I recently proposed that the liberty movement capitalize on Brexit with “Fed-exit”: a campaign to “secede" from the Federal Reserve. Fed-exit could be accomplished with a few simple policy changes.
Passing Audit the Fed is a good first step toward Fed-exit. Contrary to the Federal Reserve’s propaganda, auditing the Fed will not reduce the Federal Reserve’s mythical “independence.” It will simply allow Congress and the people to learn the full truth about the Fed’s conduct of monetary policy.
However, the desperation with which the Fed fights the audit bill suggests it believes increased transparency will boost support for Fed-exit. Considering what we discovered from the limited audit of the Fed’s activities during the 2008 financial crisis, the Fed’s fears may be justified. That audit revealed that between 2007 and 2008 the Federal Reserve loaned over $16 trillion — more than four times the annual budget of the United States — to foreign central banks and politically-influential private companies! Imagine what would be revealed by a full audit that includes looking at the Fed’s recent explosion of money creation via “quantitative easing.”
Once Congress and the public know the full truth about the Fed’s operations, we can begin working on ending, or at least reining in, the Fed. A good next step would be to explicitly forbid the Fed from making “loans” to private businesses or foreign governments. Section 13(3) of the Federal Reserve Act, which the Fed claims gives it the authority to provide "emergency assistance” to private companies, must be repealed.
Congress should also pass legislation reversing President Ronald Reagan’s executive order creating the “Plunge Protection Team.” Created after the 1987 stock market crash, the Plunge Protection Team’s “job” is to intervene whenever the financial markets appear to be on the verge of a meltdown, in order to prolong the Fed-created illusion of economic prosperity.
Congress should also restrict the Fed’s ability to purchase government securities, which the Fed uses to monetize the federal debt. Congress should also stop the Fed from manipulating interest rates. These actions would reduce the economic instability wrought by the Fed’s monetary policy. Ending the Fed’s monetization of the debt could also force Congress to not just halt the growth of, but actually begin to roll back, the welfare-warfare state.
The best way to rein in the Fed is to restore the gold standard. However, this must be a true gold standard, not the phony post-war Bretton Woods gold standard or the "gold price rule" promoted by the supply-siders. The “gold price rule” requires the Fed to raise interest rates whenever the price of gold matches or exceeds a Fed-determined target. Thus, this rule still allows the Fed to attempt to “fix” the price of money. It just provides the Fed with another after-the-fact indicator that the latest inflationary bubble is about to burst.
The most important step toward Fed-exit and the restoration of a true free-market monetary system is the repeal of all laws that in any way restrict individuals from using alternative currencies. Under a free-market monetary system, some individuals will choose to use metal-based currency, while others will choose to use digital currency. Some many even stick with fiat money. The important factor is not the type of currency individuals use, but that people have the right to decide for themselves what unit of exchange they use for their economic transactions.
As long as the Federal Reserve is allowed to manipulate the value of money and support the welfare-warfare state, we will never have a truly free market or a free society. Therefore, all those who seek liberty, peace, and prosperity should join the effort for a Fed-exit.
Wednesday
DON'T REFORM THE FED, FED-EXIT! by RON PAUL
Opponents of a central bank should take advantage of the post-Brexit vote revival of secessionist sentiments to promote a secession from central banking, or “Fed-exit.” Ending the Federal Reserve's monopoly on money is the key to restoring and maintaining our liberty and prosperity.
By manipulating the money supply to fix interest rates, the Federal Reserve engages in price fixing. After all, interest rates are nothing more than the price of money. Like all prices, they communicate information about economic conditions to market actors. Federal Reserve attempts to override the market rate of interest with a Fed-favored rate distort the price signals sent to businesses, investors, and consumers. The result of this distortion is a Fed-created boom, followed by a Fed-created bust.
The Fed’s action affects the entire economy and impacts the lives of all Americans, as well as of people around the word. Therefore, it is no exaggeration to say that the attempt to fix interest rates is the most harmful example of price fixing.
Many who normally oppose government intervention in the marketplace claim that central banking could work if only the Fed adhered to a monetary rule. Supporters of a “rules-based” monetary policy claim that a rules-based approach will bring stability and predictability to monetary policy, and thus put the economy on a path to permanent prosperity. But under a rules-based monetary policy, the Federal Reserve retains the power to manipulate interest rates. So under a rules-based approach, investors and entrepreneurs would still receive distorted price signals, which would still result in a boom-bust cycle. No rule can fix the flaws inherent in our system of monetary central planning.
