What the Price of Gold Is Telling Us

WARNING : THIS ARTICLE IS LONG BUT SOMETHING WE AS CITIZENS OF AMERICA SHOULD ALL BE WORRIED ABOUT. I KNOW IT WORRIES ME. Makes me wonder what life for my children and grandchildren will be like.

by Ron Paul


Before the U.S. House of Representatives, April 25, 2006

The financial press, and even the network news shows, have begun reporting the price of gold regularly. For twenty years, between 1980 and 2000, the price of gold was rarely mentioned. There was little interest, and the price was either falling or remaining steady.

Since 2001 however, interest in gold has soared along with its price. With the price now over $600 an ounce, a lot more people are becoming interested in gold as an investment and an economic indicator. Much can be learned by understanding what the rising dollar price of gold means.

The rise in gold prices from $250 per ounce in 2001 to over $600 today has drawn investors and speculators into the precious metals market. Though many already have made handsome profits, buying gold per se should not be touted as a good investment. After all, gold earns no interest and its quality never changes. It’s static, and does not grow as sound investments should.

It’s more accurate to say that one might invest in a gold or silver mining company, where management, labor costs, and the nature of new discoveries all play a vital role in determining the quality of the investment and the profits made.

Buying gold and holding it is somewhat analogous to converting one’s savings into one hundred dollar bills and hiding them under the mattress – yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There’s a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, e.g., gold, however, goes up if the government devalues the circulating fiat currency.

Holding gold is protection or insurance against government’s proclivity to debase its currency. The purchasing power of gold goes up not because it’s a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.

One of the characteristics of commodity money – one that originated naturally in the marketplace – is that it must serve as a store of value. Gold and silver meet that test – paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It’s more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.

The point is that most who buy gold do so to protect against a depreciating currency rather than as an investment in the classical sense. Americans understand this less than citizens of other countries; some nations have suffered from severe monetary inflation that literally led to the destruction of their national currency. Though our inflation – i.e., the depreciation of the U.S. dollar – has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and our political system. The belief that money created out of thin air can work economic miracles, if only properly “managed,” is pervasive in D.C.

In many ways we shouldn’t be surprised about this trust in such an unsound system. For at least four generations our government-run universities have systematically preached a monetary doctrine justifying the so-called wisdom of paper money over the “foolishness” of sound money. Not only that, paper money has worked surprisingly well in the past 35 years – the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these several decades have gained the knowledge necessary to make paper money respond as if it were gold. This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.

Many central bankers in the last 15 years became so confident they had achieved this milestone that they sold off large hoards of their gold reserves. At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing market gold prices. This recent deception failed just as it did in the 1960s, when our government tried to hold gold artificially low at $35 an ounce. But since they could not truly repeal the economic laws regarding money, just as many central bankers sold, others bought. It’s fascinating that the European central banks sold gold while Asian central banks bought it over the last several years.

Since gold has proven to be the real money of the ages, we see once again a shift in wealth from the West to the East, just as we saw a loss of our industrial base in the same direction. Though Treasury officials deny any U.S. sales or loans of our official gold holdings, no audits are permitted so no one can be certain.

The special nature of the dollar as the reserve currency of the world has allowed this game to last longer than it would have otherwise. But the fact that gold has gone from $252 per ounce to over $600 means there is concern about the future of the dollar. The higher the price for gold, the greater the concern for the dollar. Instead of dwelling on the dollar price of gold, we should be talking about the depreciation of the dollar. In 1934 a dollar was worth 1/20th of an ounce of gold; $20 bought an ounce of gold. Today a dollar is worth 1/600th of an ounce of gold, meaning it takes $600 to buy one ounce of gold.

The number of dollars created by the Federal Reserve, and through the fractional reserve banking system, is crucial in determining how the market assesses the relationship of the dollar and gold. Though there’s a strong correlation, it’s not instantaneous or perfectly predictable. There are many variables to consider, but in the long term the dollar price of gold represents past inflation of the money supply. Equally important, it represents the anticipation of how much new money will be created in the future. This introduces the factor of trust and confidence in our monetary authorities and our politicians. And these days the American people are casting a vote of “no confidence” in this regard, and for good reasons.

The incentive for central bankers to create new money out of thin air is twofold. One is to practice central economic planning through the manipulation of interest rates. The second is to monetize the escalating federal debt politicians create and thrive on.

