Financial fix? Abolish the Fed, says congressman
Paul: Constitution requires coin based on gold, silver
Posted: February 21, 2009
8:35 pm Eastern
By Bob Unruh
© 2009 WorldNetDaily
U.S. Rep. Ron Paul
In just recent weeks, the federal government has designated billions of tax dollars for bank bailouts, including vast quantities to quasi-government agencies that helped create the economic crisis; billions more for automakers, and billions more for homeowners who default on their loans, so where will it end? Republican Rep. Ron Paul of Texas says he has at least part of the answer: abolish the Federal Reserve.
The congressman, a candidate for the 2008 Republican presidential nomination, once again has introduced a bill that would get rid of the private organization that sets interest rates and establishes monetary priorities.
"Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy," Paul said in a statement at the time the proposal was introduced.
"The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency," Paul said. "The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy."
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The Texas lawmaker said the constitutional mandate to Congress actually provides only for currency "backed by stable commodities such as silver and gold."
"Abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold," he said.
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Paul said every problem in the economy, "from the Great Depression, to the stagflation of the '70s, to the current economic crisis caused by the housing bubble," can be traced to Federal Reserve policy.
Paul's opinions on the Fed are available in a video linked here and embedded here:
Paul's plan calls for the director of the Office of Management and Budget to "liquidate" Fed assets "in an orderly manner so as to achieve as expeditious a liquidation as may be practical while maximizing the return to the Treasury."
Columnist and commentator Chuck Baldwin believes it's about time.
"'We've seen money go out the back door of this government unlike any time in the history of our country,' Senator Byron Dorgan, a North Dakota Democrat, said on the Senate floor. 'Nobody knows what went out of the Federal Reserve Board, to whom and for what purpose. How much from the FDIC? How much from TARP? When? Why?'" he wrote.
"Senator Dorgan is exactly right. No one oversees the Fed. The Fed is held accountable to absolutely nobody. But Senator Dorgan (as with everyone else in Congress) has no one to blame but himself. Ever since the Marxist, E. Mandell House, convinced President Woodrow Wilson to create the Federal Reserve in 1913, the Congress of the United States has had virtually nothing to do with the way our fiscal policies are managed. The Fed (which is not even a government agency, but rather a private corporation consisting of mostly foreign bankers) dictates America's financial policies," Baldwin said.
Baldwin cites the U.S. Constitution itself. In Article I, Section 8, Paragraph 5, it states Congress has the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
"Only the elected Congress, not some private foreign (or even domestic) banking interest, has the power to make monetary policy," he said, and "paper money – known as the Federal Reserve Notes – is not even legal tender."
The problem Paul's plan confronts is simple, he wrote.
"No cosponsors. That's right. No cosponsors," he said.
"Until the American people demand that their elected members of Congress live up to their duties and responsibilities under the Constitution, they will continue to have their pockets picked clean by these corrupt banksters in New York City (and London) and their contemptible facilitators in Washington, D.C.," Baldwin wrote.
Paul's spokeswoman, Rachel Mills, told WND the congressman has strong feelings about the issue.
"The inflationary policies of the Fed are insidious," she told WND. "It's a hidden tax on the poor."
She confirmed the idea has been getting more attention recently, because "people are becoming really curious about the roots of our problems."
Federal Reserve Chairman Ben Bernanke this week said "policymakers" have "pulled out all the stops – cutting the federal funds rate … and establishing a series of lending programs designed to add liquidity into credit constrained markets."
He also committed to more "transparency," by introducing a new website for Fed information and new communications efforts.
Paul was unimpressed.
"While I applaud any effort towards greater Federal Reserve transparency, Chairman Bernanke's latest effort contains more window dressing than substance," he said.
Getting information from the Fed won't help, he said, "as this data is often inaccurate.
"If the Fed could not be trusted to foresee the present economic downturn, despite the myriad of market commentators predicting this, why should the current Fed data and predictions be any more trusted?" Paul asked. "Furthermore, these new initiatives only divert focus from the real areas where transparency is needed. The Fed's agreements with foreign central banks and international finance institutions need to be audited, as do the source and destination of funds provided through the Fed's emergency funding facilities."
At the CitizenEconomists.com site, J.D. Seagraves noted his organization's poll showed a "sarcastic and/or deranged 5 percent of respondents" believe the Fed's performance in the current economy is excellent.
One in four in that poll believe, "We should get rid of them."
"Support for abolishing the Federal Reserve System is mounting every day," the report said. "The fact that people are beginning to wake up to the problems caused by the Federal Reserve System is a hopeful sign. The only question is: is it too late? Can the dollar be saved by the political action of the president and the Congress, or must we wait for the entire global financial system to completely melt down so we can start over?"
Columnist Jacob Hornberger last year noted that while Paul's abolition plan is considered "wacky" by some, at least two Nobel Prize-winning economists have agreed.
Economists Milton Friedman and Friedrich Hayek called for the abolition of the Fed during their careers, Hornberger notes.
"While Friedman spent much of his life advocating externally imposed constraints on the Fed's power to expand the money supply, his first wish was to have the Fed abolished, as he pointed out in a 1995 Reason magazine interview. In his book, 'Denationalization of Money: An Analysis of the Theory and Practice of Concurrent Currencies,' Hayek advocated a free-market monetary system of competing currencies," said Hornberger.
"Most Americans probably still believe that the Great Depression was caused by 'the failure of the free-enterprise system.' It is a false belief. The truth is that the worst economic disaster in American history was caused by the Federal Reserve. Give current Fed Chairman Ben Bernanke credit for publicly acknowledging that fact in a speech delivered in 2002 commemorating Friedman's 90th birthday," Hornberger said.
WND recently reported that under the fiscal policies of the Fed, the total obligations of the United States have reached $65.5 trillion – exceeding the gross domestic product of the world.