by Brian Beers
17 September 2009
This post was written by my
colleague, Brian Beers a Senior Producer
here at CNBC.com
"Nothing good can come from the Federal
Reserve," writes Texas Congressman Ron Paul in his latest book
hitting shelves this week, titled 'End
"It is the biggest taxer of them all. Diluting the value of the dollar
by increasing its supply is a vicious, sinister tax on the poor and
Paul makes the case that the Fed is the main
culprit responsible for the current economic mess the country faces through
the destructive policies of cheap credit and excessive money printing.
"Prosperity can never be achieved by cheap
credit," says Paul. "If that were so, no one would have to work for a
living. Inflated prices only deceive one into believing that real wealth
has been created."
Federal Reserve, created in 1913, has been acting as the main
central bank of the United States for nearly one hundred years.
Many Americans are either not sure or not
interested in what role the Fed plays in managing the economy.
"The economic crisis has changed
everything," writes Congressman Paul.
Paul is currently pushing for passage of a bill,
H.R. 1207, that would allow for an unprecedented audit of the Federal
Reserve. The bill has 289 co-sponsors, and is gaining solid momentum in the
House of Representatives.
"The worse the economy gets, the more power
Congress is willing to grant to the Federal Reserve. Trillions of
dollars created and distributed by the Fed with no requirement to submit
to any oversight" argues Congressman Paul.
'End the Fed' is a sharp counter to
Keynesian economic theory, and takes aim at the hazards of a managed
Paul, a strong advocate of free-markets and the Austrian school of economics
counters those looking to blame the near collapse of the financial system on
capitalism by penning,
"Manipulating the money supply and interest
rates rejects all the principles of the free market, and so it cannot be
said that too free a market caused this mess. The market was not free at
all. It was manipulated and distorted."
Dennis Cook / AP
Fed Chairman Bernanke hint that the recession may
already be over?
Wouldn't that indicate that the "emergency interventions" of the past year
or so worked to stabilize the economy, and all is on its way back to normal?
"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. But,
when the Fed does it - complete with a scientific gloss - it is seen as
the perfectly legal and responsible conduct of monetary policy."
On the inflation front, Paul adds,
"It's as if we still believe that money can
be grown on trees, and we don't stop to realize that if it did grow on
trees, it would take on the value of leaves in the fall, to be either
mulched or bagged and put in a landfill. That is to say, it would be
You get the feeling after reading this book,
that Paul sees his goal of cutting off the power of the Fed as attainable in
the long run, but needed a "playbook" to help educate the general public as
to why they should care, and what they should demand be done about it from
their elected officials.
The passage from the book that stuck with me the most.
"When we unplug the Fed, the dollar will
stop its long depreciating trend, international currency values will
stop fluctuating wildly, banking will no longer be a dice game, and
financial power will cease to gravitate toward a small circle of
Ron Paul's case for sound money policies and the
end of "Fed domination" marches on, this time in hardcover.