In recent years, many progressives have joined libertarians and conservatives in criticizing the Federal Reserve. Progressive Fed critics often focus on the ways the Fed’s policies benefit big banks, Wall Street, and other special interests, and how the policies harm average Americans. Unfortunately, but not surprisingly, many progressives do not want a free market in money. Instead they want a more “democratic” Fed. Thus, progressives favor, for example, requiring that more members of the Fed’s board be confirmed by the US Senate. They also favor putting representatives of “public interest” groups on the Fed’s board.
The Fed’s progressive critics are correct that big banks together with powerful financial institutions have too much influence on monetary policy. While implementing progressive reforms may reduce Wall Street’s influence on monetary policy, it will likely also strengthen the influence of the deep state — that network of crony capitalists, lobbyists, congressional staffers, and others who work behind the scenes to control our economic and foreign policies.
Many progressives believe that middle- and working-class Americans would benefit from a more “stimulative” (meaning inflationary) monetary policy. Saying that inflation would help the average American turns reality on its head. Middle- and working-class Americans are the main victims of the Fed’s inflation tax. Average Americans also suffer the most when the bubble created by the Fed’s inflationary “stimulus” inevitably bursts. The true beneficiaries of inflation are crony capitalists and big-spending politicians.
Instead of fruitless efforts aimed at “reform” of the Fed, those concerned with restoring a true free market, reducing economic inequality, and promoting peace and prosperity for all should work for a “Fed-exit.” The first step, of course, is to pass Audit the Fed.
Once Congress and the people learn the full truth about the Fed, they can begin to consider the best ways to Fed-exit. There are a number of steps that can and should be taken toward that goal that I will outline in a future column.
By manipulating the money supply to fix interest rates, the Federal Reserve engages in price fixing. After all, interest rates are nothing more than the price of money. Like all prices, they communicate information about economic conditions to market actors. Federal Reserve attempts to override the market rate of interest with a Fed-favored rate distort the price signals sent to businesses, investors, and consumers. The result of this distortion is a Fed-created boom, followed by a Fed-created bust.
The Fed’s action affects the entire economy and impacts the lives of all Americans, as well as of people around the word. Therefore, it is no exaggeration to say that the attempt to fix interest rates is the most harmful example of price fixing.
Many who normally oppose government intervention in the marketplace claim that central banking could work if only the Fed adhered to a monetary rule. Supporters of a “rules-based” monetary policy claim that a rules-based approach will bring stability and predictability to monetary policy, and thus put the economy on a path to permanent prosperity. But under a rules-based monetary policy, the Federal Reserve retains the power to manipulate interest rates. So under a rules-based approach, investors and entrepreneurs would still receive distorted price signals, which would still result in a boom-bust cycle. No rule can fix the flaws inherent in our system of monetary central planning.
In recent years, many progressives have joined libertarians and conservatives in criticizing the Federal Reserve. Progressive Fed critics often focus on the ways the Fed’s policies benefit big banks, Wall Street, and other special interests, and how the policies harm average Americans. Unfortunately, but not surprisingly, many progressives do not want a free market in money. Instead they want a more “democratic” Fed. Thus, progressives favor, for example, requiring that more members of the Fed’s board be confirmed by the US Senate. They also favor putting representatives of “public interest” groups on the Fed’s board.
The Fed’s progressive critics are correct that big banks together with powerful financial institutions have too much influence on monetary policy. While implementing progressive reforms may reduce Wall Street’s influence on monetary policy, it will likely also strengthen the influence of the deep state — that network of crony capitalists, lobbyists, congressional staffers, and others who work behind the scenes to control our economic and foreign policies.
Many progressives believe that middle- and working-class Americans would benefit from a more “stimulative” (meaning inflationary) monetary policy. Saying that inflation would help the average American turns reality on its head. Middle- and working-class Americans are the main victims of the Fed’s inflation tax. Average Americans also suffer the most when the bubble created by the Fed’s inflationary “stimulus” inevitably bursts. The true beneficiaries of inflation are crony capitalists and big-spending politicians.
Instead of fruitless efforts aimed at “reform” of the Fed, those concerned with restoring a true free market, reducing economic inequality, and promoting peace and prosperity for all should work for a “Fed-exit.” The first step, of course, is to pass Audit the Fed.
Once Congress and the people learn the full truth about the Fed, they can begin to consider the best ways to Fed-exit. There are a number of steps that can and should be taken toward that goal that I will outline in a future column.
Tuesday
FOOL'S ERRAND: NATO PLEDGES FOUR MORE YEARS OF WAR IN AFGHANISTAN by RON PAUL
The longest war in US history just got even longer. As NATO wrapped up its 2016 Warsaw Summit, the organization agreed to continue funding Afghan security forces through the year 2020. Of course with all that funding comes US and NATO troops, and thousands of contractors, trainers, and more.
