Ron Paul: The More The Fed Changes …

… THE MORE IT STAYS THE SAME By Ron Paul || Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal…


By Ron Paul || Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.

Isn’t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about “green shoots” five years ago, the same people who have presided over the continued destruction of the dollar’s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.

It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers’ needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve’s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen’s proposals are no exception.

Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.

Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of U.S. GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.

When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.

ron paul

Ron Paul is a former U.S. Congressman from Texas and the leader of the pro-liberty, pro-free market movement in the United States. His weekly column – reprinted with permission – can be found here.

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GrandTango February 16, 2014 at 8:12 pm

Ron Paul is a BIG part of the problem. This ignorant B@$*ard is going on and on, like FITS, thinking that debating liberals over economic theory will solve all our problems…

We need to flush his @$$, with ALL liberal-tarians, from McCain to Sanford, so he will stop taking votes away from Conservatives. Until we go total Conservative, pieces of $#!* like Obama will remain in office…

Until this No-Answer imbecile, Paul, steps aside, or either drops his call for legal heroine and whores, as the big problem…this Obama disaster economy will stay, and w/ NO jobs and no Money…the fed is the least of the irritants.

The Real World-West Cola February 16, 2014 at 8:23 pm

“Ron Paul is a BIG part of the problem.”-says the man living off the taxpayer

Bill February 17, 2014 at 6:44 pm

“the man living off the taxpayer.”

Which one, Sanford, Mulvaney, Scott, Graham, etc, etc.???

shifty henry February 16, 2014 at 11:02 pm

This affair between the GrandTango and GrandTango will linger as one of the loneliest love stories in all belles-lettres.

USAFVetDan February 17, 2014 at 11:22 am

You can’t hit the target if you don’t know what it is. The fake two party system is merely an intentional distraction designed to bamboozle the masses into thinking they have representative government. Pull your head out.

Chad February 17, 2014 at 1:42 pm

lol, where to begin? ah, hell, just ain’t worth it.

Michael DeMaria February 18, 2014 at 6:46 pm

The ignorant bastard? Tell me how much you know about the FED, the IMF or the World Bank.

Haha I bet you think your real smart, when really everything you say SCREAMS I don’t know what I’m talking about.

MashPotato February 16, 2014 at 9:18 pm

The Man Who Should Be President

MentalJIm February 17, 2014 at 7:59 am

Yeah, it would really destroy the very fabric of our nation if Ron Paul succeeded in legalizing “heroine”. Perhaps he will also legalize heros? Great insight GrandTango.

Smirks February 17, 2014 at 9:07 am

Obama chose to give Bernanke another run, so no surprise that his replacement is going to do the exact same crap.

Beef Stew February 17, 2014 at 8:17 pm

GrandTango, you seemed to associate John McCain with libertarians. John McCain is the exact opposite of libertarian considering he is all for big government policies, huge wars, and pretty much sides with the democrats on a lot of issues. Libertarians are for less government intervention, and less spending. This isn’t “liberal” in the slightest sense. Also you seem to imply that Ron Paul is somehow not a conservative. Ron Paul is one of the most conservative congressmen to ever step foot on capitol hill. Not once did Mr.Paul vote for a tax increase during his time, nor did he support any big government programs. I encourage you to do more research on your own, or we will never elect a conservative. We will have whoever the media has picked and fed to you as the candidate. Also the media calling Romney a Reagan conservative was a complete joke. Romney was conservative with his social policies, but would have continued to spend with reckless abandon, and kept us in pointless wars killing our young men and women. Ron Paul was the only candidate who would have made a true impact on America. The rest are puppets.

ausscyn February 19, 2014 at 4:11 pm

Carol Paul is kindly helping us with our GOP fund raising again, in Nevada, and chose these ties out of Ron’s closet to donate. Ron autographed them, too. Go here to bid! Thanks!!
The paisley: http://www.ebay.com/itm/Blue-Paisley-Ron-Paul-Autographed-Tie-ONE-OF-A-KIND-/310876722968?pt=LH_DefaultDomain_0&hash=item4861b25718
The Texas tie: http://www.ebay.com/itm/Red-White-and-Blue-Ron-Paul-Autographed-TEXAS-Tie-ONE-OF-A-KIND-/310876727439?pt=LH_DefaultDomain_0&hash=item4861b2688f


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