Ron Paul: Monetary Freedom and Accountability Act

Hon. Ron Paul ^ | 02/15/02 | Hon Ron Paul

[spoosman]

"The Fed wants all of us to think the stock market is not overvalued, and that credit and monetary expansion can create lasting prosperity," Paul concluded. "My bill will make it harder for the Fed and the Treasury to manipulate gold prices, which should always serve as an unbiased indicator of the true health of world markets."

Congressman Ron Paul
U.S. House of Representatives
February 14, 2002

Mr. Speaker, I rise to introduce the Monetary Freedom and Accountability Act. This simple bill takes a step toward restoring Congress' constitutional authority over U.S. monetary policy by requiring congressional approval before the President or the Treasury secretary buys or sells gold.

Federal dealings in the gold market have the potential to seriously disrupt the free market by either artificially inflating or deflating the price of gold. Given gold's importance to America's (and the world's) monetary system, any federal interference in the gold market will have ripple effects through the entire economy. For example, if the government were to intervene to artificially lower the price of gold, the result would be to hide the true effects of an inflationary policy until the damage was too severe to remain out of the public eye.

By artificially deflating the price of gold, federal intervention in the gold market can reduce the values of private gold holdings, adversely affecting millions of investors. These investors rely on their gold holdings to protect them from the effects of our misguided fiat currency system. Federal dealings in gold can also adversely affect those countries with large gold mines, many of which are currently ravished by extreme poverty. Mr. Speaker, restoring a vibrant gold market could do more than any foreign aid program to restore economic growth to those areas.

While the Treasury denies it is dealing in gold, the Gold Anti-Trust Action Committee (GATA) has uncovered evidence suggesting that the Federal Reserve and the Treasury, operating through the Exchange-Stabilization Fund and in cooperation with major banks and the International Monetary Fund, have been interfering in the gold market with the goal of lowering the price of gold. The purpose of this policy has been to disguise the true effects of the monetary bubble responsible for the artificial prosperity of the 1990s, and to protect the politically-powerful banks that are heavy invested in gold derivatives. GATA believes federal actions to drive down the price of gold help protect the profits of these banks at the expense of investors, consumers, and taxpayers around the world.

GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government's power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: "Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise." [Emphasis added].

Mr. Speaker, in order to allow my colleagues to learn more about this issue, I am enclosing "All that Glitters is Not Gold" by Kelly Patricia O'Meara, an investigative reporter from Insight magazine. This article explains in detail GATA's allegations of federal involvement in the gold market.

Mr. Speaker, while I certainly share GATA's concerns over the effects of federal dealings in the gold market, my bill in no way interferes with the ability of the federal government to buy or sell gold. It simply requires that before the executive branch engages in such transactions, Congress has the chance to review it, debate it, and approve it.

Given the tremendous effects on the American economy from federal dealings in the gold market, it certainly is reasonable that the people's representatives have a role in approving these transactions, especially since Congress has a neglected but vital constitutional role in overseeing monetary policy. Therefore, I urge all my colleagues to stand up for sound economics, open government, and Congress' constitutional role in monetary policy by cosponsoring the Monetary Freedom and Accountability Act.

[spoosman]

It is good to hear the phrase, "our misguided fiat currency system," coming from at least one US Congressman. I do not know what the problem the rest of them have.

[Fish out of Water]

bti

[sarcastro]

Amen, Brother Paul! I wonder what all the other so-called conservatives and libertarians have to say about this. You know who I mean- guys like Kudlow and Limbaugh, who completely ignore REAL statistics (like P/E ratios) and just tell us nonsense like buying overvalued stocks is the cornerstone of capitalism. When the stocks inevitabely lose half their value, they'll just find a way to blame Clinton and Greespan- completely forgetting that they themsleves had no idea what they were talking about.

[sarcastro]

Screw that, just place the dollar on a new gold standard.

How would we do that, given how badly it's been manipulated for the past 30-90 years?

[ikka]

OK, the fiat currency system is bad.

Anyone here have real-world experiences with E-Gold or similar places?

[David]

"'Screw that, just place the dollar on a new gold standard.'

How would we do that, given how badly it's been manipulated for the past 30-90 years?"

Define the US dollar as consisting of a specified fraction of an ounce of gold; mint gold coins in denomination that reflect the specified fractions; treat the outstanding dollars as claims on the gold on hand and deliver it up in the form of coins in exchange for paper. It would be simple to do and could be implemented in a short time by a Congress that had the political will to do so.

Not a gold standard; a gold money system. The problem is that it would reduce the power of the central government and increase the power of the private citizen.

At this point, I doubt that either Congress or the American people recognize how serious the risk is of a monetary meltdown. Gold money would preclude the system from collapsing even if many people lost significant amounts of money (on derivatives and private credits). In the current system, we are exposed to waking up Monday morning with worthless paper where we thought we had money or a credit balance in our checking account.

[Jack Black]

It's an interesting site. digicash.com is another, older one that seems to have falterd somewhat. I don't know if these schemes will really take off or not.

[sarcastro]

At this point, I doubt that either Congress or the American people recognize how serious the risk is of a monetary meltdown.

You're right. But at least we understand how serious the risk is. So, once Greenspan's market manipulation power runs out once and for all, and gold REALLY rallies, those paying attention will be rewarded for it.

And by the way, all you genius CNBC "expert" market analysts- you want to see a REAL budding bull market? Check this out. Bull markets don't start when Maria Bartiromo screams, "This is a bottom! BUY BUY BUY!" Market bottoms come when the majority of the sheeple aren't expecting it.