How “Bad Banks” Became Too Big to Trust
Ron Paul

As banks merge and consolidate, Americans lose not just financial security but personal freedom. In this exclusive Q&A, Dr. Ron Paul explains how low interest rates, digital dollars and financial centralization threaten liberty – and how to fight back…

In September, Birch Gold Group hosted a live webinar titled “Bad Banks: How They Control You, Not Just Your Money,” featuring Dr. Ron Paul and Phillip Patrick. 

Thousands of Americans tuned in to hear their candid discussion on the hidden dangers of today’s banking system – from bail-ins and central bank digital currencies to the steady erosion of privacy and purchasing power. 

We received hundreds of thoughtful questions during the event, far more than time allowed. Below, Dr. Paul answers several of the most important ones. Read on for his thoughts on interest rates, CBDCs, cashless commerce and the timeless defense of honest money… 

1) “Isn’t the Fed’s low interest dangerous because the rich can borrow more easily than the middle class?”

• From Brian W.

First, Brian, I believe the Fed’s manipulation of interest rates is dangerous simply because it bears no relationship to reality. In a free market, interest rates are a means of price discovery. Interest rates are how savers and investors coordinate over time – when there’s lots of savings and capital is abundant, rates should naturally decline. When there’s a lot of demand for capital from entrepreneurs, rates should be high. 

When the central bank manipulates interest rates, it sends false signals. A too-low rate tells borrowers, “Money is cheap and abundant.” 

So, who benefits most from artificially low rates? Those closest to the financial system.

The 18th-century economist Richard Cantillon wrote about this. The first recipients of newly created money – such as banks, financial institutions or government contractors – gain purchasing power before prices rise in response to inflation. So they can spend inflated money at pre-inflation prices. As this new money circulates through the economy, it gradually increases demand and prices, but those who receive it later, like working families, face higher prices. It’s a redistribution of wealth, favoring those closest to the source of money creation – finance insiders and their cronies. We still call it the Cantillon effect.

Low interest rates push prices up – all prices, from food and fuel to homes and commodities. Now, if you already own a lot of assets, you can enjoy the ride. But if you’re working to save up for a down payment on your first home, the ladder keeps getting pulled farther and farther away from you.

That’s not a free market. That’s a shell game that quietly drains purchasing power from savers and workers into the finance sector. 

Sound money doesn’t play favorites. When interest rates are set by the market – by real savings and time preferences – capital flows to its best and most efficient uses. Not to the best lobbyists. 

Honest money is a working family’s best defense against this kind of monetary malpractice.

2) “Will there be any hard-asset banks locally – or only secure facilities? And what happens to local banks if digital currencies arrive?”

• From Barbara D. 

America used to be a country of local institutions – bankers who knew your name, hardware stores that kept a ledger by the register. Localism breeds both community and accountability. Centralization, on the other hand, breeds control. 

I do believe we’ll see local solutions: community vaulting services, state-chartered depositories like the Texas Bullion Depository. Private mints are another step in this direction. This is a healthy development! But there’s only one so far – despite folks from all 50 states who want to use them.

My concern about central bank digital currencies is mostly that they encourage centralization. A programmable dollar living on a federal ledger nudges every payment and every saver toward the center. That’s not designed to promote resilience – more like dependency and surveillance. Every single transaction funneling through Washington sounds like the end of privacy to me.

If we want communities and community banks to thrive, we should strengthen state protections for gold and silver as legal tender. 

Remember: you preserve local freedom by keeping options open – cash in hand, hard assets under sound custody, and a handful of different payment methods. Don’t let the government’s monopoly over our money become a monopoly over your speech and your liberties.

3) “Businesses refusing cash feels like a slippery slope to a cashless society. Shouldn’t cash be protected?”

• From Maria C.

I absolutely agree. Cash protects the poor and the dissident alike. You don’t need a smartphone to use a twenty-dollar bill. You don’t need permission from a payment processor to buy groceries with cash. 

That’s why I’ve always said: the freedom to transact is part of freedom of speech. If you can be cut off from your money for saying the “wrong” thing, how free are you?

When shops refuse cash, they call it convenience. In practice, it conditions people to accept a world where every purchase can be logged, reported or even canceled.

I’m not calling for heavy-handed mandates; I’m calling for common sense. States and cities can affirm cash payment as a consumer right. We can reward businesses that welcome cash. And we can vote with our feet.

A free society preserves offline options: Cash, face-to-face exchanges, even barter. Digital payments are acceptable as long as they remain options, not obligations.

4) “Can you explain the dangers of CBDCs?”

• From Anonymous

A CBDC is not just a digital dollar. We already have digital dollars in banks. A CBDC is a programmable dollar – issued and tracked on a government ledger. 

That makes two dangers immediate:

1. Surveillance by design. Every transaction becomes data for the state. First to collect, then to use, and, finally, to weaponize. “Nothing to hide” is not a principle of liberty, by the way – it’s a surrender of our liberties.
   
