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Ron Paul: The Federal Reserve’s Success Is a Failure for You and Me

I’ve been critical of the Federal Reserve and its failings for a long, long time. Even so, the Fed’s failure to properly manage price stability has rarely been more clear than it is today – and I want to explain exactly why that’s part of a deliberate policy to destroy our savings…

Why the Federal Reserves Success Is a Failure for You and Me
The district governors of the Federal Reserve system, January 1 1914. Public domain image via Library of Congress Harris and Ewing collection

By Ron Paul, for Birch Gold Group

I’ve long been critical of the Federal Reserve – in fact, I wrote a book called End the Fed way back in 2009. My position on the Fed’s failings have been clear for a long, long time.

Even so, the Fed’s failure to properly manage price stability has rarely been more clear than it is today.

Many mainstream economists (Paul Krugman and Ben Bernanke spring to mind) would tell you the Fed is an indispensable institution, and our economy simply couldn’t function without it.

Baloney. Did the entire U.S. fail to develop an economy for over a century after our nation’s birth?

Was the U.S. economy born along with the Federal Reserve in 1913?

Obviously not.

Despite a staff of over 20,000 employees including hundreds of Ph.D.s, and an annual payroll of over $2.578 billion, the Fed can't seem to get anything right. At least, not as I understand “right.”

Most people don’t understand that the Federal Reserve’s best interests are not the same as our best interests. The negative economic impacts we see, the skyrocketing prices on necessities like food and fuel, are collateral damage in the Fed’s mission to “stimulate the economy.”

Let me explain.

The goal of the 2% inflation target is deliberate wealth destruction

The father of modern macroeconomics, John Maynard Keynes, advocated money-printing for a number of reasons. His influential 1936 book The General Theory of Employment, Interest, and Money is the foundation of all modern central banking functions.

Keynes advocates deliberate money-printing for a number of reasons. One particularly chilling purpose of inflation, according to Keynes, is "the euthanasia of the rentier."

“Euthanasia” means painless killing. A “rentier” is defined as “a person who lives on income from property or securities” – in other words, someone who’s saved and invested so they no longer need to work for a living.

Keynes believed that savers were parasites! And he created an extermination plan… Once money-printing and easy-money policies lower interest rates so much that these savers can no longer survive on their incomes, everyone once able to live off their savings will either be forced back to work, or starve.

Take a moment to think about this – especially if you’re trying to survive on a fixed income. Does it feel like you’ve been deliberately targeted for destruction? If you’re like a lot of people I’ve spoken with over the last few years, the answer is yes.

Now you know why.

The Federal Reserve’s job is to create inflation

I’m going to quote from my book, End the Fed:

…the Fed itself claims that part of its job is to keep inflation in check. This is something like the tobacco industry claiming that it is trying to stop smoking or the automobile industry claiming that it is trying to control road congestion. The Fed is in the business of generating inflation. It might attempt to stop the effects of inflation, namely, rising prices. But under the old definition of inflation – an artificial increase in the supply of money and credit – the entire reason for the Fed’s existence is to generate more, not less, of it. (p. 14)

Once you understand that the Fed’s job is to create inflation, you can understand that, almost from the very beginning, they’ve done an outstanding job. The purchasing power of the U.S. dollar has declined 96.7% since the Federal Reserve first opened its doors.

How? By printing money. That’s all it takes! (By the way, if you want to understand the difference between inflation and rising prices, I explained that here.)

Thanks to Keynes, the Fed (and the world’s other central banks) believe that printing money creates economic growth – by robbing savers of their wealth.  Furthermore, it’s a stealthy process. In his 1919 book The Economic Consequences of the Peace, Keynes described inflation in rather shocking terms:

The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

But this “destruction” only works if savers store their wealth in currency…

Opting out of the Fed’s wealth destruction mission

When I tell you Keynes hated the gold standard, I doubt you’ll be surprised. After all, he’s the one who coined the phrase “barbarous relic” to describe gold – a description central bankers loved back then and love even more today.

Why do they hate gold? Lots of reasons!

Like autocrats everywhere, they despise what they cannot control.

Gold highlights the failure of Keynesian economics by generally rising in price every time the printing presses ramp up.

Most of all, when savers choose to preserve their wealth with physical precious metals, their savings cannot be confiscated by inflation. The central bank cannot punish gold owners with low interest rates or money-printing. That wealth exists outside the currency-based economy.

I believe owning physical precious metals is a matter of saving, not investing. “Investing” in my mind means buying an asset (whether it’s a cow or a 60-unit residential highrise) and accepting risk of loss in the hopes of getting a positive (in excess of inflation) return on investment. “Saving,” to me, means preserving money’s value for the future at the lowest possible risk.

Now that you understand the Fed’s true purpose is to confiscate your savings “in a manner which not one man in a million” can perceive, you’re probably feeling highly motivated to diversify your savings with physical precious metals. Birch Gold helps Americans do this every day – and they can help you, too. Learn more here.

Ron Paul is a medical doctor, a retired Captain of the U.S. Air Force, an author who’s published 21 books and former twelve-term U.S. Congressman representing the state of Texas. He’s emerged as one of the leading voices challenging government’s addiction to deficit spending and the Federal Reserve’s wealth-destructive monetary policies.  He works with Birch Gold Group to educate Americans about the threats to their financial futures, and how to protect themselves and their families.

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