It’s Time To Abolish The Fed And The SEC

On January 5, Ron Paul addressed the House Financial Services Committee’s hearing on the Madoff Ponzi scandal. He pointed out that Bernard Madoff was operating under the supervision of the SEC, that more regulation will only make the job of cunning fraudsters easier because they can claim to be approved by the government, and that two of the biggest government-run Ponzi schemes are the Social Security system and even the monetary system itself. These scams create a climate of fraud that sucks in the people and teaches them to imitate the government. This outrage must be stopped and it can be done by abolishing the Federal Reserve and the SEC, and returning to an honest monetary system based on gold and/or free competition in currencies.

Ron Paul: “For a good many years now, since the 1930s, every time a problem like this comes up, like in the Depression, we think that it is a lack of regulation, so we introduce regulatory agencies like the SEC, and, like after Enron, that was a major problem so we appropriate more money, and hire more people… that doesn’t do any good.

But this circumstance I think really makes my point, that the approach is completely wrong. [The approach] that the regulatory agencies are preempting people from doing bad things, just doesn’t work. There are millions and millions and millions of transactions. You can’t do it. All they do is give a false sense of security.

This is a perfect example of it. The SEC was involved with Madoff over the last decade. And that sort of gives the stamp of approval and says, “oh, must be okay”. So everybody’s guard is let down. This creates the moral hazard that allows people to make these mistakes and not to assume responsibility for themselves.

Does that mean we should ignore the problem? No! The problem comes because people commit fraud. And fraud laws are on the books. All the people involved with Enron were prosecuted under state laws of fraud, and the market took care of the stocks. But just adding on new regulations and spending millions and millions if not billions of dollars on regulating enterprise doesn’t do any good. It contributes to it. It is the problem.

We should look more to how the atmosphere is created by the Congress. If you look at the principle of fractional reserve banking, that in a way is a Ponzi scheme. This gets people doing things and building a mountain of debt… debt on debt, in this manner.

Also, if you really want to look at a big Ponzi scheme, and it is said too often that people end up doing what governments to, if we set examples, and believe me, everybody knows the Social Security system is a Ponzi scheme.

So yes, 50 billion dollars is horrendous, but what about an 8 trillion dollar loss in the stock market? So what do we do? We rush and pump in 8 trillion dollars. Where do we get the money? We create it out of thin air, furthering this whole idea of moral hazard and believing that we can create an unmanageable system.

It’s not the fault of the individuals at the SEC. They have an impossible job and they have to pretend they’re doing something to feel relevant the same way we do here in the Congress. We have to feel relevant we need the market to work, we need to get rid of the bad policies, the monetary system, and these mountains of debt. We say, well we’re relevant because we’re gonna hire more bureaucrats and we’re gonna appropriate more money we don’t have. And we’re gonna solve all our problems.

We’ve been doing this for 78 years, and we’ll do it again, but believe me, this will not solve our problems. We need to think about eliminating this whole regulatory process. And actually, we don’t need the SEC at all, and we could thrive even better and we would dwell on self-reliance, self-policing and the idea that people can’t commit fraud, but the government should not commit fraud either. We should not set an example.”

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Friendship And Commerce With All Nations

In his latest column Ron Paul emphasizes the need for the US to stop meddling in the affairs of other nations, to bring our troops home and to get our economy back into the business of production, not destruction. — tmartin

Opportunities for Peace and Nonintervention

by Ron Paul

Last week I discussed our worsening economic situation and the fact that there are very few options for the new administration to improve things in the long run. The same is not true on the foreign policy front. Our interventionist foreign policy stands ready to be put on a new course with the new administration. Unfortunately, it seems the new administration is likely to continue the mistakes of the past. I’ve often discussed interventionist foreign policy and the resulting blowback. The current administration’s foreign policy, I’m afraid, has created a huge impetus for blowback against the United States. However, I truly believe much of the world stands ready to look beyond our nation’s recent blunders if the new administration proves to be heading in a more reasonable direction.

Other nations around the world find our interference in their affairs condescending, and it is very dangerous for us. We may think we have much to gain by inserting ourselves in these complex situations, but on the contrary we suffer from many consequences. Other countries have their problems, to be sure. But how would we feel if China or Russia came to our soil and tried to depose our problematic leaders or correct our policies for us? Our problems are ours to solve, and we need to give other countries that respect as well. Instead, we have been turning alleged, phantom threats into real, actual threats.