2. Control by code. Programmable money can have an expiration date. Or geo-fenced so it’s only good within a specific city or neighborhood. Even filtered by use – imagine money that won’t buy you gas, only groceries, for example. 

Programmable money is for controlling and disciplining citizens. That’s the wrong direction. 

5) “If more people move savings into precious metals, could the government seize those holdings the way we worry about bank deposits?”

• From Gregg S.

Banks hold liabilities to you. In other words, your bank deposit stops being your property and becomes an IOU from the bank. 

On the other hand, physical gold and silver is property you own. Like a house or a car. 

That may sound trite, but these are different categories both in legal precedent and in common sense. 

That said, no system is immune from political abuse – history reminds us of that. I think the better question to ask is, Where does the risk of arbitrary seizure rise the fastest? 

In centralized, digitized accounts that can be frozen at a keystroke? Or in dispersed, privately owned tangible assets?

I trust the logic of decentralization. Reduce counterparty risk, reduce points of failure, and reduce the need to ask permission to use what’s yours. If citizens become more independent – holding some wealth as real property rather than claims on a leveraged system – that makes society less fragile. 

That’s a good thing for liberty.

Prudence still applies: know the difference between allocated and unallocated accounts, between personal possession and custodial arrangements, between private contracts and politicized institutions. 

And remember one more thing: Tyranny loves convenience. Freedom usually requires a little more effort – but trust me, it’s worth it.

6) “Could a crisis be used to push CBDCs as the ‘savior’ of the system? What might that look like – and can it be avoided?”

• From Bill K.

The script is familiar: 

“The system is broken; we need extraordinary powers – temporarily, of course. And it’s for your own good.” 

In a severe economic panic, a CBDC will be marketed as instant relief: Fast payments to households, direct liquidity to businesses, “access” for the unbanked. The price tag is invisible – your privacy and your autonomy.

What would it look like? A weekend of “emergency measures.” Caps on withdrawals, limits on overseas transactions. Then, a promise of stability Monday morning. All you have to do is install this new app on your smartphone. 

That’s how sweeping changes happen: Fast, during times of panic, when people are at their most desperate.

Can we avoid it? Yes – by preparing before the panic. State-level protections for cash and precious metals. Legal frameworks that prevent financial blacklisting. Multiple payment options. And most of all, a citizenry that refuses the false choice between safety and freedom. 

7) “Why would anyone pay taxes with gold or silver if bad paper money exists? Isn’t that Gresham’s Law?”

• From David M.

Gresham’s Law says “bad money drives out good” when the law treats unequal things as equal – legal tender at a fixed rate. If the government forces you to accept a declining paper dollar and sets rigid exchange terms, people will naturally spend the bad money and save the good. That’s rational behavior.

So why would anyone spend gold or silver at all? Two answers.

First, freedom of choice. In a truly free market for money, you decide what to spend and what to save. Some will still choose to settle obligations in hard money because it’s honest and final. And there might be benefits for both the buyer and seller, depending on their agreement or contract.

Second, discipline. If states allow gold and silver to be used and remove taxes on them, they introduce competition that forces the Federal Reserve to take note. When the public can walk away from the bad money monopoly, maybe the Fed will start getting serious about “price stability.” 

Let good money and bad money compete openly. The public will make the right choice.

8) “How are gold and silver ‘liquid’ in a digital age?”

• From Les H.

Liquidity is the ability to turn value into what you need, when you need it, at a fair price. Digital rails are fast – but they’re stoppable. Tangible assets are slower – but they’re independent. With precious metals, liquidity comes from depth of global demand, 24-hour spot markets, and a network of dealers and private parties who’ll trade without permission from an exchange.

In normal times, metal converts to currency in minutes through reputable dealers. In abnormal times, possessing something the world instantly recognizes as money can be the difference between waiting for an app to unfreeze and getting on with your life. 

I’m not against technology; I’m against dependence. Keep multiple ways to pay—and keep some savings in a form that doesn’t need anyone’s permission to be useful.

A closing word

Freedom isn’t free—not because of foreign wars, but because it demands self-control. The discipline to save. The patience to learn history. The courage to hold some wealth in forms that can’t be inflated away. If there’s one lesson I wish every young American would take to heart, it’s this: honest money is the foundation of an honest society. Guard it, and it will guard your liberty.

 

 

 

 

Ron Paul is a medical doctor, a retired Captain of the U.S. Air Force, an author who’s published 21 books and former twelve-term U.S. Congressman representing the state of Texas. He’s emerged as one of the leading voices challenging government’s addiction to deficit spending and the Federal Reserve’s wealth-destructive monetary policies. He works with Birch Gold Group to educate Americans about the threats to their financial futures, and how to protect themselves and their families. Outside of Birch Gold, you can find him on Facebook and X.

 

 

www.birchgold.com