A New Chairman Means Nothing To Americans Being Screwed By The Fed, Says Ron Paul

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Former Congressman Ron Paul, the man who literally wrote the book on criticizing the Federal Reserve, issued a statement Wednesday acknowledging the nomination of Janet Yellen, an American economist and professor who currently serves as vice chair of the Board of Governors of the Federal Reserve, to be the top official at the Nation’s central bank.

“Many will make a big deal about the nomination of Janet Yellen to be the next Fed Chair, but the reality is, as long as we tolerate the Federal Reserve System and its flawed monetary policy, there will be no policy change at the Federal Reserve,” said Paul.

“Notably absent from the discussion surrounding the debt ceiling and the government shutdown is the fact that the federal government would not be able to borrow the money it needs to finance its wars, bailouts, and entitlement programs if the Federal Reserve did not continue to buy government debt.

“Until the issue of the Federal Reserve is addressed, I am not optimistic we will see any true spending reform in Washington. Thankfully, the American people are waking up to what the Federal Reserve has been doing to our money and our economy,” Paul concluded.

Throughout his Congressional career, and especially during the tenure of Fed chairman Ben Bernanke, Paul became known for using his position on House economic committees to issue scathing rebukes and ask tough questions of Fed officials.

Paul also authored legislation to “Audit the Fed” (H.R. 459), which gained 274 cosponsors and passed the House during the 112th Congress on July, 25, 2012, with an overwhelming three-fourths majority of 327-98. The legislation calls for a “full audit of the Board of Governors of the Federal Reserve System and the Federal Reserve banks by the Comptroller General of the United States.”

Paul’s son, Senator Rand Paul (R-Ky.) introduced companion legislation in the Senate and garnered 37 co-sponsors, though Senate Majority Leader Harry Reid refused to allow “Audit the Fed” legislation to be brought to the floor for a vote in that legislative chamber.

Following the elder Paul’s departure from Congress, Representative Paul Broun (R-Ga) reintroduced the House “Audit the Fed” bill in January as “The Federal Reserve Transparency Act of 2013” (H.R 24) for consideration by the 113th Congress. The bill currently has 166 cosponsors. Senator Rand Paul (R-Ky) also re-introduced companion legislation this year— it currently has 25 cosponsors in the Senate.

Personal Liberty

Sam Rolley

Sam Rolley began a career in journalism working for a small town newspaper while seeking a B.A. in English. After covering community news and politics, Rolley took a position at Personal Liberty Media Group where could better hone his focus on his true passions: national politics and liberty issues. In his daily columns and reports, Rolley works to help readers understand which lies are perpetuated by the mainstream media and to stay on top of issues ignored by more conventional media outlets.

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  • http://seekingalpha.com/article/1514632 lottopol

    “…

    Most investors now believe three things about the Federal Reserve, money and
    interest rates. They think that the Federal Reserve is artificially depressing
    rates below what would be a “normal” level. They believe that in the
    process of doing so the Federal Reserve has enormously increased the supply of
    money and they believe that the USA is on a fiat money system.

    All three of those beliefs are incorrect. One benchmark rate that the
    Federal Reserve has absolute control of is the rate paid on reserves deposited
    at the Federal Reserve. That rate is now 25 basis points, after being zero
    since the inception of the Federal Reserve in 1913 until recently. If the Federal
    Reserve had left that rate at zero t-bill rates would now be even lower than
    they are now. The shortest t-bills rates would now be probably negative.

    Paying interest on reserves combined with the subsidy to the banks of
    providing free unlimited deposit insurance on non-interest bearing demand
    deposits is keeping t-bill rates positive. Absent those policies the rate on
    t-bills would be actually negative. The Chinese and others all over the world
    are willing to pay anything for the safety of depositing funds in the USA.
    Already, Bank of New York Mellon Corp. has imposed a 0.13% charge on large
    deposits.

    An investor who believes that interest rates are headed up may respond that
    the rate paid on reserves is a special case and that the vast increase in the
    money supply resulting from the quantitative easing must result in higher rates
    when the Federal Reserve reverses its course. The problem with that view is
    that the true effective money supply is still far below its 2007 level.

    Money is what can be used to buy things. Historically money has first been
    specie (gold and silver coins), then fiat money which is paper currency and
    checking accounts (M1) and more recently credit money. The credit money supply
    is what in aggregate can be bought on credit. Two hundred years ago your
    ability to take your friends out to dinner depended on whether or not you had
    enough coins (specie) in your pocket. One hundred years ago it depended on the
    quantity of currency in your pocket and possibly the balance in your checking
    account if the restaurant would take checks.

