“Question: If you could pick one cause that has gotten us here, what'd you say it is?
Ron Paul: Easy money. The Federal Reserve artificially lowering interest rates, deceiving the people, the investors, the savers, into believing that there's a lot of savings out there, and that we should invest more, build more houses, more cars. It's the malinvestment, which is every bit as dangerous, from the inflation of the money supply, as is the high prices that usually come.”

Fox Business Network, March 24, 2009 http://www.youtube.com/watch?v=hkJ1sa9mxCU 2000s, 2006-2009

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Ron Paul148

American politician and physician 1935

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“Question: …you believe the Fed shouldn't exist… make the case.
Ron Paul: First reason is, it's not authorized in the Constitution, it's an illegal institution. The second reason, it's an immoral institution, because we have delivered to a secretive body the privilege of creating money out of thin air; if you or I did it, we'd be called counterfeiters, so why have we legalized counterfeiting? But the economic reasons are overwhelming: the Federal Reserve is the creature that destroys value. This station talks about free market capitalism, and you can't have free market capitalism if you have a secret bank creating money and credit out of thin air. They become the central planners, they decide what interest rates should be, what the supply of money should be…
Question: How does the gold standard solves that?
Ron Paul: It maintains a stable currency and a stable value. If the Fed concentrated more on stable money rather than stable prices… They push up new money in stocks and in commodities and in houses, and then they have to come in to rescue the situation. They create the bubbles, then they come in and rescue it, and they do nothing more than try to do price fixing. Capitalism depends, and capital comes from savings, but there's no savings in this country, so this is all artificial. It creates the misdirection and the malinvestment and all the excessive debt, and it always has to have a correction. Since the Fed has been in existence, the dollar has lost about 97% of its value. You're supposed to encourage savings, but if something loses its value, why save dollars? There's no encouragement whatsoever. […] Gold is 6000 years old, and it still maintains its purchasing power. Oil prices really are very stable in terms of Gold. […] Both conservatives and liberals want to enhance big government, and this is a seductive way to tax the middle class.”

Ron Paul (1935) American politician and physician

CNBC debate with Faiz Shakir, March 20, 2008 http://www.youtube.com/watch?v=k94VWPjUQSM 2000s, 2006-2009

“The time has come to speak out. Britain is now locked in a vicious spiralling interest rates…The net result of completing the vicious circle is that prices have increased, the rate of inflation has gone up, the money supply has increased, unemployment has gone up, the rate of bankruptcies has increased, the industrial base has been further eroded, the Government's borrowing requirement has increased and as a result there is more pressure to raise interest rates yet again, to be followed inevitably by the same vicious circle. It is this that must be broken.”

Edward Heath (1916–2005) Prime Minister of the United Kingdom (1970–1974)

Speech to the Federation of Conservative Students in Manchester (6 October 1981), quoted in The Times (7 October 1981), p. 6.
Post-Prime Ministerial

“Ron Paul: What's happening is, there's transfer of wealth from the poor and the middle class to the wealthy. This comes about because of the monetary system that we have. When you inflate a currency or destroy a currency, the middle class gets wiped out. So the people who get to use the money first which is created by the Federal Reserve system benefit. So the money gravitates to the banks and to Wall Street. That's why you have more billionaires than ever before. Today, this country is in the middle of a recession for a lot of people… As long as we live beyond our means we are destined to live beneath our means. And we have lived beyond our means because we are financing a foreign policy that is so extravagant and beyond what we can control, as well as the spending here at home. And we're depending on the creation of money out of thin air, which is nothing more than debasement of the currency. It's counterfeit… So, if you want a healthy economy, you have to study monetary theory and figure out why it is that we're suffering. And everybody doesn't suffer equally, or this wouldn't be so bad. It's always the poor people -- those who are on retired incomes -- that suffer the most. But the politicians and those who get to use the money first, like the military industrial complex, they make a lot of money and they benefit from it.
John McCain: Everybody is paying taxes and wealth creates wealth. And the fact is that I would commend to your reading, Ron, "Wealth of Nations," because that's what this is all about. A vibrant economy creates wealth. People pay taxes. Revenues are at an all time high.”

