Posted by Anthony Gregory on 02/04/09 4:42 PM Last updated 02/05/09 08:51 AM   [Newer: Obama and Bush's Faith-Based Socialism] [Older: Protectionist Stimulus and Government-Managed "Free Trade" ]

Along with the items in Dr. Ron Paul's legislative agenda that Matt has blogged about below, the Congressman is also championing the heroic Federal Reserve Board Abolition Act. This wonderful measure would be the greatest reform to address our economic troubles, as it would finally end the plague of the business cycle, the regressive inflation tax that hurts the poor and middle class, the destruction of the U.S. dollar, and the ability of the federal government to wage unconstitutional wars on foreign countries and our liberties at home without raising taxes and meeting significant resistance. It would end the crazed program of bailouts, stilumuls packages and increased war funding currently whizzing through Washington, as well as the new despotic powers over financial institutions given to the Fed last year. The following is Dr. Paul's statement to the House of Representatives:

Madame Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.

From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation.

Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of special interests and their own appetite for big government.

Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.

In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true freemarket economy.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.

Posted 02/04/09 4:46 PM KathyLatshaw BeaReady Smithville, OH

And HERE IT IS! H.R. 833 http://www.govtrack.us/congress/bill.xpd?bill=h111-833

Posted 02/04/09 5:41 PM Anthony Gregory Berkeley, CA

Thanks! I added the link.

Posted 02/04/09 6:21 PM BruceKoerber Cedar Rapids, IA

February 4, 2009 America Has A Serious Illness! When a doctor identifies the tumor and determines that it is malignant it is time to advise the patient. Seldom does the patient jump with joy, and much of the time the patient is reluctant to make the lifestyle alterations. This is the case here! Now the time has come for surgery. The doctor is highly qualified but he cannot perform the surgery alone! If there are no willing persons among his peers (in Congress) then those who care about the patient (our Constitutional Republic) need to volunteer to help. Cut out the cancerous Federal Reserve System and all of its malignant cells (Ex. Bernanke). And then nurture the patient back to health with the remedy of sound money and limited government!

Posted 02/04/09 6:36 PM vshagoyan glendale , CA

You Go Dr Paul! Im going to write my congressman a letter telling him to support this! Thanks again for everything you are doing. We Paulites cant even express our gratitude with words.

Posted 02/04/09 6:49 PM AuthenticAuthor Canutillo, TX

Me too vshagoyan! What an excellent argument by the good Doctor. He mentions the Constitution and explains why it limits government in the way of monetary policy. I'm going to personally call my representative and senator to support his bill.

Posted 02/04/09 6:59 PM Knighted Hudson, NH

Perfectly worded Dr Paul! Thank you so much.

Posted 02/04/09 7:15 PM Timothy Gandee Perry, OH

It is wonderful to see this legislation reintroduced into the House. In fact, the timing could not have been better as the remnant is starting to make their voices heard in a larger portion of the media, economic, academic, and governmental levels. This past Monday, I had a meeting with the Deputy Chief of Staff for my Congressman here in Ohio. We have a substantial constituency in this district, so I assumed that the People were constantly bending the Congressman’s ear for this point and that. I envisioned a hoard of angry people in line at his office’s door to talk frankly and to attempt to take all of his time available to push for their cause. Quite the contrary was true. This place was as calm as an empty waiting room. The Deputy Chief of Staff said to me, “Maybe two people a year take time to even try to talk to our Congressman other than angry letters and phone calls.” This was a shock as this Congressman was just appointed to a very powerful committee in Washington and there I was one of the two individuals looking to talk. For 30 minutes we discussed the purpose of my visit. One of the main areas of focus in our conversation was this particular legislation. The other portion of the conversation was related to a first amendment petition for a redress of grievances relating to the Federal Income Tax. I asked directly if my Congressman would be co-sponsoring this bill and the answer was typical political speak of yes and no. You really couldn’t make heads or tails of the answer, but at least I was there and talking about an important issue to me. I will be in touch with his office again since this bill has been put to the floor. What is my Congressman is going to do?