    Today it is mostly your credit card that allows you to spend. We no longer
    have a fiat money system. Today we have a credit money system. Just because
    there is still some fiat money does not negate the fact that we are on a credit
    money system. When we were on a basically fiat money system there was still a
    small amount of specie in circulation. Even today a five cent piece contains
    about 5 cents worth of metal, but no one would claim we are still on a specie
    money system.

    Fiat money is easy to measure; M1 was $1.376 trillion in 2007 and was $2.535
    trillion in May 2013. The effective money supply is the sum of fiat money and
    credit money. Credit money cannot be precisely measured. However, When the
    person in California whose occupation was strawberry picker and who had made $14,000
    in his best year was able to get a mortgage of $740,000 with no money down and
    private equity could buy a company like Clear Channel in a $20 billion
    leveraged buyout, also with essentially no money down, the credit money supply
    was clearly much higher than today. A reasonable ballpark estimate of the
    credit money supply is that it was $70 trillion in 2007 compared to $50
    trillion today.

    The effective money supply is the sum of the traditional fiat money
    aggregates plus the credit money supply. Thus, despite the clams of Ron Paul
    and Rick Perry to the contrary, the effective or true money supply has fallen
    drastically over the last few years….”
    http://seekingalpha.com/article/1514632

    • TheOriginalDaveH

      lottopol says — “The problem with that view isthat the true effective money supply is still far below its 2007 level”.
      And which money supply is that?
      We can see from these charts that the M1, M2, and M3 money supplies have all grown from 2007:
      http://www.shadowstats.com/charts/monetary-base-money-supply

      Here is what is happening as a result of the Federal Reserve paying interest rates on reserves:
      http://theeconomiccollapseblog.com/archives/the-federal-reserve-is-paying-banks-not-to-lend-1-8-trillion-dollars-to-the-american-people

      If the interest-paying is halted or if the economy heats up allowing banks to earn interest high enough to satisfy their risk/reward requirements, then the outstanding money supply is going to explode, along with Consumer Prices.

      • http://seekingalpha.com/article/1514632 lottopol

        Fiat money is easy to measure; M1 was $1.376 trillion in 2007 and was $2.535
        trillion in May 2013. The effective money supply is the sum of fiat money and
        credit money. Credit money cannot be precisely measured. However, When the
        person in California whose occupation was strawberry picker and who had made $14,000
        in his best year was able to get a mortgage of $740,000 with no money down and
        private equity could buy a company like Clear Channel in a $20 billion
        leveraged buyout, also with essentially no money down, the credit money supply
        was clearly much higher than today. A reasonable ballpark estimate of the
        credit money supply is that it was $70 trillion in 2007 compared to $50
        trillion today.

        The effective money supply is the sum of the traditional fiat money
        aggregates plus the credit money supply. Thus, despite the clams of Ron Paul
        and Rick Perry to the contrary, the effective or true money supply has fallen
        drastically over the last few years.

        • TheOriginalDaveH

          What I see there, lottopol, is conjecture. Unconvincing conjecture.
          The Money Supply:
          http://wiki.mises.org/wiki/Money_supply

          • http://seekingalpha.com/article/1514632 lottopol

            That is why it is called “comments”

  • TheOriginalDaveH

    “Senate Majority Leader Harry Reid refused to allow “Audit the Fed” legislation to be brought to the floor for a vote in that legislative chamber”.
    Are you listening, Liberal Progressives? Your Democrat Leaders are protecting the Bankers. Are you catching on yet?

  • Ranchman

    And Harry Reid will do everything in his power to ensure that this Bill also never gets to a vote. Why do the people of Nevada keep electing him? WHY?!? This is the million dollar question, isn’t it? It goes way beyond “low information voters” putting scum like him back in office, term after term. Has the govt succeeded in causing irreparable division amongst us? Are we at the point in America where, no matter what thuggish politicians do to us, several million “Americans” will vote for them anyway? It’s totally pathetic what’s happening to this country…what’s already happened. And we only have ourselves to blame.

    • dan

      Organized Crime versus the less organized people…

  • Toy Pupanbai

    I see that the new nomination is keeping the jobs, ‘in the family’!
    If the FED is to be fixed, the first thing to do is to Change the Name!!!!!!!