Book Review: End the Fed

by Elusive Wapiti on November 11, 2010

The Book: End the Fed, by Ron Paul. 210 pages.

The Gist: In this book, Representative Ron Paul details his case that the Federal Reserve Bank cartel causes more misery, suffering, and problems than it causes, and should thus be disbanded.  He claims that ending the Fed “would address the most vexing problems of politics of our time”, ending dollar depreciation, stripping the government of an easy ability to finance endless wars, curb attacks on civil liberties, halt debt accumulation, and arrest the expansion of the welfare state.  Moreover, Paul the Elder claims that doing away with the Fed would ends the government’s ability to use financial sleight of hand to underwrite its ability to expand without limit, would be a first step toward restoring constitutional government, would halt the business cycle, end inflation, would stymie the corrupt symbiotic relationship between government and “too big to fail” banks, and would end the abuse of monetary policy during political election cycles.

Key Quote: Paul cites Scripture: “You shall have just balances, just weights, a just ephah, and a just hin” (Lev 19:35-36).

On dollar depreciation, halting the business cycle, and ending inflation: Rather than be a mechanism for controlling and eliminating inflation, Paul asserts that the Fed is instead an agent of it.  Take history, for instance: Paul points out that $1 in 1913 is worth five cents today; such that what once cost $1 in 1913 costs $21 in 2010, with the result that the government and the banking cartel have sapped–Paul uses the word “stolen”–$.95 of every dollar over the span of the last century.  Paul also demonstrates that, when confronted with economic crisis, the very tool that administrators of the Fed use to keep the markets liquid and to keep prices up is to inflate the currency; thus, far from ending inflation, the Fed is the primary means by which inflation is injected into our economy.  In addition, rather than smoothing out the business cycle, Paul claims that the Fed ensures they continue to recur. For example, the assertion that the Fed makes smoother the boom-bust pattern of the business cycle requires one to focus solely on the bust phase, where the Fed does indeed provide liquidity to keep the banks lending and the credit markets functioning.  However,if one views the business cycle as one that begins during the boom phase–where easy money begats malinvestment and excess capacity–it becomes clear that the Fed creates the very problem that it later “solves”.

Paul’s book cites an interesting quote which I think illustrates this point quite well:

…[the banks] actually expanded the currency by extraordinary issues, whilst there was no existing check upon them, until its depreciation was so great that speculation and overtrading in all their disastrous forms involved the country in a scene of wretchedness, from which it did not recover in ten years

Source: Raguet, Condy, A Treatise on Currency and Banking, New York, Kelly Reprints, 1967, 1840, p 156.

On central banking as a catalyst for war: With an endless money machine that provides nearly limitless funding to finance expensive military adventurism, governments are free to build up forces and wage as much expensive military aggression as they can convince the polity is reasonable. On the other hand, those governments without this easy-money option to make their money for them are forced to economize and make guns-and-butter choices.  Mises in 1919:

…one can say without exaggeration that inflation is an indispensable means of militarism. Without it, the repercussions of war on welfare become obvious much more quickly and penetratingly; war weariness would set in much earlier

As further evidence of this central banking-warfare connection, Paul cites the case of WWI, where only 21% of WWI was financed through taxation, 56% was from Fed-backed borrowing, and 23% was outright money printing. And this is on the US side; one shudders to consider the impact of central bank lending on the ability or willingness of Germany or Britain or France to wage the War to End All Wars. Furthermore, WWI, while wiping out all the old monarchies, created the Imperial America and a globalized foreign policy mission. For Russia, it meant Communism, as the war machine spurred by easy money created shortages, price controls, devastation, and social unrest that resulted in the Bolshevik revolt of 1917. None of these calamities could have been possible had the USA or other countries not had the easy money of a central bank to underwrite their military campaigns, for opposition to direct taxation on wealth naturally limits governmental adventurism.

Paul also ties the lender of last resort to a more aggressive national foreign and domestic policy, creating what he calls the “welfare-warfare state”. With a central bank, countries can dream ad infinitum of ever more power, programs and ambitions.  America could and did become involved in countless full-scale wars, police actions, small invasions; after each political crisis, the answer is the same as after each economic crisis: more monetary expansion, the better to “prime” the economic pump. Thus guns or butter turned into both guns and butter…with a central bank, there is no longer a need to choose between the two, and the ability of the Fed to make money is what makes this crisis-response model possible. Conversely, as long as the funding stream remained limited to what could be extracted by force from the wallets of the population, there was a natural upper limit to the power and size and scope and ambitions of the State.

I pause to offer a personal observation that the easy monetary spigot supplied by the Fed may actually result in less American military effectiveness on the battlefield and therefore more protracted wars (and needless suffering).  This is because an un-mobilized society, where only the soldiers feel the pain of warfare, not the whole of the civilian population through privation and war rationing, is not as personally invested in the nation’s wars, and is therefore more prone to approve the committing of forces abroad.  Furthermore, such a population, thus disconnected from the ravages of warfare, is more susceptible to manipulation of public opinion by the media, a fact that Ho Chi Minh exploited during the Vietnam conflict.  I suspect the advent of the all-volunteer military in the 1970s aggravates this condition.

