Video: Ron Paul's Farewell Speech to Congress

Congressman Ron Paul’s magnificent exit or farewell speech at the US Congress

Transcript here (bold and underline mine) [hat tip EPJ’s Bob Wenzel]

This may well be the last time I speak on the House Floor.  At the end of the year I’ll leave Congress after 23 years in office over a 36 year period.  My goals in 1976 were the same as they are today:  promote peace and prosperity by a strict adherence to the principles of individual liberty.

It was my opinion, that the course the U.S. embarked on in the latter part of the 20th Century would bring us a major financial crisis and engulf us in a foreign policy that would overextend us and undermine our national security.

To achieve the goals I sought, government would have had to shrink in size and scope, reduce spending, change the monetary system, and reject the unsustainable costs of policing the world and expanding the American Empire.

The problems seemed to be overwhelming and impossible to solve, yet from my view point, just following the constraints placed on the federal government by the Constitution would have been a good place to start.

How Much Did I Accomplish?

In many ways, according to conventional wisdom, my off-and-on career in Congress, from 1976 to 2012, accomplished very little.  No named legislation, no named federal buildings or highways—thank goodness.  In spite of my efforts, the government has grown exponentially, taxes remain excessive, and the prolific increase of incomprehensible regulations continues.  Wars are constant and pursued without Congressional declaration, deficits rise to the sky, poverty is rampant and dependency on the federal government is now worse than any time in our history.

All this with minimal concerns for the deficits and unfunded liabilities that common sense tells us cannot go on much longer.  A grand, but never mentioned, bipartisan agreement allows for the well-kept secret that keeps the spending going.  One side doesn’t give up one penny on military spending, the other side doesn’t give up one penny on welfare spending, while both sides support the bailouts and subsidies for the banking and  corporate elite.  And the spending continues as the economy weakens and the downward spiral continues.   As the government continues fiddling around, our liberties and our wealth burn in the flames of a foreign policy that makes us less safe.

The major stumbling block to real change in Washington is the total resistance to admitting that the country is broke. This has made compromising, just to agree to increase spending, inevitable since neither side has any intention of cutting spending.

The country and the Congress will remain divisive since there’s no “loot left to divvy up.”
 

Without this recognition the spenders in Washington will continue the march toward a fiscal cliff much bigger than the one anticipated this coming January.

I have thought a lot about why those of us who believe in liberty, as a solution, have done so poorly in convincing others of its benefits.  If liberty is what we claim it is- the principle that protects all personal, social and economic decisions necessary for maximum prosperity and the best chance for peace- it should be an easy sell.  Yet, history has shown that the masses have been quite receptive to the promises of authoritarians which are rarely if ever fulfilled.
 

Authoritarianism vs. Liberty

If authoritarianism leads to poverty and war and less freedom for all individuals and is controlled by rich special interests, the people should be begging for liberty.  There certainly was a strong enough sentiment for more freedom at the time of our founding that motivated those who were willing to fight in the revolution against the powerful British government. 

During my time in Congress the appetite for liberty has been quite weak; the understanding of its significance negligible.  Yet the good news is that compared to 1976 when I first came to Congress, the desire for more freedom and less government in 2012 is much greater and growing, especially in grassroots America. Tens of thousands of teenagers and college age students are, with great enthusiasm, welcoming the message of liberty.

I have a few thoughts as to why the people of a country like ours, once the freest and most prosperous, allowed the conditions to deteriorate to the degree that they have. 

Freedom, private property, and enforceable voluntary contracts, generate wealth.  In our early history we were very much aware of this.  But in the early part of the 20th century our politicians promoted the notion that the tax and monetary systems had to change if we were to involve ourselves in excessive domestic and military spending. That is why Congress gave us the Federal Reserve and the income tax.  The majority of Americans and many government officials agreed that sacrificing some liberty was necessary to carry out what some claimed to be “progressive” ideas. Pure democracy became acceptable.

They failed to recognized that what they were doing was exactly opposite of what the colonists were seeking when they broke away from the British.

Some complain that my arguments makes no sense, since great wealth and the standard of living improved  for many Americans over the last 100 years, even with these new policies. 

But the damage to the market economy, and the currency, has been insidious and steady.  It took a long time to consume our wealth, destroy the currency and undermine productivity and get our financial obligations to a point of no return. Confidence sometimes lasts longer than deserved. Most of our wealth today depends on debt.

The wealth that we enjoyed and seemed to be endless, allowed concern for the principle of a free society to be neglected.  As long as most people believed the material abundance would last forever, worrying about protecting a competitive productive economy and individual liberty seemed unnecessary.

The Age of Redistribution

This neglect ushered in an age of redistribution of wealth by government kowtowing to any and all special interests, except for those who just wanted to left alone.  That is why today money in politics far surpasses money currently going into research and development and productive entrepreneurial efforts.

The material benefits became more important than the understanding and promoting the principles of liberty and a free market.  It is good that material abundance is a result of liberty but if materialism is all that we care about, problems are guaranteed. 

The crisis arrived because the illusion that wealth and prosperity would last forever has ended. Since it was based on debt and a pretense that debt can be papered over by an out-of-control fiat monetary system, it was doomed to fail.  We have ended up with a system that doesn’t produce enough even to finance the debt and no fundamental understanding of why a free society is crucial to reversing these trends.

If this is not recognized, the recovery will linger for a long time.  Bigger government, more spending, more debt, more poverty for the middle class, and a more intense scramble by the elite special interests will continue.

We Need an Intellectual Awakening

Without an intellectual awakening, the turning point will be driven by economic law.  A dollar crisis will bring the current out-of-control system to its knees.

If it’s not accepted that big government, fiat money, ignoring liberty, central economic planning, welfarism, and warfarism caused our crisis we can expect a continuous and dangerous march toward corporatism and even fascism with even more loss of our liberties.  Prosperity for a large middle class though will become an abstract dream.

This continuous move is no different than what we have seen in how our financial crisis of 2008 was handled.  Congress first directed, with bipartisan support, bailouts for the wealthy.  Then it was the Federal Reserve with its endless quantitative easing. If at first it doesn’t succeed try again; QE1, QE2, and QE3 and with no results we try QE indefinitely—that is until it too fails. There’s a cost to all of this and let me assure you delaying the payment is no longer an option.  The rules of the market will extract its pound of flesh and it won’t be pretty.

The current crisis elicits a lot of pessimism.  And the pessimism adds to less confidence in the future.  The two feed on themselves, making our situation worse.

If the underlying cause of the crisis is not understood we cannot solve our problems. The issues of warfare, welfare, deficits, inflationism, corporatism, bailouts and authoritarianism cannot be ignored.  By only expanding these policies we cannot expect good results. 

Everyone claims support for freedom.  But too often it’s for one’s own freedom and not for others.  Too many believe that there must be limits on freedom. They argue that freedom must be directed and managed to achieve fairness and equality thus making it acceptable to curtail, through force, certain liberties.

