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Ron Paul: The Federal Reserve Is King of the Price Fixers (Video)

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In a recent episode of his video broadcast Myth Busters, Ron Paul and Chris Rosinni talked about how government destroys markets by tampering with prices. After discussing the ways government intervention has destroyed the market for health care and education in America, and looking at the negative impacts of tariffs and price supports in agriculture, they dove into the most destructive price manipulation there is – central bank manipulation of interest rates.

Paul called the Fed the “king of price fixers” and said its policy of setting interest rates is ultimately responsible for most of the economic problems we face today.

St. Louis Federal Reserve Bank Chairman James Bullard recently said he was undecided on the right path for interest rates. Paul thinks this offers a glimmer of hope

This it tremendous news because the Federal Reserve is starting to recognize something it should have recognized 100 years ago: they have no idea what the interest rate should be and it’s only going to cause trouble if they do get involved.”

Paul went on to explain how Federal Reserve policy hurts the poor and middle class, spurs unemployment, and leads to recessions.

All these problems come from the fact that there’s this total myth that there is somebody somewhere that’s smart enough to know what the interest rate should be.”

Highlights from the interview:

“The king of all price-fixers; the institution that pretty much enables government to do the bad things we talk about today…the Federal Reserve. It messes with the money supply and interest rates.”

“St. Louis Fed chairman James Bullard said ‘he’s undecided on the right path for interest rates.’ This it tremendous news because the Federal Reserve is starting to recognize something it should have recognized 100 years ago: they have no idea what the interest rate should be and it’s only going to cause trouble if they do get involved.”

“If we could only alter one price in this country today to help the economy and help deal with the business cycle, it would be to put a prohibition on the Federal Reserve that they cannot manipulate interest rates and they cannot do that by manipulating the money supply.”

“The price of money – the interest rate they pay – is crucial because if the price is lower, if the interest rate is lower than the market, people make mistakes. Business people make mistakes. Savers make mistakes. Then there is overcapacity, overinvestment and malinvestment…until finally they distort the economy so badly, and they won’t allow the correction to occur. And all they can do is talk about ‘how low can we make interest rates.’”

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“All these problems come from the fact that there’s this total myth that there is somebody somewhere that’s smart enough to know what the interest rate should be.”

“The interest rate is set by the market, by millions and millions of people deciding what to do. The real evil of this are the people who suffer from it. And the consequences are so harmful to the people they pretend they want to help, and that is the middle class, the poor, the people who want to save.”

“On several occasions, with different Federal Reserve Board chairmen, I asked them, ‘Why do you do this? It hurts savers, it hurts the retired people. They can’t earn anything. They want to take care of themselves. They don’t want to go on the dole. But they can’t earn any interest. They just consume their wealth.’ And they admit it. They say that’s the case, but it’s the price you have to pay. So they acknowledge it. The ‘greater good’ is to make sure the markets are taken care of. But what they’re saying is the ‘greater good’ is making sure the stock market keeps going up. But that will finally end, and everybody is going to suffer.”

“It allows borrowing and delay as long as the system holds together. But somebody else pays at a later date, as we are now. The recession now, the students, the unemployment now is due to the inflation – the artificial interest rates that’s been going on for 10, 15, 20 years.”

“So, we’re at a crossroads right now. They can’t continue to do what they’re doing now. They don’t know what they’re doing, and they continue to do this. The more they do it, the closer we will come to this collapse that will ruin the system, break up the system, and we will be forced to address this.”

“We need a market economy. We need sound money. We don’t need a central bank to create money and a centralized economic plan through the manipulation on interest rates. The sooner we come around to that, the better.”

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