From the September 2008 Idaho Observer:

Paper money and credit destroy people and nations

As Idaho Ron Paul Republicans seek passage of "sound money" resolutions in their local districts and central committees, we unilaterally find that resistance to sound money and repealing the Federal Reserve Act is voiced in absolute ignorance of money—and the "moneychangers’" ceaseless efforts to transfer the wealth of individuals and nations into their own greedy hands. We find ourselves amazed that rank-and-file Republicans will zealously defend the Federal Reserve System while knowing nothing about it except that it provides the paper money, sets interest rates and controls the availability of credit. Bingo. The ignorant believe that "money" is paper, usury and credit when those things are historically anathema to freedom, prosperity and happiness while inevitably foretelling personal bankruptcy and national insolvency.

The Federal Reserve System and its member banks, through paper money, credit and usury, have been undermining the nation’s stability since 1913. The Constitution does not authorize Congress to commission a private banking institution (The Federal Reserve) to control the value of our money. The power to manage the money system should be restored to the nation itself. If we are to regain control of our money, the RP Republican example shows it will require teaching our people that paper and credit will inevitably lead to our destruction—not our salvation.

Thomas Jefferson on "money"

"Specie is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war." ~Letter to John Wayles Eppes (1813)

"Paper is is only the ghost of money, and not money itself."

~Letter to Edward Carrington (1788)

"Experience has proved to us that a dollar of silver disappears for every dollar of paper emitted." ~Letter to James Monroe (1791)

"It is a [disputed] question, whether the circulation of paper, rather than of specie, is a good or an evil...I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin." ~Letter to John W. Eppes (1813)

"Everyone knows, that although not literally, it is nearly true, that every paper dollar emitted banishes a silver one from the circulation. A nation, therefore, making its purchases and payments with bills fitted for circulation, thrusts an equal sum of coin out of circulation. This is equivalent to borrowing that sum, and yet the vendor receiving payment in a medium as effectual as coin for his purchases or payments, has no claim to interest. And so the nation may continue to issue its bills as far as its wants require, and the limits of the circulation will admit...But this, the only resource which the government could command with certainty, the States have unfortunately fooled away, nay corruptly alienated to swindlers and shavers, under the cover of private banks."

~Letter to John W. Eppes (1813)

"That paper money has some advantages is admitted. But that its abuses also are inevitable and, by breaking up the measure of value, makes a lottery of all private property, cannot be denied. ~Letter to Josephus B. Stuart (1817)

"The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted." ~Letter to John W. Eppes (1813)

"Scenes are now to take place as will open the eyes of credulity and of insanity itself, to the dangers of a paper medium abandoned to the discretion of avarice and of swindlers." ~Letter to Thomas Cooper (1814)

"Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us." ~Letter to John W. Eppes (1813)

"It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not." ~Letter to Richard Henry Lee (1779)

"A spirit... of gambling in our public paper has seized on too many of our citizens, and we fear it will check our commerce, arts, manufactures, and agriculture, unless stopped." ~Letter to William Carmichael (1791)

"All the capital employed in paper speculation is barren and useless, producing, like that on a gaming table, no accession to itself, and is withdrawn from commerce and agriculture where it would have produced addition to the common mass...It nourishes in our citizens habits of vice and idleness instead of industry and morality...It has furnished effectual means of corrupting such a portion of the legislature as turns the balance between the honest voters whichever way it is directed." ~Letter to George Washington (1792)

"We are now taught to believe that legerdemain tricks upon paper can produce as solid wealth as hard labor in the earth. It is vain for common sense to urge that nothing can produce but nothing; that it is an idle dream to believe in a philosopher’s stone which is to turn everything into gold, and to redeem man from the original sentence of his Maker, ‘in the sweat of his brow shall he eat his bread.’"