Today no one in Washington believes for a minute that runaway deficits are going to be curtailed. In March alone, the federal government created an historic $85 billion deficit. The current supplemental bill going through Congress has grown from $92 billion to over $106 billion, and everyone knows it will not draw President Bush’s first veto. Most knowledgeable people therefore assume that inflation of the money supply is not only going to continue, but accelerate. This anticipation, plus the fact that many new dollars have been created over the past 15 years that have not yet been fully discounted, guarantees the further depreciation of the dollar in terms of gold.

There’s no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it’s about to do in the future. Forget about the lip service given to transparency by new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community, and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply.

Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting the monetary aggregate known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us and Congress makes no demands to receive it.

Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed’s inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments, and other central bankers will act accordingly. The fact that our money supply is rising significantly cannot be hidden from the markets.

The response in time will drive the dollar down, while driving interest rates and commodity prices up. Already we see this trend developing, which surely will accelerate in the not too distant future. Part of this reaction will be from those who seek a haven to protect their wealth – not invest – by treating gold and silver as universal and historic money. This means holding fewer dollars that are decreasing in value while holding gold as it increases in value.

A soaring gold price is a vote of “no confidence” in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to reign in runaway spending.

Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won’t help in the long run. If the markets are fooled short term, it only means the adjustments will be much more dramatic later on. And in the meantime, other market imbalances develop.

The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock markets bubbles and housing bubbles. When these distortions run their course and are discovered, the corrections will be quite painful.

Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations. This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.

Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold – since it serves as a check on government size and power. This is a sad commentary on the politics of today. The best analogy to our affinity for government spending, borrowing, and inflating is that of a drug addict who knows if he doesn’t quit he’ll die; yet he can’t quit because of the heavy price required to overcome the dependency. The right choice is very difficult, but remaining addicted to drugs guarantees the death of the patient, while our addiction to deficit spending, debt, and inflation guarantees the collapse of our economy.

Special interest groups, who vigorously compete for federal dollars, want to perpetuate the system rather than admit to a dangerous addiction. Those who champion welfare for the poor, entitlements for the middle class, or war contracts for the military industrial corporations, all agree on the so-called benefits bestowed by the Fed’s power to counterfeit fiat money. Bankers, who benefit from our fractional reserve system, likewise never criticize the Fed, especially since it’s the lender of last resort that bails out financial institutions when crises arise. And it’s true, special interests and bankers do benefit from the Fed, and may well get bailed out – just as we saw with the Long-Term Capital Management fund crisis a few years ago. In the past, companies like Lockheed and Chrysler benefited as well. But what the Fed cannot do is guarantee the market will maintain trust in the worthiness of the dollar. Current policy guarantees that the integrity of the dollar will be undermined. Exactly when this will occur, and the extent of the resulting damage to financial system, cannot be known for sure – but it is coming. There are plenty of indications already on the horizon.

Foreign policy plays a significant role in the economy and the value of the dollar. A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency – especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.

The cost of war is enormously detrimental; it significantly contributes to the economic instability of the nation by boosting spending, deficits, and inflation. Funds used for war are funds that could have remained in the productive economy to raise the standard of living of Americans now unemployed, underemployed, or barely living on the margin.

Yet even these costs may be preferable to paying for war with huge tax increases. This is because although fiat dollars are theoretically worthless, value is imbued by the trust placed in them by the world’s financial community. Subjective trust in a currency can override objective knowledge about government policies, but only for a limited time.

Economic strength and military power contribute to the trust in a currency; in today’s world trust in the U.S. dollar is not earned and therefore fragile. The history of the dollar, being as good as gold up until 1971, is helpful in maintaining an artificially higher value for the dollar than deserved.

Foreign policy contributes to the crisis when the spending to maintain our worldwide military commitments becomes prohibitive, and inflationary pressures accelerate. But the real crisis hits when the world realizes the king has no clothes, in that the dollar has no backing, and we face a military setback even greater than we already are experiencing in Iraq. Our token friends may quickly transform into vocal enemies once the attack on the dollar begins.

False trust placed in the dollar once was helpful to us, but panic and rejection of the dollar will develop into a real financial crisis. Then we will have no other option but to tighten our belts, go back to work, stop borrowing, start saving, and rebuild our industrial base, while adjusting to a lower standard of living for most Americans.

Counterfeiting the nation’s money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That’s why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency. Too bad they weren’t explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar.

