Thursday, October 8, 2009

END THE FED by Ron Paul Book Review

I recently read two of Ron Paul's books. The Revolution Manifesto and End the Fed which recently came out last month. Both books are great reads and I highly recommend both of them. I will be reviewing End the Fed which Ron Paul lays out the case to end the Federal Reserve monetary system which inflates the currency and steals the wealth of the common man. Ron Paul is a United States House of Representative's member from the state of Texas. Ron Paul is also a physician who practiced obstetrics and delivered over 4,000 babies in his career. In End the Fed Ron Paul lays out why you should care, the history of money in the US, and his influences along with the case for a currency backed by gold.

First off, you should care about the money printing at the FED for many reasons. One, the more money created makes the dollars you save worth less through the silent killer of inflation. To some this is counter intuitive because it's not the goods actually increasing in value, it's your money's purchasing power being devalued relative to those goods. Two, the FED prints money to bailout the rich banksters, automakers, and other failures and expects you to pay for in through inflation and future taxation. Three, the FED also fights wars that you'll pay for the same way. To sum it it the FED is stealing from you.

In the United States we have had three central banks. The two previous central banks have failed. The first and second banks of the United States failed for the same reason the Federal Reserve will fail. The banks just print money and create money that isn't worth the paper it's printed on. The so called money is backed by the full faith and credit of the United Sates government. That is the governments ability to tax it's citizens or just print money.

Ron Paul was greatly influenced in his economic thinking by the Austrian School of Economics. The Austrian School of Economics believes that you shouldn't intervene in the market through monetary or fiscal stimulus. The Austrian School differs from the Keynesian approach that believes the government should prime the pump and stimulate the economy during recessions and depressions to ease the pain. Many of the economic leaders in government espouse the Keynesian approach. The Austrian school believes stimulating just makes the problems worse and makes the future pain ever greater because the stimulative government spending doesn't reflect real demand. The Austrian School believes there are unintended consequences with government intervention like inflation. A good example of this today is the Cash for Clunkers program which helped stimulate the economy but essentially just pulled forward demand that would have occurred sometime in the future. The unintended consequence would be the harsher downturn in the future because of the demand that would not have otherwise occurred because of the government program. Also, the citizens of the United Sates are paying for this program in taxes. You and I essentially helped get somebody else into a new car.
Ron Paul makes the constitutional, philosophical, libertarian, and economic case for abolishing the FED. The power that the FED currently has is unconstitutional because this power should be under the congress and not a private baking cartel of the federal reserve. The philosophical case is made because the FED creates the bubble and does more harm than good. We don't have to have the boom and bust cycles that the federal reserve creates. The economic cycles created by increasing and decreasing the money supply could be eliminated by abolishing the FED. The libertarian case for abolishing the FED is that more and more power is going to government and not to the people. Like Benjamin Franklin stated "if you sacrifice some of your freedoms for security, you deserve nor will get freedom or security. By fighting foriegn wars and having occupation in over 130 countries to increase our global empire we aren't making diplomatic allies in all cases and there's a "blowback" effect from these actions. Countries in the middle east don't want to be told by the United States what policies they should employ. Nobody likes a bully. September 11th is an example of such "blowback". Over a million Iraqi civilians were killed in the war on terror. I wouldn't be happy with a country that caused this damage.
Ron Paul put a great deal of work into End The Fed and it shows. This book is a must read for all americans.

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