Posted 02/04/09 7:34 PM Linda APO AP, Japan

Aw, man, and my "End the Fed, HR2755" bumper sticker just arrived a couple of weeks ago.

Posted 02/04/09 8:03 PM Mike of mv Mission Viejo, CA

I sent the following letter to my Congressman, who I was thrilled to find out is part of the House Committee on Financial Services, to whom the bill has been referred: Dear Congressman Miller, This letter is to ask you, as a member of the House Committee on Financial Services, to support House Bill HR 833, the Federal Reserve Abolition Act. I believe it is time for Congress (and especially Republicans) to stand up and say NO to the funding of wasteful spending by the Fed, which allows the printing of paper money out of thin air. The Federal Reserve has not acted in the best interest of us taxpayers, but rather has manipulated interest rates for the benefit of a few. The Fed goes unchecked in its activities, and is therefore UNCONSTITUTIONAL. The Constitution gives YOU, the Congress, power over our monetary system and does not allow you to delegate that authority. The Fed doesn't even get audited! Please consider joining the courageous effort to bring our money back into solvency by eliminating the Federal Reserve and going back to the Gold Standard. I would be proud to support you in any way I can to do this. Thank you for your consideration in this matter.

Posted 02/04/09 8:16 PM Jefferson Davis, CA

I wrote to TWO California Congress people (I know, I know...but its only a little white lie) End the Fed!!!!!

Posted 02/04/09 8:20 PM SilverSeraph Goose Creek, SC

We need to make a lot of noise about this one. This could be the single most needed reform right now. I would practically be satisfied if this is the only Law passed this year. We need to petition not just our representatives, but also members of the media as well. Ones we believe will back this and make the public aware of it. It doesn't matter if we don't agree with everything coming out of Fox New etc. If enough of us request coverage of it and get enough bad press for the Fed, we might be able to create enough of a public outcry.

Posted 02/04/09 10:08 PM Chase Albany, NY

Yeah, let's keep the spotlight on this one. Thanks for posting AG.

Posted 02/04/09 10:38 PM Joel Cole Shelby Township, MI

Get your letters written, your phones ready and your fax machines warmed up...It's time to rock!

Posted 02/05/09 12:09 AM droveto Torrington, CT

If we abolished the Federal Reserve, what would happen to the debt? I'm just curious, I really have no idea what would happen at that point.

Posted 02/05/09 05:08 AM redshirt Philadelphia, PA

Wasn't there a link to a site that allowed you to easily find and write your congress rep? Anyone have that?

Posted 02/05/09 06:14 AM Timothy Gandee Perry, OH

DownSizeDC has a nice campaign to easily write your representatives - http://www.downsizedc.org/etp/campaigns/108 I would also HIGHLY recommend schedulinga meeting with your US Rep to talk to them about this. Letters and calls can easily be disregarded, but a visit can go a long way. Take the initiative to do something more. Also, do not foget www.endthefed.us (petition drive) and the upcoming April 25 End the Federal Reserve protests at EVERY Federal Reserve Bank in America.

Posted 02/05/09 06:35 AM Bill Greene Braselton, GA

redshirt, it's: https://writerep.house.gov/

Posted 02/05/09 07:03 AM StatusQuoJoe Phoenix, AZ

droveto, if we abolish the Federal Reserve then we should also repudiate the debt owed to the central banking cartel. Our debt in terms of treasury bills held by investors would need to be paid off incrementally perhaps beginning with using FRNs.

Posted 02/05/09 07:58 AM imaaron Brooklyn, NY

Awesome! Keep fighting Dr. Paul!

Posted 02/05/09 09:19 AM EndtheFed22 Roseville, CA

Go Ron Paul! I will contact as many congress members as time permits, and explain to them why this needs to be passed. PS It's nice to see someone with balls in congress!

