Somewhat predictably, the professional fearmongers at Fox News have been hosting all kinds of segments about the currency riots in Greece suggesting that "America could be next!" (Of course, the corollary to this is "it's all Obama's fault".)
So of course the situation was ripe for Rep. Ron Paul to bring his own unique brand of wingnuttery to the airwaves, which he happily did Thursday for Megyn Kelly on Fox's America Live program:
Kelly: You know, it's really scary to see what can happen in a society when the overspending comes home to roost -- you know, when you see the consequences of years and years of overspending. Obviously people here are very worried about our debt and our deficit. Congressman Paul, could this kind of thing happen here? Could what we're seeing in Greece and California happen on a nationwide basis here?
Paul: Oh yeah. Absolutely. There's going to be anger, and there's going to be riots in the streets as well.
But this is all a consequence of the fact that why and how do governments spend like this? It's because they don't have sound money. When we run up deficits, we tax, but never enough. We can't tax, it would ruin the economy. Then we borrow, and we get away with that for a long time. But we rely on the printing presses from the Federal Reserve to create the money, and that's where the problem is.
This is why we have to look at the Federal Reserve, we have to get an audit of the Federal Reserve, we have to look at the monetary system and the dollar system, because you can't have fake money. This is counterfeit! And we've been operating like this since 1971. At no time in the history of the world has the whole world been on fiat money for so long -- building up these financial bubbles, distorting the economies and running up all this debt. And it has to be paid for.
Now, Paul manages to sound reasonable in all this, but this is really quite a display of far-right extremism: after all, he just called the American dollar counterfeit. And though he never utters the words "gold standard" here, that's what he's talking about: The United States removed the dollar from the gold standard in 1971.
This extremism is at the root of his advocacy for an audit of the Fed, and why he joined up with Alan Grayson in his efforts to get a bill requiring an audit of the Fed through Congress. It's also why he's so furious at the compromise hammered out by Grayson and Sen. Bernie Sanders to get answered the questions about some of its decisions after 2007 -- because it doesn't give Paul the broad perennial tool he sought for destroying the Fed altogether.
DDay had a powerfully insightful post on this:
Now I know Ron Paul and some libertarians are angered by this deal. But understand that Ron Paul doesn’t want an audit of the Federal Reserve. He wants to end the Federal Reserve. The best-selling book “End the Fed” that he wrote tipped me off to this. He wants to go back to hard-money policies and a return to the gold standard. Now, you can argue that this would end the cartel of central bankers scheming with their monetary policy, or that it would turn US monetary policy into the inflation-uber-alles laissez-faire mess we’re seeing in Europe that is threatening a global depression. The consequences for Paul’s favored end-state would be catastrophic if implemented in real time. This Fed is failing in different ways – and their actions should draw more scrutiny – but eliminating it would return us to the Stone Age.
And so you should probably know who you’re dealing with. There’s no good reason for the restrictions on this particular audit, but in its streamlined form, it seeks to answer one question – what did the Fed do on an emergency basis with two trillion dollars in taxpayer money. Not only does the Sanders amendment force an answer to that question, it opens it up to public scrutiny in ways that Paul-Grayson didn’t. As Baker says, this is a beginning and not an ending for transparency and accountability.
David Vitter may offer the original proposal for a vote and more power to him. But an audit really is just an audit. Ron Paul wanted to use an audit as a tool to destroy the Fed.
Ron Paul, a fake libertarian, Goldbug John Bircher, has a very different agenda than progressives on almost everything and his support for auditing the Fed is based upon different goals. Therefore, when the legislation changed in ways that don't advance that goal he is unhappy.
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Progressive economists call the compromise a "big victory." Paul's balking because the legislation no longer fits his agenda. That's fine. The senate came on board because of the changes and the conference will probably change it again. This is just plain old sausage making that benefits the progressive side for once. Unless one actually agrees with Ron Paul's kooky Fed obsession, there's no reason to care what he thinks about it.
I've written a great deal over the years about Ron Paul and his deep background as a far-right extremist, including his fetish about the Federal Reserve:
Along the way, Paul developed as one of his major ongoing themes the extremist belief that the Federal Reserve is an illegitimate authority, that our current monetary system is built upon a house of cards and is due momentarily to collapse, and that to avoid such a fate we must return to the gold standard and abolish the Fed.
Notably, Paul makes only passing reference to this at his campaign Web site:
In addition, the Federal Reserve, our central bank, fosters runaway debt by increasing the money supply – making each dollar in your pocket worth less. The Fed is a private bank run by unelected officials who are not required to be open or accountable to "we the people."
He's much more explicit about all this in his book The Case for Gold, which takes old far-right theories about the legitimacy of the monetary system and launders them of their sometimes explicit anti-Semitism and presents them as devout and reasoned patriotism.
These arguments, in fact, have had some currency on the extremist right for some years now, having been a favorite theory of the Posse Comitatus and various tax protesters, including the Montana Freemen, who themselves picked it up from other conspiracy theorists, and then used it for creating fictitious monetary systems of their own. As I explain in Chapter 5 of In God's Country: The Patriot Movement and the Pacific Northwest:
The Freemen justified this with an argument straight out of Roy Schwasinger's seminars: The federal government was bankrupt and illegally printing bogus money anyway, money that no longer had any basis, since the government took the dollar off the gold standard in 1971. So the Freemen were free to create their own money out of equally thin air -- not only that, but by basis of the "constitutional" nature of the common-law courts that issued the liens, their system was more legitimate than the federal government's.
The alternative-universe notion that the Federal Reserve system prints "funny money" based on no real foundation has floated about on the far right for years, and is a key component of some cult belief systems like Lyndon LaRouche's. In reality, the modern international monetary system is based on the economic engine behind each kind of currency -- the levels of supply and demand that a nation produces. It is, like all economic systems, essentially a mental construct, but it has very real grounding in the work of producing goods and services within each nation. The American dollar's continuing strength abroad is a reflection of our nation's output; indeed, it is still considered the basis of most international currency rates.
Those who argue that money must be based on some hard commodity -- usually gold and silver -- ignore the fact that when a currency is based on gold, the value given to gold is as essentially arbitrary as that assigned to paper currency. That is, the value of gold would rise and decline according to the value of the output behind the economic system using it as a standard. Indeed, since gold is still used in manufacturing and jewelry-making, the crossover between gold as a commodity and gold as an expression of currency had the tendency to destabilize the currency system, which is why the United States went off the gold standard in 1971.
These tax-protest theories extended to other beliefs, including the notion that the Internal Revenue Service is an illegitimate agency and the federal income tax a scam. As the ADL explains in this report, have been circulating on the fringe right for some time now, mostly in the guise of the tax-protest movement. And Ron Paul has been one of their leading figures in the past decade.
I'm frankly baffled by progressives who believe that Ron Paul is the kind of politician who potentially could be part of a "transpartisan" politics. Paul in reality -- judging by his behavior, his support, and his actual record in Congress -- is someone far out on the right, a leader of a faction whose primary fuel is an animus toward all things progressive.
Progressive alliances with Ron Paul need of necessity be short-lived and of limited scope, because his entire long-range purpose is the destruction of our values: women's reproductive rights, civil rights for minorities, public education, environmental protections, public health care -- all of which Paul has a demonstrated animus towards. Anyone deluded enough to believe Ron Paul represents a long-term opportunity for progressives is in the end naively selling out the values they supposedly espouse.
