[Congressional Record Volume 155, Number 33 (Wednesday, February 25, 2009)]
[House]
[Page H2808]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     FEDERAL RESERVE IS THE CULPRIT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Mr. Speaker, the Federal Reserve is the culprit; it has 
delivered this crisis to us. The Federal Reserve's low interest rate 
policy is a big mistake; it is not a panacea.
  Artificially low interest rates are achieved by inflating the money 
supply. Low interest rates penalize the thrifty, and those who save are 
cheated. It promotes consumption and borrowing over savings and 
investing. Manipulating interest rates is an immoral act, it is 
economically destructive. The policy of artificially low interest rates 
caused our problems and, therefore, cannot be the solution.
  The market rate of interest is crucial information for the smooth 
operation of the economy. A central bank setting interest rates is 
price fixing and is a form of central economic planning. Price fixing 
is a tool of socialists and destroys production.
  Central bankers, politicians and bureaucrats can't know what the 
proper rate should be. They lack the knowledge and are deceived by 
their aggrandizement. Manipulating the money supply and interest rates 
rejects all the principles of the free market.
  Ironically, free markets and sound money generates low rates, but 
unlike the artificially low rates orchestrated by the Fed, the 
information conveyed is beneficial to investors and savers.
  The Congress, by conceding this authority, conveys extraordinary 
economic powers to the elite few. This is a power that has been abused 
throughout history. Only the Federal Reserve can inflate the currency, 
creating new money and credit out of thin area, in secrecy, without 
oversight or supervision.
  Inflation facilitates deficits, needless wars, and excessive welfare 
spending. Debasing a currency is counterfeiting. It steals value from 
every dollar earned or saved. It robs the people and makes them poorer. 
It is the enemy of the working person.
  Inflation is the most vicious and regressive of all forms of 
taxation. It transfers wealth from the middle class to the privileged 
rich.
  The economic chaos that results from a policy of central bank 
inflation inevitably leads to political instability and violence. It is 
an ancient tool of all authoritarians.
  Inflating is never a benefit to freedom-loving people. It destroys 
prosperity and feeds the fires of war. It is responsible for recessions 
and depressions. It is deceptive, addictive, and causes delusions of 
grandeur with regards to wealth and knowledge.
  Wealth cannot be achieved by creating money by fiat. It instead 
destroys wealth and it rewards the special interests. Depending on 
monetary fraud for national prosperity or a reversal of our downward 
spiral is riskier than depending on the lottery.
  Inflation has been used to pay for all the wars and empires, and they 
all end badly. Inflationism and corporatism engenders protectionism and 
trade wars. It prompts scapegoating; blaming foreigners, illegal 
immigrants, ethnic minorities, and too often freedom itself for the 
predictable events and suffering that results. Besides, the whole 
process is unconstitutional. There is no legal authority to operate 
such a monetary system. So let's stop it. Let us restore a policy of 
prosperity, peace and liberty. The time has come. Let's end the Fed.

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