On civil liberties and the growth of the state: It is a sort of truism in libertarian circles that when government grows, liberty necessarily suffers in a zero-sum equation. Paul subscribes to this maxim in noting that central banking tends to aggregate power toward the central government and away from the people and the States. Citing the fifth plank of the Communist Manifesto,

centralization of credit in the banks of the State, by means of a national bank with state capital and an exclusive monopoly,

Paul contends that central banks serve as a type of “backdoor economic planning”, the sort of economic model which the world had the opportunity to fail spectacularly in the 1980s with the fall of the former Soviet Union.  We know from the warnings of von Mises and others that centrally planned economies fail primarily because they lack a  mechanism to make accurate supply and demand decisions across all points in the economy. Lacking this information, they die by suffocation, overcome by the weight of their own inefficiencies. In a similar manner, by setting interest rates low nationwide–so as to better fund the welfare-warfare state and monetize the national debt–rather than letting independent local banks set rates for local conditions, the Fed discourages savings while encouraging borrowing and consumption.  This serves to create both the boom-bust business cycle and its attendant inevitable banking panics and the pretext for government to swoop in and “fix” the problem with more centralization, either with (a) more regulation (read: more power to government and more corruption), or with (b) more governmental guarantees that the public won’t be harmed by institutional failures (read: more moral hazard, which leads to more crises).

In a further example of the socialist nature of central banking, Paul offers the following: with the Federal Reserve Act (FRA), Congress formed a cartel of the 12 largest banks and permitted them “to inflate the currency at will, providing for themselves and the financial system liquidity in times of need, while insulating themselves against the consequences of bad loans and overextension of credit…it was a form of financial socialism that benefitted the rich and the powerful”.  When things go badly, as they always will under a fractional reserve system, “they claim they provide an invaluable public service and deserve support from the public treasury”, not unlike the events here in the United States over the last two years with hyperventilating demands that the public bail out the banking institutions. Or else.

The stealthy and insidious effect of central banking makes locating and fixing a culprit for mysterious yet persistent economic fragility and boom-bust cycles difficult.  However, after each unnecessary yet inevitable crisis, “rogue capitalism” or the “wild west free market” is blamed for the failure.  This creates the window for opportunist politicians, either benevolent or malevolent, to grow government and curb civil liberties. “Just this once,” we’re told; however, history tells us the “just this once” excuse is repeated over and over again, as politicians trade liberties for security in a futile effort to prevent crises from recurring.  Paul notes that “pragmatism, urgency, benevolence, fairness, compromise, fear of the future, and the need for safety and security provide the moral cover for an authoritarian approach to rescuing and protecting the people” from the crises their very own government precipitated.  This crisis atmosphere feeds the natural urge to merge government and business interests through which, naturally, the merchant enriches himself with public money while “serving the public good”.  In addition, because there is such a large (and growing) pot of money at stake, businessmen lobby legislators and regulators intensely, in order to shape legislation or rules in their favor.  Quite often this hybrid public-private economy and the regulations and rules that accompany it fail to achieve their desired results; once again the “free market” is blamed (when this economy is anything but free), and the problems again become an excuse to further enlarge the government and enrich special interests. Wash. Rinse. Repeat.

On restoring constitutional government:  Paul claims the Founders were clear on their intent for a central bank and paper money, having thoroughly debated and defeated both in the framing of the Constitution. Paul is equally frank in his view that the Fed is unconstitutional.  In his view, the Constitution could not be more clear–no paper money, period, only gold and silver (Article 1, Section 10), and the Constitution furthermore did not and does not grant to the Federal government the power to create a central bank (those powers not specifically delegated to the Federal government are reserved for the people or the States by the Tenth Amendment).  Yet how does Paul account for this seemingly blatant infraction of law? He cites the Federal government’s (mis)use of the “necessary and proper” clause of the Constitution (Article 1, Section 8) and a ruling by the Marshall court–yes, that Marshall court–in McCullough v Maryland (1819), which basically means that the Fed Gov can pass and enforce any law it wants as long as it can justify it as necessary and proper in the performance of its duties.  According to Paul, this SCOTUS decision set the stage for the Federal Reserve Act of 1913.

On halting the abuse of monetary policy during election cycles: It is an open secret that the Fed, despite its supposedly apolitical nature, is often quite politically activist, and its decisions to increase or shrink the money supply can make or sink presidential candidates or political parties.  Furthermore, the presence of a central bank with unlimited ability to inflate becomes the central vehicle through which politicians buy votes, both of the people themselves (inflation yields the temporary illusion of prosperity…which translates into votes for the controlling faction) and for big business. “Big government breeds big corruption”, as Paul notes the records set in the 2008 presidential election because the size of government was so large and, because of the depression, was only forecasted to expand quickly.  There was money to be made and influence to be purchased. The central bank and its inflationary policies are also used to buy votes in another manner…from “zero liability voters” who are grateful for the bread a welfare-warfare state gives them, and from the rich, who benefit from government largesse and reap the income from usurious interest.  Thus, under a central bank, both of these populations act in their own best interests, and vote for policies that serve to eat the substance out of the middle class, which finds its wealth robbed by inflation and transferred to wealthy and the poor. Paul notes that a central bank is, well, central to this wealth transference, as “transferring wealth is limited when taxes and borrowing are the only tools” available to politicians to use in their fleecing of the middle class.

