“The entire federal government,” laments Congressman Ron Paul in his newest book, End the Fed, “is one giant toxic asset at the moment. It certainly has no business telling the private sector how to run its affairs. It is in worse financial shape than all the companies in the private sector put together.”

Hard words, but Congressman Paul knows whereof he speaks. It was Ron Paul, unique among congressmen for his understanding of how a free-market economy is supposed to work, who warned repeatedly of the coming economic calamity. It was Ron Paul, too, who warned both the Bush and Obama administrations that attempts by the government to bail out failing corporations with taxpayer dollars and passing massive stimulus packages would only make things worse. And it has been Ron Paul who has warned of disastrous long-term consequences of the inflationary activities of the Ben Bernanke-led Federal Reserve.

Congressman Paul’s concerns about the Federal Reserve are nothing new. The gynecologist-turned-eleven-term congressman from Texas has spent a long political career promoting liberty and limited constitutional government as the American Founders understood them and exposing the mischief at the Federal Reserve. With the unexpected success of his presidential campaign and his recent best-selling manifesto on liberty, Dr. Paul’s uncompromising, consistent, and thoroughly principled stances on limited, constitutionally legitimate government are well known around the world. Now, thanks to End the Fed, his views on paper money, fractional-reserve banking, and the Federal Reserve and its manipulation of the money supply are summarized for a mass readership. Under a single cover and on just 212 readable pages are assembled philosophical, economic, and constitutional arguments for abolishing the Federal Reserve, a succinct history of banking, and a number of fascinating recollections and snippets of telling dialogue between Dr. Paul and various chairmen of the Fed as far back as Paul Volcker.

Finances and Freedoms
For Dr. Paul, an understanding of economics and finance is absolutely crucial to understanding liberty fully; one cannot embrace liberty while rejecting free-market economics in any degree. Yet it has become characteristic of many on the right — otherwise eloquent partisans of liberty and free-market economics, like the late Milton Friedman — to set aside certain free-market principles where money and banking are concerned. Laissez faire for factories, mines, retailers, and agriculture, indeed, say apologists for the Fed, but for banking, money, and finance, we must have regulation, currency manipulation, the fixing of interest rates, and other characteristics of a command economy.

Unfortunately, many people have allowed themselves to be persuaded that economics, banking, and finance are numinous, abstract disciplines best left to the experts. But we ignore these topics to our considerable detriment. Dr. Paul writes: “Everyone should have an intense interest in what money is and how it’s manipulated by the few at the expense of the many. Money is crucial for survival. It is necessary for maintaining a free society. A healthy economy depends on it. Limiting political power is impossible without it. Sound money is essential for preventing unnecessary wars. Prosperity and peace in the long run are impossible without it. To understand money, one absolutely must understand what a central bank is all about.”

America’s central bank, the Federal Reserve or “Fed,” was established in 1913, and according to Dr. Paul, has been complicit in — indeed, has been the driving engine for — the supersizing of the federal government that has transformed America since the First World War, and not for the better. This is because the Federal Reserve, with its ability to artificially increase the money supply (especially after the gold standard was abandoned), has largely emancipated Washington decision makers from the risky politics of raising revenue via direct taxation.

Heavy, direct taxation we certainly have, but the income tax and other federal taxes, obnoxious though they are, pale beside the Fed’s ability to raise money for the federal government simply by printing it (or, which amounts to the same thing, making a computer entry). Only thus has the federal government been able to finance hugely unpopular projects, like international wars, that Americans would never consent to if the monies were extracted up front via direct taxation. Thanks to the inflationary magic of so-called fiat money, the Federal Reserve (and other central banks like it around the world) can print money as needed, and the bill will come later, in the form of reduced purchasing power resulting from inflation. Inflation, by the way, is also a kind of tax, but one so subtly (and dishonestly) administered that few are able to diagnose its origin.

Those “in the Know”
The various Fed chairmen of Congressman Paul’s acquaintance have all been well aware of what the Fed does. Paul Volcker, the most forthcoming of the lot, assured the congressman at a private breakfast that he would never use the Fed’s powers to inflate recklessly, although he acknowledged that such actions lay within the Fed’s purview. “As we were leaving,” Paul recalls, “I said that, although I didn’t expect that he [Volcker] would use these extreme powers, who knew if in the future we might just have someone who would.”

