Ron Paul's Misguided Views on the Federal Reserve bank

Ron Paul's Misguided Views on the Federal Reserve bank

Presidential Candidate Ron Paul has become the quirky candidate embraced by the fringe groups. He campaigns as a stop the war libertarian. What rankles me about his position is his view that the Fed should be abolished. Take a listen at the video below:

There is so much to disagree with here. His biggest argument is that because the Fed is an independent institution, it lacks the proper transparency and oversight to properly function. Well, that was the whole idea. The Fed needed to be removed from politics so that Fed Chairmen didn't succumb to political pressure to print money and help politicians stay in office. Independence is essential. George H Bush wanted Greenspan to lower interest rates in 1991 so that he could stay in office. Imagine what would happen if Presidents and Congress had more influence.

They do by the way have influence. Every four years the President chooses a Fed Chairman who must be approved by the Senate. If a Chairman isn't doing well or lacks the public trust, he can be removed after his four year term expires. This is unlike a Supreme Court justice who serves for life.

In the video he also says that the United States has only grown via a $800 billion yearly accounts deficit. This is wrong. The United States enjoys one of the highest rates of productivity growth in the world and this, more than anything has contributed to the country's growth in wealth.

He also makes the point that the wealthy were the main beneficiaries of the Fed's low rate policy from 2000-2007. This ignores the millions of middle and lower class consumers who benefited from lower rates on mortgages, credit cards, etc. The rate of home ownership in the country has soared. While some took on more debt than they could afford, whose fault is this. As a libertarian, Paul should realize that responsibility rests with the individual.

I realize its fun and a bit hip to get on the Ron Paul bandwagon. But remember what happened the last time we didn't have a Federal Reserve - The Great Depression. Things may sometimes get a bit off-kilter with the Fed, but they can sure get a whole lot worse without it.

 

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

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Comments

  • Manq

    October 05, 2007

    You are paying Yahoo to put this blog on to a sponsored search result?

    You really want to keep paying for this government bureaucracy with our federal income taxes? You must be joking!

    I would love for him to get rid of the IRS! More than a third of my paycheck goes to what? 45% or so goes to the wars, 32% pays interest to the Chinese who are keeping us "afloat", and the remainder pays for our current government system. What a joke.

  • John

    October 05, 2007

    If more people viewed history form the forensic angle, rather than their opinion, or gut feelings about what "really happened", our society would have a clearer view of our future. Ron Paul speaks in these forensic terms far more than other candidates. It would only make since for the United States to make our next president a liberal. "Why?" you say? Look at the role of government in our lives in comparison to the times of founding fathers. Every angel of our lives is affected by the government in some way. Free speech? Look at Andrew Meyer. Right to bear arms? If a police officer finds a handgun in your trunk, you are immediately arrested until a permit is presented. Guilty until proven innocent. Department of homeland security? what is this? Don’t we have the CIA, FBI, army, navy, and police? Just like at my job, when more work is put on our plates, the more hats we have to put on.

    It is no secret that ALL of our money is controlled and value determined by our fed gov. Free market? Well, it is TECHNICALLY non-existent if you consider everything is balanced on the macro scale just as a puppet would be maneuvered.

    Would it make since for me to give my neighbor $100 unconditionally, when I can't even make my mortgage payment? That is how some of our foreign policy works.

    by the way, what price should our leaders pay for lying abour WMD's? in earlier times these people would have been evicted like Richard Nixon. Today, the media controls the people of the US like dogs on a leash. We have been tought not to focus on misconseptions, but to follow a the leader unconditionaly simlilar to a dictatorship.

    The book 1984 has more and more meaning every day in our society. Look at our flat monitors, all connected with video cameras attached to them. Sound familiar?
    It feels like a paranoid conspiracy theory today, and it really is, as far as I am concerned. however the tools of ultra socialism, controlled thought, and big brother are coming in to view. It may not be in our lifetimes, but if we keep letting the government grow and be responsible for the weak, we will fall into this scenario for sure. A mild liberal would delay this, or turn our society around a bit.

  • Mark

    October 06, 2007

    Amanda,

    What could possibly go wrong with giving a private institution, the Federal Reserve Corporation, sole right to print money and set discount rates? You agree with giving a private company the right to regulate what we use as a means of trade? They control the supply of money in our country. They can print as much as they want, inflating the hell out of the dollar, all backed by IOU's, make loans on that money at whatever interest rate they deem appropriate. Have you ever heard of fractional reserves? Dollar hemegony? Please, don't be so naive. I realize you would like to give the Federal government the benefit of the doubt, but you should be more diligent. What other options you ask? Tie the currency to something real, anything besides an IOU.

  • John

    October 06, 2007

    "The Internet has opened up a whole new world. I don't think the government can control things."
    I partially agree with you, however, i feel that MOST Americans are NOT internet savy, AND by the time that the majority become internet savy, there will be far more gov control of the internet. for example, the rise in prosecutions for "illegal" downloads.

    imagine "Department of Internet Security", its not that far off, would you agree?

    I would bet that 99% of Americas getting news still get it from Fox, Cnn, ABC, NBC, PBS and Pop radio.