Some decide what and whose freedoms are to be limited.  These are the politicians whose goal in life is power. Their success depends on gaining support from special interests.

No More ‘isms’ 

The great news is the answer is not to be found in more “isms.”  The answers are to be found in more liberty which cost so much less.  Under these circumstances spending goes down, wealth production goes up, and the quality of life improves.

Just this recognition—especially if we move in this direction—increases optimism which in itself is beneficial.  The follow through with sound policies are required which must be understood and supported by the people.

But there is good evidence that the generation coming of age at the present time is supportive of moving in the direction of more liberty and self-reliance. The more this change in direction and the solutions become known, the quicker will be the return of optimism.

Our job, for those of us who believe that a different system than the  one that we have  had for the  last 100 years, has driven us to this unsustainable crisis, is to be more convincing that there is a wonderful, uncomplicated, and moral system that provides the answers.  We had a taste of it in our early history. We need not give up on the notion of advancing this cause.  

It worked, but we allowed our leaders to concentrate on the material abundance that freedom generates, while ignoring freedom itself.  Now we have neither, but the door is open, out of necessity, for an answer. The answer available is based on the Constitution, individual liberty and prohibiting the use of government force to provide privileges and benefits to all special interests.

After over 100 years we face a society quite different from the one that was intended by the Founders.  In many ways their efforts to protect future generations with the Constitution from this danger has failed.  Skeptics, at the time the Constitution was written in 1787, warned us of today’s possible outcome.  The insidious nature of the erosion of our liberties and the reassurance our great abundance gave us, allowed the process to evolve into the dangerous period in which we now live.

Dependency on Government Largesse 

Today we face a dependency on government largesse for almost every need.  Our liberties are restricted and government operates outside the rule of law, protecting and rewarding those who buy or coerce government into satisfying their demands. Here are a few examples:

-Undeclared wars are commonplace. 
-Welfare for the rich and poor is considered an entitlement.

-The economy is overregulated, overtaxed and grossly distorted by a deeply flawed monetary system.

-Debt is growing exponentially.

-The Patriot Act and FISA legislation passed without much debate have resulted in a steady erosion of our 4th Amendment rights.

-Tragically our government engages in preemptive war, otherwise known as aggression, with no complaints from the American people.

-The drone warfare we are pursuing worldwide is destined to end badly for us as the hatred builds for innocent lives lost and the international laws flaunted. Once we are financially weakened and militarily challenged, there will be a lot resentment thrown our way.

-It’s now the law of the land that the military can arrest American citizens, hold them indefinitely, without charges or a trial.

-Rampant hostility toward free trade is supported by a large number in Washington.

-Supporters of sanctions, currency manipulation and WTO trade retaliation, call the true free traders “isolationists.”

-Sanctions are used to punish countries that don’t follow our orders.

-Bailouts and guarantees for all kinds of misbehavior are routine.

-Central economic planning through monetary policy, regulations and legislative mandates has been an acceptable policy.

Questions

Excessive government has created such a mess it prompts many questions:

Why are sick people who use medical marijuana put in prison?

Why does the federal government restrict the drinking of raw milk?

Why can’t Americans manufacturer rope and other products from hemp?

Why are Americans not allowed to use gold and silver as legal tender as mandated by the Constitution?

Why is Germany concerned enough to consider repatriating their gold held by the FED for her in New York?  Is it that the trust in the U.S. and dollar supremacy beginning to wane?

Why do our political leaders believe it’s unnecessary to thoroughly audit our own gold?

Why can’t Americans decide which type of light bulbs they can buy?

Why is the TSA permitted to abuse the rights of any American traveling by air?

Why should there be mandatory sentences—even up to life for crimes without victims—as our drug laws require?

Why have we allowed the federal government to regulate commodes in our homes?

Why is it political suicide for anyone to criticize AIPAC ?

Why haven’t we given up on the drug war since it’s an obvious failure and violates the people’s rights? Has nobody noticed that the authorities can’t even keep drugs out of the prisons? How can making our entire society a prison solve the problem?

Why do we sacrifice so much getting needlessly involved in border disputes and civil strife around the world and ignore the root cause of the most deadly border in the world-the one between Mexico and the US?

Why does Congress willingly give up its prerogatives to the Executive Branch?

Why does changing the party in power never change policy? Could it be that the views of both parties are essentially the same?

Why did the big banks, the large corporations, and foreign banks and foreign central banks get bailed out in 2008 and the middle class lost their jobs and their homes?

Why do so many in the government and the federal officials believe that creating money out of thin air creates wealth?

Why do so many accept the deeply flawed principle that government bureaucrats and politicians can protect us from ourselves without totally destroying the principle of liberty?

Why can’t people understand that war always destroys wealth and liberty?

Why is there so little concern for the Executive Order that gives the President authority to establish a “kill list,” including American citizens, of those targeted for assassination?

Why is patriotism thought to be blind loyalty to the government and the politicians who run it, rather than loyalty to the principles of liberty and support for the people? Real patriotism is a willingness to challenge the government when it’s wrong.

Why is it is claimed that if people won’t  or can’t take care of their own needs, that people in government can do it for them?

Why did we ever give the government a safe haven for initiating violence against the people?

Why do some members defend free markets, but not civil liberties?

Why do some members defend civil liberties but not free markets? Aren’t they the same?

Why don’t more defend both economic liberty and personal liberty?

Why are there not more individuals who seek to intellectually influence others to bring about positive changes than those who seek power to force others to obey their commands?

Why does the use of religion to support a social gospel and preemptive wars, both of which requires authoritarians to use violence, or the threat of violence, go unchallenged? 

Aggression and forced redistribution of wealth has nothing to do with the teachings of the world great religions.

Why do we allow the government and the Federal Reserve to disseminate false information dealing with both economic and  foreign policy?

Why is democracy held in such high esteem when it’s the enemy of the minority and makes all rights relative to the dictates of the majority?

Why should anyone be surprised that Congress has no credibility, since there’s such a disconnect between what politicians say and what they do?

Is there any explanation for all the deception, the unhappiness, the fear of the future, the loss of confidence in our leaders, the distrust, the anger and frustration?   Yes there is, and there’s a way to reverse these attitudes.  The negative perceptions are logical and a consequence of bad policies bringing about our problems.  Identification of the problems and recognizing the cause allow the proper changes to come easy.

Trust Yourself, Not the Government

Too many people have for too long placed too much confidence and trust in government and not enough in themselves.  Fortunately, many are now becoming aware of the seriousness of the gross mistakes of the past several decades. The blame is shared by both political parties.  Many Americans now are demanding to hear the plain truth of things and want the demagoguing to stop.  Without this first step, solutions are impossible.

Seeking the truth and finding the answers in liberty and self-reliance promotes the optimism necessary for restoring prosperity.  The task is not that difficult if politics doesn’t get in the way.

We have allowed ourselves to get into such a mess for various reasons.