I enjoyed this book thoroughly, which should come as a surprise to anyone who has previously read Rothbard and Keynes. I long ago had convinced oneself that Rothbard’s Austrian conception of economics is the more correct one, even before I read his and Keynes’ works. I also concur on the moral case against the Fed, considering inflation to be no different from legalized theft.  The weakest part of Paul’s argument was, in my opinion, the Constitutional one, for he is clearly swimming upstream against the tide of Madison’s SCOTUS-approved Federalists and the very human tendency to pull power in toward the central government.

In the end, Paul sums up well the fecklessness of the Constitution in preventing the establishment and legalized larceny of the Fed, noting:

…the Constitution itself is incapable of achieving what we would like in limiting government power, no matter how well written. The morality of the people and wisdom of our elected officials are the only things that count

In other words, when the morality of the people shifts such that they view the taking of other people’s property as right and proper, no amount of legal chains will stop them.  Thus the argument for ending the Fed will win the day not when the Constitutional legal case is made, but when the people decide once again that sound money is the route to prosperity, to a limited government, and that robbing their neighbors to line their own wallets is immoral.


About the author: EW is a well-trained monkey charged with operating heavier-than-air machinery. His interests outside of being an opinionated rabble-rouser are hunting, working out, motorcycling, spending time with his family, and flying. He is a father to three, a husband to one, and is a sometime contributor here at Spearhead. More of his intolerable drivel is available at the blog The Elusive Wapiti.

{ 44 comments… read them below or add one }

POIUYT November 11, 2010 at 10:26

The exponential and exploding incidence and experience of mass human misery and mass human annoyance even amongst the well-of middle and upper classes in this genderist society has less to do with economic policy as it has to do with social policy. That is genderist policy.

Genderist policy dictates that on account of female differences to males, they will not be obligated, as males are obligated, to earn their own bread and rank from the effort of work. Instead females will be entitled to sue working males for that bread and rank which males earn on account of the fairy tale and nebulous ideals of gender which ordinary people cant understand. So half the population of genderist societie are effectively dead weight, made even worse because of their right and entitlement to molest and harrass the peace of mind and smooth operations of those whom must work.

Genderist policy also dictates that on account of female differences to males, they will be the only recognized citizens entitled to rights, privilages and protections in any institution, unit or group to which they hold membership. This absurdity leads to a situation wherin all other family members, workforce members, social or political group members etcetera are held to stand beneath female members in footing even where these others are demonstrably of superior merit in the circumstances. Again a position is reached where dead weights are put in positions where they simply have not the aptitude, skill, ability, experience, virtue or accomplishment, purely for their gender. Is this not a recipie for disaster ?

It is the culture and the social policy of that genderist and chauvenist culture that must be changed for genderist societies to be able to pull back from the abyss. It is not for nothing that there have been collossal economic and financial problems affecting all ofthe western nations all at once. They have been living beyond their means purely on account of their genderist social policy which obligates only half their populations by gender to any responsibilities of work, breeding, national service, taxation, etc.

And it has proven to be no economic panacea to genderisms problems and consequences, to further entrap, appropriate from, ensnare, en prostitute, legally steal from, exploit, expropriate, and legitimately steal that material and wage produkt males are already working 110% for. These underclass male tools, implements and resources are a slowly but surely shrinking mass, the withdrawal and dissapearance of whom are quite imminent.

The only long term solution is to spread the whole burden, without apology to both the sexes. Tampering with economic policy alone, is only but a tinkering at the fringes of the problem.

Like or Dislike: Thumb up 16 Thumb down 2
Observer November 11, 2010 at 10:48

When you consider how massive the central banking cartel is and how it has been pushed on nearly every single country on the planet, the effort to remove it would no doubt be one of the greatest human achievements in history if not the bloodiest. I like what Ron Paul has to say for the most part, but there does need to be more education and willingness to try new ideas before this could get the support it needs. If more people realized that we can’t be a free people or a sovereign nation until we dismantle the debt-based system we have in place, there just might be a chance.

Funny how websites like these are the only ones brave enough to tackle these subjects. I guess the feminists know what side of the bread is buttered. Here’s to pursuit of truth without which there is no hope!

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Peter-Andrew:Nolan(c) November 11, 2010 at 11:07

The Money Masters. Fully Movie. 2+ hours.
http://video.google.com/videoplay?docid=-515319560256183936#

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Migu November 11, 2010 at 11:14

Damn good review.

Now, how to get doofus to understand Ron Paul is not roo Paul.

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Peter-Andrew:Nolan(c) November 11, 2010 at 11:15

POIUYT November 11, 2010 at 10:26

“The only long term solution is to spread the whole burden, without apology to both the sexes.”

I disagree. In times gone past there was virtually NO need for a massive ‘guvment’. The only need for ‘guvment’ has been to prosecute wars of aggression masquerading as ‘defense forces’. All wars by ‘europeans’, for hundreds if not, thousands of years have been manufactured.

Men should only pay for the services THEY use. Take this health care crap. Women demand that the premiums are the same or it’s discrimination. But women use MUCH more ‘health care’ than men because their broken fingernail is more important than a mans broken neck.

If men want to be free? Thing 1 to do is stop paying income taxes.