~Letter to Charles Yancey (1816)

"I own it to be my opinion, that good will arise from the destruction of our credit. I see nothing else which can restrain our disposition to luxury, and to the change of those manners which alone can preserve republican government. As it is impossible to prevent credit, the best way would be to cure its ill effects by giving an instantaneous recovery to the creditor. This would be reducing purchases on credit to purchases for ready money. A man would then see a prison painted on everything he wished, but had not ready money to pay for." ~Letter to Archibald Stuart (1786)

"The maxim of buying nothing without the money in our pockets to pay for it would make of our country one of the happiest on earth." ~Letter to Alexander Donald (1787)

"Every discouragement should be thrown in the way of men who undertake to trade without capital." ~Letter to Nathaniel Tracy (1785)

"The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences…"

~Letter to John Adams (1819)

Ron Paul: The Federal Reserve Monopoly Over Money

Recently I had the opportunity to question Federal Reserve Chairman Ben Bernanke when he appeared before the congressional Joint Economic committee. The topic that morning was the state of the American economy, and many of my colleagues raised questions about how the Fed might better "regulate" things to ease fears of an economic downturn. The tenor of my colleagues’ questions suggested that Mr. Bernanke’s job is nothing less than to run the U.S. economy, like some kind of Soviet central planner.

Certainly it’s true that Mr. Bernanke can drastically affect the economy at the drop of a hat, simply by making decisions about the money supply and interest rates. But why do members of Congress assume this is good? Why do we accept without objection that a small group of people on the Federal Reserve Board wields so much power over our economic well-being? Is centralized, monopoly control over our money even compatible with a supposedly free-market economy?

Few Americans give much thought to the Federal Reserve System or monetary policy in general. But even as they strive to earn a living, and hopefully save or invest for the future, Congress and the Federal Reserve Bank are working insidiously against them. Day by day, every dollar you have is being devalued.

The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch—Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference—that threatens to impoverish us by further destroying the value of our dollars.

The Fed’s inflationary policies hurt older people the most. Older people generally rely on fixed incomes from pensions and Social Security, along with their savings. Inflation destroys the buying power of their fixed incomes, while low interest rates reduce any income from savings. So while Fed policies encourage younger people to overborrow because interest rates are so low, they also punish thrifty older people who saved for retirement.

The financial press sometimes criticizes Federal Reserve policy, but the validity of the fiat system itself is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic – or so they believe.

Fiat dollars allow us to live beyond our means, but only for so long. History shows that when the destruction of monetary value becomes rampant, nearly everyone suffers and the economic and political structure becomes unstable. Spendthrift politicians may love a system that generates more and more money for their special interest projects, but the rest of us have good reason to be concerned about our monetary system and the future value of our dollars. (April 10, 2007)

Ron Paul: Fiat Paper Money In an article entitled "Gold and Economic Freedom," Federal Reserve Chairman Alan Greenspan wrote that, "The excess credit which the Fed pumped into the economy spilled over into the stock market—triggering a fantastic speculative boom...The speculative imbalances had become overwhelming and unmanageable by the Fed...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."

The irony is that Mr. Greenspan’s words, written in 1966 to describe the era leading up to the Great Depression, could easily have been written in 2003 to describe the consequences of his own Fed policies during the 1990s.

Mr. Greenspan once understood that a fiat money system represents nothing more than a sinister and evil form of hidden taxation. When the government can print money at will, it’s morally identical to the counterfeiter who illegally prints currency. Fiat money policies especially hurt savers and those on fixed incomes, who find the value of their dollars steadily eroded by the Fed’s printing presses.

We need to understand why a fiat system is so popular with economists, the business community, bankers, and government officials. One explanation is that a fiat monetary system allows power and influence to fall into the hands of those who control the creation of new money, and to those who get to use the money or credit early in its circulation. The insidious and eventual cost falls on unidentified victims, who are usually oblivious to the cause of their plight.

Another explanation is that it’s human nature to seek the comforts of wealth with the least amount of effort. This desire is quite positive when it inspires efficient work and innovation in a capitalist society. Productivity is improved and the standard of living goes up for everyone. But this human trait of seeking wealth and comfort with the least amount of effort is often abused. It leads some to believe that by certain monetary manipulations, wealth can be increased out of thin air.

Most Americans are oblivious to the entire issue of monetary policy. We all deal with the consequences of our fiat money system, however. Every dollar created dilutes the value of existing dollars in circulation. Those individuals who worked hard, paid their taxes, and saved some money for a rainy day are hit the hardest. Their dollars depreciate in value while earning interest that is kept artificially low by the Federal Reserve easy-credit policy. The poor and those dependent on fixed incomes can’t keep up with the rising cost of living.

We do hear some minor criticism directed toward the Federal Reserve, but the validity of the fiat system is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic—or so they believe. (September 20, 2003)

"The money power preys upon the nation in times of peace and conspires against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. It denounces, as public enemies, all who question its methods or throw light on its crimes." ~Abraham Lincoln