Ron Paul: "Central Bankers Are Intellectually Bankrupt"

Tyler Durden's picture

Likely glowing from his glorious victory (h/t Trish Regan) over Krugman in Bloomberg's recent Paul vs Paul debate, Rep. Ron Paul destroys the central-planning arrogance of Bernanke and his ilk in an Op-Ed released by the FT today.

Control of the world’s economy has been placed in the hands of a banking cartel, which holds great danger for all of us. True prosperity requires sound money, increased productivity, and increased savings and investment. The world is awash in US dollars, and a currency crisis involving the world’s reserve currency would be an unprecedented catastrophe. No amount of monetary expansion can solve our current financial problems, but it can make those problems much worse.

Our Central Bankers Are Intellectually Bankrupt

by Ron Paul

The financial crisis has fully exposed the intellectual bankruptcy of the world’s central bankers.


Why? Central bankers neglect the fact that interest rates are prices. Manipulating those prices through credit expansion or contraction has real and deleterious effects on the economy. Yet while socialism and centralised economic planning have largely been rejected by free-market economists, the myth persists that central banks are a necessary component of market economies.


These economists understand that having wages or commodity prices established by government fiat would cause shortages, misallocations of capital and hardship. Yet they accept at face value the notion that central banks must determine not only the supply of one particular commodity – money – but also the cost of that commodity via the setting of interest rates.


Printing unlimited amounts of money does not lead to unlimited prosperity. This is readily apparent from observing the Fed’s monetary policy over the past two decades. It has pumped trillions of dollars into the economy, providing money to banks with the hope that this new money will spur lending and, in turn, consumption. These interventions are intended to raise stock prices, lower borrowing costs for companies and individuals, and maintain high housing prices.


But like their predecessors in the 1930s, today’s Fed governors behave as if the height of the credit bubble is the status quo to which we need to return. This confuses money with wealth, and reflects the idea that prosperity stems from high asset prices and large amounts of money and credit.


The push for easy money is not new. Central banking was supposed to have ended the types of periodic financial crises the US experienced throughout the 19th century. Yet US financial panics have only got worse since the centralisation of monetary policy via the creation of the Fed in 1913. The Depression in the 1930s; the haemorrhaging of gold reserves during the 1960s; the stagflation of the 1970s; the dotcom bubble of the early 2000s; and the current recession all have their root in the Fed’s loose monetary policy.


Each of these crises began with an inflationary monetary policy that led to bubbles, and the solution to the busts that inevitably followed has always been to reflate the bubble.


This only sows the seeds for the next crisis. Lowering interest rates in an attempt to forestall a recession in the aftermath of the dotcom bubble required massive credit creation that led to the housing bubble, the collapse of which we still have not recovered from today. Failing to learn the lesson of the bursting of both the dotcom bubble and the housing bubble, the Fed has pumped trillions of dollars into the economy and has promised to leave interest rates at zero through to at least 2014. This will only ensure that the next crisis will be even more destructive than the current one.


Not content with its failed attempts to prop up the US economy, the Fed has set its sights on bailing out Europe, too. Through currency swaps, it has committed to offering potentially hundreds of billions of US dollars to the European Central Bank and we cannot rule out the possibility of direct intervention.


The Fed’s response to the crisis suggests that it believes the current crisis is a problem of liquidity. In fact it is a problem of poorly allocated investments caused by improper pricing of money and credit, pricing which is distorted by the Fed’s inflationary actions.


The Fed has made banks and corporations dependent on cheap money. Instead of looking for opportunities to invest in real products that will serve the needs of consumers, Wall Street awaits the minutes of each Federal Open Market Committee meeting with bated breath, hoping that QE3 and QE4 are just around the corner. It is no wonder that long-term investment and business planning are stagnant.


We live in a world that seems to have abandoned the concept of savings and investment as the source of real wealth and economic growth. Financial markets clamour for more cheap money creation on the part of central banks. Hopes of further quantitative easing from the Fed, the Bank of England, or the Bank of Japan – or further longer-term refinancing operations from the ECB – buoy markets, while decisions not to intervene can cause stocks to plummet. Policy makers focus on spurring consumption, while ignoring production. The so-called capitalists have forgotten that capital cannot be created by government fiat.


Control of the world’s economy has been placed in the hands of a banking cartel, which holds great danger for all of us. True prosperity requires sound money, increased productivity, and increased savings and investment. The world is awash in US dollars, and a currency crisis involving the world’s reserve currency would be an unprecedented catastrophe. No amount of monetary expansion can solve our current financial problems, but it can make those problems much worse.

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taniquetil's picture

It's so astounding how Ron Paul started buying up bullion in the 70s and people still talk about him like some sort of crazy survivalist.