Congressman Paul’s relationship with Volcker’s successor, Alan Greenspan, was long and tempestuous. In his youth, Greenspan himself favored the gold standard, not paper money, a position he made clear in a 1966 article, “Gold and Economic Freedom.” In that piece, Greenspan pointed out that “in the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in the 1930s through the 1970s]…. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.”

So how did a one-time champion of the gold standard and free-market economics come to preside over the largest experiment in fiat currency and monetary manipulation the world has ever seen? According to Ron Paul, Greenspan came to believe that “central bankers essentially had become smart enough to achieve all the benefits of the gold standard without its limitations” — those being limitations that the gold standard imposes on governments, not private citizens. In June 2000, Greenspan told Congressman Paul:

What we find over the generations is that the underlying forces which engender economic change themselves are changing all the time, human nature being the sole apparent constant throughout the whole process. I think it is safe to say that economists generally continuously struggle to understand which particular structure is essentially defining what make[s] the economy likely to move in one direction or another in the period immediately ahead, and I will venture to say that the view continuously changes from one decade to the next…. The general elements which contribute to stability in a market economy change from period to period as we observe that certain hypotheses about how the system works do not square with reality.

In other words, somewhere along the line, Greenspan the theorist and moral philosopher yielded to Greenspan the pragmatist, whose highest aim as Fed chairman was not to safeguard the liberties of Americans, but to promote “stability” — stability for the elites, at least, who, having reaped the benefits of free-market profits, are unwilling to hazard the instability associated with losses.

Sadly, Greenspan also seems to have rejected any notion of permanent economic laws, preferring instead to believe that economic constants change over time. But in admitting human nature to be “the sole apparent constant,” Greenspan betrays his lack of understanding. According to the ideology of Ludwig von Mises and the rest of the so-called Austrian economists who have always been the most vigorous and ideologically consistent foes of central banking, economics, as evaluated by the methods of “praxeology,” or the study of human action, is human nature. The laws of economics are nothing more than universal, apodictic axioms of praxeology applied to economic behavior. As such they defy quantitative but not qualitative analysis.

But this is not what the Alan Greenspans of the world want to believe. For central bankers and their apologists, the money supply, optimal interest rates, price indexes, unemployment forecasts, and economic cycles all ought to submit to the statistician’s tools of trade. There must be a way, they fervently believe, to predict quantitatively what the economy is going to do (or else the entire notion of monetary manipulation is without intellectual foundation). The fact that such calculations are impossible for would-be economic planners has unfortunately failed to deter the Greenspans and Bernankes of the world from continuing to act as though the economy can be reduced to a mathematical formula or computer program.

Alan Greenspan was succeeded in February 2006 by the sphinx-like Ben Bernanke, whose periodic verbal sparring with Congressman Ron Paul has become the stuff of YouTube legend. On March 24 of this year, for example, Congressman Paul asked Bernanke whether he laid the blame for the crisis on the markets or on “crony capitalism.” Bernanke replied that he did not think the meltdown was “a failure of capitalism per se,” and that the free markets should remain “the primary mechanism for allocating capital.” But not surprisingly, the Fed chairman went on to defend the need for “mechanisms like deposit insurance and lender of last resort” to avert panics, bank runs, and the like. Asked whether such mechanisms are the source of moral hazard — the tendency of people to act irresponsibly when they know they will be shielded from the full consequences of their actions — Bernanke merely added that the Fed was created to avert financial panics and make for more orderly markets.

So End the Fed
Now, with Congressman Paul’s bill H.R.1207 calling for a congressional audit of the Federal Reserve gaining traction in the House with more than 284 cosponsors, Ben Bernanke is beginning to feel real political heat. For the first time in the Fed’s nearly century-long history, large numbers of Americans and not a few political leaders, led by Ron Paul, are waking up to the realities of central banking and the Fed’s role in causing the value of the dollar to depreciate and the economy to oscillate between boom and bust.