We should follow the foreign policy advice of the Founders - friendship and commerce with all nations. One positive step would be to end our destructive embargo of Cuba, which deprives our farmers of a market just 90 miles from US shores while strengthening the Communist regime. We’ve seen 50 years of statist restrictions not accomplish anything. A change is needed. Other countries should decide how to govern themselves. Even if we don’t necessarily approve, it’s none of our business. If other people foolishly choose to live under statist experimental regimes, they need to fail in their own right, and not have us as a scapegoat. We need to focus on our own affairs.

However, the pressures exerted on our leadership from the military industrial complex and big business is not in favor of peace or freedom, or especially nonintervention. Intervention is big business. Defense contracts topped $300 billion last year, and total spending on war and our overseas empire is up to $1 trillion per year. That represents a lot of people earning a living off of war and conquest. But rather than adding to our economy, all of this money is taken from the economy in order to wage war and destruction. Imagine if those resources were put to creative, productive use here at home!

We need to rein in our overseas empire, as quickly as possible. We need to bring our troops home, and get our economy back into the business of production, not destruction. The smartest thing we could do is admit we don’t know all the answers to all the world’s problems. If the new administration can take a closer look at real free trade and no entangling alliances, we would be much better off for it. Economically - we could save hundreds of billions of dollars each year! The new leadership has the opportunity and the political capital to do this. But unfortunately, it is not likely to happen.

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Israel Invades Gaza - Ron Paul Responds

  • The idea for “preventive war” is spreading
  • We should be on neither side; that conflict has been going on for a long time
  • Even though Israel invades Gaza, we - the US - will be blamed for this
  • Palestinians are confined to a “concentration camp” and are no match for Israel
  • The Middle East is a powder keg
  • We’re involved in too many wars and are going bankrupt
  • 2009 will see inflation and a rapid deterioration of the dollar
  • We’re spending too much money, borrowing too much money, and printing too much money
  • Escalation in Gaza and Afghanistan means big trouble at the world stage and at home
  • The attack on our personal liberties continues

Update: Ron Paul was interviewed on the invasion by Press TV on January 5.

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Ron Paul’s Audacity of Hope

In his latest column Ron Paul paints a dark yet realistic picture of America’s probable future. Socialism, corporatism, protectionism and nationalism are poised to devour what is left of our country, our currency and our freedoms. Inflation will be back with a vengeance, and America will go broke as a result of the Federal Reserve’s increasingly desperate monetary policies. Is a breakdown and subsequent reconstruction the only hope for reclaiming a nation where freedom once again reigns supreme? While many of us are in a position to take immediate steps to increase our personal liberties and preserve our financial wellbeing, major systemic changes might only occur once the current madness has infected every last corner of America. At that time, a sufficient number of individuals will see through the veil of socialist deception, regain confidence in their own abilities, and realize that only a free people can peacefully unleash the creative energy required to turn things around. In these challenging times, we would all be well advised to hope for the best and prepare for the worst. — tmartin

Transition and Hope

by Ron Paul

As another year draws to a close, there are some important transitions ahead of us. Not just transitions to a new administration, but also economically, politically and culturally.

Many hoped that the changes would signify overwhelming positive steps for our country, and that we would enter a new era, as promised during the campaign. I would like for this to be true, but based on the continuity so far, I would not be surprised to see America stay on the same course of failed monetary and economic policies. The course has been set for several decades, and in reality there is little the new administration could do to fix things without actually making them worse. But I expect them to try. The only real solutions involve allowing the market to liquidate the debt and malinvestment. The political reality is that this is not going to happen.

Through the coming months and years, our nation will find itself at many crossroads, as all manner of socialist, corporatist, protectionist and nationalist initiatives will be thrown at the economy to see if anything will reflate it. Some of these so-called fixes will be enacted amidst much outcry, as with the $700 billion TARP bailout, which the public was right to oppose. About half of that money is gone without a trace, with no accountability, and the economy is no better off for it.

Others, such as the proposed new $800 billion plus economic stimulus the new administration is already clamoring for, might have limited public support, as many will find the prospect of receiving a government check a little too tempting to object to. After all, Wall Street got a bailout. What about the little guy? Everything will be attempted by government in the short run to remedy the worsening situation - everything, that is, but freedom. Therefore everything attempted will fail.