Ron Paul (1935) American politician and physician

GOP debate, Dearborn, Michigan, October 9, 2007 http://www.freep.com/apps/pbcs.dll/article?AID=/20071009/NEWS02/71009073 2000s, 2006-2009

“From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial 'boom' followed by a recession or depression when the Fed-created bubble bursts.”

Ron Paul (1935) American politician and physician

Before the US House of Representatives, introducing the The Federal Reserve Board Abolition Act, H.R. 833. http://www.lewrockwell.com/paul/paul504.html (9 February 2009) 2000s, 2006-2009

“Let there be no doubt that our present rate of inflation is the main cause of our economic difficulties. There never has been a more mistaken piece of economic analysis than the view that we should accept inflation to avoid unemployment. Inflation today, so far from being an alternative to unemployment, is its main cause. If our rate of cost increase is allowed to continue close to twice that of the average for the developed world it will increasingly price us out of world markets. Employers…will have to restrict their activities and still more their labour force in response to mounting and uncontainable wage and salary bills.”

Roy Jenkins (1920–2003) British politician, historian and writer

Hugh Anderson Memorial lecture at the Cambridge Union (28 February 1975), quoted in The Times (1 March 1975), p. 2
1970s

“When credit is expanding, the rising price level and high profits bring about a high rate of interest. When the expansion has reached, the limit permitted by the stock of gold, the rate of interest is put still higher in order to bring about a fall in the price level. When the fall in prices takes effect, a low rate of interest becomes appropriate, and when credit contraction has proceeded so far that a redundant supply of gold has accumulated, the rate of interest is depressed still lower in order to bring about a renewed rise in the price level. Thus a high rate of interest corresponds first with rising, then with falling, prices, and so synchronizes with high prices. A low rate of interest corresponds first with falling, and then with rising, prices, and so synchronizes with low prices.”

Ralph George Hawtrey (1879–1975) British economist

Ralph George Hawtrey, quoted in Irving Fisher, The Theory of Interest (1930), Chapter 19. The Relation of Interest to Money and Prices

“The sentence, 'stopping the printing presses,' is a figurative expression, because it is being done now by creating credit by the Federal Reserve System. But this is government action — all inflation is ultimately the result of activities which government determines and can control. And all inflations have been stopped in the past by the government stopping creating money, or preventing the central bank from creating more money. May I add just one thing? See, all inflations have been stopped by people who created or believed in a very naive form of the Quantity Theory, and acted on that. It may be wrong, but it is the only adequate theory effective to stop an inflation.”

Friedrich Hayek (1899–1992) Austrian and British economist and Nobel Prize for Economics laureate

1975 interview https://mises.org/library/hayek-meets-press-1975 on "Meet the Press." 1960s–1970s

“Money, first and foremost, is a medium of communication, conveying the information we call 'price'. Government control of the money supply is censorship, a violation of the First Amendment. Inflation is a lie.”

L. Neil Smith (1946) American writer

"Some New Tactical Reflections".

“Money is different from all other commodities: other things being equal, more shoes, or more discoveries of oil or copper benefit society, since they help alleviate natural scarcity. But once a commodity is established as a money on the market, no more money at all is needed. Since the only use of money is for exchange and reckoning, more dollars or pounds or marks in circulation cannot confer a social benefit: they will simply dilute the exchange value of every existing dollar or pound or mark. So it is a great boon that gold or silver are scarce and are costly to increase in supply.
But if government manages to establish paper tickets or bank credit as money, as equivalent to gold grams or ounces, then the government, as dominant money-supplier, becomes free to create money costlessly and at will. As a result, this 'inflation' of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy.”

Murray N. Rothbard (1926–1995) American economist of the Austrian School, libertarian political theorist, and historian

"Taking Money Back" http://mises.org/story/2882, in The Freeman (September - October 1995) http://www.fee.org/publications/the-freeman/.

“Instead of paying interest to those who have more money than they need and in order to keep money in circulation, people should pay a small fee if they keep the money out of circulation.”

Margrit Kennedy (1939–2013) German architect

Source: Interest and Inflation Free Money (1995), Chapter Two, Creating an Interest and Inflation Free Money, p. 37 (See also: Wörgl Austria.)

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