In wartime, many nations actually operated counterfeiting programs to undermine our dollar, but never to a disastrous level. The enemy knew how harmful excessive creation of new money could be to the dollar and our economy. But it seems we never learned the dangers of creating new money out of thin air. We don’t need an Arab nation or the Chinese to undermine our system with a counterfeiting operation. We do it ourselves, with all the disadvantages that would occur if others did it to us. Today we hear threats from some Arab, Muslim, and far Eastern countries about undermining the dollar system – not by dishonest counterfeiting, but by initiating an alternative monetary system based on gold. Wouldn’t that be ironic? Such an event theoretically could do great harm to us. This day may well come, not so much as a direct political attack on the dollar system but out of necessity to restore confidence in money once again.

Historically, paper money never has lasted for long periods of time, while gold has survived thousands of years of attacks by political interests and big government. In time, the world once again will restore trust in the monetary system by making some currency as good as gold.

Gold, or any acceptable market commodity money, is required to preserve liberty. Monopoly control by government of a system that creates fiat money out of thin air guarantees the loss of liberty. No matter how well-intended our militarism is portrayed, or how happily the promises of wonderful programs for the poor are promoted, inflating the money supply to pay these bills makes government bigger. Empires always fail, and expenses always exceed projections. Harmful unintended consequences are the rule, not the exception. Welfare for the poor is inefficient and wasteful. The beneficiaries are rarely the poor themselves, but instead the politicians, bureaucrats, or the wealthy. The same is true of all foreign aid – it’s nothing more than a program that steals from the poor in a rich country and gives to the rich leaders of a poor country. Whether it’s war or welfare payments, it always means higher taxes, inflation, and debt. Whether it’s the extraction of wealth from the productive economy, the distortion of the market by interest rate manipulation, or spending for war and welfare, it can’t happen without infringing upon personal liberty.

At home the war on poverty, terrorism, drugs, or foreign rulers provides an opportunity for authoritarians to rise to power, individuals who think nothing of violating the people’s rights to privacy and freedom of speech. They believe their role is to protect the secrecy of government, rather than protect the privacy of citizens. Unfortunately, that is the atmosphere under which we live today, with essentially no respect for the Bill of Rights.

Though great economic harm comes from a government monopoly fiat monetary system, the loss of liberty associated with it is equally troubling. Just as empires are self-limiting in terms of money and manpower, so too is a monetary system based on illusion and fraud. When the end comes we will be given an opportunity to choose once again between honest money and liberty on one hand; chaos, poverty, and authoritarianism on the other.

The economic harm done by a fiat monetary system is pervasive, dangerous, and unfair. Though runaway inflation is injurious to almost everyone, it is more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. Small businesses and individual enterprises suffer more than the financial elite, who borrow large sums before the money loses value. Those who are on the receiving end of government contracts – especially in the military industrial complex during wartime – receive undeserved benefits.

It’s a mistake to blame high gasoline and oil prices on price gouging. If we impose new taxes or fix prices, while ignoring monetary inflation, corporate subsidies, and excessive regulations, shortages will result. The market is the only way to determine the best price for any commodity. The law of supply and demand cannot be repealed. The real problems arise when government planners give subsidies to energy companies and favor one form of energy over another.

Energy prices are rising for many reasons: Inflation; increased demand from China and India; decreased supply resulting from our invasion of Iraq; anticipated disruption of supply as we push regime change in Iran; regulatory restrictions on gasoline production; government interference in the free market development of alternative fuels; and subsidies to big oil such as free leases and grants for research and development.

Interestingly, the cost of oil and gas is actually much higher than we pay at the retail level. Much of the DOD budget is spent protecting “our” oil supplies, and if such spending is factored in gasoline probably costs us more than $5 a gallon. The sad irony is that this military effort to secure cheap oil supplies inevitably backfires, and actually curtails supplies and boosts prices at the pump. The waste and fraud in issuing contracts to large corporations for work in Iraq only add to price increases.