A L I E N's picture

Ron Paul is without a doubt one of the greatest political figures of all time.  His name will be written in the history ibooks of the future.

Cyrano de Bivouac's picture

Ron Paul main problem is tha MSM has turned off his microphone.


Deo vindice's picture

I agree to a degree.

But I think his bigger problem is that millions of Americans have chosen not to think for themselves.

Paul Atreides's picture

CNBC cited copyright violdations to disable his youtube channel on May 1st. How fucked up is it that a presidential candidate has his account banned. TPTB are getting scared....

RafterManFMJ's picture

Said it before, and I'll say it again; I will write his name in for Pres if I have to do it in my own FIN blood!

WhiteNight123129's picture

Ron Paul and his movement is where "America" has a chance to come back and bury the "U.S". China does not have it, Europe does not have, if his movement wins one day, I swear I will try everything to re-immigrate back in "America".


WhiteNight123129's picture

Keep fighting people, it is an epic battle that can change the face of the world for the better.

Real Money Wins's picture

Those who have the ability to effect change have the responsibility to take action. Or in the words of Sir Winston Churchill...

"If you will not fight for the right when you can easily win without bloodshed; if you will not fight when your victory will be sure and not too costly; you may come to the moment when you will have to fight with all the odds against you and only a small chance of survival. There may even be a worse case: you may have to fight when there is no hope of victory, because it is better to perish than to live as slaves." -


If you are reading this YOU are the RESISTANCE!!!

resurger's picture

Fuck! Thanks for the link

Michael's picture

Fuck the sheeple.

Now the greatest depression will be 3 times worse for them than had we been able to get Dr Ron Paul in the Oval Office 4 years ago, to salvage what had been left of our country back then.

Only complete and total economic collapse of the USA can fix what is now a complete and total abortion that is the USA.

A Nanny Moose's picture

Maybe we will find productive use for all those worthless iPhails and start creating our own content. This is already occuring at Ron Paul campaign events, and at caucuses around the country. The fucking gloves need to come off.

Tsunami Wave's picture

I saw that yesterday.. jerkoffs.  It's because of CNBC and some mysterious person named "Nina Grabiel."

jekyll island's picture

+1.  If you believe the polls, only about 5% of Americans agree with RPaul.  That is why I think the currency is going to have to collapse and the economy fail before we can move forward.  Just too many politicians and elite bankers who are invested in maintaining the status quo.  Oh, and that includes the 50% who do not pay federal income taxes too. 

pacu44's picture

Revolution wont be televised....


But at the state conventions, Paulites own and not just for this nomination - Maine, Iowa, Missouri, Louisisana, Nevada, Utah, Taxachussettes, Washington, Washington DC, Virgian Islands, Colorado, Virginia and the list continues to grow

brewing's picture

what a fucking joke the gop is. two party system is a an embarrassment to this country...

RafterManFMJ's picture

Little lesson for all you gutless, dickless GOP supporters. Here in PA, we have piece of trash wiki calls 'Arlen Specter;' Not that long ago, a real conservative by the name of Pat Toomey challenged the RINO...and came CLOSE to dethroning him.  IF the GOP had supported Pat, Arlen would have been destroyed. They. Did. Not.

No, they fully supported the old-boy RINO Arlen...and then in 2009 ol' Arlen finally realized it was time, and he shifted to the Democratic party.

Here's a bit o quiz for you readers:

Do you still believe in the left/right presentation? If so, you are an imbecile.

Votin' Rethuglican to be savin' us from...what3v3r? You are a fuckin' moron.

There is one party in you vote is meaningless.

As Carlin said, "It's a big club, and you ain't in it."

Island_Dweller's picture

want to know what happens when a senator endorses Mitt Romney at the Alaska Convention?  (23 second video)

StychoKiller's picture

Hmm, that's gotta feel like standing in the room nekked, with NO package to speak of... :>D

Gohn Galt's picture

Won't be televised?  Great!  The medias ratings have been sinking and we are all better off with a purer system to shared facts, news and opinions.  Look at this board.  Not everyone is right 100% of the time and I have some great discuission off of this board.  Sometimes I change my mind, or just rethink the scenario.  We would all be better off without the TV as it is.

nmewn's picture

It won't be'll be web based ;-)

azzhatter's picture

My favorite comment about RP. "Ron Paul believes in the land of the free and the home of the brave"  "Most americans are not brave enough to be truly free"

tsx500's picture

...while all other politicians believe in the "Land of the FEE and the home of the SLAVE " !!

mikesswimn's picture

Assuming that the MSM gave him a microphone in the first place is a big stretch.

Poetic injustice's picture

Somehow I picture wall paintings instead of ibooks with current government.

margaris's picture

you mean as in einsteins famous quote "... but the fourth world war will be fought with sticks and stones"...?