Politicians deceive themselves as to how wealth is produced.  Excessive confidence is placed in the judgment of politicians and bureaucrats.  This replaces the confidence in a free society.  Too many in high places of authority became convinced that only they,   armed with arbitrary government power, can bring about fairness, while facilitating wealth production.  This always proves to be a utopian dream and destroys wealth and liberty.  It impoverishes the people and rewards the special interests who end up controlling both political parties.

It’s no surprise then that much of what goes on in Washington is driven by aggressive partisanship and power seeking, with philosophic differences being minor.

Economic Ignorance

Economic ignorance is commonplace.  Keynesianism continues to thrive, although today it is facing healthy and enthusiastic rebuttals.  Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber.

Supporters of all government edicts use humanitarian arguments to justify them.

Humanitarian arguments are always used to justify government mandates related to the economy, monetary policy, foreign policy, and personal liberty. This is on purpose to make it more difficult to challenge.  But, initiating violence for humanitarian reasons is still violence.  Good intentions are no excuse and are just as harmful as when people use force with bad intentions.  The results are always negative.

The immoral use of force is the source of man’s political problems.  Sadly, many religious groups, secular organizations, and psychopathic authoritarians endorse government initiated force to change the world.  Even when the desired goals are well-intentioned—or especially when well-intentioned—the results are dismal.  The good results sought never materialize.  The new problems created require even more government force as a solution.  The net result is institutionalizing government initiated violence and morally justifying it on humanitarian grounds.

This is the same fundamental reason our government  uses force  for invading other countries at will, central economic planning at home, and the regulation of personal liberty and habits of our citizens.

It is rather strange, that unless one has a criminal mind and no respect for other people and their property, no one claims it’s permissible to go into one’s neighbor’s house and tell them how to behave, what they can eat, smoke and drink or how to spend their money.

Yet, rarely is it asked why it is morally acceptable that a stranger with a badge and a gun can do the same thing in the name of law and order.  Any resistance is met with brute force, fines, taxes, arrests, and even imprisonment. This is done more frequently every day without a proper search warrant.

No Government Monopoly over Initiating Violence

Restraining aggressive behavior is one thing, but legalizing a government monopoly for initiating aggression can only lead to exhausting liberty associated with chaos, anger and the breakdown of civil society.  Permitting such authority and expecting saintly behavior from the bureaucrats and the politicians is a pipe dream.  We now have a standing army of armed bureaucrats in the TSA, CIA, FBI, Fish and Wildlife, FEMA, IRS, Corp of Engineers, etc. numbering over 100,000.  Citizens are guilty until proven innocent in the unconstitutional administrative courts.

Government in a free society should have no authority to meddle in social activities or the economic transactions of individuals. Nor should government meddle in the affairs of other nations. All things peaceful, even when controversial, should be permitted.

We must reject the notion of prior restraint in economic activity just we do in the area of free speech and religious liberty. But even in these areas government is starting to use a backdoor approach of political correctness to regulate speech-a dangerous trend. Since 9/11 monitoring speech on the internet is now a problem since warrants are no longer required.

The Proliferation of Federal Crimes

The Constitution established four federal crimes.  Today the experts can’t even agree on how many federal crimes are now on the books—they number into the thousands.  No one person can comprehend the enormity of the legal system—especially the tax code.  Due to the ill-advised drug war and the endless federal expansion of the criminal code we have over 6 million people under correctional suspension, more than the Soviets ever had, and more than any other nation today, including China.  I don’t understand the complacency of the Congress and the willingness to continue their obsession with passing more Federal laws.  Mandatory sentencing laws associated with drug laws have compounded our prison problems.

The federal register is now 75,000 pages long and the tax code has 72,000 pages, and expands every year.  When will the people start shouting, “enough is enough,” and demand Congress cease and desist.

Achieving Liberty

Liberty can only be achieved when government is denied the aggressive use of force.  If one seeks liberty, a precise type of government is needed.  To achieve it, more than lip service is required.

Two choices are available.

A government designed to protect liberty—a natural right—as its sole objective.  The people are expected to care for themselves and reject the use of any force for interfering with another person’s liberty.  Government is given a strictly limited authority to enforce contracts, property ownership, settle disputes, and defend against foreign aggression.

A government that pretends to protect liberty but is granted power to arbitrarily use force over the people and foreign nations.  Though the grant of power many times is meant to be small and limited, it inevitably metastasizes into an omnipotent political cancer.  This is the problem for which the world has suffered throughout the ages.  Though meant to be limited it nevertheless is a 100% sacrifice of a principle that would-be-tyrants find irresistible.  It is used vigorously—though incrementally and insidiously.  Granting power to government officials always proves the adage that:  “power corrupts.”

Once government gets a limited concession for the use of force to mold people habits and plan the economy, it causes a steady move toward tyrannical government.  Only a revolutionary spirit can reverse the process and deny to the government this arbitrary use of aggression.  There’s no in-between.  Sacrificing a little liberty for imaginary safety always ends badly.

Today’s mess is a result of Americans accepting option #2, even though the Founders attempted to give us Option #1.

The results are not good.  As our liberties have been eroded our wealth has been consumed.  The wealth we see today is based on debt and a foolish willingness on the part of foreigners to take our dollars for goods and services. They then loan them back to us to perpetuate our debt system.  It’s amazing that it has worked for this long but the impasse in Washington, in solving our problems indicate that many are starting to understand the seriousness of the world -wide debt crisis and the dangers we face. The longer this process continues the harsher the outcome will be.

The Financial Crisis Is a Moral Crisis

Many are now acknowledging that a financial crisis looms but few understand it’s, in reality, a moral crisis. It’s the moral crisis that has allowed our liberties to be undermined and permits the exponential growth of illegal government power.  Without a clear understanding of the nature of the crisis it will be difficult to prevent a steady march toward tyranny and the poverty that will accompany it.

Ultimately, the people have to decide which form of government they want; option #1 or option #2.  There is no other choice.  Claiming there is a choice of a “little” tyranny is like describing pregnancy as a “touch of pregnancy.”  It is a myth to believe that a mixture of free markets and government central economic planning is a worthy compromise.  What we see today is a result of that type of thinking.  And the results speak for themselves.

A Culture of Violence

American now suffers from a culture of violence.  It’s easy to reject the initiation of violence against one’s neighbor but it’s ironic that the people arbitrarily and freely anoint government officials with monopoly power to initiate violence against the American people—practically at will.

Because it’s the government that initiates force, most people accept it as being legitimate.  Those who exert the force have no sense of guilt. It is believed by too many that governments are morally justified in initiating force supposedly to “do good.”  They incorrectly believe that this authority has come from the “consent of the people.”  The minority, or victims of government violence never consented to suffer the abuse of government mandates, even when dictated by the majority.  Victims of TSA excesses never consented to this abuse.

