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Paul's opposition to the Federal Reserve is supported by the Austrian Business Cycle Theory, which holds that instead of containing inflation, the Federal Reserve, in theory and in practice, is responsible for causing inflation. In addition to eroding the value of individual savings, this creation of inflation leads to booms and busts in the economy. Thus Paul argues that government, via a central bank (the Federal Reserve), is the primary cause of economic recessions and depressions. He believes that economic volatility is decreased when the free market determines interest rates and money supply. He has stated in numerous speeches that most of his colleagues in Congress are unwilling to abolish the central bank because it funds many government activities. He says that to compensate for eliminating the "hidden tax" of inflation, Congress and the president would instead have to raise taxes or cut government services, either of which could be politically damaging to their reputations. He states that the "inflation tax" is a tax on the poor, because the Federal Reserve prints more money which subsidizes select industries, while poor people pay higher prices for goods as more money is placed in circulation.
Paul adheres deeply to Austrian school economics and libertarian criticism of fractional-reserve banking, opposing fiat currency and the inflation thereof; he has written six books on the subjects, has pictures of classical liberal economists Friedrich Hayek, Murray Rothbard, and Ludwig von Mises hanging on his office wall, and is a distinguished counselor to the Mises Institute. Paul opposes inflation as an underhanded form of taxation, because it takes value away from the money that individuals hold without having to directly tax them. He sees the creation of the Federal Reserve, and its ability to "print money out of thin air" without commodity backing, as responsible for eroding the value of money, observing that "a dollar today is worth 4 cents compared to a dollar in 1913 when the Federal Reserve got in." In 1982, Paul was the prime mover in the creation of the U.S. Gold Commission, and in many public speeches Paul has voiced concern over the dominance of the current banking system and called for the return to a commodity-backed currency through a gradual reintroduction of hard currency, including both gold and silver. A commodity standard binds currency issue to the value of that commodity rather than fiat, making the value of the currency as stable as the commodity.
He condemns the role of the Federal Reserve and the national debt in creating inflation. The minority report of the U.S. Gold Commission states that the federal and state governments are strictly limited in their monetary role by Article One, Section Eight, Clauses 2, 5, and 6, and Section Ten, Clause 1, "The Constitution forbids the states to make anything but gold and silver coin a tender in payment of debt, nor does it permit the federal government to make anything a legal tender." The Commission also recommended that the federal government "restore a definition for the term 'dollar.' We suggest defining a 'dollar' as a weight of gold of a certain fineness, .999 fine." On multiple occasions in congressional hearings, he has sharply challenged two different chairmen of the Federal Reserve, Alan Greenspan and Ben Bernanke.
He has also called for the removal of all taxes on gold transactions. He has repeatedly introduced the Federal Reserve Board Abolition Act since 1999, to enable "America to return to the type of monetary system envisioned by our Nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold"; it has received virtually no mainstream news coverage. He opposes dependency on paper fiat money, but also says that there "were some shortcomings of the gold standard of the 19th century ... because it was a fixed price and caused confusion." He argues that hard money, such as backed by gold or silver, would prevent inflation, but adds, "I wouldn't exactly go back on the gold standard but I would legalize the constitution where gold and silver should and could be legal tender, which would restrain the Federal Government from spending and then turning that over to the Federal Reserve and letting the Federal Reserve print the money."
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Ron Paul on the Federal Reserve System (1988 - Part 2)by thefilmarchive2,533 views
@taz0k2 The president has full power to abolish the federal reserve and the party of NO has already voted against and two Democrates. We only have had the reserve abolished once by one president ever and it worked but the US was not over populated then nor did people have to live homeless or go to jail for living without plumbing and all the bull shit that people take your kids away from you in todays world. Abolishing the reserve would work under a Democart ran congress but not under the new.
carnypimp 1 year ago
@taz0k2 Can the Congress order the Federal Reserve to print more money and give it to them?
Isn't it the case that the government still have to "borrow" money from the Federal Reserve?
I have heard many people say what Ron Paul says and I find it immensely interesting, but I unfortunately I don't get the system well enough to understand if what they say really is true.
taz0k2 1 year ago
Thanks for uploading the video! :-)
Ron Paul says that:
"We have believed since the 1971 that there should be no linkage of our money to anything sound as the consitution mandates. There should be not linkage of the dollar to gold or silver, which then gives the Congress the leeway of spending endlessly. Deficits don't matter, we can tax and we can borrow but if we still don't have enough money we can depend on the Federal Reserve just to print the money."
I don't understand how that works.
taz0k2 1 year ago