Gilbert K. Chesterton said that “The golden age only comes to men when they have forgotten gold.” The statement suggests two things (1) Men have a tendency to leave gold to try paper experiments, and (2) Gold, for thousands of years, has always made its return. Has gold been forgotten in the year of our Lord 2016? You bet it has! On this edition of Myth-Busters, Ron Paul dissects the immoral paper experiment that we live under today. Is it Constitutional? When you deposit money into a bank, is it really there? Here’s another good question: Is it really “yours”? Don’t miss this important show!
Ron Paul: Hello everybody and thank you for tuning in to the Liberty Report. Today is the day we do the program called Myth Busters and the co-host is Chris Rossini and he is also the editor of the ronpaullibertyreport.com. Chris, good to have you with us today.
Chris Rossini: Great to be back Dr. Paul. Thank you.
Ron Paul: Very good. Our program is getting more attention all the time and today we are going to deal with a subject, which is as far as I am concerned a vital subject, so let’s go ahead and find out if there is any myths involved with our monetary system.
Chris Rossini: Yes, there definitely are. Yes, pretty soon Dr. Paul, we are going to be seeing yet another President be inaugurated in this country, he is going to put his hand on the Bible and his other hand up in the air and uphold the US Constitution. Now, when I read my Constitution, assuming that the President has the same copy that I have. I see an Article 1, Section 10, that no state shall make any thing, but gold and silver coin, a tender in payments of debts. Now, the drafters of the US Constitution realized that Americans may want to change the law someday, so there is an amendment process that was created and I have these questions for you Dr. Paul.
Number one, was this article 1, section 10, ever amended and is our current monetary system unconstitutional?
Ron Paul: The myth dealing with this is the myth that most Americans believe, is the system of money we have today is constitutional, but it isn’t. It is unconstitutional and we’ve been operating that way for a long time, because it has been abused from the very beginning, but the real abuse came in 1913 with the establishment of the Federal Reserve, because Federal Reserve notes became legal tender and it has been a deterioration of that whole system. So, it is definitely unconstitutional, as a matter of fact some states and individuals insist on using gold and silver as legal tender. If we owe the government a dollar, we give them silver dollar or pay in terms of dollars. We are considered doing something illegal and unconstitutional.
The thing that confuses a lot of people is legal and constitutional. Congress writes laws and there is regulations and we establish bureaucracies that get involved and they call that legal, so most people says legal tender, now the government says the Federal Reserve notes are legal tender for all payments, probably again private.
But, the problem is it’s not constitutional. Constitutionality though in this day and age doesn’t mean a whole lot, so not only will there be an oath-taking soon by a new President and the oath will be a little bit complex when it comes to the money issue, there will be a lot of other things, I mean probably 80% of what the government does, what the Congress does, the Congressmen take their oath of office and the Supreme Court is supposed to help us out, but so far they haven’t done a very good job. The courts have been especially bad on monetary issues, they rule in favor of easy money and paper money and rejecting legal tender laws and rejecting gold clause laws, whether it was during the Civil War period or under Roosevelt. They literally went in the opposite direction.
So, the system has really failed. it has failed in many ways, but in particular the monetary system and that has done so much harm to us all, because money is a very important issue. I think that what is interesting is when we had the Constitution, money was understood to be a weight and measure, it wasn’t just a coin. Biblically this is the case, they never talked about a coin, they talked about honest weights and measure and that is what is happening. This is counterfeit, it’s illegal, it’s very damaging, it has all bad economic effects and it produces so many side effects, so indeed the myth is that too many Americans accept the notion that the system of money that we use today, the fiat system, the system run by in a very secretive manner, by the Federal Reserve is legal. Technically, I said it could be construed as legal, but it is absolutely unconstitutional and immoral.
Chris Rossini:Next, Dr. Paul, let’s talk about what happens when we take our paychecks or any money that we get over to the bank. What is going on over there? Now, we tend to think that I am going to deposit my money in the bank and they can hold it for me and I can get it whenever I want. We don’t think of it as I am going to go to the bank and loan them my money and they are going to owe me that money. So, please cover that part and also when we do deposit our money, they don’t necessarily take it and wrap a rubber band around it and say this is Ron Paul’s money, don’t touch it, we are storing it for him just in case he comes back. So, please talk about that and what happens if everybody, if a big financial crisis or something happens and people all run to the bank. What happens then?
