Ron Paul and the Fed Reserve

real -

Welcome to CM.com.

There are a lot of people on the "End the Fed" bandwagon making all kinds of noise.  But when you ask the follow-on question, "And after you have ended the Fed, what will you replace it with?" you get a thundering silence and an occasional cricket.

Perhaps better questions are "How can the Fed be made more transparent?" or "How can we make the Fed accountable to the American taxpayers?"

And of course, the CT crowd will tell you that nothing can be done that isn't already a pre-ordained move in the grand chess game that has been played for centuries, blah, blah, blah.............

We could start by issuing money as sovereign credit instead of debt.  Or is that too easy?

Again, welcome - BTW, have you watched Crash Course yet?  A lot of folks come here following a topical link and miss the Crash Course - which IMO is the Crown Jewel of the site, all of the other great discussions notwithstanding.

I would like to see a PM coin system as a competing legal tender.  It would have to be  weight based coins with a floating  $ value to work.  With our instant access to market values with IPhone apps and computers I don't think this would be a problem.  With both monies being legal tender, then they could duke it out and see how long benificent Ben gets a paycheck.  Since this would remove control from a central power, I doubt this will happen, but it might well work otherwise.   

If you put a face value on the coins then Gresham's law of "Bad money drives out good if their exchange rate is set by law"  would come into play.   Without the face value (aka-fixed exchange rate), then people will gravitate to that which holds its value best. 

JO you are being generous.

Congress couldn't find their collective a$$ if they all sat down on their hands. 

Durangokid

Yes, the Fed is private.  It also enjoys a charter from the federal government.  One might call it extra-constitutional.  The Constitution says the government should regulate the currency, but it doesn't say that it can't outsource it to a private corporation or consortium.

I'm really enjoying reading your post.  I must admit I still haven't finished reading what you wrote because I'm short on time at the moment but I promise to read it all.  I'll try to keep this short and simple. :) 

I don't call the Fed extra-constitutional, I call it un-constitutional and here is the reason why.

You're correct when you say that the government should regulate the currency.

Article 1 section 8 states.

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To coin Money, is a action, or is other words, congress has the responsibility to create money, but we all know that the government creates no money at all.

I'm in disagreement with you is where you said that the consitution doesn't prohibit the Federal Government from outsourcing the creation of money or allowing the Federal Government to charter banks (create corporations).

The tenth ammendment states

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

I am not aware of anywhere in the constutition where it authorizes the Federal Government to create corporations or outsource congresses duty to create money as clearly called for in the constitution.

Ok back to reading the rest of what you wrote. :)

DurangoKid,

Excellent! 

Are you by any chance affilitated with ICA?

"Ron Paul doesn't really get it anyway.  His advocacy of a gold back currency is proof enough.  In and of itself, accomplishes nothing.  There's nothing magic about gold.  Basing our currency on silver would be more practical, but only marginally so.  Circulating receipts for metal stored away in vaults doesn't get to the heart of the problem."

First off, watch number ten of the Crash Course on inflation. Getting people to accept paper not PM's is magic. instead of wasting time fighting the Fed repeal the legal tender laws so people can use what they want to trade with. (this is called freedom). As far as letting the govt print it's own money interest free to pay for it's spending, go ahead, but with the absence of legal tender laws who would accept paper currency?

"So if sound money is such a good thing, what is stopping people from simply trading with each other in gold and silver? Why are you still being paid in fiat dollars, and why can’t you pay for gas in gold? The answer is that the government has enacted policies that provide considerable stumbling blocks to such transactions.

One of the main stumbling blocks is Federal legal tender laws, which state that government-controlled fiat currency MUST be accepted for many kinds of monetary transactions.

In light of this, Gresham’s Law takes effect. Gresham’s Law states that bad money drives out good money. Meaning, if someone is forced to accept your bad money, it is to your advantage to pass it off, like a hot potato, in exchange for something of value. Any good money you have, you will hoard. Eventually, real money is driven out of circulation and under people’s mattresses, so to speak. In the absence of legal tender laws, people are free to accept the medium of exchange of their choice, and are likely to insist on payment in something of real value."

http://www.ronpaul.com/2008-09-28/ron-paul-on-legal-tender-laws/

aggrivated,

"It would have to be  weight based coins with a floating  $ value to work."