Posted 02/05/09 09:33 AM alan.lockett San Marcos, TX

StatusQuoJoe, If we abolish the Fed, then we would bring on our heads a trade war and capital flight that would be economically devastating. We might even see a coup against the Congress. I am not saying we shouldn't do it, but there are powerful vested interests that want to see the Fed continue. We should fight to get rid of the Fed, but we need to be ready for a bigger fight if we succeed. Success won't happen this year, but it would be a major victory if we could get, say 100+ representatives to vote for the bill. Also, if we repudiate the debt, you have to keep in mind that some T-bills are owned by elderly Americans, although 80-90% of new T-bills are bought by foreigners and foreign institutions. As to the claim that we pay the Fed interest for loans - I'm not sure that this is true of the federal debt, although it is somewhat true that we pay interest to the Fed through the banks that borrow money from them.

Posted 02/05/09 09:50 AM alan.lockett San Marcos, TX

Ok, it does look like the Fed is now starting to buy up T-bills as part of the process of "quantitative easing" ... so future debt will certainly be owed to the Fed. I expect private and foreign borrowing of T-bills will decline considerably over the next year, and it looks like the Fed will step in as the "buyer of last resort".

Posted 02/05/09 10:12 AM alan.lockett San Marcos, TX

Ok, it does look like the Fed is now starting to buy up T-bills as part of the process of "quantitative easing" ... so future debt will certainly be owed to the Fed. I expect private and foreign borrowing of T-bills will decline considerably over the next year, and it looks like the Fed will step in as the "buyer of last resort".

Posted 02/05/09 1:07 PM ticsani Boca Raton, FL

This is wonderful. I think Dr. Paul is correct to introduce the Federal Reserve Board Abolition Act. Fat chance this will see the light of day. Vested interests in seeing this Act put down ASAP only understand the language of confrontation. In order to meet this challenge a nation wide sit-down strike would get their attention.

Posted 02/05/09 3:56 PM StatusQuoJoe Phoenix, AZ

alan.lockett, how about we abolish the Fed and then re-value gold to roughly match enough of the debt to repudiate that portion owed to the central banks and shareholders, and the balance (T-Bills) pay them off in the re-valued gold. Say gold at $20,000/ounce?

Posted 02/05/09 9:11 PM JohnDevilman Los Angeles, CA

This needs to be made into a viral video thing with some epic music as Dr. Paul reads this and we can show clips of people protesting "end the fed", etc. and digg dug all around to get people hip to what's being introduced. Where's the video specialists on this board?

Posted 02/06/09 07:29 AM StatusQuoJoe Phoenix, AZ

One more thought on the gold re-valuation idea, I don't think I made myself clear. If the Treasury were to re-value gold to say $20,000 per ounce we would doing the share holders in the Federal Reserve a great favor since they have a lot of gold in reserve and right now they have it valued at a little less than $50/ounce. By re-valuing gold to $20k/oz our treasury would be granting the shareholders in the Fed a tremendous gift, so repudiation of their debt could be offset by the revaluation of gold. Then, with the gold reserves that the treasury has they would be able to service the debt held by holders of U.S. T-Bills. Maybe my logic or understanding of the issue is way off here, and I would appreciate clarification is someone has the time to set my thinking straight.

Posted 02/06/09 08:19 AM AuthenticAuthor Canutillo, TX

StatusQuoJoe: What is the market price for gold per ounce anyway? I'm not too sure if $20,000 will be low enough to sell it. I figure, "Hey, if they under-price the gold, I can get some and make a killing when inflation hits." But if you're just talking about revaluing the gold so that their books look good...uh...I think that will backfire. There's an article in Mises.org that explains how popular accounting trends to "revalue" items to reflect "objective" market expectations have lead to enormous exaggerations in financial reports, only to lead to enormous mal-investments later on because of a feed-back loop. I personally would rather see the Fed price the gold versus "revalue" it for this reason. The market determines the value of commodities, not commodity holders themselves.

Posted 02/06/09 10:26 AM StatusQuoJoe Phoenix, AZ

AuthenticAuthor thanks for taking the time to help me figure this out. I read this article a while back that was on 321Gold: http://www.321gold.com/editorials/thomson_s/thomson_s_011409.html The author, Stewart Thomson, made some pretty good points I thought but seemed to suggest collusion between the Fed (Bernanke) and the Treasury on the revaluation issue. I was just suggesting that if we (the Treasury) repudiated the bankster's debt we could do them a favor by "adjusting" their books on golds value ;)

Posted 02/06/09 12:01 PM pensotti Reno, NV

So what do we have 100,000 +/- C4Lers. Everyone of us needs to email, fax, mail, call and talk to our reps in support of HR 833. Though I know that not everyone reads C4L daily. Is there a way we can email out an action item to the membership. Education and knowledge is great, but action is where the rubber meets the road.