When problems arise under conditions that exist today, it’s a serious error to blame the little bit of the free market that still functions. Last summer the market worked efficiently after Katrina – gas hit $3 a gallon, but soon supplies increased, usage went down, and the price returned to $2. In the 1980s, market forces took oil from $40 per barrel to $10 per barrel, and no one cried for the oil companies that went bankrupt. Today’s increases are for the reasons mentioned above. It’s natural for labor to seek its highest wage, and businesses to strive for the greatest profit. That’s the way the market works. When the free market is allowed to work, it’s the consumer who ultimately determines price and quality, with labor and business accommodating consumer choices. Once this process is distorted by government, prices rise excessively, labor costs and profits are negatively affected, and problems emerge. Instead of fixing the problem, politicians and demagogues respond by demanding windfall profits taxes and price controls, while never questioning how previous government interference caused the whole mess in the first place. Never let it be said that higher oil prices and profits cause inflation; inflation of the money supply causes higher prices!

Since keeping interest rates below market levels is synonymous with new money creation by the Fed, the resulting business cycle, higher cost of living, and job losses all can be laid at the doorstep of the Fed. This burden hits the poor the most, making Fed taxation by inflation the worst of all regressive taxes. Statistics about revenues generated by the income tax are grossly misleading; in reality much harm is done by our welfare/warfare system supposedly designed to help the poor and tax the rich. Only sound money can rectify the blatant injustice of this destructive system.

The Founders understood this great danger, and voted overwhelmingly to reject “emitting bills of credit,” the term they used for paper or fiat money. It’s too bad the knowledge and advice of our founders, and their mandate in the Constitution, are ignored today at our great peril. The current surge in gold prices – which reflects our dollar’s devaluation – is warning us to pay closer attention to our fiscal, monetary, entitlement, and foreign policy.

Meaning of the Gold Price – Summation

A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil prices higher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.

Certainly geo-political events in the Middle East under a gold standard would not alter its price, though they could affect the supply of oil and cause oil prices to rise. Only under conditions created by excessive paper money would one expect all or most prices to rise. This is a mere reflection of the devaluation of the dollar.

Particular things to remember:


If one endorses small government and maximum liberty, one must support commodity money.
One of the strongest restraints against unnecessary war is a gold standard.
Deficit financing by government is severely restricted by sound money.
The harmful effects of the business cycle are virtually eliminated with an honest gold standard.
Saving and thrift are encouraged by a gold standard; and discouraged by paper money.
Price inflation, with generally rising price levels, is characteristic of paper money. Reports that the consumer price index and the producer price index are rising are distractions: the real cause of inflation is the Fed’s creation of new money.
Interest rate manipulation by central bank helps the rich, the banks, the government, and the politicians.
Paper money permits the regressive inflation tax to be passed off on the poor and the middle class.
Speculative financial bubbles are characteristic of paper money – not gold.
Paper money encourages economic and political chaos, which subsequently causes a search for scapegoats rather than blaming the central bank.
Dangerous protectionist measures frequently are implemented to compensate for the dislocations caused by fiat money.
Paper money, inflation, and the conditions they create contribute to the problems of illegal immigration.
The value of gold is remarkably stable.
The dollar price of gold reflects dollar depreciation.
Holding gold helps preserve and store wealth, but technically gold is not a true investment.
Since 2001 the dollar has been devalued by 60%.
In 1934 FDR devalued the dollar by 41%.
In 1971 Nixon devalued the dollar by 7.9%.
In 1973 Nixon devalued the dollar by 10%.
These were momentous monetary events, and every knowledgeable person worldwide paid close attention. Major changes were endured in 1979 and 1980 to save the dollar from disintegration. This involved a severe recession, interest rates over 21%, and general price inflation of 15%.

Today we face a 60% devaluation and counting, yet no one seems to care. It’s of greater significance than the three events mentioned above. And yet the one measurement that best reflects the degree of inflation, the Fed and our government deny us. Since March, M3 reporting has been discontinued. For starters, I’d like to see Congress demand that this report be resumed. I fully believe the American people and Congress are entitled to this information. Will we one day complain about false intelligence, as we have with the Iraq war? Will we complain about not having enough information to address monetary policy after it’s too late?

If ever there was a time to get a handle on what sound money is and what it means, that time is today.

Inflation, as exposed by high gold prices, transfers wealth from the middle class to the rich, as real wages decline while the salaries of CEOs, movie stars, and athletes skyrocket – along with the profits of the military industrial complex, the oil industry, and other special interests.

A sharply rising gold price is a vote of “no confidence” in Congress’ ability to control the budget, the Fed’s ability to control the money supply, and the administration’s ability to bring stability to the Middle East.