This attitude has given us a policy of initiating war to “do good,” as well. It is claimed that war, to prevent war for noble purposes, is justified.  This is similar to what we were once told that:  “destroying a village to save a village” was justified.  It was said by a US Secretary of State that the loss of 500,000 Iraqis, mostly children, in the 1990s, as a result of American bombs and sanctions, was “worth it” to achieve the “good” we brought to the Iraqi people.  And look at the mess that Iraq is in today.

Government use of force to mold social and economic behavior at home and abroad has justified individuals using force on their own terms.  The fact that violence by government is seen as morally justified, is the reason why violence will increase when the big financial crisis hits and becomes a political crisis as well.

First, we recognize that individuals shouldn’t initiate violence, then we give the authority to government.   Eventually, the immoral use of government violence, when things goes badly, will be used to justify an individual’s “right” to do the same thing. Neither the government nor individuals have the moral right to initiate violence against another yet we are moving toward the day when both will claim this authority.  If this cycle is not reversed society will break down.

When needs are pressing, conditions deteriorate and rights become relative to the demands and the whims of the majority.  It’s then not a great leap for individuals to take it upon themselves to use violence to get what they claim is theirs.  As the economy deteriorates and the wealth discrepancies increase—as are already occurring— violence increases as those in need take it in their own hands to get what they believe is theirs.  They will not wait for a government rescue program.

When government officials wield power over others to bail out the special interests, even with disastrous results to the average citizen, they feel no guilt for the harm they do. Those who take us into undeclared wars with many casualties resulting, never lose sleep over the death and destruction their bad decisions caused. They are convinced that what they do is morally justified, and the fact that many suffer   just can’t be helped.

When the street criminals do the same thing, they too have no remorse, believing they are only taking what is rightfully theirs.  All moral standards become relative.  Whether it’s bailouts, privileges, government subsidies or benefits for some from inflating a currency, it’s all part of a process justified by a philosophy of forced redistribution of wealth.  Violence, or a threat of such, is the instrument required and unfortunately is of little concern of most members of Congress.

Some argue it’s only a matter of “fairness” that those in need are cared for. There are two problems with this. First, the principle is used to provide a greater amount of benefits to the rich than the poor. Second, no one seems to be concerned about whether or not it’s fair to those who end up paying for the benefits. The costs are usually placed on the backs of the middle class and are hidden from the public eye. Too many people believe government handouts are free, like printing money out of thin air, and there is no cost. That deception is coming to an end. The bills are coming due and that’s what the economic slowdown is all about.

Sadly, we have become accustomed to living with the illegitimate use of force by government.  It is the tool for telling the people how to live, what to eat and drink, what to read and how to spend their money.

To develop a truly free society, the issue of initiating force must be understood and rejected.  Granting to government even a small amount of force is a dangerous concession.

Limiting Government Excesses vs. a Virtuous Moral People

Our Constitution, which was intended to limit government power and abuse, has failed.  The Founders warned that a free society depends on a virtuous and moral people.  The current crisis reflects that their concerns were justified.

Most politicians and pundits are aware of the problems we face but spend all their time in trying to reform government.  The sad part is that the suggested reforms almost always lead to less freedom and the importance of a virtuous and moral people is either ignored, or not understood. The new reforms serve only to further undermine liberty.  The compounding effect has given us this steady erosion of liberty and the massive expansion of debt.  The real question is: if it is liberty we seek, should most of the emphasis be placed on government reform or trying to understand what “a virtuous and moral people” means and how to promote it. The Constitution has not prevented the people from demanding handouts for both rich and poor in their efforts to reform the government, while ignoring the principles of a free society. All branches of our government today are controlled by individuals who use their power to undermine liberty and enhance the welfare/warfare state-and frequently their own wealth and power.

If the people are unhappy with the government performance it must be recognized that government is merely a reflection of an immoral society that rejected a moral government of constitutional limitations of power and love of freedom.

If this is the problem all the tinkering with thousands of pages of new laws and regulations will do nothing to solve the problem.

It is self-evident that our freedoms have been severely limited and the apparent prosperity we still have, is nothing more than leftover wealth from a previous time.  This fictitious wealth based on debt and benefits from a false trust in our currency and credit, will play havoc with our society when the bills come due.  This means that the full consequence of our lost liberties is yet to be felt.

But that illusion is now ending.  Reversing a downward spiral depends on accepting a new approach.

Expect the rapidly expanding homeschooling movement to play a significant role in the revolutionary reforms needed to build a free society with Constitutional protections. We cannot expect a Federal government controlled school system to provide the intellectual ammunition to combat the dangerous growth of government that threatens our liberties.

The internet will provide the alternative to the government/media complex that controls the news and most political propaganda. This is why it’s essential that the internet remains free of government regulation.

Many of our religious institutions and secular organizations support greater dependency on the state by supporting war, welfare and corporatism and ignore the need for a virtuous people.

I never believed that the world or our country could be made more free by politicians, if the people had no desire for freedom.

Under the current circumstances the most we can hope to achieve in the political process is to use it as a podium to reach the people to alert them of the nature of the crisis and the importance of their need to assume responsibility for themselves, if it is liberty that they truly seek.  Without this, a constitutionally protected free society is impossible.

If this is true, our individual goal in life ought to be for us to seek virtue and excellence and recognize that self-esteem and happiness only comes from using one’s natural ability, in the most productive manner possible, according to one’s own talents.

Productivity and creativity are the true source of personal satisfaction. Freedom, and not dependency, provides the environment needed to achieve these goals. Government cannot do this for us; it only gets in the way. When the government gets involved, the goal becomes a bailout or a subsidy and these cannot provide a sense of  personal achievement.

Achieving legislative power and political influence should not be our goal. Most of the change, if it is to come, will not come from the politicians, but rather from individuals, family, friends, intellectual leaders and our religious institutions.  The solution can only come from rejecting the use of coercion, compulsion, government commands, and aggressive force, to mold social and economic behavior.  Without accepting these restraints, inevitably the consensus will be to allow the government to mandate economic equality and obedience to the politicians who gain power and promote an environment that smothers the freedoms of everyone. It is then that the responsible individuals who seek excellence and self-esteem by being self-reliance and productive, become the true victims.

Conclusion

What are the greatest dangers that the American people face today and impede the goal of a free society? There are five.

1. The continuous attack on our civil liberties which threatens the rule of law and our ability to resist the onrush of tyranny.             

2. Violent anti-Americanism that has engulfed the world. Because the phenomenon of “blow-back” is not understood or denied, our foreign policy is destined to keep us involved in many wars that we have no business being in. National bankruptcy and a greater threat to our national security will result.                                                       

3. The ease in which we go to war, without a declaration by Congress, but accepting international authority from the UN or NATO even for preemptive wars, otherwise known as aggression. 

4. A financial political crisis as a consequence of excessive debt, unfunded liabilities, spending, bailouts, and gross discrepancy in wealth distribution going from the middle class to the rich. The danger of central economic planning, by the Federal Reserve must be understood.    

