Pastor's Blog

Chapter 6 of Ron Paul's End the Fed is entitled "Conversations with Greenspan", and chapter 7 is, "Conversations with Bernanke ". In these chapters he recounts a few conversations he's had with these two chairman (one past, the other current) of Federal Reserve. Both chapters are quite interesting. I was surprised to learn that Greenspan had written a 1966 article "Gold and Economic Freedom" in Ayn Rand's objectivist newspaper. In it, he gave a brilliant defense of the gold standard. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. [This is a reference to FDR's confiscation of gold and the outlawing of ownership of gold in 1933]. If everyone decided, for example, to convert all his bank deposits as silver or copper or any other good and thereaft...

Chapter three of Ron Paul's book, End the Fed , is entitled "My Intellectual Influences." In it he describes how he came to embrace the free market and sound money ideas he advocates in the book. He starts with the work ethic that was instilled into him by his father as he worked as a small boy in the family's dairy business during the Great Depression. The scarcity of money caused him to value the virtues of hard work and saving, and led him to explore how money "works." (It's my experience that children who grow up having to earn their own money, rather than receiving an unearned allowance, come to understand economics better.) Later he came across the proponents of the Austrian school of economics. Of course, he mentions Ludwig von Mises, F. A. Hayek, Murray N. Rothbard, and Hans F. Sennholz, as formative influences. He had the most personal interaction with Rothbard. In was an event that occurred on August 15, 1971 that led him to enter the political...

Hans Sennholz has called the creation of the Fed "the most tragic blunder ever committed by Congress. The day it was passed, old America died and a new era began. A new institution was born that was to cause, or greatly contribute to, the unprecedented economic instability in the decades to come." It was a form of financial socialism that benefited the rich and the powerful. As for the excuse, it was then what it is now. The claim is that the Fed would protect the monetary and financial system against inflation and violent swings in market activity... In practice the reality has been much different. One only needs to reflect on the dramatic decline in the value of the dollar that has taken place since the Fed was established in 1913. The goods and services you could buy for $1.00 in 1913 now cost nearly $21.00. Another way to look at this is from the perspective of the purchasing power of the dollar itself. It has fallen to less than $0.05 of its 1913 value. We might say tha...

Even the Fed itself claims that part of its jobe is to keep inflation in check. This is something like the tobacco industry claiming that it is trying to stop smoking or the automobile industry claiming that it is tyring to control road congesttion. The Fed is in the business of generating inflation. It might attempt to stop the effects of inflation, namely rising prices. But under the old definition of inflation--an artificial increase in the supply of money and credit--the eitnre reason for the Fed's existence is to generate more, not less of it. What the largest banks desire is precisely what we might expect any large corporation to desire: privatized profits and socialized losses. (p. 14)

In chapter two Ron Paul does a decent job explaining "The Origin and Nature of the Fed." From its founding in 1913, secrecy and inside deals have been part of the way the Fed works. Part of the public relations game played by the chairman of the Fed is designed to suggest that the Fed is an essential part of our system, one we cannot do without. In fact, the Fed came about during a priod of our nation's history called the Progressive Era, when the income tax and many new government institutions were created. It was a time in which business in general became infatuated with the idea of forming cartels as a way protecting profits and socializing losses. The largest banks were no exception. They were very unhappy that there was not national lender of last restort that they could depend on to bail them out in times of crisis. With no bailout mechanism in place, they had to sink or swim on their own merits. (p. 13)

The Fed’s activities since the market meltdown of 2008 have been dangerous in the extreme. The Fed is using all its power to drive the monetary base to unprecedented heights, creating trillions in new money out of thin air. From April 2008 to April 2009, the adjusted monetary base shot up from $856 billion to an unbelievable $1.749 trillion. Was there any new wealth created? New Production? No, this was the Ben Bernanke printing press at work. If you and I did anything similar, we would be called counterfeiters and be sent away for a lifetime in prison. (p. 8) Back on November 21, 2002, Ben Bernanke explained precisely what his views are, so perhaps there should have been no surprise. “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. governmen...

True reform of the federal government and reduce it to its constitutional limits simply cannot take place without ending the Federal Reserve. If you solve the money monopoly problem by ending the Fed, you solve many other problems, too. Essentially you take away from the government the capacity to use financial trickery to expand without limit. It is the first step to restoring constitutional government. Without the Fed, the federal government would have to live within its means. It would still be too big and too intrusive, just like all state governments are today, but the outrageous empire at home and abroad would have to come to an end. (p. 7)

I want to give you some highlights from chapter one of Ron Paul's End the Fed . But first, some context and biblical perspective. The Bible has quite a lot to say about money. Much of it comes in the form of aphorisms (largely in the wisdom literature), in which we learn about diligence leading to prosperity (Prov. 10:4; 12:27; 13:4), the wisdom of diversifying investments (Ecc. 11:1-2), the Lord repaying the generous man who gives to the poor (Prov. 19:17), avoiding the dangers of debt (Prov. 22:7), saving for future needs (Prov. 21:20), calculating the cost of projects (Lk. 14:28), etc. But there are also a number of commandments in the law, as well as instruction in the prophets, that have a direct bearing on the standard operating procedures of the Federal Reserve System. The Bible, in no uncertain terms, condemns dishonest money. You shall do no wrong in judgment, in measures of length or weight or quantity. You shall have just balances, just weights, a just ephah, and a just...

I just purchased a new book, written by one of the very few men in Washington who actually seems to understand and properly respect the limitations the Constitution sets on the federal government: Ron Paul. The book is End the Fed . He's talking, of course, about the Federal Reserve which manipulates the money supply, and in so doing creates all kinds of economic havoc. Most people have very little understanding of how the Fed works and how its actions affect us. Paul's book is a kind of "Fed for Dummies" to help us average joes understand what is arguably the most powerful institution in the world.