Ultimately, the gold price is a measurement of trust in the currency and the politicians who run the country. It’s been that way for a long time, and is not about to change.

If we care about the financial system, the tax system, and the monumental debt we’re accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money – money the government and central banks absolutely cannot create out of thin air.

Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Runaway inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.

April 27, 2006

Dr. Ron Paul is a Republican member of Congress from Texas.

From The Desk Of Pastor Paul Viggiano

Here's a vote for a Christian voice

We shouldn't shy away from trying to press others to adopt our beliefs. We do it every time we vote or speak our minds.
By Paul Viggiano

After six months of regular church attendance, the atheist/attorney finally called for an appointment. I was thrilled! Was there a transformation? Had the Lord touched his heart? People come to church for all sorts of reasons. Why had he been coming so consistently? I was more than happy to meet with him; a bit curious, too.

He sat across from me in my study. He had listened to me for hours. Now I would listen to him. A thinker, he had pondered Christianity, but there were roadblocks. He voiced them.

"Why do Christians insist," he asked, "on forcing their political and ethical beliefs upon others?" I hadn't anticipated this question. He just didn't understand why something as personal and intimate as one's faith, had to spill over into politics. After all, faith is so holy and politics is so ... political.

I'd heard this before.

As a Christian, I am often bombarded by some undefined segment of our culture chastising me for seeking to "force" my beliefs on others and, as a March 15 letter to the editor asserts, "insist that they live by morality."

There seems to be legitimate confusion and even frustration. Here's my explanation:

I asked my lawyer/friend if he thought I should vote. He said I should. To him, voting was serious business. People ought to vote! Good Americans vote! But isn't it logically necessary that, in the very act of voting, one is seeking to force his beliefs upon everyone who is voting against whatever he is voting for? (You may wish to read that sentence again ... I'll wait.)

It doesn't seem consistent to tell me I should vote and then tell me that I shouldn't seek to force my beliefs upon others. That is exactly what voting does.

Walk with me into the booth:

The propositions and candidates stare at me from the confusing little punch-card booklet. Vote "Yes" vote "No" vote for "ME!" It seems I have some decisions to make. Should marriage be only between a man and a woman? Should it be illegal to terminate babies prior to birth? Should murderers be put to death? Should creation be taught in schools? Should the Pledge of Allegiance include some reference to God?

These decisions lie before us. Can you hear the question begging? When we vote, whose beliefs should we be seeking to force upon others? I believe the reasonable and conscientious vote to all of the above should be "Yes." It's someone else's belief that the vote be "No." Either way, somebody is seeking to force his beliefs on somebody else. In a society where people vote, this is simply unavoidable.

Since voters necessarily seek to force their beliefs upon others, it would appear that the actual objection is against those who have a religious genesis for their system of ethics and beliefs. People don't want religion forced upon them. If by saying this people mean they don't want to be forced to attend church against their will, I say "Amen."

But people fail to understand that Christianity is a world view. My faith is not like my health club or butcher who I visit and then forget about when I move on to a different category in my life. My faith informs every aspect of my life, including politics.

Why is it appropriate for certain people to vote in a manner consistent with what they learned from their parents or tabloids or sit-coms, but it is inappropriate for me to vote in a manner consistent with what I've learned from reading sacred scripture? After all, I think the scriptures are the zenith of truth and wisdom.

Why does the origin of my ideals somehow disqualify them (or me) from playing a part in the public arena? Why are the teachings of Moses and the Apostle Paul considered unacceptable influences in the venue of civic conscience, while the sentiments of Reiner, Moore and Penn are deemed admissible? It seems hardly fair to disqualify my opinion because you don't like its origin.

My attorney/friend's confusion was assuaged. I'm not sure if he was convinced. But if he wasn't, it's not because there was no reasonable answer to his question.

People should vote in a manner consistent with their highest beliefs. The Christian source for the highest ideals is the Bible. It trumps all human wisdom. "Trust in the Lord with all your heart," the Proverbs teach, "and lean not on your own understanding, in all your ways acknowledge Him and He will make your paths straight." That includes politics.

Vacation

We just got back from vacation. You ever need a vacation from your vacation? We had a great time. Easter at Dad's house. A week at my sisters with a visit to Yosemite. Then an anniversery weekend at a bed and breakfast in the mountains. Nights spent in front of the fireplace or in the jacuzzi spa. A sunset over Bass Lake (almost, we left before the sun made it down). An 8 mile hike in Mariposa Grove. I highly recommend anyone who gets the chance to visit the grove do so. Nothing like standing next to the biggest tree on earth. And of course good southern Barbeque and an incredible Steak house.

