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Wednesday, May 20, 2009

Ron Call for the End of the Federal Reserve

Ron Paul: Audit the Fed, Then End It

Read this article here.
By Barry Ritholtz - May 19th, 2009, 7:17AM

I’ll say this much about Ron Paul: He is intellectually consistent in his staunch opposition to the incredible money creation that has been going on at the Federal Reserve.

While I cannot imagine anyone managing to disband the Central Bank — as long as any other countries have one, it would amount to unilateral disarmament — he can effect change for the better at Fed.

For example, Paul is calling for a full audit of the Fed — including the dreaded Maiden Lane holdings, the mess that is the junk paper formerly owned by Bear Stearns. This would be a positive, as taxpayers would learn the truth about how much financial support was given to incompetently rub financial institutions. These enormous taxpayer giveaways will shock the conscious of those who read the details.

Paul wants ALL of the Fed’s holdings to reflect the “transparency of our monetary system.” This at least puts into debate whether we should be so actively rewarding the speculators while  punishing the prudent.

Excerpt:

“The main argument seems to be that congressional oversight over the Fed is government interference in the free market. This argument shows a misunderstanding of what a free market really is. Fundamentally, you cannot defend the Federal Reserve and the free market at the same time. The Fed negates the very foundation of a free market by artificially manipulating the price and supply of money — the lifeblood of the economy. In a free market, interest rates, like the price of any other consumer good, are decentralized and set by the market. The only legitimate, constitutional role of government in monetary policy is to protect the integrity of the monetary unit and defend against counterfeiters.

Instead, Congress has abdicated this responsibility to a cabal of elite, quasi-governmental banks that, instead of stabilizing the economy, have destabilized it. It took less than two decades for the Federal Reserve to bring on the Great Depression of the 1930s. It has also inflated away the value of our currency by over 96 percent since its inception. It has invisibly stolen from the poor and given to the rich through this controlled inflation, and now openly stolen through recent bank bailouts. It has predictably exacerbated the very problems it was meant to solve . . .

As far as the foolishness of placing complex monetary policy decisions in the hands of politicians — I couldn’t agree more. No politician or central banker, no matter how brilliant, is smart enough to know more than the market itself. The failure of central economic planning has been witnessed over and over. It is frankly beyond me why we ever agreed to try it again.”

Interesting stuff from Dr. Paul  . . .


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