Books by Paul, Ron

Paul, Ron. End the Fed. New York: Grand Central, 2000. ISBN 978-0-446-54919-6.

Imagine a company whose performance, measured over almost a century by the primary metric given in its charter, looked like this:

Now, would you be likely, were your own personal prosperity and that of all of those around you on the line, to entrust your financial future to their wisdom and demonstrated track record? Well, if you live in the United States, or your finances are engaged in any way in that economy (whether as an investor, creditor, or trade partner), you are, because this is the chart of the purchasing power of the United States Dollar since it began to be managed by the Federal Reserve System in 1913. Helluva record, don't you think?

Now, if you know anything about basic economics (which puts you several rungs up the ladder from most present-day politicians and members of the chattering classes), you'll recall that inflation is not defined as rising prices but rather an increase in the supply of money. It's just as if you were at an auction and you gave all of the bidders 10% more money: the selling price of the item would be 10% greater, not because it had appreciated in value but simply because the bidders had more to spend on acquiring it. And what is, fundamentally, the function of the Federal Reserve System? Well, that would be to implement an “elastic currency”, decoupled from real-world measures of value, with the goal of smoothing out the business cycle. Looking at this shorn of all the bafflegab, the mission statement is to create paper money out of thin air in order to fund government programs which the legislature lacks the spine to fund from taxation or debt, and to permit banks to profit by extending credit well beyond the limits of prudence, knowing they're backed up by the “lender of last resort” when things go South. The Federal Reserve System is nothing other than an engine of inflation (money creation), and it's hardly a surprise that the dollars it issues have lost more than 95% of their value in the years since its foundation.

Acute observers of the economic scene have been warning about the risks of such a system for decades—it came onto my personal radar well before there was a human bootprint on the Moon. But somehow, despite dollar crises, oil shocks, gold and silver bubble markets, saving and loan collapse, dot.bomb, housing bubble, and all the rest, the wise money guys somehow kept all of the balls in the air—until they didn't. We are now in the early days of an extended period in which almost a century of bogus prosperity founded on paper (not to mention, new and improved pure zap electronic) money and debt which cannot ever be repaid will have to be unwound. This will be painful in the extreme, and the profligate borrowers who have been riding high whilst running up their credit cards will end up marked down, not only in the economic realm but in geopolitical power.

Nobody imagines today that it would be possible, as Alan Greenspan envisioned in the days he was a member of Ayn Rand's inner circle, to abolish the paper money machine and return to honest money (or, even better, as Hayek recommended, competing moneys, freely interchangeable in an open market). But then, nobody imagines that the present system could collapse, which it is in the process of doing. The US$ will continue its slide toward zero, perhaps with an inflection point in the second derivative as the consequences of “bailouts” and “stimuli” kick in. The Euro will first see risk premiums increase across sovereign debt issued by Eurozone nations, and then the weaker members drop out to avoid the collapse of their own economies. No currency union without political union has ever survived in the long term, and the Euro is no exception.

Will we finally come to our senses and abandon this statist paper in favour of the mellow glow of gold? This is devoutly to be wished, but I fear unlikely in my lifetime or even in those of the koi in my pond. As long as politicians can fiddle with the money in order to loot savers and investors to fund their patronage schemes and line their own pockets they will: it's been going on since Babylon, and it will probably go to the stars as we expand our dominion throughout the universe. One doesn't want to hope for total economic and societal collapse, but that appears to be the best bet for a return to honest and moral money. If that's your wish, I suppose you can be heartened that the present administration in the United States appears bent upon that outcome. Our other option is opting out with technology. We have the ability today to electronically implement Hayek's multiple currency system online. This has already been done by ventures such as e-gold, but The Man has, to date, effectively stomped upon them. It will probably take a prickly sovereign state player to make this work. Hello, Dubai!

Let me get back to this book. It is superb: read it and encourage all of your similarly-inclined friends to do the same. If they're coming in cold to these concepts, it may be a bit of a shock (“You mean, the government doesn't create money?”), but there's a bibliography at the end with three levels of reading lists to bring people up to speed. Long-term supporters of hard money will find this mostly a reinforcement of their views, but for those experiencing for the first time the consequences of rapidly depreciating dollars, this will be an eye-opening revelation of the ultimate cause, and the malignant institution which must be abolished to put an end to this most pernicious tax upon the most prudent of citizens.

October 2009 

Paul, Ron. The Revolution. New York: Grand Central, 2008. ISBN 978-0-446-53751-3.

Ron Paul's campaign for the 2008 Republican presidential nomination has probably done more to expose voters in the United States to the message of limited, constitutional governance, individual liberty, non-interventionist foreign policy, and sound money than any political initiative in decades. Although largely ignored by the collectivist legacy media, the stunning fund-raising success of the campaign, even if not translated into corresponding success at the polls, is evidence that this essentially libertarian message (indeed, Dr. Paul ran for president in 1988 as the standard bearer of the Libertarian Party) resonates with a substantial part of the American electorate, even among the “millennial generation”, which conventional wisdom believes thoroughly indoctrinated with collectivist dogma and poised to vote away the last vestiges of individual freedom in the United States. In the concluding chapter, the candidate observes:

The fact is, liberty is not given a fair chance in our society, neither in the media, nor in politics, nor (especially) in education. I have spoken to many young people during my career, some of whom had never heard my ideas before. But as soon as I explained the philosophy of liberty and told them a little American history in light of that philosophy, their eyes lit up. Here was something they'd never heard before, but something that was compelling and moving, and which appealed to their sense of idealism. Liberty had simply never been presented to them as a choice. (p. 158)

This slender (173 page) book presents that choice as persuasively and elegantly as anything I have read. Further, the case for liberty is anchored in the tradition of American history and the classic conservatism which characterised the Republican party for the first half of the 20th century. The author repeatedly demonstrates just how recent much of the explosive growth in government has been, and observes that people seemed to get along just fine, and the economy prospered, without the crushing burden of intrusive regulation and taxation. One of the most striking examples is the discussion of abolishing the personal income tax. “Impossible”, as other politicians would immediately shout? Well, the personal income tax accounts for about 40% of federal revenue, so eliminating it would require reducing the federal budget by the same 40%. How far back would you have to go in history to discover an epoch where the federal budget was 40% below that of 2007? Why, you'd have to go all the way back to 1997! (p. 80)

The big government politicians who dominate both major political parties in the United States dismiss the common-sense policies advocated by Ron Paul in this book by saying “you can't turn back the clock”. But as Chesterton observed, why not? You can turn back a clock, and you can replace disastrous policies which are bankrupting a society and destroying personal liberty with time-tested policies which have delivered prosperity and freedom for centuries wherever adopted. Paul argues that the debt-funded imperial nanny state is doomed in any case by simple economic considerations. The only question is whether it is deliberately and systematically dismantled by the kinds of incremental steps he advocates here, or eventually collapses Soviet-style due to bankruptcy and/or hyperinflation. Should the U.S., as many expect, lurch dramatically in the collectivist direction in the coming years, it will only accelerate the inevitable debacle.

Anybody who wishes to discover alternatives to the present course and that limited constitutional government is not a relic of the past but the only viable alternative for a free people to live in peace and prosperity will find this book an excellent introduction to the libertarian/constitutionalist perspective. A five page reading list cites both classics of libertarian thought and analyses of historical and contemporary events from a libertarian viewpoint.

May 2008