President Obama said last week that the US must keep 3,000 more troops than planned in Afghanistan. The real reason is obvious: the mission has failed and Washington cannot bear to admit it. But Obama didn’t put it that way. He said:
“It is in our national security interest, especially after all the blood and treasure we’ve invested over the years, that we give our partners in Afghanistan the best chance to succeed.”
This is how irrational Washington’s logic is. Where else but in government would you see it argued that you cannot stop spending on a project because you have already spent so much to no avail? In the real world, people who invest their own hard-earned money in a failed scheme do something called “cut your losses.” Government never does that.
Isn’t 15 years of US “blood and treasure” enough of a “best chance” to succeed?
NATO Secretary General Jens Stoltenberg announced at the summit that thanks to an additional billion dollars in NATO member-country donations, the organization had come up with close to the $5 billion per year that it has pledged to the Afghan government. Of that $5 billion you can guess who is paying the lion’s share. That’s right, we are. We send $3.45 billion every year to, according to Transparency International, the third most corrupt country on earth -- while Americans struggle with unemployment, stagnant wages, and inflation. That is why I always say that foreign aid is money stolen from poor people in the United States and sent to rich people overseas.
NATO head Stoltenberg said, “Our message is clear: Afghanistan doesn't stand alone. We're committed for the long haul.” How nice of the Norwegian politician to commit Americans to financing the war in Afghanistan for “the long haul.”
When I suggested in a recent interview that the only sensible US policy in Afghanistan would be to bring all the troops home, the host asked whether I was worried the Taliban would rush in to fill the vacuum. That’s what has already happened, I said. The Taliban are stronger than ever in Afghanistan. They control more territory than at any time since the original US invasion in 2001. Despite 15 years of US interventionism, nearly 2,500 dead US soldiers, and well over a trillion dollars, Afghanistan is no closer to being a model democracy than it was before 9/11. It’s a failed policy. It’s a purposeless war. It is a failed program.
The neocons argue that Iraq, Libya, and other US interventions fell apart because the US did not stay long enough. As usual they are wrong. They failed and they will continue to fail because they cannot succeed. You cannot invade a country, overthrow its government, and build a new country from the ground up. It is a fool’s errand and Washington has turned most Americans into fools. It’s time to end this game and get back to the wise foreign policy of the founders: non-intervention in the affairs of others.
President Obama said last week that the US must keep 3,000 more troops than planned in Afghanistan. The real reason is obvious: the mission has failed and Washington cannot bear to admit it. But Obama didn’t put it that way. He said:
“It is in our national security interest, especially after all the blood and treasure we’ve invested over the years, that we give our partners in Afghanistan the best chance to succeed.”
This is how irrational Washington’s logic is. Where else but in government would you see it argued that you cannot stop spending on a project because you have already spent so much to no avail? In the real world, people who invest their own hard-earned money in a failed scheme do something called “cut your losses.” Government never does that.
Isn’t 15 years of US “blood and treasure” enough of a “best chance” to succeed?
NATO Secretary General Jens Stoltenberg announced at the summit that thanks to an additional billion dollars in NATO member-country donations, the organization had come up with close to the $5 billion per year that it has pledged to the Afghan government. Of that $5 billion you can guess who is paying the lion’s share. That’s right, we are. We send $3.45 billion every year to, according to Transparency International, the third most corrupt country on earth -- while Americans struggle with unemployment, stagnant wages, and inflation. That is why I always say that foreign aid is money stolen from poor people in the United States and sent to rich people overseas.
NATO head Stoltenberg said, “Our message is clear: Afghanistan doesn't stand alone. We're committed for the long haul.” How nice of the Norwegian politician to commit Americans to financing the war in Afghanistan for “the long haul.”
When I suggested in a recent interview that the only sensible US policy in Afghanistan would be to bring all the troops home, the host asked whether I was worried the Taliban would rush in to fill the vacuum. That’s what has already happened, I said. The Taliban are stronger than ever in Afghanistan. They control more territory than at any time since the original US invasion in 2001. Despite 15 years of US interventionism, nearly 2,500 dead US soldiers, and well over a trillion dollars, Afghanistan is no closer to being a model democracy than it was before 9/11. It’s a failed policy. It’s a purposeless war. It is a failed program.
The neocons argue that Iraq, Libya, and other US interventions fell apart because the US did not stay long enough. As usual they are wrong. They failed and they will continue to fail because they cannot succeed. You cannot invade a country, overthrow its government, and build a new country from the ground up. It is a fool’s errand and Washington has turned most Americans into fools. It’s time to end this game and get back to the wise foreign policy of the founders: non-intervention in the affairs of others.