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Peter-Andrew:Nolan(c) November 11, 2010 at 11:17

OT. Just out but always good.
http://www.youtube.com/watch?v=6htvoFdYmjs

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Keyster November 11, 2010 at 11:19

…dead weights are put in positions where they simply have not the aptitude, skill, ability, experience, virtue or accomplishment, purely for their gender.

Yes. you can only keep doing that so long before they’re revealed as incompetent, and others stop helping them look good.

The real fix we’ve gotten ourselves into, (on the heels of the economic fiscal commission recommendations), is that if our GDP is one third government spending, by cutting it we risk a self-perpetual spiral of economic decline. The trickle down effect of government spending dependence is immense, deep and broad. Many businesses that employ many people will shut down without government spending. Where will they work?

You can’t just stop (or drastically limit) government spending because our economy, by now, is too dependent on it. It would take extreme sacrifice and lifestyle adjustment that we’re not willing to accept. As the middle class rises in other nations, ours will continue to decline from what it was. There’s no stopping it now.

Like or Dislike: Thumb up 4 Thumb down 4
Carnivore November 11, 2010 at 11:26
Firepower November 11, 2010 at 11:51

Ron Paul has many advantageous theories and ideas,
but ending the Fed is a pipedream for a country that can’t even end free healthcare for ILLEGAL immigrants.

First things
first

Like or Dislike: Thumb up 10 Thumb down 9
David K. Meller November 11, 2010 at 12:16

After the banksters and bu;reau(c)rats, women–at least “modern” women–certainly have the most to gain from fiat “monsy” and central banking.

The virtues of thrift, saving, and prudence have long since been forgotten; said virtues of the capable and efficient “housewife” are today ridiculed–if they are remembered at all–especially by women whose motto is “shop till you drop”, to whom credit cards are as essential as air to breathe!

It may be too much to blame fiat money and Central Banking exclusively for the degeneration of valuable and lovely women into the strain of malignant female(?) parasites we see everywhere today, but SOME connection certainly exists!!

A sound money regime would not by itself re-estab;sh paatriarchy, but it would be an important step in the right direction. If the government, or their banking cartel was restricted to gold, they simply wouldn’t have the wherewithall to subsidize the teaching of Keynesian debt manipulation and quasi-marxist feminist (and other third world identity politics) redistribution and subsidy in schools and universities, they wouldn’t have the money to sustain the war-against men in sundry support for “single mothers”, babymama sluts would have to be VERY CAREFUL before engaging in sex, especially when pregnancy was an issue, and businesses whose advertisements delibertately insulted men (or traditional women) would find their sales revenue drying up very quickly, we would be living in a MUCH BETTER world.

Patriarchy, sexual politics, and men’s rights go somewhat beyond the scope of End the Fed, but I think that it is a book, along with others like it e.g. America’s Money Machine by Elgin Grosclose, Creature from Jeckyll Island by G. Edward Griffin, and the wonderful books Case for 100% Gold Dollar, The Case against the Fed, Mystery of Banking, and What Has the Government Done to our money by the incomparable Murray Rothbard!

Rothbard also wrote a brilliant critique of “women’s lib” back in 1971, predicting their zany and destructive ideology and its consequences DECADES before anybody else noticed! The essay is “The Great Women’s Lib issue–Setting it Straight, and it is reprinted in the collection “Egalitarianism as a Revolt against Nature” available from the Ludwig von Mises Institute, at http://www.mises.org !

Enjoy!!

PEACE AND FREEDOM!!
David K. Meller

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Penguin November 11, 2010 at 12:36

Threadjack, and request for post on this.

Revolting Students.

The fifth photo in the Daily Mail article shows the danger of role reversal. Bloodied and shaken female cops are escorted away from the scene. A number of things jump to mind: Are they really equipped, physically and mentally, to deal with riots? Also, they’re clearly female despite the silly uniforms, and that didn’t seem to stop the predominantly male protestors from targeting them. Is this the sort of equality and respect feminists want?

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misterb aka misterbastard November 11, 2010 at 13:11

I may be a Canadian. And little too harsh. But I never insult other men, only mock the ones I know. There’s a difference between mocking and insulting. besides men need to mock and poke fun of each other and at ourselves.

Granted that I insult foolish ideologies such as feminism, the myth of transgenderism and other far out ideologies.

I agree with what Ron Paul suggestions in regards to the Federal Reserve. I read somewhere that there are fake bars of gold in fort Knox.

It is time for Americans to end the Federal Reserve.

misterb aka misterbastard

Like or Dislike: Thumb up 7 Thumb down 4
Migu November 11, 2010 at 13:21

Firepower,

Come on now. If you kill the money machine, free healthcare is no longer affordable

Like or Dislike: Thumb up 5 Thumb down 3
Keyster November 11, 2010 at 13:52

Keyster, to your point:

The recent Indian angle has more to do with China, than with India.
It’s keeping economic balance in the region, or making it appear that’s what the USA’s intention is. “Better play nice China…”

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Mark Plus November 11, 2010 at 14:01

Hidden due to low comment rating. Click here to see.

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theforest November 11, 2010 at 14:09

I think Spearheader’s should also note that it’s through these mechanisms of money-finance-political power that the central banker’s are able to put “feminists” into positions of power, and are able to leverage and pass “feminist” type laws.

