One reason so many Americans face personal financial difficulty is that they live in a culture of excess designed to discourage saving and encourage spending. At the root of that culture lies the Federal Reserve and its expansionist monetary policy, which has reduced the value of a dollar from $1.00 in 1913 when the Fed was created to just $0.05 today.
The following excerpts are from Texas Republican Congressman Ron Paul’s new book, End The Fed.
Artificially low interest rates are achieved by inflating the money supply, and they penalize the thrifty and cheat those who save. They promote consumption and borrowing over saving and investing. Manipulating interest rates is an immoral act. It’s economically destructive.
p. 133
___________________________________The Fed encourages irresponsible accumulation of personal debt. People live beyond their means with the help of an expansionist monetary policy. They trade in their futures for the present. They neglect the need to save in order to consume more and more. In this sense, the Fed is the ultimate promoter of consumerism and living for the present. This amounts to a terrible cultural distortion in which short-term thinking wins out over long-term planning.
p. 151
___________________________________Excessive debt of a country or a people, once it reaches a certain point, is unpayable and must be liquidated. That point is almost impossible to accurately predict, since it will vary from one situation or country to another. One thing certain is that we as a country, and probably the world, have reached that point.
Individuals and corporations can default and debt is liquidated. When the need arises, liquidation is necessary and beneficial. The market today is demanding this liquidation; the politicians and the Fed are doing everything conceivable to prevent it, but they are only prolonging the agony.
p. 184
