Ron Paul: The Paper Money Standard is Bucking History

Sunday, February 01, 2009


There is no other power greater than the power over money: The power to create and contract the money supply, the power to control the purchasing power of your money. Throughout history this has proven to be the most sought after, monopolistic power of man. And it has become more sophisticated over the decades and over the centuries, more sophisticated now, and more international in scope than ever before. So I see the issue of power and control over money as something that we cannot ignore, that we must address.

I believe that closely associated with this is the issue of morality as well. By what moral right do they have to create purchasing power out of thin air? Whether it is done by the creation of credit or Federal Reserve notes or whether it’s the creation of SDRs and is international in scope – by what right do they do this? Is it any more moral to dilute the value of the purchasing power of the money that you hold in your wallet than it is for the farmer to dilute the milk supply with water?

I would say there is an issue of morality here just as strong as the issue of power. I happen to believe also because it [the creation of fiat money from thin air] is a moral issue more than an economic issue, it is for this reason that the people have lost trust in their government, trust in the banks, trust in business, trust in themselves, and that we are a nation of distrust. It is for this reason that until we restore trust in government, trust in the system, and trust in the money, there will be no resolution to this problem. It is the issue of trust in people and trust in money that must come before you can start talking about nickel-ing and dime-ing it trying to get back to a balanced budget because that certainly hasn’t worked.

So I think it is important to address the issue of central planning, the issue of power, and third, I think that we must address in general terms the origin of money. I know that’s been talked about, and we recognize – those of us who believe in commodity money – clearly understand that money, paper money and credit creation didn’t come out of the marketplace. That came out of the heads and the fantasies of the intellectuals and the government officials and those who want paper to be money – but never out of the marketplace.

So I would say that the paper standard is bucking history, and its bucking economic law and economic truth, and they only can do it with force and more power to make people accept it. Because economically, and historically, paper is not money! It can’t be money – it is only money because we’re forced to used it, and because there is a residual thrust in the pieces of paper that we carry around because at one time it did have real value. You have to have something that people seek after and that they hold as something important that they will hold as money.

History has shown that people have chosen gold first, and probably silver second. They’d rather have cigarettes than pieces of paper!
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