    Remember, as much as you or i would like to believe that the general public is capible of out of the box thinking, they are not. they never will be. Thats a fact.

    Now, Ron paul is the new knight in shining armor when it comes to solving this issue i stated above. he cares about our freedom and the well being of the american people. However, he is not one of the "good ol' boys", meaning he will not "play ball" with the major corporations out there including Fox, Cnn, ABC, NBC, ect. Unfortunatly, this is his down fall.

    If I ever ran for president (waka waka!.. i know, just humor me)( i would get fried right away for my spelling) i would be a snake in the grass, i would appear slick like the rest of the candidates and keep the truth quiet, rather than out in peoples faces like Ron Paul, then when elected i would execute the plans of Ron Paul, and fuck over all the corporations that i promised fruitfull contracts and breaks, for the good of the country and longevity of our freedoms.
    A leader such as this would be a hero, rather than a "liar for capital gains and war", "beat around the bush" president that we have now.

    Name 1 good thing that Bush has done.

    Free market will always work, its the government's job to step in and break up the monopolies rather than create them.

  • Amanda P

    October 09, 2007

    "What could possibly go wrong with giving a private institution, the Federal Reserve Corporation, sole right to print money and set discount rates?"

    But the Fed is not a private institution. It is a quasi-private, quasi-federal institution. This has been upheld by the courts. What other private institution has to have its chief executive nominated by the President and approved by the Senate? What other private institution has to submit a yearly report to the Speaker of the House? The Fed IS NOT A PRIVATE INSTITUTION as you seem to mistakenly say. It is independent to a degree and this was done on purpose to prevent it from being used as a political tool.

    What's amazing to me is that all of you libertarians actually advocate for the government taking more control over the Fed. If the government gains more control over the Fed then you realize that gives the politicos in office even more power. They'd be able to print money and raise rates at will. That's what banana republics in South America and Africa do. That's how dictators seize control and stay in power.

    Look at the facts. Educate yourself and don't parrot discredited ideas just because they sound anti-establishement.

    XOXO,
    Amanda

  • Max

    October 12, 2007

    What if we don't want to be the slaves of usurers and thugs. The End is nigh! Can't stop the freedom train! Vote RON PAUL!

  • Stephen

    October 12, 2007

    Why should anyone have to pay money to the Federal Reserve??..I'll stick with Ron Paul, we have had enough!!!..Ditto to Max!!!

  • Anonymous

    October 12, 2007

    Derivatives are not a new creation

    Gentlemen, I have had men watching you for a long time and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its
    charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves.
    -- attributed to President Andrew Jackson, who in 1836 forced the closing of the Second Bank of the U.S. by revoking its charter

  • Jay Henderson

    October 12, 2007

    Paper money backed by nothing allows governments to print all they want. This dilutes the money supply and the value of every new dollar is less than the old ones. The people who get it first (bankers, military industrial complex, government mandated monopolies) grow richer and richer, why prices rise for everyone else. Inflation is 100% a monetary phenomenon. Actually, with gold and silver or "sound money", prices would decrease not increase. This is the theft that is taking place under our noses and has been for almost 100 years. Keynsian economists think this can continue forever, but every paper currency in history has eventually become worthless. This is the doing of a central bank. Unless you want our money to continue it's steady decline down into oblivion, we must stop inflating the supply and return to a sound money policy. If not, we will all "pay" for our debt by losing everything we've saved. That's why Ron is correct.

  • Rye

    October 12, 2007

    Amanda P,

    You paint a pretty picture of the Fed, but I just don't buy it. Your claim that the fed is "quasi private" is true, but I don't want the people that quite literally determine the worth of my money to do so in private! The Fed controls the rate at which new currency is created, which directly affects (devalues) my (and everyone else's) savings. No matter what you tell me about the nature of the Fed, there is no way that you will convince me that this is ethical by any stretch of the imagination. The only ethical way to pursue this is to allow *everyone* to determine the value of the currency, and the only way to do that is to allow for a sound (commodity-backed) currency. Why in the hell does my government think it is A-OK to bail out foreign markets at the cost of the value of my dollar?! "the Mexican economy, it did help bail out LTC, and it did help end the Asian financial crisis" [sic]

    Here's another point: if you want to keep your dollar, what do you have against me using a currency that IS backed by gold? If nothing, then why must I pay taxes on the interest earned when my gold inevitably grows in value versus the dollar? That is not ethical, either.

    The constitution provides for the control of the currency by the legislative branch. It does NOT allow for the transfer of that power to some "quasi private" entity. It is unconstitutional, whatever the courts have said thus far.

    Finally, a frequently cited argument by supporters of the Fed is the following: "Look at how wealthy we are now!" That wealth is due to a rapid increase in the level of our technology, not because of the fed "staving off" financial crises. We would be far better off today never having had a Fed.

    I feel confident that all the little bumps in the road that the Fed allowed us to avoid through monetary inflation are going to bite us in the ass someday, and I suspect sooner than later.

    Enjoy your paper money while it lasts.

    "Gold standard? I want the paper standard!" -Amanda P

    Cheers,
    Rye

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