But why take so drastic a measure as to end the Fed, after so long? Is it not better, as so many of Paul’s detractors have argued, to merely reform the institution? No, declares Paul, since the Fed, with its power to destroy the dollar and fund the operations of government by other means than up-front taxation, is, like all modern central banks, a fundamentally dishonest and immoral institution. The Founding Fathers understood very well the evils of paper money, and while granting Congress the authority in the Constitution to “coin [not print!] money,” forbade the states from making “anything but gold and silver coin a tender in payment of debts.” Entries in the journals of the Continental Congress observed that “paper currency … is multiplied beyond the rules of good policy. No truth being more evident, than that where the quantity of money … exceeds what is useful as a medium of commerce, its comparative value must be proportionately reduced.”

Unfortunately, Congressman Paul notes with rare cynicism, “the two weakest arguments for any issue on the House floor are moral and constitutional.” The immorality of the Fed should be evident to everyone, since “the moral principles that would guarantee sound money, and our not needing a central bank to manage it, are honesty, which would reject fraud, and keeping one’s word. Contracts [meaning monetary contracts, whose integrity depends on a sound dollar] should be protected, not undermined by government.”

Nor does Paul mince words about his congressional colleagues: “Members of Congress, when they knowingly endorse this system of fraud because of the benefits they receive, commit an immoral act. Financing spending in an irresponsible manner, through Fed action or future debt burdens, provides immediate political benefits to politicians.”

But all of this would come to an end if the people themselves held their political leadership to a higher moral standard. Americans have become accustomed to a government that promises them security and benefits instead of merely protecting their freedoms and enforcing their contracts. End the Fed is a plea to Americans to educate themselves about money and free-market economics — and then demand an end to the system that has systematically devalued the dollar and held ordinary Americans in thrall for several generations. If we do not soon abolish the Federal Reserve and return to sound money, we will likely experience national insolvency and an end to our dwindling political liberties. End the Fed is, simply put, a must-read for every American who can spell his name.

End the Fed, by Ron Paul, New York: Grand Central Publishing, 2009, 212 pages, hard cover. (To order, click here.)

TrackBack URI for this entry

Comments (27)

Subscribe to this comment's feed

JJ Suprise said:

	Riverroach Amen, and thanks for everything you are doing. God Bless Dr.Paul and the John Birch Society
	report abuse vote down vote up

September 14, 2009 | url
Votes: +8

Mark said:

	... Bravo!!! Great review!
	report abuse vote down vote up

September 14, 2009
Votes: +3

Ickybiker said:

	Powerful The most powerful statement made it this review: "A healthy economy depends on it. Limiting political power is impossible without it." This is I believe the crux of the whole issue of out of control government. At this time, arguing over any other point of contention is moot, unless we stop shoveling coal into this runaway locomotive.
	report abuse vote down vote up

September 14, 2009
Votes: +10

Redman said:

	End the Fed Unless we end the fed, all other actions will be like watering the lawn as the house burns down. Dr. Paul has laid out the case and what we need to do. Now it is up to the American people to stand up and be counted, to act in their own best interest and the best interest of their children and grandchildren. End the Fed is a must read for caring Americans.
	report abuse vote down vote up

September 14, 2009
Votes: +8

RonPaul2012 said:

	economics major On my way out to pick this up right now! As i've been too indebted to send dr. paul a donation, here is one way i can support the only honest politician i've ever heard of, and receive a great lesson at the same time. Support Ron Paul! Buy his book and when you are done reading it, lend it to a friend so that they can be awakened as well Ron Paul 2012
	report abuse vote down vote up

September 14, 2009
Votes: +6

Ron Moss said:

Dad Andrew Jackson saw our day. Read his 6th annual address. "Events have satisfied my mind and I believe the minds of the American people, that the mischiefs and dangers which flow from the national bank far overbalance all it's advantages. The bold effort the present bank has made to control the Government, the distresses it has wantonly produced, the violence of which it has been the occasion in one of our cities famed for its obvervance of law and order, are but premonitions of fate which awaits the American people should they be deluded into a perpetration of this institution or the establishment of another like it." Dec1, 1834

report abuse vote down vote up

September 14, 2009 | url
Votes: +8

End the fed...? Well that is realistic..., Lowly rated comment [Show]

Joe E said:

	... Thank you Mr. Scaliger for a fine review. I've read the book myself and I can't see a better way to summarize this monumental work. I can only hope people are motivated by what you wrote to pick up Dr. Paul's book, End the Fed, written by thee greatest statesman of our age. God grant a long life to Dr. Ron Paul!
	report abuse vote down vote up

September 14, 2009
Votes: +6

Dave said:

	... www.webofdebt.com
	report abuse vote down vote up

September 14, 2009
Votes: +1

Dave said:

	... http://www.webofdebt.com/artic..._china.php
	report abuse vote down vote up

September 14, 2009
Votes: +2

patriot said:

	... also read "The Creature from Jekyll Island" by G. Edward Griffin.
	report abuse vote down vote up

September 14, 2009
Votes: +7

terrymac said:

end the fed! To Ron Paul! Amen! Glad to see you making the case, and thanks to Charles Scaliger for this review! Just found this: China, of all nations, is encouraging its citizens to buy gold and silver. Do you think they plan to institute a hard-money currency backed by gold and silver? It would be the smart thing to do. How is it that a communist nation must point the way to the "land of the free?" http://www.digitaljournal.com/article/279166

report abuse vote down vote up

September 14, 2009
Votes: +7

Evan said:

	almost Oskar The banking cartels did indeed create the FED legislation. The FED is the Cancer and eliminating it is the cure. It is the FED that allows the moral hazard that allow giant Wall St companies to malinvest and make high risk moves. Why? Because if they lose their losses will be spread through us the taxpayers.
	report abuse vote down vote up

September 14, 2009
Votes: +7

Kyle said:

	END THE FED! Great review! I'm in the middle of this book right now and have been convinced the federal reserve is the most important issue of today.
	report abuse vote down vote up

September 14, 2009 | url
Votes: +9

Dan Tolleson said:

	Yep -- that's right! "If we do not soon abolish the Federal Reserve and return to sound money, we will likely experience national insolvency and an end to our dwindling political liberties."
	report abuse vote down vote up

September 14, 2009
Votes: +7

Flu-Bird said:

	end of liberal bullies Looks like with all the decent recently shown in WASHINGTON D.C. by thousands of patriots there could be perhaps hundreds of liberal demacrats given their pink slips next year
	report abuse vote down vote up

September 14, 2009
Votes: +3

OhioVallandingham said:

	first off "Looks like with all the decent recently shown in WASHINGTON D.C. by thousands of patriots' Descent is when you go down a hill or go spelunking into a cave. The word you were looking for is dissent. You said decent. Like the food was not great, it was decent. How can we convince anyone to End the Fed if we spell like hilljacks with 6th grade educations?
	report abuse vote down vote up

September 14, 2009 | url
Votes: -2

The Dude said:

... Hey Ohio, You are a jackass. I knew what Flu-bird was trying to say. Ohio are you trying to blame a sixth grade education on the downfall of America? It is people like you that point a finger and not help out, is the reason our Country has problems. Try this Ohio- hey Flu-Bird you misspelled dissent. Pink slips yes I would like to be that guy handing them out. We need to help each other out not make fun or rudely point out our downfalls. I am a high school drop out, I own a consulting firm and a small busissness.I served with the Marine's for a couple tours. My lack of education has never stopped me from what I need to do in life. I have been lucky to have people in my life like Ron Paul who wants to help us regardless of our education. Ron Paul- thanks for your time and your Book, you have my vote. Love our country fear our government put an end to the tyranny.

report abuse vote down vote up

September 15, 2009
Votes: +10

lookinthemirror said:

	... Amen and right on, The Dude. Ron Paul would smile at your response to Ohio. respect, civility and teaching words.... (hope I spelled those right :-) Once you know the truth you can never go back. "If you want to know who is going to change this country, go home and look in the mirror." - Maude Barlow
	report abuse vote down vote up

September 15, 2009
Votes: +2

John and Dagny Galt said:

The John Galt Solution of Starving The Monkeys is the only solution! There are only two types of human beings. One type wants everyone to leave everyone else alone. The other type refuses to do so. The John Galt Solution of Starving The Monkeys is the only solution! Sincerely, John and Dagny Galt Atlas Shrugged, Owner's Manual For The Universe!(tm) http://www.starvingthemonkeys.com/ http://voluntaryist.com/fundamentals/introduction.php .

report abuse vote down vote up

September 15, 2009 | url
Votes: +2

Bill Ross said:

Don't sweat the details... Any action or policy which uses force and / or fraud to deprive the honest and productive of the just fruits of their labors alters the motivational economics away from productivity towards unproductive defense and, ultimately rebellion, collapsing civilization. Proof: http://www.nazisociopaths.org/modules/article/view.article.php/c1/32 Our far wiser ancestors once solved the problem of sociopathic predators collapsing civilization with the "rule of law": http://www.nazisociopaths.org/modules/article/view.article.php/c1/34 Bill Ross (Electronic Design Engineer)

report abuse vote down vote up

September 15, 2009 | url
Votes: +1

RonPaulShouldaWon said:

	Ron Paul is spot on If you like Ron or have seen the movie Creature from Jekyll Island take a look at this web site. Great concise comic about whats really happeneing. http://planetnext.wordpress.com/
	report abuse vote down vote up

September 15, 2009 | url
Votes: +2

SCHNORCHEL said:

Economics 101 Rejected Back in the late 1960s, while pursuing my Aerospace Systems Engineering career at Autonetics Anaheim, Rockwell International Aerospace Systems Group, I took, for credit, a Business Administration Adult Education night school course at then Fullerton Junior College. It was called "Economics 101," teaching from the widely used standard text Economics, by Samuelson. In it, we adult students were brainwashed with pretty, multi-colored diagrams of Macroeconomics, which told us how the Federal Reserve would "stabilize" the economy. It turns out that Fed Chairman Bernanke is also a devotee of this cockamamie theory. The Economics 101 professor was a retiree from one of President Franklin Roosevelt's Brain Trusts, the OPA [Office of Price Administration]. He would frequently regale us with his fond "Back at the OPA" anecdotes. Had I recited what Ludwig Von Mises taught about Human Action, the professor probably would have flunked me out of the course. Because I knew of no alternative to "Economics 101" at that time and therefore mindlessly aped the economics book's theories, the Professor considered me his favorite student and gave me an "A." Now I know better, of course, having read books like The Creature from Jekyll Island [ISBN 0-912986-15-8].

report abuse vote down vote up

September 15, 2009
Votes: +2

Freedom4America said:

Hell ya End the Fed It is time We The People TAKE BACK America from not only government but from the BANKSTERS not only controlling us but controlling the world. Excellent review of We The People's president book "End the Fed". Can not wait to get our copy. Don't forget the Money Bomb for Rand Paul on September 23rd. We need Rand as Senator to prepare him for VP in 2012. Dr. Ron Paul/Dr. Rand Paul 2012 "ONLY Doctors WILL HEAL the USA"

report abuse vote down vote up

September 15, 2009 | url
Votes: +4

Lonely Libertarian said:

Keynes could NOT explain it... One thing which Keynesian economics has never been able to explain is "Stagflation." Having already gone through this in the early 70s, one would have expected a change of direction more toward the more sustainable Austrian school and the deflationary-biased gold standard. The ONLY logical explanation as to why this was not done is that The Fed controls everything. Therefore, it must be eviscerated, disembolwled and dissolved; and the sooner the better!

report abuse vote down vote up

September 15, 2009
Votes: +1

Anonymous Coward said:

	Stop calling it central banking and start calling it "state monopoly banking" Stop calling it central banking and start calling it "state monopoly banking." That will pull on this one issue, to our side, a lot of leftists that are anti-monopolist,
	report abuse vote down vote up

September 16, 2009
Votes: +1

Jim said:

Ridiculous Perhaps someone would care to explain how commodity-backed 'sound money' would at all be to the benefit of the American people - Ron Paul failed to make this argument in his book, as he merely focused on the destruction of the Fed like an angry teenager lashing out the control & guidance of his parents. 'End the Fed' offers ZERO details on an alternative system of 'sound money', nor does he at all connect the growth of the money supply to the growth in population, urban density and the overall development of the nation - which is the TRUE backing of our dollars - the roads, buildings, tanks, planes, homes, etc. that have been built, TRUE ASSETS, with the expansion of money. Ron Paul would like us to go back in time, to somehow return to the 18th century where people were mostly independent farmers and tradesmen, two pairs of shoes, and pumped water from a well. People lived meager lives not because they were 'free' to do so, but because no other alternatives existed. Alas we cannot travel back in time before massive immigration, development, cars, computers, and satellites - though simpler times do sound nice, they are merely the imagination of a nostalgic old man wishing to return to boyhood innocence...

report abuse vote down vote up

October 09, 2009
Votes: -3