Auditing The Fed

Recently, Republican Congressman Ron Paul from Texas wrote an opinion piece regarding the weak U.S. dollar. Recently there have been a lot of complaints from Democrats that Republicans have become a party of "no" and have zero solutions to combat the problems we face as American's today. Well apparently they aren't looking in the right places.

I get it, when you think Ron Paul you think crazy controversial nut who spouts out crazy things, but please don't judge the man by his minority followers who are conspiracy crazies. Those who are so adamant that 9/11 was an inside job and think anyone who doesn't agree is a sheep. Let's just focus on the real problem at hand and real solutions for a real problem.

The Federal Reserve

A lot of people think the Federal Reserve is actually necessary and I'm not here to argue that point with you. Whether I agree or not, I doubt within one post I would be able to change your mind. I'm sure it'll take the situation to completely collapse before your mind is changed and that's OK.

Also a lot of people are going to blame former President GWB and current President OHB for our financial crisis, but one of the main contributing factors to our difficult economic times, which happen far too frequently if you ask me, is the unchecking of the Federal Reserve for nearly, and I'll spell it out to deliver it's full impact, ONE HUNDRED YEARS.

These are the people who control the printing of our money, how often it is printed and how much of it is printed. These are people who are not elected by the people. They are private bankers. They have their own self interests in mind not the countries.

All over the world, countries are now referring to the World Currency as the Euro and no longer the American Dollar and if we don't do something about it we'll find ourselves with a weaker economy than what we have today.

Congressman Paul has written a bill, HR 1207, and it's Senate version S. 604, The Federal Reserve Transparency Act. This will allow us Americans to audit the Federal Reserve and put a leash on the rabid dog that's running wild biting us in the rear. Also, this is why we elected President Obama, right? For Transparency in government? Well here's your chance.

Fed Chairman Ben Bernanke has embarked on an ambitious program of monetary expansion, more than doubling the monetary base to almost $1.9 trillion and doubling the size of its balance sheet to over $2 trillion, placing the American economy in a precarious position.

If all this excess money begins to be loaned out, the Fed risks creating a hyperinflationary crisis similar to 1920s Germany. If the Fed contracts this money, it risks harming the banks it desperately wants to see bailed out.

This is why World History is so important kids. We can learn from our past mistakes.

It is imperative that the American people know what the Fed is up to, how much money it loans to banks and what types of agreements it enters into with foreign banks and governments. Just about all of this information is exempt from audit or oversight. The Fed's actions directly affect the value of the dollar, which is coming under increasing pressure from our foreign creditors. If we do not wish to see a complete collapse of the dollar, the Fed needs to be subject to a strict audit of its actions, if not an outright abolition of its charter.

So, what's the solution?

The Fed's influence comes about because of its monopolization of the creation of money. If we could abolish the government monopoly on the creation of money, the Federal Reserve would be forced to clean up its act or go out of business. Economists know that monopolies lead to reduced output and higher prices, a suboptimal allocation of resources. This applies as well to the market for circulating currency as it does to markets for any other good.

In the previous Congress I introduced legislation that would eliminate the three major barriers to competition in currency and break the Fed's stranglehold on money.

How do you accomplish that? Well, as stated there are three major barriers that bar competition of the dollar which would need to be addressed.

The first barrier: Legal tender laws, which Congress does not have the Constitutional authority to enact. Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency.

Zimbabwe anyone?

The second barrier: laws that prohibit the operation of private mints. Certain sections of U.S. code classified as anti-counterfeiting statutes were in fact intended to shut down private mints that had been operating in California. There is no reason to ban private companies from minting gold and silver coins to compete with the dollar.

What are they afraid of? It's not counterfeiting. It's competition. I'm sure everyone is upset that no one can compete with Wal-mart, why aren't more people upset that the Fed has competition?

All currencies are based on trust, trust that the issuing authority will not debase the currency. If it becomes known that the issuer of a particular currency is minting underweight coins, people will stop accepting that currency and that company will go out of business.

A little extra I wanted to point out. A lot of our money today is not being made with full copper or silver. They're being replaced by cheaper metals because it is now more expensive to make a nickel than the actual worth of the nickel. That's sad. I'm sure everyone remembers stories from their grandpa where he would buy an entire bag of M&M's that would last a week with just one nickel.

The final barrier to competing currencies: Laws that assess capital gains and sales taxes on gold and silver coins. Under federal law, coins are considered collectibles, and are liable for capital gains taxes. These taxes actually tax monetary debasement. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases because of a weak dollar, the federal government considers this an increase in wealth and assesses taxes.

Enough said.

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