5. World government taking over  local and US sovereignty by getting involved in the issues of war, welfare, trade, banking,  a world currency, taxes, property ownership, and private ownership of guns.

Happily, there is an answer for these very dangerous trends.

What a wonderful world it would be if everyone accepted the simple moral premise of rejecting all acts of aggression.  The retort to such a suggestion is always:  it’s too simplistic, too idealistic, impractical, naïve, utopian, dangerous, and unrealistic to strive for such an ideal.

The answer to that is that for thousands of years the acceptance of government force, to rule over the people, at the sacrifice of liberty, was considered moral and the only available option for achieving peace and prosperity.

What could be more utopian than that myth—considering the results especially looking at the state sponsored killing, by nearly every government during the 20th Century, estimated to be in the hundreds of millions.  It’s time to reconsider this grant of authority to the state.

No good has ever come from granting monopoly power to the state to use aggression against the people to arbitrarily mold human behavior.  Such power, when left unchecked, becomes the seed of an ugly tyranny.  This method of governance has been adequately tested, and the results are in: reality dictates we try liberty.

The idealism of non-aggression and rejecting all offensive use of force should be tried.  The idealism of government sanctioned violence has been abused throughout history and is the primary source of poverty and war.  The theory of a society being based on individual freedom has been around for a long time.  It’s time to take a bold step and actually permit it by advancing this cause, rather than taking a step backwards as some would like us to do.

Today the principle of habeas corpus, established when King John signed the Magna Carta in 1215, is under attack. There’s every reason to believe that a renewed effort with the use of the internet that we can instead advance the cause of liberty by spreading an uncensored message that will serve to rein in government authority and challenge the obsession with war and welfare.

What I’m talking about is a system of government guided by the moral principles of peace and tolerance.

The Founders were convinced that a free society could not exist without a moral people.  Just writing rules won’t work if the people choose to ignore them.  Today the rule of law written in the Constitution has little meaning for most Americans, especially those who work in Washington DC.

Benjamin Franklin claimed “only a virtuous people are capable of freedom.”  John Adams concurred:  “Our Constitution was made for a moral and religious people.  It is wholly inadequate to the government of any other.”

A moral people must reject all violence in an effort to mold people’s beliefs or habits.

A society that boos or ridicules the Golden Rule is not a moral society.  All great religions endorse the Golden Rule.  The same moral standards that individuals are required to follow should apply to all government officials.  They cannot be exempt.

The ultimate solution is not in the hands of the government.

The solution falls on each and every individual, with guidance from family, friends and community.

The #1 responsibility for each of us is to change ourselves with hope that others will follow.  This is of greater importance than working on changing the government; that is secondary to promoting a virtuous society.  If we can achieve this, then the government will change.

It doesn’t mean that political action or holding office has no value. At times it does nudge policy in the right direction. But what is true is that when seeking office is done for personal aggrandizement, money or power, it becomes useless if not harmful. When political action is taken for the right reasons it’s easy to understand why compromise should be avoided. It also becomes clear why progress is best achieved by working with coalitions, which bring people together, without anyone sacrificing his principles.

Political action, to be truly beneficial, must be directed toward changing the hearts and minds of the people, recognizing that it’s the virtue and morality of the people that allow liberty to flourish.

The Constitution or more laws per se, have no value if the people’s attitudes aren’t changed.

To achieve liberty and peace, two powerful human emotions have to be overcome.  Number one is “envy” which leads to hate and class warfare.  Number two is “intolerance” which leads to bigoted and judgmental policies.  These emotions must be replaced with a much better understanding of love, compassion, tolerance and free market economics. Freedom, when understood, brings people together. When tried, freedom is popular.

The problem we have faced over the years has been that economic interventionists are swayed by envy, whereas social interventionists are swayed by intolerance of habits and lifestyles. The misunderstanding that tolerance is an endorsement of certain activities, motivates many to legislate moral standards which should only be set by individuals making their own choices. Both sides use force to deal with these misplaced emotions. Both are authoritarians. Neither endorses voluntarism.  Both views ought to be rejected.

I have come to one firm conviction after these many years of trying to figure out “the plain truth of things.”  The best chance for achieving peace and prosperity, for the maximum number of people world-wide, is to pursue the cause of LIBERTY.

If you find this to be a worthwhile message, spread it throughout the land.

To add: The message above applies to universally which means to the Filipinos too.

Article 3 the Bill of Rights of the 1987 Philippine Constitution holds that

No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws

Video: Ron Paul on the US Presidential Elections: It's a One Party System

In the following telephone interview by CNBC, Congressman Ron Paul says that he won't be endorsing Republican presidential challenger Mitt Romney. 

Mr. Paul's caustic remarks on both candidates:

Neither one of them has the vaguest idea what Austrian free-market hard-money economics is all about. But at the same time they know how to play the game and they represent a one party system… 

There is essentially no difference between one administration and another, no matter what the platform.

Ron Paul: Government Dependency Will End in Chaos

The distinguished Ron Paul on why the welfare dependency culture will end in chaos 

The media insists on characterizing statements about dependency on government handouts as controversial, but in truth such statements are absolutely correct.  It's not that nearly half of Americans are dependent on government; it's actually more than half.  If one includes not just people on food stamps and welfare, but also seniors on Medicare, Social Security and people employed by the government directly, the number is more like 165 million out of 308 million, which is 53%.

Some argue that Social Security and Medicare benefits are a right because people pay into these programs their whole lives, or that we need a government safety net in place for people who fall on hard times.  However, this all becomes a moot point when the funds people depend on become worthless due to government default or rampant inflation.

This is less an issue of dignity or dependence on government, and more about the deceitfulness of government promises.

The Fed recently announced that it plans to keep interest rates near zero and keep buying near worthless assets from banks indefinitely.  This enables Congress to spend without having to take deficits or the debt seriously and there is every indication they intend to spend with impunity until the system collapses.  There are no brakes on the runaway train.  The federal debt ceiling law does nothing to limit spending. The ceiling will have to be raised yet again perhaps before the year is out.  What is happening in Greece with austerity measures and riots in the street will happen here within a decade according to some realistic estimates if we do not find some way to fiscally restrain our government.

There is little point in a debate about being entitled to healthcare or food or shelter from fellow taxpayers if the whole system has collapsed.  And, with the way our politicians have taken over and mismanaged vast amounts of resources, collapse seems almost unavoidable.  Yet the number of Americans who have significant dependency on government is dangerously high, and I honestly fear for them.

Worse, corporate welfare is also at an all time high with no signs of diminishing.  Though it is hard to quantify, Tad Dehaven at Cato has estimated that the government spends nearly twice as much on corporate welfare than on social welfare.  Both parties are equally guilty.  More and more, the business sector is learning to rely on taxpayer largesse in one form or another.  They used to be solely concerned with providing a better product to the consumer at a better price.  Now, success on Wall Street depends entirely too much on having the best lobbyists on K Street.  If one includes the employees of "private" businesses who depend on government contracts, grants or bailouts, there are even more people dependent on government in some way.

