By Ron Paul
I’d like to talk about the silliness of The Federal Reserve. Here we have 12 people, secretly in a room, and they’re pretending to know what interest rates ought to be. The real problem is that they believe they’re smart enough to figure it out. My argument is that they don’t have the vaguest idea what interest rates should be. Nobody in the world knows what they should be!
Just as all prices should be set in the marketplace, it takes hundreds, thousands, and millions of people to buy and sell, as well as borrow and lend, for interest rates to be determined.
Central bankers merely deceive themselves. I have met Federal Reserve Board members who really believe in this. It’s almost like a religious belief that the world would be totally chaotic if you didn’t have smart people doing central economic planning by manipulating interest rates and the money supply.
I’d like to share a quote from Friedrich Hayek, who is the one and only Austrian economist to win a Nobel Prize. Hayek won that prize in 1974. Interestingly enough, in the early 1980’s, he was in Washington D.C., while I was a member of Congress. I was fortunate enough to have dinner with Hayek, which was really a fascination for me.
Hayek is well known for a statement and concept that he called “The Pretense of Knowledge”:
"To act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm."
There can’t be anything more straightforward than that. Hayek has been proven absolutely right. Look at the harm done by The Federal Reserve’s manipulations.
Unfortunately, at the present time, we have socialism in money. However, the markets always win out in the end. We have a tremendous opportunity before us. As the failure of The Federal Reserve becomes more apparent, changes will have to come.
Hopefully, enough people will be open to the ideas of sound money when that time does, in fact, arrive.
Thank you, and be sure to tune in to tomorrow's Liberty Report!