Unfortunately, government will continue to consolidate and abuse power at an accelerated pace. Government will get bigger, in the short term, and as monetary policy goes from irresponsible to absurd, I have every expectation that we will soon shift from some prices falling to an inflationary nightmare.

But there is hope. As all these attempts fail, more people will demand freedom, and see that it is the only way. Government can only get so big before the country goes broke.

It is regrettable that we keep forgetting what history has shown over and over to be true, because truly, it is a hard and destructive lesson to keep learning. Perhaps it is just something that every generation has to learn for itself. The political and cultural changes that come from these economic transitions will be key to the direction and quality of life for future generations. But I am hopeful because of the strength of the American people and the increased number of voices recognizing that liberty really is the only way to peace and prosperity.

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Private Fraud vs. Public Fraud

In his latest column Ron Paul points out that governments are the biggest perpetrators of fraud on a massive scale. Social Security is just one example of a series of government-run Ponzi schemes that are doomed to collapse. Meanwhile, when confronted with new aspects of the growing crisis, government officials typically react by introducing even more misguided laws and regulations, thereby making the situation even worse. As we watch our prosperity and liberty dwindle away, the best we can hope for is government staying out of the way so we can rebuild the economy under an honest free-market system and return to true financial stability. — tmartin

Government and Fraud

by Ron Paul

Billions of dollars were recently lost in the collapse of Bernie Madoff’s self-described Ponzi scheme, in which too-good-to-be-true returns on investments were not really returns at all, but the funds of defrauded new investors. The pyramid scheme collapsed dramatically when too many clients called in their accounts, and not enough new victims could be found to support these withdrawals. Bernie Madoff was running a blatant fraud operation. Fraud is already illegal, and he will be facing criminal consequences, which is as it should be, and should act as an appropriate deterrent to potential future criminals. But it seems every time someone breaks the law, politicians and pundits decide we need more laws, even though lack of laws was not the problem.

The government itself runs a fraud much bigger than Madoff’s. Our Social Security system is the very definition of a Ponzi, or pyramid scheme. If the government truly had an interest in protecting people’s savings, they would allow people to opt out of Social Security altogether. We would cut wasteful spending, such as our overseas empire, to honor current obligations to seniors, and eventually phase the program out. Instead, as with Enron and Sarbanes Oxley, I expect new, unrelated legislation to be proposed that further damages freedom in the name of protecting us, amidst loud proclamations that they have made the world safe.

Merely passing a law does not fix any problems, just as throwing paper at a recession does not stop it. How can a government so complicit in mandatory public fraud effectively pre-empt private fraud? I see no reason to believe that any new law, or regulatory agency will solve anything. But I do see liberty slipping away every time Congress decides to “do something”. We already have an oversight agency, the SEC, which did a poor job overseeing and preventing this, but does a great job hamstringing honest, productive businesses and driving them overseas.

Total trust in government solutions only creates moral hazard, and amplifies risky behavior. Trust in government got us here. We trusted government to eliminate risk, but it just made risk more creative and dangerous. We trusted the Federal Reserve, a supra-governmental cabal of private banks, to know better than the free market what interest rates should be, and how to stabilize the business cycle, but like a spinning top that loses its balance, it has instead spun the business cycle and the economy wildly out of control.

No governmental activity can negate market forces or nullify the cardinal rule of caveat emptor. Government can however, use our fears against us and promise unrealistic outcomes as a means to consolidate power and erode our liberties. Liberty comes with risk. This is a fact of life. But life without liberty is not much of a life at all.

The only way the American people will get through these difficult times is through our own resilience and ingenuity. At best, the government is irrelevant in finding prosperity again. At worst, government can present a massive obstacle for the economy to overcome. If we do not wise up and rein government back in to its Constitutional limitations, bloated government could be a cumbersome unnecessary weight the economy will continually have to support to stay afloat.

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Merry Christmas from the Paul Family

Ron Paul sent out the following Christmas message to friends and supporters:

“It is a tradition that Carol and I send a family Christmas card every year to our supporters and friends across the country. We met so many great people this year and tried to include everyone, but I am sure we had a few computer glitches and missed a few folks we shouldn’t have. So, we wanted to make sure eveyone saw our card so we could share our holiday wishes with eveyone.

Click here to download our Christmas card for 2008. (pdf)

Merry Christmas and Happy New Year!

