Subscribe to Mic Daily
We’ll send you a rundown of the top five stories every day

Thursday's Supreme Court ruling on President Obama's flagship legislation and Attorney General Eric Holder's vote of contempt are stealing the headlines this week. The 24-hour news stations are devoting all their energies into covering every nuanced angle of each decision, interviewing prominent politicians, and monitoring the public's reaction to these significant changes in Washington D.C. In the shadow of these two monumental decisions, presidential candidate and Congressional Baseball Hall of Fame inductee Ron Paul held a hearing in the Domestic Monetary Policy and Technology subcommittee, chaired by Dr. Paul, entitled: Fractional Reserve Banking and the Federal Reserve: The Economic Consequences of High-Powered Money. 

Chairman Paul, an adherent to the Austrian School of economics, invited fellow Austrians Dr. Joseph Salerno, Dr. John Cochran, and Dr. Lawrence H. White to discuss the effects fractional reserve banking and central economic planning have on the economy. If the need for massive government intervention in health care - that will benefit Big Pharma more than the Average Joe - and the Fast and Furious gun-running scandal are the symptoms; central planning, along with fractional reserve banking is the disease. 

The unintended consequences of any government intervention, whether it be foreign or domestic, rarely affects those who enact the legislation in the same way as those who are on the receiving end. Both sides of the Congressional aisle make millions trading stocks of companies who lobby on bills that come before their committees. Sure it's legal, but the conflict of interest is so obvious even a NBA referee could see it. The military-industrial complex continues to reap massive profits from the perpetual warfare state. Big Pharma loves government involvement in health care. In fact, the pharmaceutical industry has received a 77,500% return on their lobbying investment. This merging of state and corporate powers on the backs of the taxpayer, is a symptom of the Federal Reserve system and fractional reserve banking. 

As Dr. Salerno's testimony stated, "Fractional reserve banking occurs when the bank lends or invests some of its deposits, payable on demand, and retains only a fraction in cash reserves." Salerno goes on to explain how fractional reserve banking is inherently inflationary. Since all banks engage in fractional reserve banking, the money supply continues to increase, prices go up, markets are distorted, we have the booms, and then the inevitable busts. The law of diminishing marginal utility tells us that the marginal utility of each homogeneous unit decreases as the supply of units increases. The more money Ben Bernanke drops from his helicopters, the less valuable the currency becomes. Purchasing power lost. 

Who benefits from the inflationary, debt based pyramid scheme that is the Federal Reserve system? The banksters who get the secret trillion dollar loans, the special interests that throw millions to the legislatures, and the ever-expanding state apparatus that continues to threaten the life and liberty of its citizens. Who doesn't benefit from paper money and central planning? Both Greeks and Americans. Those on fixed incomes. Those burdened by massive student loan debt. The savers. The job creators. 

The Federal Reserve system is the culprit. The gun-running scandal that has led to Eric Holder being held in contempt of Congress is a symptom of big, mischievous government - fueled by endless, funny money. Our health care crisis is a result of previous government interventions, including the Fed's monetary manipulation. Murray Rothbard explained the unintended consequences of government intervention, "Our very real medical crisis has been the product of massive government intervention, state and federal, throughout the century; in particular, an artificial boosting of demand coupled with an artificial restriction of supply. The result has been accelerating high prices and deterioration of patient care. And next, socialized medicine could easily bring us to the vaunted medical status of the Soviet Union: everyone has the right to free medical care, but there is, in effect, no medicine and no care." 

It's important to understand that failed government policies aren't only the inevitable result of central planning -- they're also ripping us off!