Read the rest here

This is a lesson isn't just for Americans but for all society. 

Bottom line: The Santa Claus fund has limits.

Quote of the Day: Manipulation of Interest Rates Sow Seeds to Crisis

Because the interest rate is the price of money, manipulation of interest rates has the same effect in the market for loanable funds as price controls have in markets for goods and services. Since demand for funds has increased, but the supply is not being increased, the only way to match the shortfall is to continue to create new credit. But this process cannot continue indefinitely. At some point the capital projects funded by the new credit are completed. Houses must be sold, mines must begin to produce ore, factories must begin to operate and produce consumer goods.

But because consumption patterns have either remained unchanged or have become more present-oriented, by the time these new capital projects are finished and begin to produce, the producers find no market for their goods. Because the coordination between savings and consumption was severed through the artificial lowering of the interest rate, both savers and borrowers have been signaled into unsustainable patterns of economic activity. Resources that would have been used in productive endeavors under a regime of market-determined interest rates are instead shuttled into endeavors that only after the fact are determined to be unprofitable.  In order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into sectors in which they can be put to productive use. 

Another effect of the injections of credit into the system is that prices rise.  More money chasing the same amount of goods results in a rise in prices.  Wall Street and the banking system gain the use of the new credit before prices rise.  Main Street, however, sees the prices rise before they are able to take advantage of the newly-created credit. The purchasing power of the dollar is eroded and the standard of living of the American people drops.

We live today not in a free market economic system but in a "mixed economy", marked by an uneasy mixture of corporatism; vestiges of free market capitalism; and outright central planning in some sectors.  Each infusion of credit by the Fed distorts the structure of the economy, damages the important role that interest rates play in the market, and erodes the purchasing power of the dollar.  Fed policymakers view themselves as wise gurus managing the economy, yet every action they take results in economic distortion and devastation.

Unless Congress gets serious about reining in the Federal Reserve and putting an end to its manipulation, the economic distortions the Fed has caused will not be liquidated; they will become more entrenched, keeping true economic recovery out of our grasp and sowing the seeds for future crisis.

This is from US Congressman Ron Paul

Ron Paul on the Ben Bernanke’s QE 3.0

No one is surprised by the Fed's action today to inject even more money into the economy through additional asset purchases. The Fed's only solution for every problem is to print more money and provide more liquidity. Mr. Bernanke and Fed governors appear not to understand that our current economic malaise resulted directly because of the excessive credit the Fed already pumped into the system.

For all of its vaunted policy tools, the Fed now finds itself repeating the same basic action over and over in an attempt to prime the economy with more debt and credit. But this latest decision to provide more quantitative easing will only prolong our economic stagnation, corrupt market signals, and encourage even more misallocation and malinvestment of resources. Rather than stimulating a real recovery by focusing on a strong dollar and market interest rates, the Fed's announcement today shows a disastrous detachment from reality on the part of our central bank. Any further quantitative easing from the Fed, in whatever form, will only make our next economic crash that much more serious.

(source Lew Rockwell.com)

Inflation is a policy that cannot and will not last.

Video: Ron Paul on Foolish US Foreign Policies

Neil Cavuto to Congressman Ron Paul "You were decades ahead of this" (hat tip Bob Wenzel)

Ron Paul: US is a Constitutional Republic and Not a Democracy

Congressman Ron Paul reminds Americans that they are supposedly a constitutional Republic and not a democracy (bold emphasis mine)

Democracy is majority rule at the expense of the minority. Our system has certain democratic elements, but the founders never mentioned democracy in the Constitution, the Bill of Rights, or the Declaration of Independence. In fact, our most important protections are decidedly undemocratic. For example, the First Amendment protects free speech. It doesn't – or shouldn't – matter if that speech is abhorrent to 51% or even 99% of the people. Speech is not subject to majority approval. Under our republican form of government, the individual, the smallest of minorities, is protected from the mob.

Sadly, the constitution and its protections are respected less and less as we have quietly allowed our constitutional republic to devolve into a militarist, corporatist social democracy. Laws are broken, quietly changed and ignored when inconvenient to those in power, while others in positions to check and balance do nothing. The protections the founders put in place are more and more just an illusion.

This is why increasing importance is placed on the beliefs and views of the president. The very narrow limitations on government power are clearly laid out in Article 1 Section 8 of the Constitution. Nowhere is there any reference to being able to force Americans to buy health insurance or face a tax/penalty, for example. Yet this power has been claimed by the executive and astonishingly affirmed by Congress and the Supreme Court. Because we are a constitutional republic, the mere popularity of a policy should not matter. If it is in clear violation of the limits of government and the people still want it, a Constitutional amendment is the only appropriate way to proceed. However, rather than going through this arduous process, the Constitution was in effect, ignored and the insurance mandate was allowed anyway.

This demonstrates how there is now a great deal of unhindered flexibility in the Oval Office to impose personal views and preferences on the country, so long as 51% of the people can be convinced to vote a certain way. The other 49% on the other hand have much to be angry about and protest under this system.

We should not tolerate the fact that we have become a nation ruled by men, their whims and the mood of the day, and not laws. It cannot be emphasized enough that we are a republic, not a democracy and, as such, we should insist that the framework of the Constitution be respected and boundaries set by law are not crossed by our leaders. These legal limitations on government assure that other men do not impose their will over the individual, rather, the individual is able to govern himself. When government is restrained, liberty thrives.

Unfortunately, the “increasing importance” that will be “placed on the beliefs and views of the president” or the coming US presidential elections will be determined mostly by the following dynamics:

The jarring charts signifying the “epidemic” of entitlements are from Nicolas Eberstadt of the American Enterprise Institute at the Wall Street Journal

The devolution to “militarist, corporatist, social democracy” is why US fiscal conditions will continue to deteriorate.

Democracy or the rule of men rather than the rule of law self-reinforces on its own destruction.

Quote of the Day: Neoconservatism Represents Big Government

Neoconservatism is not the philosophy of free markets and a wise foreign policy. Instead, it represents big-government welfare at home and a program of using our military might to spread their version of American values throughout the world. Since neoconservatives dominate the way the U.S. government now operates, it behooves us all to understand their beliefs and goals.

This is from congressman Ron Paul on Neo-conservatism

Quote of the Day: Freedom is not Defined by Safety

Freedom is not defined by safety. Freedom is defined by the ability of citizens to live without government interference. Government cannot create a world without risks, nor would we really wish to live in such a fictional place. Only a totalitarian society would even claim absolute safety as a worthy ideal, because it would require total state control over its citizens’ lives. Liberty has meaning only if we still believe in it when terrible things happen and a false government security blanket beckons

This is from Ron Paul’s latest outlook Security and Self Governance

Quote of the Day: Obamacare is Against a Free Society

Today we should remember that virtually everything government does is a 'mandate.' The issue is not whether Congress can compel commerce by forcing you to buy insurance, or simply compel you to pay a tax if you don’t. The issue is that this compulsion implies the use of government force against those who refuse. The fundamental hallmark of a free society should be the rejection of force. In a free society, therefore, individuals could opt out of “Obamacare” without paying a government tribute.