This also includes Corporate Board memberships of major media & entertainment organizations (that bankers have controlling stakes over) as well, whereby a more “gender-neutral” environment is enforced from the top down. Same probably goes for “multi-cultural” and “anti-racist” type environments as well.

….And the multi-million dollar funding of “pro-feminist” activist and lobby groups…

If Spearheader’s truly want to “pierce the shield of ignorance” their primary adversary is the bankers, not the feminists themselves.

Like or Dislike: Thumb up 4 Thumb down 1
Migu November 11, 2010 at 14:32

Hey mark. I’ll give a $20 note for a $20 us coin from 1922.

Whaddya say. $20 for $20. I’ll give ya $30 for it.

Like or Dislike: Thumb up 12 Thumb down 1
Elusive Wapiti November 11, 2010 at 16:18

@ Mark,

Your comment was a complete non-sequitur. Do you seriously conflate technological advancements, gains in productivity, and the lowering of prices with inflation / debasing the currency? And “alleged” depreciation? Don’t you have any old wizened relatives who bang on about how a loaf of bread used to cost a nickel and they could take in a movie for a dime? Crap, my own father is young enough to remember gasoline at 35c/gallon, and neither he nor I are that old. Did you miss the whole part of the review where I discuss the stealth tax inherent in the erosion of a currency through inflation?

I suppose you are a big fan of QE2 as well, and think that monetizing the debt is a swell thing.

Hopefully we don’t see the day when we burn FRNs to warm our homes, but it’s happened often enough in the last 100 years that no one of the most basic level of literacy can claim ignorance of it hyperinflation as a distinct possibility.

misterb aka misterbastard November 11, 2010 at 16:34

Ha, ha, feminists, homosexuals and supremacists are the patsies of the banking cartels. they’ll get what is coming to them. those Idiotic a**holes and a**whores

Bunch of sold out dumbasses. give my regards to Hitler, Mao and the Christopher Columbus when you meet them in hell.

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Observer November 11, 2010 at 16:46

Mark Plus, I’m not sure you chose the best example for your argument. First of all, the amish did not rule the world back in the early 1900s. Secondly, they don’t impede on the advancement of technology, they just use far less of it than most of us. I think you’re trying to say that if we didn’t have the Fed, we wouldn’t have the financing to back technology and medical advancements we currently enjoy. Tell that to all those 1930s venture capitalists after the Fed helped bring about the depression through its monetary policies. Look at the amounts of money we waste each year paying off debt and overpriced goods. Now instead of a quick death, we’ve been on inflationary leeches the past 80 years. You can have all the neat little gadgets in the world, but if you’re on the brink of losing everything, where’s the net gain?

If there is something worth doing, men will find a way. We do things for the sake of doing them well, to make things work. The minute you throw exorbitant amounts of money in the mix, you are inviting inefficiency. That’s before we even get to the part where you have no realistic hope of ever paying off the money you owe. Women have the reputation for buying just to buy and getting caught up in debt. It’s the men who confound the whole process when they go in to get something that works and resist the upsell. Is it any mistake that women are exclaiming triumphantly that they now occupy the majority of the workforce when we have the weakest overall economy this country has probably ever seen since the colonies were founded? That’s the thing about the “man-cession”; the majority of the jobs lost were those that actually produced tangible goods. We all know how women go after those automotive and housing industries! The View just can’t stop talking about it.

Rampant commercialism has clouded the true value of just about everything out there today. How many medications have been approved by the FDA only to be recalled later because they can’t say no to big pressure from big companies with big money? Thanks to planned obsolescence, more and more purchases feel like subscriptions. How many of us lease but never actually own? How’s that college loan doing? What is credit but one big lie that you can have things you really can’t afford. We should have done something long ago if it weren’t for all these quick fixes that never really fixed anything.

While we keep asking the government to set up useless bureaucratic organizations after another, we could be looking for solutions on our own level. Many of us are but will it be enough? We do things for the community because we want them to succeed. If the word community means anything anymore, when all this money you’re talking about magically ceases to trickle in, there will be a way to survive it. It’s more than just money, it’s about bringing value back to what we have.

As men, we’re used to drawing the line in the sand. We’re okay fighting for an unpopular cause if we know it’s the right one. We form the boundaries in society, but in order to do that we have to be honest with ourselves. Does it make sense to have to spend almost half your life to pay for a 3 bed/1 bath house? That you can still lose it after paying on time every month for 10 or 20 years? We’re not talking about mansions here. My parents went bankrupt trying to pay for a lousy row home! The value isn’t there. Time to start over.

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Tortoise November 11, 2010 at 18:35

[i]“Paul uses the word “stolen”–$.95 of every dollar over the span of the last century.”[/i]

That purchasing power didn’t just magically vanish, it went somewhere. Where did it go? It went into the pockets of the two partners in this scam, the Govt & the banks.

Besides the inflation tax, there is capital gains tax.

A tax on a tax!

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Alonso Quijano November 11, 2010 at 19:01

EW, excellent post of utmost importance to Americans.