Ron Paul: Obviously the people have been deceived into believing their money is there and for many years they have a logical reason to believe that, because if they go and write a check and take their money out, it will come out, but it’s not their money, it is somebody else’s money. So, it’s a con game, it’s a Ponzi scheme. So, if you put money in the bank, if we were working in a free market, it would be put in the bank and it would be designated to the individual. I put a $100 in the bank and the bank says I have $100 and if I agree to let the bank use it for a year, then the bank can take that $100 of mine and loan it to somebody, but that would be very restrictive compared to what they have today, because they want this whole idea, fractional reserves and they want to blow it out immediately.
So, today if I put $100 in the bank, the bank 10 minutes later can loan out $90, so there is a $190 instantaneously, but then that is pyramided and then that $90 deposit and someone lends that out. But, it’s actually even worse than that, because this is working on the assumption if the banks are required to have a 10% reserve, then they can only loan 90% of it, but the whole thing is they loan the whole thing out, but they have to cover themselves once a week and have to report to the Federal Reserve to promise the people that their money is still there, even though it’s only 10% of their money and there has been no agreement that the Federal Reserve or the banks can loan this out. So, they say that it is there, but it is really not there.
Of course this is very dishonest, very damaging, very unconstitutional and of course the myth here is that your money is actually there. It is easier to think about this, because most people have heard the saying about social security, some people I guess still believe that if you put away $100,000 over a lifetime in social security, it is designated yours, which is absolutely false, because the money that they take from us on a monthly basis is put into social security, but that is barely paying those individuals who are on the receiving end and getting their money back, so it is a Ponzi scheme and the Ponzi schemes run out when you don’t have enough people putting money in and that is essentially what is happening. There is fewer people working now to take care of the people in retirement and that can get much worse, because of economic conditions, less employment, less population, a lot of things that will cut it back, but that is the real problem.
So, the myth that your money is there applies to social security funds and also to those funds in a bank. But, the fraud and the deceit will continue as long as the world and the people all trust the fact that I can get the money and even though the money loses its value, it will be there. But, the whole thing is, is a bank run occurs and that is what happened in ’08 and ’09 there was a bank run, because there were bankruptcies and they had to fudge the books and print more money and accommodate that. But, if that is allowed to run, it is pyramided now, the money is pyramided in the system, but in the correction, which has to correct these mistakes, if that is allowed to run, you have the deflation, which is trying to correct all the mistakes of the inflation, but that is not permitted.
But, the myth here is that it’s whether our deposits in our bank or in our social security account, there is really no wealth there, it is all dependent on more inflation and more taxation and taking from another victim.
Chris Rossini: Yes. We already covered that this is an unconstitutional system that we have, it is a system, so the people that created this system did so by getting around the Constitution and also because they saw benefits to themselves. Obviously, if there was no benefit to themselves, why do it at all? With sound money and gold and commodity money, there is no way to tilt the tables in your directions, so under this Federal Reserve System they are tilting the tables, so please talk about why they do this, who benefits, how they benefit and please cover that Dr. Paul.
Ron Paul: The real myth here is that most people have come to believe that because of our economic system and the political promises, is that it is beneficial number one to the poor people, because how else could government spend money and send out checks on welfare and so it serves the interests of the poor. So, this is the motivation, but it a falsehood, because if you look at how the Federal Reserve is established you might get a better hint on how it happened.
It was done in total secrecy, it was done in Jekyll island and it wasn’t done by any Ralph Naders of the world trying to represent the poor consumers and the middle class and it was the bankers that did this and the special interests and they had their political alliances, a few senators that went along with this, they made their plans and they snuck it through and it has done quite well for those people who it was designed for and that is the very wealthy, the banks, the special interests, the big corporations, the people who get to use the money first and the military industrial complex and the politicians who are on the inside of this, so there is a tremendous benefit.
But, the real myth is why do the people go along with it if this is so clear that it hurts the people, hurts the economy, causes a business cycle, causes the unemployment, causes the inflation and the people suffering, look at how the middle class is suffering now and nobody says it’s the Federal Reserve’s fault. No, they don’t do this, because they believe this myth that the Federal Reserve got set up and they would really protect the people and it does exactly the opposite, because the middle class becomes the victims and as long as they can convey trust in the scheme, the scheme of counterfeiting and printing money that serves the special interests, this will continue, but what happens is the number of people suffering and paying the bills and the middles class, that gets much worse.