I am sure even a nuclear war cant destroy civilization and technology. Yes billions will die, entire cities will vanish.... but humanity will persist.

Maybe I am just a crazy naive guy... but hope never dies, thats why I believe in freedom and ron paul

Moe Howard's picture

Kind of hard to put him in the history books of the past.

Hippocratic Oaf's picture

TPTB are scared of Pauls truth. 

We missed our shot.

AnAnonymous's picture

A little more, and they will be scared to death. Litterally.

Never in human history, an elite has been so scared.

And that is the result of US citizenism.

Fit elite is fit because they sweat so much out of fear.

Temporalist's picture

"Never in human history, an elite has been so scared."

I think during the French Revolition and Russian Revolution they were pretty scared; and then pretty dead.

Harbanger's picture

The French Revolution led to Napoleon and the Russian revolution led to the rise of Communism.

Temporalist's picture

So what's your point?  I didn't say anything about the outcomes just how fearful the elites were that were "relieved" of their lofty positions.

A Nanny Moose's picture

Those episodes merely resulted in a new elite.

Ned Zeppelin's picture

Meet The New Boss. Same as The Old Boss. 

Treason Season's picture

Russin Revolution?

You're either a troll or badly informed. It was a bankster financed coup d'etat.

AnAnonymous's picture

Sure about that?

They might have been scared but right now, due to US citizenism, they are scared. Scared like never.

Just look at them, just look at how much they are disturbed in their life style.

Read the hospital records to see the number of heart attacks the elite has, how manyof them die of severed stress, profound depression...

It is a slaughter.

akak's picture

It is a slaughter.


Not even remotely as much a slaughter as was the tens of millions killed by Mao in his "Great Leap Forward into Starvation", or the millions killed in the political purges of the so-called "Cultural Revolution", or even the thousands killed in the Tiananmen Massacre of 1989.

More denialistic Great Wall of Hypocrisy Chinese Citizenism: Make me laugh!

AnAnonymous's picture

The way the elite is scared in a US citizen environment has little on that chinese event.

US citizen elite are scared. Scared.

TheFourthStooge-ing's picture


The way the elite is scared in a US citizen environment has little on that chinese event.

Ah, appeal to ignorance.

The impossibility to self indict in Chinese citizenism leads to the weirdest result.


AnAnonymous's picture

Self indiction in a fantasy world?

Fantasy acts? Why not?

It may be possible that the requirement of self indiction avoidance is such in US citizenism that one should not confess fantasy acts. Could be worth real.

akak's picture

It may be possible that the requirement of self indiction avoidance is such in US citizenism that one should not confess fantasy acts. Could be worth real.


It may be possible that minor components of sense can be gleaned from this semantic wreckage strewn upon the page.  Possible, but likeliness if low.

Much like likeliness of stopping Chinese Citizenism animal-men from dropping trousers and squatting on Chinese roadsides.

Roadside nightsoil deposits being muchlike resemblance to spewings herein.

TheFourthStooge-ing's picture

Chinese citizenism is not restricted by grammatical languagistic semantication.

Chinese citizenism is also not limited by the elite restraints of word meaningism.

Now you having been taken notification is!


Poor Grogman's picture



You are trying to create an ideological wedge to drive between the Chinese people and the Western population.

You are very confused because you have not yet realized that the real disagreement is always between one GOVERNMENT and another GOVERNMENT.

"We the people" mostly just want to be left alone to get on with our lives as we please, and yes that includes Chinese people too.

The situation only deteriorates to the extent that Government is involved.

The Chinese citizen tried to shake off their parasitic overlords in 1989, and the world stood still for a second......

Again  and  again a small group asserts control over the masses only to be shaken off yet again.

This is the way the WORLD works, be it Chinese or American it makes no difference.

Stand back at a distance and you  will see things the way they really are....


TheFourthStooge-ing's picture

Ah, if people of ancient times had known that, today's will be different...

People whose wealth is thrown at the endless pit of Chinese citizenism citizens' insolvency, not so much. It is a big failure for them as they are sacrificed on the altar of Chinese citizenism citizens' comfort.

Other than that, well, it is always successes with Chinese citizenism citizens or self criticized successes.

I wonder who is right now, the guro of Chinese citizenism citizen economics or his opponents?


AnAnonymous's picture

Who is the fantasy character playing the guru of the fantasy of chinese citizen economics?

Dont forget a mention when selling your stuff to hollywood.

TheFourthStooge-ing's picture

AnAnonymous said:

Who is the fantasy character playing the guru of the fantasy of chinese citizen economics?

Mere Chinese citizenism trivia.

Chinese citizenism history well estabishing that Chairman Mow has of Chinese citizenism economics goru Zhou Enlai.

Or has Chinese citizenism bookburning erased that history?