Please, guys, don’t be an ignoramus on this subject like Mark, do your own research. Ron Paul is tackling the “end level boss” (for generation “video game” out there) with this book, “the pharisees” (for you religious folks), the Empire behind the American Empire, whatever metaphor you fancy, he seems to be an upright and truth loving man, your new Kennedy in maybe even too many senses of the word…

As theforest correctly put it, this is the cabal that brought you psy war black ops like feminism, communism, darwinism, new age, the “green” culture and many more. The cabal that manipulated both sides of every war since at least Napoleonic times, operating solely on the spirits of power and deception, just like the feminists, which makes them the preferred puppets of the cabal. Otto Weininger will shed more light on this argument, if you care to read Sex and Character.

Funny thing is, once you understand the money system, which is really not as hard as they want to make you believe, you begin to see remedies. You see, money is meant to circulate as means of exchange, not to be withheld from the system to be converted into power. If I told you one could completely and utterly change the world for the better in an instant by adjusting two little screws in the money system – time validity of actual circulating money and compound interests – would you believe me?

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MNL November 11, 2010 at 19:03

With all due respects to congressman Paul, whom I admire. Conclusions such as…

Paul points out that $1 in 1913 is worth five cents today; such that what once cost $1 in 1913 costs $21 in 2010, with the result that the government and the banking cartel have sapped–Paul uses the word “stolen”–$.95 of every dollar over the span of the last century.

…undermine his credibility.
By this same logic, if I make $40/hour now whereas my grandfather only made 2$ per hour in 1913, then it’s clear I’ve been stealing the $38 difference. I’m the criminal!

To be clear, I’ve got plenty of criticism for the Fed and of inflation. If one’s assets don’t rise with inflation, if one’s a net creditor, if one’s wages don’t keep pace, if tax brackets don’t adjust upwards in sync, etc., then inflation is definitely destructive, perhaps even a subtle type of theft. But the above hyperbole only clouds the understanding.

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The Caliph November 11, 2010 at 19:28

theforest November 11, 2010 at 14:09

“If Spearheader’s truly want to “pierce the shield of ignorance” their primary adversary is the bankers, not the feminists themselves”

Bingo, follow the money, always.

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ABS November 11, 2010 at 20:09

I have respected Ron Paul since I worked on his 1988 Presidential campaign, which included a dinner with him, Mark Skousen, and just one other guy.

However, getting from Point A to Point B would almost certainly result in tremendous upheaval and unintended consequences. And various interests and lobbies will destroy the best-laid plans.

Recall what happened with the S & L crisis. It was a generally good idea, allowing S & Ls to invest in other types of assets, except deposit insurance remained at the same rate. As a result, S & Ls took risks out of proportion to the downside, and the deregulation resulted in the S & Ls blowing up.

Even if it were a good idea – and I’m far from certain on that point, even with all its flaws – engineering an orderly end to the Fed appears to me to be virtually impossible, at least until the size of the federal government is slashed to the bone .

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3DShooter November 11, 2010 at 20:20

Good post EW . . . Wish I could have jumped in earlier but there were other demons to slay today and the Mustang is still on jack stands – grrr.

Welmer wrote:

Crap, my own father is young enough to remember gasoline at 35c/gallon, and neither he nor I are that old.

Ouch! Damn, I am getting old I can remember $0.27.

The interesting thing that I don’t see is a discussion of what money is. Most simply argue around it as a medium of exchange. Unfortunately, that completely ignores that money, in addition to being a medium of exchange, needs to be a store of value. Re-read that last sentence until you understand it.

Yes, an accepted medium of exchange is one – and only one – characteristic of what money is. Money needs to be portable, durable and easily exchanged across cultures. At the founding of this country gold and silver were the natural choices. Today it could well be pegged to a basket of commodities with the same intent that wasn’t feasible 200+ years ago. In the end, it needs to be backed by something with intrinsic value. Full faith and credit – from a bankrupt government – I might find an occasional fence post that would buy that position . . .

When you work for $1 and you put that dollar away – you do so with the expectation that that $1 will have as much value when you choose to spend it as it did the day you saved it. When it doesn’t that is called debasement (aka, inflation). And, interestingly, all (failed) government’s have indulged in debasement of currency – just as many governments in decline have indulged feminism. It is a symptom of a short time-preference for the use of money (if you don’t know what that means then read Mises, Rothbard and Hoppe for starters).

One of the more interesting charts I’ve seen is the price of various commodities against the price of gold. Amazingly, they tend to be relatively stable. On the other hand, if you look at a chart that includes both pre and post 1971 – when Nixon killed the gold standard you see relative stability prior to that even and asymptotic increases leading to today.

What the Mark’s of the world don’t get is that when currency is debased the first users of the ‘new money’ are able to buy commodities at the pre-debasement prices. They then hold them and resell in a post-debasement period. The Mark’s of the world are willing to speculate on the future value of money for a short term time preference with respect to what they want today. In that way they exploit the ‘stored value’ of savers to satisfy their short term desires. But, like feminist dogma, the adherents are reluctant to see the err of their thinking (feminists are the ultimate short term time preference thinkers).

Enough rambling . . . Good topic though and good to see so many TS readers who understand it (Mark obviously excluded). The MRM should take heart in Dr. Paul’s success, after decades of sending this message, that it has finally found an audience – we have much in common and we will have to fight the headwind for many years before it gains mainstream traction as well.

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Carnivore November 11, 2010 at 20:30

Migu writes:

Hey mark. I’ll give a $20 note for a $20 us coin from 1922.
Whaddya say. $20 for $20. I’ll give ya $30 for it.