Monday
ON JULY 4TH DEMAND FREEDOM, DON'T CELEBRATE THE STATE by RON PAUL
As we gather with family and friends to celebrate the July 4th holiday we should remember that we are not celebrating the state, but rather commemorating an act of secession from an oppressive government. We are celebrating the adoption of the Declaration of Independence from Great Britain – a daring move by the Founders inspired by a desire for liberty.
Thomas Jefferson famously said, “Eternal vigilance is the price of liberty.” That does not only mean that we should be prepared to defend against foreign invaders. Perhaps more importantly it means that we must retain the lessons from the original American revolt and guard against a government that views the people as the enemy.
We are familiar with the great observation from essayist Randolph Bourne that “War is the health of the state.” But Bourne further explained that, “if the State's chief function is war, then the State must suck out of the nation a large part of its energy for its purely sterile purposes of defense and aggression. It devotes to waste or to actual destruction as much as it can of the vitality of the nation.”
War benefits the special interests. It benefits the military-industrial complex. It benefits the neocons whose “expertise” always leads to disaster. It benefits the mainstream media. It benefits the wealthy. As Bourne said, it sucks the productive parts from the economy and concentrates them in the hands of the state for destructive purposes.
It is often said – and surely it will be repeated many times today – that our nation’s wars have preserved our freedoms. That is not true. Aside from our fight to secede from British rule, America’s wars have one-by-one diminished our freedoms. They have not been fought to bring us liberty, but have most often been fought at the behest of deceitful and evil people to no benefit but their own. Thousands have died in vain on the lies of the war-promoters. Much of our freedom has died as well.
We should ask ourselves whether the last 15 years of the war on terror have benefited the rest of us. Are we safer? More free? Is any end in sight?
No to all the above. In our age of undeclared war, we are also in perpetual war. Trillions of dollars have been spent and millions of lives lost to no benefit. Instead, we are mired ever deeper in the Middle East. Drone attacks proceed at the same pace. We are “pivoting” to Asia not with friendship but with warships. And some fools even think it’s a good idea to try to provoke Russia into World War III!
At home the government uses the threat of terrorism to further gut the Second, Fourth, Fifth, and Tenth Amendments. Yet in the 15 years since 9/11 less than 100 people have been killed by “radical jihadists” – including the recent attack in Orlando.
The state uses war to take away our freedoms. If on this 240th anniversary of the original July 4th we wish to survive as a free society we must begin to exercise some of that “eternal vigilance” against an ever more oppressive state. If the people demand change, the politicians will listen.
Thomas Jefferson famously said, “Eternal vigilance is the price of liberty.” That does not only mean that we should be prepared to defend against foreign invaders. Perhaps more importantly it means that we must retain the lessons from the original American revolt and guard against a government that views the people as the enemy.
We are familiar with the great observation from essayist Randolph Bourne that “War is the health of the state.” But Bourne further explained that, “if the State's chief function is war, then the State must suck out of the nation a large part of its energy for its purely sterile purposes of defense and aggression. It devotes to waste or to actual destruction as much as it can of the vitality of the nation.”
War benefits the special interests. It benefits the military-industrial complex. It benefits the neocons whose “expertise” always leads to disaster. It benefits the mainstream media. It benefits the wealthy. As Bourne said, it sucks the productive parts from the economy and concentrates them in the hands of the state for destructive purposes.
It is often said – and surely it will be repeated many times today – that our nation’s wars have preserved our freedoms. That is not true. Aside from our fight to secede from British rule, America’s wars have one-by-one diminished our freedoms. They have not been fought to bring us liberty, but have most often been fought at the behest of deceitful and evil people to no benefit but their own. Thousands have died in vain on the lies of the war-promoters. Much of our freedom has died as well.
We should ask ourselves whether the last 15 years of the war on terror have benefited the rest of us. Are we safer? More free? Is any end in sight?
No to all the above. In our age of undeclared war, we are also in perpetual war. Trillions of dollars have been spent and millions of lives lost to no benefit. Instead, we are mired ever deeper in the Middle East. Drone attacks proceed at the same pace. We are “pivoting” to Asia not with friendship but with warships. And some fools even think it’s a good idea to try to provoke Russia into World War III!
At home the government uses the threat of terrorism to further gut the Second, Fourth, Fifth, and Tenth Amendments. Yet in the 15 years since 9/11 less than 100 people have been killed by “radical jihadists” – including the recent attack in Orlando.
The state uses war to take away our freedoms. If on this 240th anniversary of the original July 4th we wish to survive as a free society we must begin to exercise some of that “eternal vigilance” against an ever more oppressive state. If the people demand change, the politicians will listen.
Subscribe to:
Posts (Atom)