Ron and Carol Paul”

The Christmas card contains an update on the Paul family and the following message from Carol:

“Let me thank all of you for the prayers and messages that came during my recent illness. We have been blessed. And even with a few obstacles along the way, it keeps us working harder.

Ron has been busy with Congressional business as well as getting the Campaign for Liberty off to a great start. He feels that so much has been accomplished this year with the help of supporters and volunteers and for this we are also thankful… and we have to keep going!

We are proud to live in a country that allows its citizens freedom to choose, and we want everyone to be able to choose liberty.

Merry Christmas and Happy New Year,

Carol and Ron”

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Doomed to Collapse?

In his latest column Ron Paul warns of dire consequences if we do not get back on a sustainable economic course in this country.

Economic Freedom or Socialist Intervention?

by Ron Paul

The freedom to fail is an essential part of freedom. Government-provided financial security necessitates relinquishing the very essence of freedom. Last week, the big 3 American automakers came back to Capitol Hill with their hands out to the government. Congress spent this past week debating how much money to give them and what strings should be attached. Though the bailout plan for the auto industry has suffered what I would call a temporary setback in the Senate, other avenues for public funding are being explored through the Federal Reserve and the Treasury Department. I am afraid the American auto industry will soon learn that having billions rain down from Washington will not be the blessing one might expect.

The government, after it subsidizes an industry, tends to become a very demanding benefactor. Politicians may not have any real idea about how to build a car, run a bank, educate a child, heal the sick or build a road, but they are quite adept at using carrots and sticks to manipulate and threaten those who do. Most of the federal control over education, roads, healthcare, and now banking and soon auto manufacturing, is done through money, mandates and conditions. The bailout proposal we were considering would force automobile manufacturers to submit their business plans for the approval of a new federal “car czar.” This bureaucrat would have the authority to approve the automakers’ restructuring plan, monitor implementation of the plan, and even stop certain transactions he determines are inconsistent with the companies’ long-term viability.

One could argue that if billions of taxpayer dollars are going to flow into a failing industry, then representatives of those taxpayers have “bought” a say in how that industry is run - which is precisely why bailouts are such a bad idea for both the industry and the taxpayers. The federal government has neither the competence nor the Constitutional authority to tell private companies, such as automakers, how to run their businesses. I would have thought that failed experiments with central planning and government control of business that caused so much harm in the last century would have taught my colleagues the folly of making businesses obey politicians and bureaucrats instead of heeding the wishes of consumers, employees, and stockholders. But the auto industry is in danger of learning for themselves one of the oldest lessons in politics: he who pays the fiddler calls the tune.

It is not the job of government to sustain business. The government should get out of the way, and instead examine excessive regulations, tax policy and red tape that have been hostile to manufacturing in this country. We should get back on a sustainable economic course in this country, or we are doomed to collapse, as the Soviets did, under the crushing burden of big government and a strangled economy that can no longer pay for it.

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What comes after the auto bailout?

Earlier today Ron Paul was interviewed about the auto bailout and a potential homeowner bailout on Newsradio AM 740 KTRH, one of Houston’s most popular radio stations. Listen to the interview below.

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Ron Paul on Gun Control

In his latest essay Ron Paul addresses the issue of gun control. When the government makes guns illegal, only criminals - and the government itself - will own firearms. The result is less freedom and less safety for everyone else, i.e. law-abiding citizens. — tmartin

Gun Control: Protecting Terrorists and Despots

by Ron Paul

Tragically, over the Thanksgiving holiday, the world was reminded how evil and cruel people can be. According to emerging accounts of the events in India, about a dozen well-armed and devastatingly well-trained terrorists laid siege on the city of Mumbai, killing almost two hundred people, and terrorizing thousands.

Regardless of the reasons, the indiscriminate shooting on masses of unarmed and defenseless people is chilling and reprehensible. How were these terrorists able to continue so long, relatively unchallenged, killing so many?

India’s gun laws are her business, of course. However, once the shock of these events and the initial reaction of fear passes, Americans should take away a valuable lesson about real homeland security and gun control from this tragedy.

Gun control advocates tell us that removing guns from society makes us safer. If that were the case why do the worst shootings happen in gun free zones, like schools? And while accidents do happen, aggressive, terroristic shootings like this are unheard of at gun and knife shows, or military bases. It bears repeating that an armed society truly is a polite society.