Those of us in Congress who believe in individual liberty must work tirelessly to repeal this national health care law and reduce federal involvement in healthcare generally. Obamacare can only increase third party interference in the doctor-patient relationship, increase costs, and reduce the quality of care. Only free market medicine can restore the critical independence of doctors, reduce costs through real competition and price sensitivity, and eliminate enormous paperwork burdens. Americans will opt out of Obamacare with or without Congress, but we can seize the opportunity today by crafting the legal framework to allow them to do so.

That’s from Ron Paul commenting on today’s Supreme Court ruling

UN Hits on President Obama’s Drone Warfare

The UN sees Obama’s drone warfare as violating international human rights.

From Personal Liberty Digest,

A U.N. investigator wants some answers regarding President Barack Obama’s penchant for carrying out targeted drone attacks overseas that routinely result in civilian casualties.

The United States uses military drones to carry out attacks in Afghanistan, Pakistan, Iraq, Yemen and Somalia. In a 28-page report addressed to the U.N. Human Rights Council, Christof Heyns, special rapporteur on extrajudicial, summary or arbitrary executions, said that Washington must clarify the legal basis for the policy of killing suspected al-Qaida and Taliban leaders and associates rather than trying to capture them.

“The government should clarify the procedures in place to ensure that any targeted killing complies with international humanitarian law and human rights and indicate the measures or strategies applied to prevent casualties, as well as the measures in place to provide prompt, thorough, effective and independent public investigation of alleged violations,” the report says.

President Obama’s imperial role as one man judge, jury and executioner through the drone warfare has in fact been implemented in the Philippines.

In my view, the territorial disputes, which I think China has been complicit, has only opened the doors for deeper intervention by the US in local politics.

And more incidences of drone warfare or overt interventions (in the name of war on terror) will likely lead to more anti-American protests.

As Ron Paul recently warned,

The use of drones overseas may have become so convenient, operated as they are from a great distance, that far more “collateral damage” has become acceptable. Collateral damage is a polite way of saying “killing innocent civilians.”…

This dramatic increase in the use of drones and the lowered threshold for their use to kill foreigners has tremendous implications for our national security. At home, some claim the use of drones reduces risk to American service members. But this can be true only in the most shortsighted sense. Internationally the expanded use of drones is wildly unpopular and in fact creates more enemies than it eliminates.

President Obama perhaps believes that he is the world’s savior.

Libertarianism: Political Career and Risks

When society has been lobotomized or programmed into believing that government is a “given”, and that the individual is not only branded as immoral (e.g. greed) but more importantly, nonexistent (e.g. nationalism), then looking for a political career from the standpoint of liberty seems almost close to nil.

But this shouldn’t stop passionate freedom loving disciples from preaching the truth. Austrian economist Bob Wenzel writes,

And that's what libertarians need to know about running for office. It's not about compromising your principles to gain more votes, its not about hiding your true views on taxes and minimum wage laws to gain more votes, it's about running to get the hardcore libertarian message out.

It's about hoping that after you give a speech where you denounce minimum wage laws, all taxes and the local public fire department, that at least one person, maybe two, wander over to you after your speech and tell you that what you said sounded interesting. It's about losing the election, but at the same time advancing the libertarian cause.

In other words, it's okay for a libertarian to run for office, if it's the Ron Paul way. If it's about losing the election but spreading the word. If it's about writing op-eds, appearing in debates and being interviewed on radio about hardcore libertarianism.

Libertarians aren't close to getting elected in most places with just a libertarian message. But the message can be spread. Ron Paul has proved that. If this is done in enough places, enough times, the message can be spread even more, and more people will catch on.

Then some day, perhaps five years from now, perhaps ten, we may hear of people sticking completely to libertarian principle and winning here and winning there. That will be the signal that large numbers of people at that time want liberty and understand what liberty is.

Embracing the principle of freedom confronts mountains of sacrifices and risks, particularly the risk of ostracism and of losing social privileges in the face of massive tentacle of influence by governments in almost every aspect of our lives.

The great Ludwig von Mises sets a shining example of this fight of principle over convenience; Professor Mises sacrificed a glamorous teaching career.

In an encomium, one of the greatest student by Professor Mises, the preeminent dean of the Austrian school Murray Rothbard reveals of the career life of Mises,

But it remains an ineradicable blot on the record of American academia that Mises was never able to find a paid, full-time post in any American university. It is truly shameful that at a time when every third-rate Marxoid refugee was able to find a prestigious berth in academia, that one of the great minds of the twentieth century could not find an academic post. Mises's widow Margit, in her moving memoir about life with Lu, records their happiness and her gratitude that the New York University Graduate School of Business Administration, in 1945, appointed Mises as Visiting Professor teaching one course a term. Mises was delighted to be back at university teaching; but the present writer cannot be nearly as enthusiastic about a part-time post paying the pittance of $2,000 a year. Mises's course was, at first, on "Statism and the Profit Motive," and it later changed to one on "Socialism." This part-time teaching post was renewed until 1949…

Likewise, in the face of Keynesian revolution, the great Mises stuck to his convictions when the rest sold out, again from Professor Rothbard,

It must have been galling to Mises that, in contrast to his shabby treatment at the hands of American academia, favorite former students who had abandoned Misesian doctrines for Keynesianism, but whose only real contributions to economics had come as Misesians, received high and prestigious academic posts. Thus Gottfried Haberler was ensconced as full professor at Harvard, and Fritz Machlup went to John Hopkins and later to Princeton. Oskar Morgenstern, too, landed at Princeton. All of these high academic positions were, of course, paid for by the university

Well, even the soul of American revolution Thomas Paine, known for this famous passage…

Society in every state is a blessing, but government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.

…had a melancholic-tragic ending.

Author George Smith accounts for Mr. Paine’s demise,

The man who inspired the country to secede from a corrupt state had six people in attendance at his funeral, none of whom were dignitaries.

The struggle for the cause of liberty is a tall order.

But I think the information age will most likely tilt the balance from the dominant political mindset towards liberty.

Video: 10 years after, Ron Paul was Right

In a 5 minute 2002 speech at the US Congress, congressman Ron Paul made a challenge for the public to track the accuracy of his litany of predictions. (hat tip Bob Wenzel)

At the close of this speech Mr. Paul said,

"I have no timetable for these predictions, but just in case, keep them around and look at them in 5-10 years. Let's hope and pray that I'm wrong on all accounts. If so, I will be very pleased."

Unfortunately, after 10 years, most of the events which he had hoped that would NOT happen became stunningly true.