Posted 02/06/09 12:23 PM VictimOfFeds San Clemente, CA

reshirt, there is also congress.org which includes Senators and Reps

Posted 02/06/09 12:29 PM AuthenticAuthor Canutillo, TX

Well, StatusQuoJoe, I just read that article. Thanks for providing it. Yes, the author did suggest collusion between the Fed and the Treasury, a suggestion that I find disturbing. Now, I'm just a Criminal Justice major, so take what I say with a grain of salt please. Even more disturbing is his point #39: "The key to restarting the economy is control of the gold market." This is absolutely antithetical to the free-market ideal, and it will definitely backfire as I will explain later. Point #28 got me chuckling: "The stories you may have heard about govt agent men smashing into homes and safe deposit boxes are nonsense." I believe he was referring to the confiscation of gold way back in the 1930s, and he may be right about some exaggerations...although he contradicts himself when he mentions how citizens were "ordered" to sell their gold. But you don't have to go that far to find that indeed, the government has remained in the business of confiscating gold, and under the guise of "anti-counterfeit" operations. Good example: Liberty Dollar. Confiscation is just a little footnote compared to government taking control of gold prices. And unless I'm mistaken, the Fed has been selling gold by the barrel full for the past year or so in order to keep gold prices low, as to give the false impression that the dollar is valuable in itself. Confiscation of gold would only make the dollar look worse, in my opinion...unless the Fed is that stupid to try it. His point #24: "Bubbles are created by greed, not fear." Wrong. Bubbles are mal-investments that pile onto each other over time and eventually collapse when they fail to pay on time. You don't have to be greedy to make a mal-investment. Stewart Thomson's is a very smart guy, but his argument seems to rest on Keynesian principles. He argues that the gold revaluation is necessary to prevent "hoarding", even though such hoarding was brought about by the collapse of confidence in the dollar due to the Fed. He also repeatedly suggests that less cash being traded is bad for the economy, even though there all sorts of possibilities for private currencies to compete...should the government would just let us flex that right. Hey, I'd accept gold any day for my services. Besides, what is hoarding anyway? That the buying of particular commodities prevents such commodities from going into circulation, that it is an end in itself? It is true that gold is not used everywhere, but people don't usually buy it because they feel like getting more storage space; they plan to use it. Gold "revaluation" in this sense is really just a price-cap on gold, which will result in a shortage of it once hyperinflation hits, only to panic the rest of the market into seeking other more available yet more expensive assets such as silver. It's like adding gasoline to a fire. The one thing that the dollar lacks right now is restraint in its supply, among a slew of other things. But that's not what the Fed is looking for. So, Stewart's article was just...incomplete if not misleading. He's very right though, about taking advantage of the government's decisions. However, he speaks only as an investor looking out for #1. I'd like to see what Peter Shiff has to say on the matter. Thank you very much for putting up with my rant StatusQuoJoe. Okay, back to what you said (finally). I think I see what you're getting at. So in other words, make their books reflect how much gold they can truly afford? I think if that were to happen, most people would realize just how duped they were into accepting dollars all this time. The Fed probably wouldn't last very long. Hyperinflation would happen sooner, but it would not be nearly as bad as if everyone kept cheering for more printed money. And THAT would be a good thing. ;) That's just a guess. I could be wrong.

Posted 02/06/09 12:44 PM VictimOfFeds San Clemente, CA

What a shock, congress.org is not working. That's the site I use to write my congress people. The government technology not working, how unusual.

Posted 02/19/09 11:11 AM Stauffer Baldwin, WI

Small point: The boom-bust cycle existed before the Federal Reserve because fractional reserve banking existed for quite a while before the Federal Reserve (but it did expand fractional reserve banking). Therefore we must do more than just ending the fed.