The fact is that firearm technology exists. It cannot be uninvented. As long as there is metalworking and welding capability, it matters not what gun laws are imposed upon law-abiding people. Those that wish to have guns, and disregard the law, will have guns. Gun control makes violence safer and more effective for the aggressive, whether the aggressor is a terrorist or a government.

History shows us that another tragedy of gun laws is genocide. Hitler, for example, knew well that in order to enact his “final solution,” disarmament was a necessary precursor. While it is not always the case that an unarmed populace WILL be killed by their government, if a government is going to kill its own people, it MUST disarm them first so they cannot fight back. Disarmament must happen at a time when overall trust in government is high, and under the guise of safety for the people, or perhaps the children. Knowing that any government, no matter how idealistically started, can become despotic, the Founding Fathers enabled the future freedom of Americans by enacting the second amendment.

In our own country, we should be ever vigilant against any attempts to disarm the people, especially in this economic downturn. I expect violent crime to rise sharply in the coming days, and as states and municipalities are even more financially strained, the police will be even less able or willing to respond to crime. In many areas, local police could become more and more absorbed with revenue generating activities, like minor traffic violations and the asset forfeiture opportunities of non-violent drug offenses. Your safety has always, ultimately been your own responsibility, but never more so than now. People have a natural right to defend themselves. Governments that take that away from their people should be highly suspect.

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Playing God With The Economy

The unholy alliance between self-important bureaucrats and failed bailout bankers continues to wreaks havoc upon the economy. Only a gold standard can prevent these charlatans from poisoning the entire world with their increasingly worthless dollars. In his latest column Ron Paul speaks truth to power and calls for the abolishment of the Federal Reserve. But can reasoned arguments alone win this epic battle for sound money? — tmartin

The Neo-Alchemy of the Federal Reserve

by Ron Paul

As the printing presses for the bailouts run at full speed, those in power are no longer even pretending that the new giveaways will fix our problems. Now that we are used to rewarding failure with taxpayer-funded bailouts, we are being told that this is “just a start,” more funds will inevitably be needed for more industries, and that things would be much worse had we done nothing.

The updated total bailout commitments add up to over $8 trillion now. This translates into a monetary base increase of 75 percent over the last two months. This money does not come from some rainy day fund tucked away in the budget somewhere – it is created from thin air, and devalues every dollar in circulation. Dumping money on an economy, as they have been doing, is not the same as dumping wealth. In fact, it has quite the opposite effect.

One key attribute that gives money value is scarcity. If something that is used as money becomes too plentiful, it loses value. That is how inflation and hyperinflation happens. Giving a central bank the power to create fiat money out of thin air creates the tremendous risk of eventual hyperinflation. Most of the founding fathers did not want a central bank. Having just experienced the hyperinflation of the Continental dollar, they understood the power and the temptations inherent in that type of system. It gives one entity far too much power to control and destabilize the economy.

Our central bankers have had a tremendous amount of hubris over the years, believing that they could actually manage a paper money system in such a way as to replicate the behavior and benefits of a gold standard. In fact, back in 2004 then Fed Chairman Alan Greenspan told me as much. People talk about toxic assets, but the real toxicity in our economy comes from the neo-alchemy practiced by the Federal Reserve System. Just as alchemists of the past frequently poisoned themselves with the lead or mercury they were trying to turn to gold, today’s bankers are poisoning the economy with accelerated fiat money creation.

Throughout the ages, gold has stood the test of time as a consistently reliable medium of exchange, and has frequently been referred to as “God’s money”, as only God can make more of it. Seeking superhuman power over money in the way alchemists did in ancient times caused society to shun them as charlatans. In much the same way, free people today should be sending the message that this power and control over our money is no longer acceptable.

The irony is that even had the ancient practice of alchemy been successful, and gold was suddenly, magically made abundant, alchemists still would have failed to create real wealth. Creating gold from lead would have cheapened its status to that of rhinestones or cubic zirconia. It is unnatural and dangerous for paper to be considered as precious as a precious metal. Our fiat currency system is crumbling and coming to an end, as all fiat currencies eventually do.

Congress should reject the central bank as a failure for its manipulations of money that have brought our economy to its knees. I am hoping that in the 111th Congress my legislation to abolish the Federal Reserve System gains traction so that the central bank can no longer destroy our money.

Read more about how the Federal Reserve ruins our country and destroys our future.

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