. George W.
Bush or Nancy Pelosi would run the Fed exactly as it is being run now;
they would run it exactly for the same interests of the same group of
merchant bankers who make the campaign contributions and control the mass
media which determines what the people know and think about each politician.
-
- Dick Eastman
- Yakima, Washington
-
-
- The Federal Reserve Monopoly over Money
- By Ron Paul
- 4-10-7
-
- Recently, I had the opportunity to question Federal Reserve
Chairman Ben Bernanke when he appeared before the congressional Joint
Economic committee. The topic that morning was the state of the American
economy, and many of my colleagues raised questions about how the Fed
might better "regulate" things to ease fears of an economic
downturn. The tenor of my colleagues' questions suggested that Mr. Bernanke's
job is nothing less than to run the U.S. economy, like some kind of Soviet
central planner.
-
- Certainly it's true that Mr. Bernanke can drastically
affect the economy at the drop of a hat, simply by making decisions about
the money supply and interest rates. But why do members of Congress
assume this is good? Why do we accept without objection that a small
group of people on the Federal Reserve Board wields so much power over
our economic well-being? Is centralized, monopoly control over our money
even compatible with a supposedly free- market economy?
-
- Few Americans give much thought to the Federal Reserve
System or monetary policy in general. But even as they strive to earn
a living, and hopefully save or invest for the future, Congress and the
Federal Reserve Bank are working insidiously against them. Day by day,
every dollar you have is being devalued.
-
- The greatest threat facing America today is not terrorism,
or foreign economic competition, or illegal immigration. The greatest
threat facing America today is the disastrous fiscal policies of our
own government, marked by shameless deficit spending and Federal Reserve
currency devaluation. It is this one-two punch-- Congress spending more
than it can tax or borrow, and the Fed printing money to make up the difference--
that threatens to impoverish us by further destroying the value of our
dollars.
-
- The Fed's inflationary policies hurt older people the
most. Older people generally rely on fixed incomes from pensions and
Social Security, along with their savings. Inflation destroys the buying
power of their fixed incomes, while low interest rates reduce any income
from savings. So while Fed policies encourage younger people to overborrow
because interest rates are so low, they also punish thrifty older people
who saved for retirement.
-
- The financial press sometimes criticizes Federal Reserve
policy, but the validity of the fiat system itself is never challenged.
-
- Both political parties want the Fed to print more money,
either to support social spending or military adventurism. Politicians
want the printing presses to run faster and create more credit, so that
the economy will be healed like magic- or so they believe.
-
- Fiat dollars allow us to live beyond our means, but only
for so long. History shows that when the destruction of monetary value
becomes rampant, nearly everyone suffers and the economic and political
structure becomes unstable. Spendthrift politicians may love a system
that generates more and more money for their special interest projects,
but the rest of us have good reason to be concerned about our monetary
system and the future value of our dollars.
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