The Fed & Ron Paul

QUOTES OF THE WEEK:

From Congressman Ron Paul, in his weekly “Texas Straight Talk” column, posted on his House of Representatives website on May 18th:

“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.”

“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.

To understand how unwise it is to have the Federal Reserve, one must first understand the magnitude of the privileges they have. They have been given the power to create money, by the trillions, and to give it to their friends, under any terms they wish, with little or no meaningful oversight or accountability. Thus the loudest arguments against greater transparency are likely to come from those friends, and understandably so. 

However, it is the responsibility of every member of Congress to represent the interests of the people that sent them to Washington and find out what has been happening with our money. As the branch of government with the power of the purse, we really have no other reasonable choice when the economy is in the shape it is in.”
 
. . . and from Richard Russell, editor of Dow Theory Letters, in remarks posted on his website on May 18th:

“The US national debt was $9.364 trillion a year ago.  Today it is $11.256 trillion.  That means that over the last 12 months we've added $1.89 trillion to the national debt.  I figure that over the next two fiscal years the US national debt should rise by $3 trillion from the current $11.256 trillion to around $14 to 15 trillion.  I figure the average interest on the national debt is around 4%.  Well, 4% of $14 trillion is over half a trillion dollars a year.  How in God's name is the US going to attract over half a trillion dollars every year to carry our national debt?  My answer -- higher taxes and inflation.  When you think about it, this is one major reason why the government doesn't want gold to sky-rocket.  An exploding price for gold tells the world that the US and its financing is backed against the wall, and that inflation plus higher taxes are the only ways out.”