The banks get their money for free. If you are taught to be frugal and take care of yourself and put the money in the bank and save for a rainy day or save for your retirement, you lose. You lose because you don’t make any interest at all ad even when I had asked a couple of the federal Reserve Board Chairmen they said you are right, that is true, but that is the type of thing we have to put up with, because for the greater good, but the greater good is for the interests of the big banks and corporations and the industrialists who get to use the money first, where it has more value, then when the money circulates in the economy, the value of the currency goes up, which means prices go up, but the government says there is no inflation, so we don’t have any cost of living increase.
Yes, then if that is the case, why is everybody broke? Why is everybody out of money if there is no inflation? Part of it is because they don’t have a good job anymore, because the system breeds this and it’s a destruction of the middle class. So, the special interests do get served, but the people get conned into believing that this is a wonderful thing, because the welfare system is what really helps the poor, helps the middle class, otherwise we couldn’t pay for the food stamps.
It works for a while, but eventually the currency is destroyed, the wealth is destroyed, productivity goes down and there has to be a correction and usually it’s chaos and a calamity and of course that is what I believe is approaching rather rapidly.
Chris Rossini: Yes. Finally, let’s finish up with the smoke and mirrors that was created to pacify the public into trusting and that is called the FDIC, Federal Deposit Insurance Corporation and that little sign at the bank, how powerful it is, it tells you that you are insured, don’t worry about it, put your money here, we’ve got you covered. That is what people do, they put their money there and their neighbors put their money there, they are not stupid, so I will put my money there too, the little sign says, but can that sign ever actually be accurate Dr. Paul? If there is ever a serious financial crisis, can the FDIC really save you?
Ron Paul: If you look at what the FDIC has in their account, it’s miniscule compared to what is in the accounts of people, because if there is this liquidation of debt and there is a reversal of all this pyramiding of debt, no there is no money there whatsoever, but that doesn’t mean there won’t be a very, very strong effort to pretend that they can get by this, because they in many ways did that, even though many people suffered in ’08 and ’09, because they kept control of the run on the banks, because the big banks were bailed out and their debts were covered. So, no, the myth is that the FDIC is going to help us prevent the disaster, but no, it’s going to make it much worse, because it can hold the system together for longer, make the bubble much bigger and a good term to use with the FDIC and almost all government insurance is a moral hazard, it causes people to believe one thing and they do more of it, thinking that the government’s going to take care of it, they will give us our money and they will take care of us, but they cannot maintain true value and true wealth.
So, it is a dangerous notion, but insurance in government is a fallacy. They can’t insure, whether it is in the area where I live or something I was challenged with when I was in Congress, is I don’t believe in flood insurance. Flood insurance had a moral hazard, it caused people to build in flooded areas and then their houses get flooded and then the government had to bail them out, so the people give up their right to own property. But, people wouldn’t build in these bad areas if there wasn’t this moral hazard of the government saying if there is a flood we will take care of you, so they go along with that.
That is what the FDIC does, it creates a moral hazard for people to believe the FDIC can take care of us and they absolutely cannot. We have to realize that insurance is a measurement of risk, only markets can do better, whether it’s flood insurance or money system. And people should be reassured, I want my account guaranteed. In the free market it would be guaranteed, because it would be free market insurance. There is free market insurance on houses and different things like that. Of course the government gets involved very much in it.
But, no, there is free market insurance, it measures risk and they would be monitoring the banks and give you an update on your bank, not the government who works in collusion with the big banks and gets them off the hook. So, the FDIC will not protect us, that is a myth, so we ought to start thinking about sound money.
Chris, this sort of finishes us up for today, but I wanted to make a suggestion that for people who want to follow up with this, they might follow up, of course I’ve had a book out and it’s been pretty popular, it’s called End the Fed. We talk about auditing the Fed, but the real thing to do is end the Fed, but you also have a book Chris, Set Money Free. Both books are available on the Internet and I hope they will take a look at that.
Chris, I want to thank you for being with us today.
Chris Rossini: Thank you again Dr. Paul.