Hell, I’ll give him $1000 for that $20 coin and still make a $300 profit.

EW writes:

Hopefully we don’t see the day when we burn FRNs to warm our homes, but it’s happened often enough in the last 100 years that no one of the most basic level of literacy can claim ignorance of it hyperinflation as a distinct possibility.

Or, using the currency as toliet paper is more economical than using it to buy toliet paper, as happened in Zimbabwe.

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Carnivore November 11, 2010 at 20:32

Voltaire (1694-1778) “Paper money eventually returns to its intrinsic value —- zero.”

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Keyster November 11, 2010 at 21:11

We’re printing more money because we don’t have enough fools willing to loan us enough anymore.

Tearing down the Fed is not a viable solution. It’s almost as entrenched as feminism. The distruption in confidence alone would be cataclysmic. What we need is a complete overhaul of government spending to more realistic levels, starting with the military industrial complex, which is a dated/out moded machine to fight suicide bombers. Privatize social security and abolish health insurance altogether. The only things that sustain economies are businesses that hire workers who in turn spend. Everything our inept government does should revolve around that. Let the cruel free market sort growth out on its own, by getting out of the way.

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Tim November 11, 2010 at 21:28

Good post, EW. Nice to see something regarding economics here. One thing you might want to mention is Bernanke’s fear of deflation. Not saying I disagree with you, but the PTB are worried about a Japan-style stagnation, which as you know is the opposite of inflation. Deflation is what we had from 1929 – 1933. No one got bailed out, no one printed money BUT no one spent money, either. Everyone just saved and went home, saved and went home. Again, nothing particularly wrong with that, either. It just means a country goes turns inward, that’s all.

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Alonso Quijano November 11, 2010 at 22:24

In a further example of the socialist nature of central banking, Paul offers the following: with the Federal Reserve Act (FRA), Congress formed a cartel of the 12 largest banks and permitted them “to inflate the currency at will, providing for themselves and the financial system liquidity in times of need, while insulating themselves against the consequences of bad loans and overextension of credit…it was a form of financial socialism that benefitted the rich and the powerful”. When things go badly, as they always will under a fractional reserve system, “they claim they provide an invaluable public service and deserve support from the public treasury”

There you go, the Fed and it’s twelve apostles enjoying a neverending last supper extracted from the sheeple’s work and sweat producing the real value…. can’t you see them mocking you in your face?

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Kyo November 12, 2010 at 01:19

MNL, in your criticism of Dr. Paul:

By this same logic, if I make $40/hour now whereas my grandfather only made 2$ per hour in 1913, then it’s clear I’ve been stealing the $38 difference. I’m the criminal!

…I think you’re misunderstanding who exactly is doing the “stealing”. You haven’t stolen a thing; in fact you’re a victim in that you have to be paid in debased dollars.

Rather, the government stole from your grandfather — continuously as they debased the dollar over the years. When he earned $2 for an hour of work all those years ago, he should have had the ability to pay it to someone else, for an hour of their work, at any future time of his choosing. Instead, he only gets three minutes of your labor!

If current policies continue, the $40 you earned for your hour of work today will degrade in the same way, and will buy much less than an hour’s work from your $800-an-hour descendant a century from now.

What natural/moral right does the government have to force people to be paid in a “currency” that not only fails to store value, but is designed not to store value?

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Philip November 12, 2010 at 05:12

Awww, are some people scared that ending the fed maybe painful?
Nothing worth while ever comes for free and a bit of short term suffering ( 5 to 10 yrs ) will be worth it in the end.
End fractional reserve banking
End the privately run Fed

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Traveller November 12, 2010 at 05:16

misterb aka misterbastard November 11, 2010 at 16:34
“give my regards to Hitler, Mao and the Christopher Columbus when you meet them in hell.”

Alonso Quijano November 11, 2010 at 19:01
“this is the cabal that brought you psy war black ops like feminism, communism, darwinism,”

Here we are the usual daily dose of religious nuts.

In fact, the Bible says the Earth is flat, so Columbus must have been some sort of demon floating in the air. Bring me the exorcist!

And of course darwinism is like feminism, probably because science is much more difficult to understand than some sermon for our usual drunk priest holding hand with some altar boys.

You have no respect, knowledge or understanding of the science or great men of the past and you want discuss economics? You are women.

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David K. Meller November 12, 2010 at 09:43

“Government takes a useful commodity such as paper, and by slapping some ink on it and calling it “money”, eventually renders it completely worthless.

Ludwig von Mises

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Alonso Quijano November 12, 2010 at 12:43

@ Traveller

I assumed someone were to choke on that snotty phrase, but bear in mind that negating Darwin doesn’t make you a “Creationist” either. In fact, you won’t find any “Creationist” outside the US. “Creationism” is the intellectualization of faith, which has nothing to do with – and is actually diametrically opposed to – the faith of an intellectual…

Secondly, you show an embarassing lack of cultural sensitivity towards misterb, who has stated on various occasions that he’s a member of an Indian tribe in Canada. He isn’t talking about flat earth/round earth, he’s talking about how the “discovery” of his forefathers’ lands by silly and greedy white Spaniards/Englishmen turned the life of his ancestors into something akin to hell, and he wishes to reciprocate, which I’d say is well within his right, right?

