How I First Met Ron PaulSubmitted by Michael Nystrom on Thu, 01/25/2007 - 15:48
Okay, I don't actually know Ron Paul personally -- I only know of him through his speeches on the House floor, his writings, and through his many appearances in documentaries that you can view on the web.
The first time I ever saw him was on television back in 2002 one February morning as I was getting ready for work. This was back when I was still working as a web designer in Seattle. As was my custom, I was getting dressed, brushing my teeth and whatnot while watching CNBC. Prior to my life as a web designer, I used to be a stockbroker, and I still had the habit of watching CNBC as I got ready for work.
That morning old Greenspan was on the tube, droning along unintelligibly the way he did, in one of his periodic appearances before Congress. What happened next shocked the hell out of me. It was none other than Ron Paul (though I didn't know who he was at the time), calling the mighty Greenspan on the carpet! I dropped my toothbrush and sat down and listened, stunned.
What he said was amazing, like nothing I had ever heard on TV, and CNBC soon cut away for a break. Later that night, I went on the web and found the testimony on CSPAN's website (this was before Youtube) and played it again and again painstakingly transcribing it for the web. This was also back when I was running a website called Depression2.tv, and after I finished my transcription work, I posted it to the site. You can still see that post here on the web:
http://www.depression2.tv/journal/february.html - scroll down a little to the post from 2-27-2002.
This is what I said in that post:
// Begin transcript:
2-27-2002 Seattle - To be honest, I have only heard of Ron Paul in the last few weeks, and only in connection with GATA. I don't know what his politics are outside of this area. What I do know is that this morning I saw him, live on CNBC, calling our entire fiat money system into question. I cried. He called the Untouchable, Alan Greenspan, right down on the carpet, asking if he sees any similarities between the Federal Reserve's management of money to Enron's shenanigans. He spoke the truth in the rarified air of the House Committee testimony.
He began by making reference to Greenspan's flip comments a few weeks ago about how if fiat money fails, we can always go back to seashells and oxen. That the discount window would stand ready with an adequate supply of oxen.
Following is a transcript of the exchange:
Dr. Paul: "Chairman, if we get to this point (of the collapse of the dollar), which I suspect we will someday, I ask that we have hearings to debate the issue of what medium exchange we will have before the Fed starts using oxen as a medium of exchange...
"I feel that it is an important point, and I want to relate that to the Enron issue. In many ways I feel that the system you have been asked to manage is similar to being asked to manage an Enron system. Because Congress is notoriously in favor of deficit spending. We are currently expanding the national debt at $250 billion per year, and we have nearly a $6 trillion debt. We create that debt by buying votes. We spend a lot of money.
"Now, the Federal Reserve comes in and they buy that debt in order to maintain the interest rate that they think is the right interest rate. And they take that and use it as an asset. You put it in the bank, you call this debt that we created an asset, and you use it as collateral for our Federal Reserve Notes.
"So that's a pretty good scheme, and I think in the moral terms, as well as the economic terms, it is very similar to how Enron operates. I'm not convinced that this system works very well because a lot of people here praise you for the adequate amount of liquidity, and that's what inflation is - you create more money, lower interest rates. Every time you ask for liquidity, every time you ask for lower interest rates, you're asking for inflation of the money supply. And I think what we fail to ever do is ask about the cost.
"Do we ever concern ourselves about the people who have had 2/3 of their income removed because they happen to be savers, and living off interest? We gouge them with interest, inflation, a loss of purchasing power, as well as taxing that. And a lot of people in this country have suffered from that particular system.
"Now the analogy that I would like to draw is something that you said in your testimony on page 13. And you have mentioned several times now that Enron may be a good lesson. And I think it is. And I'm not for more of this regulation by the SEC. I think you're correct that derivatives provide a market tool that is worthwhile. But you said the Enron decline is the effective illustration of the vulnerability of a firm who's market value largely rests on capitalized reputation, with very little if no physical assets.
"That's exactly what our monetary system is all about. And that's why I believe that the dollar is vulnerable. We in Congress do not have a responsibility to run Enron. Some other government has the responsibility to deal with fraud. We have a responsibility to the dollar. And I think that's what we fail so often to address around here.
"And you said that Enron provides the encouragement that the force of market discipline can be counted on over time to foster a much greater transparency. That's exactly what the market does with money. If you look at the rapid and sudden devaluations of the fiat currencies around the world, if you look at what happened to us in '79 and '80, that was the market coming in and enforcing vulnerability & transparency on us.
"Now, gold gives you a hint as to what's happening. Gold has sent a mild message in this past year, in spite of the fact that central banks and other continually sell and loan out gold to push the price of gold down. But there is a message here.
"So I would ask you, can you see any correlation between what you're asked to do in running our monetary system to that which Enron was involved in?"
"I hope there are fundamental differences.....er...ar...I mean there areâ...it's ....ah,.. first, dealing with a fiat currency, what it essentially is that we are doing is that the currency is granted value by fiat of the sovereign, as it is said in the text books. The issue there is that..uh...in years past..uh..there have been, there's been considerable evidence.. that fiat currencies have been mismanaged in general and that inflation has been too often the result.
"What I was mentioning in the speech that you were referring to was the fact that there is some evidence that we're learning that lesson ... learning how to manage fiat currency..ah...ah...I've always had some considerable skepticism about whether that in a long run can succeed, but I must say to you the evidence..errr...of recent decades is that it has been succeeding. Whether that continues is a forecast which I can't really ...er....project on.
"The Enron situation is essentially one in which..ah..there was an endeavor to imply that earnings were much greater than they really were. That increasing debt was hidden. I can think of no reason to have done what they did with their off-balance sheet transactions, other than to obscure the extent of the debt that they had, and what was essentially squandered in that process was the reputational capital, which they had succeeded in achieving over a period of time...and I don't perceive that ...that anything that we are doing as a central bank..ah.. involves anything related to that..I hope that ...where we need to be transparent and indicate what we are doing, we do so and we do so except in those areas where it - as I mentioned to you previously - inhibits the ability to actually function as a central bank. But as I say in summary I hope your analogy is inappropriate."
Paul's last word:"I'll keep hoping."
// End Transcript
Wow! Talk about a schooling of the "Maestro!" I was hooked! Here was a man who speaks the truth and fears no one, I thought. A man who cannot be bought by money or influence â€“ this is the kind of man that is truly dangerous for the powers that be. And now, four years later, he is running for president. This is a courageous man who reminds us all of what it means to be an independent American, concerned first and foremost with what is right. We need more like him, and this man deserves our support.
Enough for today. This story will continues tomorrow. In the mean time, I can see that many people have registered on this site so far. Thank you all! You have to register to post comments -- it only takes a second. If you've registered, please show your support by posting!
If you have a website or blog that supports Dr. Paul, please share it in your comments. I'll be starting a Ron Paul blogroll soon (as soon as I have some sites to link to!).
And of course, I'd like to hear your stories as well, of how you first came to know of Dr. Ron Paul.
Thank you. Until tomorrow...