Book Commentary: End the Fed

bkspaulfed2009by katharineotto.wordpress.com:  At the national Libertarian convention in 2004, I blocked the exit and forced then US Congressman Ron Paul to meet me and shake my hand.

In 2008, when he was again campaigning for president, I wrote him and Ralph Nader, and asked them to run together for president and vice-president respectively.  Each has a history of breaking precedent, so I figured they could pull it off.

In 2009, I read End the Fed, and wrote the following book commentary and review.  Yesterday, I caught part of a live interview with Dr. Paul, in which he warned of a coming financial crisis.  While I agree with his assessment about the present situation, I believe the future needn’t be as dark as he fears.

The nation’s debt is unsustainable, and those dependent on the government stand to lose the most if the US declares bankruptcy.  That includes the elderly and the indigent, but it also includes all government employees, retirees, elected and appointed government officials, all the federal bureaucracies, the military, and government contractors.  That’s why Congress is so heavily invested in raising the “debt ceiling” until after the 2016 presidential elections.

We must remember that all of these people have generous benefits and retirement plans invested on Wall Street, in Treasuries, and in other places “too big to fail.”  Unfortunately for Wall Street and the federal government, the Baby Boomers are beginning to retire, withdrawing money from Wall Street as well as beginning Social Security, two huge money drains on the federal coffers.

Step number one to protecting yourself against loss is to get out of debt.  There is a move to abandon Wall Street for Main Street, where you have more control.  Dr. Paul’s concept of free coinage is good, as is the notion of returning to the stable gold standard.

And with that, I offer the 2009 review of a book that remains current.

End the Fed

by Ron Paul, 2009
Book Commentary by Katharine C. Otto
Written November, 2009

US Congressman Ron Paul’s latest book, End the Fed, raises more questions than it answers, but they are questions every taxpayer needs to ask. The representative from Texas’ 14th district, Dr. Paul, an obstetrician and gynecologist, has long advocated sound money and the gold standard.  This year, he has spearheaded a move in Congress  to audit the Federal Reserve (Federal ReserveTransparency Act, HR 1207).  The bill is now co-sponsored by over 300 members of the House of Representatives.

End the Fed is a personal account of Representative Paul’s interest and track record in economics and monetary policy.  He tells us his decision to enter politics was inspired on August 15, 1971, when President Richard Nixon defaulted on the US pledge to exchange gold for $35 per ounce from foreign governments.  “This was the third broken promise by our government regarding gold backing to our dollar.  Lincoln did it in the Civil War, and FDR did it in 1933 when he confiscated gold from the American people and made it illegal for American citizens to own gold.  Roosevelt took the gold at $20 an ounce and promptly revalued it at $35.  The citizens lost, the government profited.” (p. 45).

Dr. Paul hoped a seat in Congress would provide a forum for examining and helping to restructure the United States’ economic policies.

Simply and concisely written, End the Fed starts with a brief overview of the Fed’s creation, ostensibly to provide for “elastic” money through “fractional-reserve banking, the notion that depositors’ money currently in use as cash may also be loaned out for speculative projects and then redeposited.  The system works so long as people do not attempt to withdraw all their money at once.” (p 15)

He claims the Federal Reserve Act of 1913 is unconstitutional and immoral. It shifts wealth from the poor and middle-class to the privileged and favored few.  It debases the currency by allowing the Fed to expand the money supply without limit.  This has led to relentless inflation, boom-and-bust business cycles, vast expansion of the federal government, and perpetual war, all at the expense of taxpayers whose buying power is reduced while their taxes go up.

End the Fed gives a short history of banking in the US, the role of central banks, and the rationale behind Paul’s call for a return to the gold standard.  He says the Fed creates money out of thin air, but he doesn’t go into the method of doing this.  In this sense, the book oversimplifies in favor of readability.  (A more thorough explanation of the Fed’s creation and methods, as well as banking in general, is contained in The Creature from Jekyll Island:  A Second Look at the Federal Reserve, by G. Edward Griffin, 1994, realityzone.com.)

Born in 1935, Congressman Paul says he started working in his family dairy business at the age of five, checking milk bottles for cleanliness.  He remembers the tail end of the Depression and World War II rationing.  He developed an early interest in coin collecting that evolved into a fascination with economics.  He tells us he was heavily influenced by the Austrian school of economics, primarily Ludwig von Mises.  He also cites F. A. Hayek of The Road to Serfdom fame, and several other Libertarian-minded thinkers. He gives an account of his experience in Congress, pertinent committees and legislation, and conversations with current and former Fed chairmen Ben Bernanke and Allan Greenspan.

Although the book makes no attempt to delve into the intricacies of economics, or the methods by which the Fed has been able to create our current Ponzi dollar—he calls it a Ponzi scheme—Ron Paul has provided a highly readable insider’s view of the devastation wrought by the Federal Reserve Act and the departure from the gold standard.  He ends the book by suggesting several possible and relatively painless ways to restore integrity to our monetary system.

The book’s title came from a University of Michigan student-initiated chant, “End the Fed!” during a presidential campaign tour in October, 2007. The author ends by saying, “Freedom and central banking are incompatible.  It is freedom we seek, and when that precious goal is achieved, the chant ‘End the Fed!’ will become a reality.”

 

 

 

 

 

 

 

 

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