Ron Paul: Our current banking system is about counterfeiting moneySubmitted by legalizeliberty on Tue, 07/10/2012 - 16:18
On July 9, Congressman Ron Paul compiled testimony of a recent hearing in the House on fractional banking, and the Federal Reserve's control of monetary policy. From that testimony, Congressman Paul emphasized that the primary moral hazard in our economy is that America's current banking system's use of fractional banking was the equivalent of making money appear out of thin air, or in fundamental terms, legal counterfeiting.
As Murray Rothbard put it, "Fractional reserve banks ... create money out of thin air. Essentially they do it in the same way as counterfeiters. Counterfeiters, too, create money out of thin air by printing something masquerading as money or as a warehouse receipt for money. In this way, they fraudulently extract resources from the public, from the people who have genuinely earned their money. In the same way, fractional reserve banks counterfeit warehouse receipts for money, which then circulate as equivalent to money among the public. There is one exception to the equivalence: The law fails to treat the receipts as counterfeit."