As for Yosemite. I love it, it's beautiful, however, it has become way too commercialized. Too many people.

But now I'm home and glad of it. My last two days of vacation I'm doing absolutely nothing. Just sitting on my butt reading and watching movies. I need the rest. It's good to have my own space, my own bed, my own computer, ect.

Spending over a week with family I reallized something though. God has truly blessed me and my children. I've reallized how much knowledge and understanding and guidance he really gives me. I've been reminded what a lack of that guidance brings. I have a great deal more appreciation for what I do have and a great deal more concern for my family.

Income tax

I was lucky enough to get a return this year. It seems silly to me that I have to ask the government to give me back my money. But every year I do. I think we should all write our congressmen and tell them read this article. Not that they would listen to us.


Cough Up

by Ron Paul


April 15th, our national tax day, comes this year just as Congress prepares to pass the 2007 federal budget. If you think paying taxes was painful this year, I’ve got some bad news: the new budget is a grotesque illustration of everything wrong with the federal government. At $2.7 trillion, it’s the largest budget in U.S. history by a long shot. Like it or not, the pressure to raise your taxes will be enormous in coming years no matter who controls Congress. The amount of money government spends, borrows, and prints simply cannot be sustained.

For most people, their income tax return represents their most meaningful interaction with the federal government. It requires them to confess their actions over the past year to the IRS in excruciating detail. It's an annual ritual guaranteed to elicit strong feelings of disgust. Thanks to the deception of income tax withholding, however, some people actually look forward to tax time and a much-anticipated refund. Imagine how quickly Americans would demand lower taxes and spending if they had to write the federal government a check each month.

Most people understandably want a simpler income tax system, but it’s useless to discuss tax reform without spending reform. Who wants a 40% flat tax? Who wants a national sales tax if it adds 50% to the retail price of everything we buy? In other words, why change the tax structure if spending stays the same? Once we accept that Congress needs $2.7 trillion from us, the only question is how it will be collected. The current answer is the labyrinthine tax code, which pits taxpayers against each other in a political scramble to make sure the other guy pays. The truth is that Congress does not need $2.7 trillion, or anything close to it, to fund the proper constitutional functions of the federal government.

The only tax reform needed is to lower or abolish existing taxes. When reform proposals seem complicated, the reason is simple: they obscure their true nature as schemes to shift the tax burden around. It’s not who pays or how we pay; it’s how much we pay.

The real enemy of tax reform is the spending culture in Washington. Let me repeat: we will never have tax reform in this country until Congress changes its spending habits. The reform rhetoric, regardless of which party it comes from, never changes the reality that federal spending grows every year. Congress spent $2.4 trillion in the last Bush budget; the new budget proposes to spend $2.7 trillion. The same unconstitutional agencies are funded, the same unwise programs are perpetuated, but at higher levels than last year. The previous budget serves merely as a baseline; the only question in any given year is how much spending will increase. Once created, no spending program is ever eliminated. The cycle goes on and on, with different administrations and different people in Congress.

But could America exist without an income tax? The idea seems radical, yet in truth America did just fine without a federal income tax for the first 126 years of her history. Prior to 1913, the government operated with revenues raised through tariffs, excise taxes, and property taxes, without ever touching a worker's paycheck. Even today, individual income taxes account for only approximately one-third of federal revenue. Eliminating one-third of the proposed 2007 budget would still leave federal spending at roughly $1.8 trillion – a sum greater than the budget just 6 years ago in 2000! Does anyone seriously believe we could not find ways to cut spending back to 2000 levels? Perhaps the idea of an America without an income tax is not so radical after all. It’s something to think about this week as we approach April 15th.

April 11, 2006

Dr. Ron Paul is a Republican member of Congress from Texas.

One year down, many more to go...

As I approach the first of many anniversaries to come in my marriage, I sit in wonder and awe. Is marriage what I expected to be? Nope! It’s wonderful and dreadful all at once. Wonderful in that I have the family I always dreamed of. I have a beautiful, loving, intelligent, Christian wife who loves me. I have an adorable little boy who also loves me. I am without a doubt a very blessed man. They are the answer to many years of prayers.

