Ron Paul
Ron Paul

Ron Paul: We Must Expose The Federal Reserve And End The Welfare-Warfare State – OpEd


Federal spending once again dominated the debate in Washington last week, as House Republicans and Senate Democrats began work on their ten-year budget plans. Contrary to claims, neither party’s budget reduces spending. While the Republican plan increases spending a little less than the Democrat plan, it would still spend $5 trillion in 2023, an almost two trillion dollar increase over this year’s budget.

Of course, these projections of future budgets are meaningless, as a current Congress cannot bind a future one. Therefore, the projected spending for next year is the only part of the budget with any significance. So is there a great gulf between the two parties’ budgets for next year? No. For fiscal year 2014, the Democrat budget proposes spending $3.7 trillion, while the “radical” Republican budget spends $3.5 trillion!

While the two parties bicker over minor differences in spending, the stock market, which many in Washington predicted would crash unless the parties reached a “grand bargain” on taxes and spending, seems unaffected by the various manufactured budget crises. Unfortunately, the market’s indifference to Washington spending games is based on the fallacy that the deficit does not matter as long as the Federal Reserve is willing to monetize the federal debt.

Federal Reserve Chairman Ben Bernanke is certainly doing all he can to facilitate deficit spending. The Federal Reserve’s desire to monetize the federal debt is a main reason for the aggressive program of buying federal debt via the continuous quantitative easing. Under Chairman Bernanke, the Federal Reserve is pumping as much as $85 billion a month into the American economy. This out-of-control monetary policy is largely conducted behind closed doors, yet it has much more effect on the do day-to-day lives of Americans than Congress’s phony budget debates. The Federal Reserve’s polices erode the value of the dollar, causing prices to rise, which in turn diminishes people’s standard of living. This inflation tax may be the most hideous tax of all because it is both hidden and regressive.

Of course, the Federal Reserve can only keep this up for so long before doing serious damage to the economy. The Austrian school of economics teaches that the Federal Reserve is responsible for the boom-and-bust cycles that plague modern economies. The Federal Reserve’s aggressive money pumping runs the risk of creating hyperinflation — especially once banks stop hoarding their reserves and began flooding the economy with Fed-created fiat currency.

Even though the economic crisis of 2008 proved the Austrians correct, there are still too many in D.C. and on Wall Street who believe the Keynesian fallacy that government and the Federal Reserve can spend-and-inflate our way to prosperity. But, as is the case with the narcotics addict, the longer the Federal Reserve enables Congress’s habit of deficit spending, the more painful will be the withdrawal when Congress is finally forced to kick the habit.

The role of the Federal Reserve in facilitating deficit spending by the US—and even foreign governments—means it is a mistake to segregate monetary and fiscal policy. Our nation will never get its fiscal house in order until we reform monetary policy. The first step is letting the American people know the real facts about the Federal Reserve’s actions.

The debate over the federal budget and even the battle over the Federal Reserve are ultimately arguments over symptoms rather than the cause. The root of the fiscal crisis is the belief that the federal government is qualified to manage the economy, provide for the people’s needs, and spread democracy throughout the world through either by foreign aid or by force of arms. Neither party in Washington questions the welfare-warfare state.

Until Congress begins debating questions such as whether or not we really need thousands of military facilities around the world, whether or not we should shut down the Education Department and return control to local communities and parents, and whether we should allow young people to completely op-out of the entitlement programs, the so-called debates in Washington, D.C. will continue to amount to nothing but sound and fury, signifying nothing.

Ronald Ernest "Ron" Paul (born August 20, 1935) is an American physician, author, and politician who served as the U.S. Representative for Texas's 14th congressional district, which includes Galveston. He was a three-time candidate for President of the United States, as a Libertarian in 1988 and as a Republican in 2008 and 2012.

Source: Ron Paul Institute for Peace and Prosperity.

3 thoughts on “Ron Paul: We Must Expose The Federal Reserve And End The Welfare-Warfare State – OpEd”

  1. The members of Congress know why they manage the ways and means of humans using a currency or token coin. They empowered themselves above everyone else…and even ruined the Church’s empowerment to carry out their jurisprudence…and practice the principals of life, rather than the manufacturing and sale of weapons,etc.

  2. It appears, that in its retreat, from the 20th Century Super Power status, to living in the long shadows cast by the new economic reality and the Chinese fact of the 21st Century , even the Pan Eurasian Alliance, and in their transition to Asian bases, there remains a few stubborn knots of socialist corporations looking for even more hand-outs from the American peons.We also see a mounting number of peons seeking basic sustenance, in survival mode, and realizing that the incantations of the Great Corporate American Propaganda Whores for happiness were in fact lies to sell products that eventually led the nation to ruination.Remember the “cars with wings”, cars with chrome, cars with huge V-8 engines, cars that rusted faster than the payments could be made?”throw away society? McMansions with impossible mortgages, some foreclosed now, even destroyed by the Banks? Slowly but surely the slick ‘tie and suit coat liars’ with huge paychecks larger retirement “Golden parachutes” are fading, as the shirt sleeves pick up the tab for yet another “Hollywood” sequence of American history – manipulated once again, but perhaps for the last time, by the smart asses that would sell out even their country, their countrymen, for safe passage to personal riches. Will a more practical, less gullible America emerge?

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