Wikinvest Wire

Ron Paul on U.S. Government Ponzi schemes

Monday, January 05, 2009

From today's Madoff Fraud Allegations & Financial Markets Regulation hearing during which Ron Paul calls fractional reserve banking and our social security system Ponzi schemes.


guy n. cognito said...

thankfully no one at the SEC will be fired because of the powerful American Federation of Government Employees union.

the AFGE, proudly protecting incompetent bureaucrats, gross negligence, and outright corruption since 1932.

the AFGE makes the UAW look like a model of Japanese kaizen.

Adam said...

Ron Paul is wrong on both counts.

Think for a second.

Fractional reserve banking is not a Ponzi Scheme if you do not leverage too high.

Also SS is not a Ponzi Scheme unless you think the whole economy is one too. SS is based off people working.

In reality it is about moderation.

doc holiday said...

In general, I like Ron, and he makes good points in his sermons, but then he always leaves yah hanging with no solution and then he looks powerless and reminds yah that elected officials really never do much but talk. I like the idea of getting rid of The SEC and while we are re-inventing the circus, why not get rid of Department Of Justice, for all their lack of involvement in the Bush era of collusion and fraudulent activity and all the false and misleading crap, treason... blah, blah...

Adam said...

By whole economy, I mean, in general what has been done in millennium. Trading, making stuff, people working, etc.

Not the past 5 to 10 year bubble.

Dan said...

Fractional reserve banking is not a Ponzi Scheme if you do not leverage too high.

I think you're high. ; )


Adam said...

Nope you are high. Not all savers need their money at the same time.

Too much loaning is bad. Fractional Reserve banking in and of itself is not.

Like I said. In moderation, it is a good proficient way to manage money.

Anonymous said...


Re: "Not all savers need their money at the same time"

As Mises or any good Austrian economist would point out, the issue is private property rights. You either have it or you don't. It is the savers' money, not the bank's, not the government's and not anyone else's. So, if all savers want to use their money at the same time, fractional reserve banking is fraud, ergo a Ponzi scheme. Bank failures caused by bank runs are a natural consequence of fraud.

In the absence of strong private property rights, we are on the path to fascism.

Anonymous said...

"Too much loaning is bad. Fractional Reserve banking in and of itself is not.'

Fractional reserve system is theoretically good, but people are naturally greedy. They will loan too much again, just as they did in the past 5 years and many times before. It is completely unmanageable. Read "The Creature From Jekyl Island" for an excellent review of the Fed and fractional reserve system. It's a ponzi scheme and Ron Paul was dead on.

Adam said...

There were 5 major bank runs in the 1800s and one in 1907. 1819, 1837, 1873, and 1893.

The US was essentially on a gold or silver standard and laissez faire in the 1800s.

FDIC has lessened the impact of panics and bank runs.

Our current financial mess is nothing compared to those panics.

When was our last one? 1929? That is 80 years ago. Please do not tell me a lack of Fed or gold standard would be better.

I'll read the "Creature" synopsis to see if that changes my mind.

Anonymous said...


A hard money standard is not going to prevent bank runs. Banks not committing fraud will prevent bank runs. However, a hard money standard will limit the scope of the fraud by exposing it at an earlier stage, unlike what we have today. Central banking disguises the fraud as economic planning so that it can be practiced over a much longer time period. The final result is always the same. Presently, this is ending with a worldwide run on the whole Fed/Treasury fiat network. We are in a currency debasement race to the bottom. That is how the government Ponzi scheme usually ends. At the root of all this is a personal position on private property rights. If you believe they must be upheld, then you are a capitalist. If you believe otherwise, you are a socialist. There is no middle ground.

Anonymous said...

"Fractional reserve banking is not a Ponzi Scheme if you do not leverage too high."

Who is loaning the US Fed continuously to help grow this trillion dollar debt?

Oh the Chinese.

If Ponzi can print money like the US Fed, will he get busted?

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