So what is the dread? The work! Marriage and fatherhood are more work than I ever imagined. I am, self-admittedly a lazy man. I know that to be the husband and father I want to be and that my family deserves will take a whole lot of work on my part. Don’t get me wrong, I anxiously await spending the rest of my life with Patty and Darrien, but there are times I long for the ease of bachelorhood, the freedom to do what I want, when I want, how I want, answering to no one. The life of a nomad wandering from place to place, never knowing what tomorrow will bring, and often not caring. Malcontent to stay in one place very long, always moving, always changing, always in a life of limbo. Always looking for the next adventure. Always going against the grain. Always rebelling against any authority in my life. Content to answer to no one.

No small wonder I left the navy, eh?

But now I’m in a cage of my own choosing as husband and father. A life which requires stability, responsibility, and a grounded ness which I am entirely unaccustomed. I don’t regret my decision to be a husband and father, but there are times I miss the freedom my wanton life once provided me. I’m still working on incorporating my Nomadic tendencies into my stable environment. So far the best I can come up with is to take my family to places of my past which, while not new to me, are new to them, and thus I get to re-live the joy of adventure through them.

However my life as a surfer of sofas is over. Maybe my children will follow in my footsteps someday. I’m sure my wife would just love that.

I've given up much, but I've gained more than I ever could have imagined.

Homeschool statistics

This is for those who constantly question my choice to homeschool my son. This is by far the best way to raise a child available today.

http://www.hslda.org/docs/nche/000010/200410250.asp

The Revival of Renewal

I logged on to a blog

http://therenewal.blogspot.com/

that has been in hibernation for what seems an eternity, and was blasted by a whole slew of articles. I'm glad to see ya'll have awakened from your slumber. It also seems that you are still loved and adored by all those Emmanuelites. I'll have to visit you more often.

Should the children of illegal aliens be citizens?

The Immigration Question

by Ron Paul



The recent immigration protests in Los Angeles have brought the issue to the forefront, provoking strong reactions from millions of Americans. The protesters’ cause of open borders is not well served when they drape themselves in Mexican flags and chant slogans in Spanish. If anything, their protests underscore the Balkanization of America caused by widespread illegal immigration. How much longer can we maintain huge unassimilated subgroups within America, filled with millions of people who don’t speak English or participate fully in American life? Americans finally have decided the status quo is unacceptable, and immigration may be the issue that decides the 2008 presidential election.

We’re often reminded that America is a nation of immigrants, implying that we’re coldhearted to restrict immigration in any way. But the new Americans reaching our shores in the late 1800s and early 1900s were legal immigrants. In many cases they had no chance of returning home again. They maintained their various ethnic and cultural identities, but they also learned English and embraced their new nationality.

Today, the overwhelming majority of Americans – including immigrants – want immigration reduced, not expanded. The economic, cultural, and political situation was very different 100 years ago.

We’re often told that immigrants do the jobs Americans won’t do, and sometimes this is true. But in many instances illegal immigrants simply increase the supply of labor in a community, which lowers wages. And while cheap labor certainly benefits the economy as a whole, when calculating the true cost of illegal immigration we must include the cost of social services that many new immigrants consume – especially medical care.

We must reject amnesty for illegal immigrants in any form. We cannot continue to reward lawbreakers and expect things to get better. If we reward millions who came here illegally, surely millions more will follow suit. Ten years from now we will be in the same position, with a whole new generation of lawbreakers seeking amnesty.

Amnesty also insults legal immigrants, who face years of paperwork and long waits to earn precious American citizenship.

Birthright citizenship similarly rewards lawbreaking, and must be stopped. As long as illegal immigrants know their children born here will be citizens, the perverse incentive to sneak into this country remains strong. Citizenship involves more than the mere location of one’s birth. True citizenship requires cultural connections and an allegiance to the United States. Americans are happy to welcome those who wish to come here and build a better life for themselves, but we rightfully expect immigrants to show loyalty and attempt to assimilate themselves culturally. Birthright citizenship sometimes confers the benefits of being American on people who do not truly embrace America.

We need to allocate far more resources, both in terms of money and manpower, to securing our borders and coastlines here at home. This is the most critical task before us, both in terms of immigration problems and the threat of foreign terrorists. Unless and until we secure our borders, illegal immigration and the problems associated with it will only increase.

April 4, 2006

Dr. Ron Paul is a Republican member of Congress from Texas.