Make it simple, price everything in ounces of whatever pm's are being used.

"to coin money"  and  " regulate the value thereof"       

Reality  Check:

Gold coins are "debt free" money.     When the FR was created, its notes had 40% gold backing and gold coins circulated along with them.    FDR signed Executive Order 6102 in 1933,  confiscating Americans private gold holdings to be surrendered to the Federal Reserve. Then  by the next year the Gold Reserve Act titled all gold held by the Federal Reserve to the US Treasury.   

Now why would a US President, and Congress pass such laws,  is it to "regulate the value thereof"?     Hardly.   US Treasury bonds were payable in dollars which were in turn redeemable in gold.   This tie to gold prevented FDR, Congress, the Federal Reserve and the bankers from issuing as much debt and notes without the threat of the American people showing up at their doorsteps to exchange their funny money for the real thing.    Ask yourself ----who benefit from passing such laws?    Certainly not the American people.

The freedom to choose what money to transact in allows the American people to escape tyrants.   If Ron Paul represents is but one step on a thousand mile journey,  Amen brother  

"to coin money"  and  " regulate the value thereof"       

Reality  Check:

Gold coins are "debt free" money.

If they are debt free then why does someone have to go into debt in order for those coins to go into circulation?

Thomas,

The US mint now produces gold coins and sells them trough dealerships accross the nation.    There is no need to get in debt to purchase one.

However, if you bought one and deposited it in a bank,    because of the  deposit contract , banks have the right to give you other forms of money upon withdrawal.    Your gold coin becomes part of the existing money system http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html

realasset,

Red seal notes are turned in to the Treasury for destruction whenever they turn up in the banking system.      Remember, government removed gold from circulating as money then the legal tender statute forced acceptance of government approved money.    This monopoly benefited banks and the political party in power, which have taken turns to see who could  expand government more thoroughly, on the backs of our people.

Americans should be allowed to transact in any form of money that is acceptable to them, and their foreign trading partners.  If the money is good, then it  would be widely accepted.  BS money would be used to heat homes in the winter.

real -

'Dogs' works just fine, and so does "Hey you"

You've underscored the point I was trying to make - very few people understand how the Fed works, and that's the problem.  What we need is a lot more transparency in what the Fed does.  We need Congressional oversight of what the Fed does, as outlined in the Constitution.  I think Thomas Hedin wrote in one of his posts the the Fed is 'extra-Constitutional' and that is a problem.  Not above the Constitution, or next to it, but within it.  Most people have a working knowledge of what the various Cabinet positions "Do".  Ask 10 people what the Federal Reserve does and you will probably get 6 blank stares, 3 wild conspiracy theories and 1 "something to do with money" answers. 

Open the books and shine a bright light on the cockroaches running the Fed, watch them scatter, account for where all that money went, answer up for it, roll with the resulting systemic shock waves and fix it.

It may turn out that Congressional oversight of the Fed and the Nation's monetary policy is just another thing for Congress to screw up, but at least they'd be screwing up a responsibility that was given to them by the Constitution.  In a weird way, I'm okay with that - because we the people also have it within our power to fix that problem as well.

This is a link to the website of the Federal Reserve Bank Of New York.        Start with "About The Fed (What We Do)"

http://www.newyorkfed.org/markets/openmarket.html       

Durango Kid,

Red notes, Bank Notes, Federal Reserve notes,   Greenbacks, Wealth Money, Funny Money and other forms should be allowed if that is what Americans want to transact in.      What are they afraid of,  the American people?

Greg,

There is no need to ban fractional reserve banking or fiat money as long as people are free to transact in any money they choose. This way the people have the liberty and the recourse to keep tyrants at bay.     Monopoly on issuing money is the issue.

If private merchants or individuals are free to refuse a type of money,   the market would ruthlessly flush out  garbage money,  real fast.