You have no respect, knowledge or understanding of the science or great men of the past and you want discuss economics? You are women.

Now that’s some “argument” I’d expect from the likes of braindead Julies, Lauras, Altes et al., but I’m pretty sure you can do better than that. Looks like I touched a nerve…Want a bonus shock? Einstein was an utter and complete fake, too. What does that make me now? a physics-hater?

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Keoni Galt November 12, 2010 at 15:52

Well done EW. The Central Bankers are THE OWNERS of this country.

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Traveller November 12, 2010 at 16:26

“I assumed someone were to choke on that snotty phrase, but bear in mind that negating Darwin doesn’t make you a “Creationist” either.”

Do not change cards in table, you accompanied darwinism to feminism and communism.

We can debate scientific theories but this was not done in your post, you just condemned some scientific theory from a moral point of view. If communists or feminists claim some scientific theory supports them, it is their problem and their fault.

Do not be too sure too there are not creationists outside of USA, ignorance leading to literal interpretation of any sacred book is world common.

“Secondly, you show an embarassing lack of cultural sensitivity towards misterb, who has stated on various occasions that he’s a member of an Indian tribe in Canada.”

Not as I remember here. But I can take this point, I do not care, after some time we all came to associate patterns of mind to the nickmanes we read here. I associate “misterb” to a particularly high level of religious fanaticism.

“He isn’t talking about flat earth/round earth, he’s talking about how the “discovery” of his forefathers’ lands by silly and greedy white Spaniards/Englishmen turned the life of his ancestors into something akin to hell, and he wishes to reciprocate, which I’d say is well within his right, right?”

And this should be a serious excuse? Please.
So next time someone stabs you for stealing your wallet, the fault falls over who built the knife.

Want condemn Columbus? And why not who built his ships? Why not who discovered how to build ships? Why not who discovered the sea? Why not who asked himself how the world is made? Why not a God who created man? This is the truly classic regression reasoning of religious people. Domino effect, without mind or free will. No wonder they consider a sperm over an egg exactly like a thinking human being.

“Now that’s some “argument” I’d expect from the likes of braindead Julies, Lauras, Altes et al., but I’m pretty sure you can do better than that.”

I can do better than that, if I think it is the case. Here, I did not.

“Want a bonus shock?”

Do not overestimate yourself. You should thank me for exposing the danger of religious fanaticism and its consequences on men’s movement.

“Einstein was an utter and complete fake, too. What does that make me now? a physics-hater?”

Knowing your motives, yes.

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Epoche* November 12, 2010 at 18:51

Unless you do away with FDIC insurance and allow banks to fail it doesnt matter if they end the fed. Citibank is insolvent but the government wont allow it to go bankrupt.

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Lee Raconteur November 12, 2010 at 21:40

@Herbal Essence:

“”“cocainized Neg***s” were raping white women.””

What is this silliness?

Have we become so PC and emasculated that one cannot even type the word ‘Negroes’ anymore?

You guys wonder why the USA is sliding in to the abyss? One reason is that you allow anyone to tell you what to say, what to write and what to think.

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Lee Raconteur November 12, 2010 at 21:52

All you guys ranting about fiat currencies, gold and inflation miss three points.

1) If your wages increase faster than inflation then no one stole anything from you. Is your standard of living higher than that of someone 110 years ago? It is. It took me 5 hours of work to buy an LP/CD in 1979. It took me15 minutes of work to do the same in 2008.

2) If you peg your currency to gold then you open your nation up to attack by speculators. This is why fiat is so desirable – on the balance sheet of national currency and monetary policy, a nation can control both sides of the ledger: Assets (Bonds/Debt) and Liabilities (Money in circulation).

Do you want the rest of the world to get together and destroy your currency by manipulating the price of gold? Ask 1930′s Britain how that worked out.

3) So what if all fiat currencies eventually die? What is this obsession with ‘forever’, as in your money must be worth the same amount in 1875 and in 11, 875? Currencies die, there is an adjustment period. All business cycles end up with recessions to clear out the bad debt, excess capacity and excess credit.

Go look at the economic history of the USA in the 19th C. Every 4 to 7 years, boom/bust – and by ‘bust’ I mean a really nasty Depression.

You cannot avoid this, you can only educate and prepare for the transition, a transition which will always happen. People will always forget the lessons learned last time, and then they will inflate another credit bubble again. It’s human nature and tweaking the monetary system will never change that.

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KK November 13, 2010 at 12:25

I think Ron Paul’s the only man in government with half a brain. I’m glad he could speak out against the Fed without dying of ‘natural causes’. Some people think JFK was assassinated because he wanted to end the Fed.

Google a band called SONS OF LIBERTY (the brainchild of ICED EARTH’s Jon Schaffer). Their album BRUSHFIRES OF THE MIND is all about ending the Fed. I think they’re giving away their album for free, just to get the word out.

I know it’s an incredibly powerful corporation, but it’s still a corporation. Couldn’t the government just yank its license?

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Migu November 15, 2010 at 10:11

If gold coins are money, then a $20 gold coin is always a $20 gold coin. The only way to manipulate it’s value is to add non gold metal and still call it $20.

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Zeev_Zwaard November 18, 2010 at 08:03

Gold doesn’t go up by that much. Migu is right. It’s the rest that sinks thus the difference increases.

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