Ron Paul: Federal Reserve System is the Epitome of Crony Capitalism

Here is the gist of US congressman Ron Paul’s courageous talk before the Committee on Financial Services, Subcommittee on Domestic Monetary Policy & Technology, United States House of Representatives, May 8, 2012 (From Lew Rockwell)

Much confusion exists over what the Federal Reserve System actually is. Some people claim that is a secret cabal of elite bankers, while others claim that it is part of the federal government. In reality it is a bit of both. The Federal Reserve Board is a government agency, while the Federal Reserve Banks are privately-run government-chartered institutions, and monetary policy decisions are made by the Federal Open Market Committee, which has members from both the Board and the Reserve Banks.

The Federal Reserve System is the epitome of crony capitalism. It exemplifies the collusion between big government and big business to profit at the expense of the taxpayers. The Fed's bailout of large banks during the financial crisis propped up poorly-run corporations that should have gone under, giving them an advantage that no other business in the United States would have received. The bailouts continue today, as banks maintain $1.5 trillion worth of excess reserves at the Fed, reserves which were created through the Fed's purchase of worthless securities from banks. The trillions of dollars that the Fed has injected into the system have the goal of forcing down interest rates. But the Fed fails to realize that interest rates are a price, the price of money and credit, and that forcing interest rates down will only create an even bigger bubble and an enormous economic depression when this entire house of cards comes falling down.

The Federal Reserve is statutorily required to focus on three aims when engaged in monetary policy: full employment, stables prices, and moderate long-term interest rates. In practice, only the first two have received any attention, the so-called "dual mandate." Some reformers have called for the full employment mandate to be repealed, in order to allow the Fed to focus solely on stable prices. But these critics ignore the fact that stable prices are not a desirable goal. After all, with increasing productivity and technological innovation, the natural trend for most goods is for prices to decrease. By calling for the prices of goods to remain stable, the Fed would have to inflate the money supply in order to counteract this trend towards price declines, pumping new money into the system and creating economic distortions. This is exactly what happened during the 1920s, as the Fed's monetary pumping was masked by rising productivity. The result was stable prices, but the malinvestment caused by the Fed's loose monetary policy became evident by 1929. There is no reason to expect that focusing on stable prices today would have a dissimilar outcome.

Other reformers have called for changes to the composition of the Federal Open Market Committee, the body which sets the Fed's monetary policy objectives. On Constitutional grounds, the FOMC is undoubtedly problematic, as government appointees and the heads of the private Federal Reserve Banks work together to set monetary policy objectives that directly impact the strength of the dollar. While all of the members of the FOMC ought to be confirmed by the Senate, debates about the size of the FOMC or whether Reserve Bank Presidents should make up a majority of the members or whether they should even serve at all are largely a sideshow. While the only dissent to monetary policy decisions in recent years has come from Reserve Bank Presidents, there is no reason to think that expanding the FOMC to include more Reserve Bank Presidents would lead to any greater dissent or to any substantive changes to the conduct of monetary policy.

Another proposal for reform is for outright nationalization of the Fed or its functions. No longer would the Fed create money; that function would be taken up by the Treasury, issuing as much money as it sees fit. No longer would the Treasury issue debt to cover fiscal deficits, it would just issue new money to cover budget shortfalls. If what the Fed does now is bad, allowing the Treasury to print and issue money at will would be even worse. These types of proposals hearken back to the days of the first greenbacks, which the U.S. government began issuing in 1863. A pure fiat paper currency, unbacked by silver or gold, the greenbacks were widely reviled. Only once the greenbacks were made redeemable in gold were they accepted by the American people. The current system of Federal Reserve Notes is even worse than the greenback era in that there is no hope that they will ever be redeemable for gold or silver. The only limiting factor is that the Federal Reserve System only creates new money when purchasing assets, normally debt securities. Allowing the federal government to print money without at least a nominal check on the amount issued would inevitably lead to a Weimar-like hyperinflation.

So what then is the solution? The Fed maintains that a paper standard can be adequately managed without causing malinvestment, inflation, or other economic distortions. If the Fed were omniscient and knew the wishes, desires, and future actions of all Americans, this might be possible. But the Fed cannot possibly aggregate or act on the information necessary to engage in monetary policy. The actions of hundreds of millions of individuals, all seeking to better their position in life, acting purposefully towards that aim, cannot possibly be compiled into aggregates or calculated through mathematical equations or econometric models. Neither a single person, nor the members and staff of the FOMC, nor millions of people with millions of computers working in a new Goskomtsen will ever be able to accumulate, analyze, and act upon the information required to create a centrally planned monetary system. Centrally planned fiat paper standards such as the one currently in place in this country are doomed to failure.

This brings us to the question of the gold standard. The era of the classical gold standard was undoubtedly one of the greatest eras in human history. For a period of several decades in the late 19^th century, largely uninterrupted by war, the West made enormous advances. Economic productivity increased, art and culture flourished, and living standards rose so that even the poorest citizens lived a life their forebears could have only dreamed of.

But the problem with the gold standard is that it was run by the government, which exercised a monopoly over monetary affairs. The temptation to suspend gold redemption, so often resorted to by governments throughout history, reared its head again with the outbreak of World War I. Once the tie to gold was severed and fiscal restraint thrown to the wind, undoing the damage would have required great fiscal austerity on the part of governments. Emancipated from the shackles of the gold standard, the Western world proceeded to set up a gold-exchange standard which lasted not even a decade before the easy money policies it enabled led to the Great Depression. While returning to the gold standard would certainly be far better than maintaining the current fiat paper system, as long as the government retains the power to go off gold we may end up repeating the same mistakes that occurred from 1934 to 1971 as the government went first off the gold coin standard and finally off the gold bullion exchange standard.

The only viable solution for monetary stability is to get government out of the money business permanently. The way to bring this about is through currency competition: allowing parallel currencies to circulate without any one currency receiving any special recognition or favor from the government. Fiat paper monetary standards throughout history have always collapsed due to their inflationary nature, and our current fiat paper standard will be no different. The Federal Reserve is currently sowing the seeds of its own destruction through its loose and reckless monetary policy. The day of reckoning may still be many years in the future, but given the lack of understanding on the part of the Federal Reserve's decision makers, it is quickly coming upon us.

Incidentally and ironically archrivals Ron Paul and Fed Chair Ben Bernanke had a face to face breakfast meeting the following day.

Here’s the Wall Street Journal Blog reporting on what transpired.

Still, Wednesday’s breakfast brought together two figures who publicly agree on very little. A longtime critic of paper currency and fan of the gold standard, Mr. Paul’s fiery Fed-bashing has enthused his campaign trail supporters, who often start rallies with loud chants of “end the Fed!”

Mr. Bernanke, meanwhile, dedicated a significant chunk of his first lecture at George Washington University in March to enumerating the flaws associated with a system in which the dollar is valued at a fixed price per unit of gold.

So did Wednesday’s meeting overturn any deep-set beliefs?

“He’s for the gold standard now,” joked Mr. Paul.

End the Fed. End Central Banking. End the politicization of money.