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The Federal Reserve Monopoly Over Money by Ron Paul
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.
