Just Got An Email From Ron Paul

[Thunderbroom]

I think this is at least the fourth thread regarding the current financial mess in the US. I'm not highly studied in economics, but this message makes sense to me:

 

Dear Friends:

 

The financial meltdown the economists of the Austrian School predicted has arrived.

 

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

 

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

 

Still, at least a few observations are necessary.

 

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

 

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

 

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

 

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

 

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

 

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

 

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

 

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

 

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

 

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

 

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

 

The only thing we learn from history, I am afraid, is that we do not learn from history.

 

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

 

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

 

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

 

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

 

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

 

In liberty,

 

Ron Paul

 

Maybe I'll merge all of these threads when I get home from my gig tonight.

[RSBro]

I got that one too, and this one yesterday-

 

******

 

Wednesday, September 24, 2008

 

Dear Friends,

 

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

 

The events of the past week are no exception.

 

The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."

 

That describes the current bailout package to a T. And we're being told it's unavoidable.

 

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

 

 

[Craig Vecchione]

He's a Senator. What's he done to prevent this? I'm asking as a serious question, not to bust balls.

[ThudMaker]

He's a Senator. What's he done to prevent this? I'm asking as a serious question, not to bust balls.

Actually, he's a rep, not a Senator.

[lug]

He's a Senator. What's he done to prevent this? I'm asking as a serious question, not to bust balls.

 

He's voted against party line more than any other republican if that helps.

[Craig Vecchione]

 

Actually, he's a rep, not a Senator.

 

 

Oops. Oddly enough, I actually meant to write "Congressman".

[Thunderbroom]

He's voted against party line more than any other republican if that helps.

 

Yep. Check his voting record. He always sides with the Constitution.

 

He's the only Republican that I have ever supported via my vote and my wallet.

[1tallbassguy]

 

He's a Senator. What's he done to prevent this? I'm asking as a serious question, not to bust balls.

 

 

 

Congressman Paul schools Ben Bernanke

 

[YOUTUBE]dv6rQ0U01Yc[/YOUTUBE]

[JacieFB]

Ron who?

 

 

Wait...your spam folder didn't catch it?

 

 

 

 

 

 

 

I kid. An interesting read, for sure.

[walkerci]

Ron Paul is dead on correct.

Again.

And again.

[ThudMaker]

What dictatorial powers is Paulson going to get out of this? Looks like someone is trying to scare people. That person would be Ron Paul.

[Ender_rpm]

The concern is that Paulson will take over the entire economy as Econ Czar, and tell the nice, good hearted capitalists what to do. Um Ooook.

 

He's repeating what most conservative economists have been saying for at least 5 years, that all markets are cyclical, what goes up must come down, etc. All markets. There is no such thing as a non-cyclical market, anyone who tells you different is selling something

[J.]

I think he makes a good point in comparing the onset of the Great Depression and the market drop of 1921 to the current situation. If this bailout fails, we'll probably see a sharp correction that will be very, very painful. At least we'll be able to take our lumps and climb back out of the hole quickly. If the bailout package passes, we might postpone the crash, but it's entirely possible that it will happen eventually, and when it does it might be even more severe.

 

It's a roll of the dice at this point.

[In Absentia]

 

Yep. Check his voting record. He always sides with the Constitution. He's the only Republican that I have ever supported via my vote and my wallet.

 

 

Yep, they call him "Dr. No".

[Craig Vecchione]

Okay, so he has voted for the Constitution. But does that answer my question? What's voting for the Constitution done to help prevent this mess? Has he written any bills to try to help?

 

Long ago a manager told me, "don't come to me with a problem unless you also have a proposed solution". I'm kinda saying the same thing here unless you folk who are up on Rep. Paul can school me on what he's done.

[ThudMaker]

Okay, so he has voted for the Constitution. But does that answer my question? What's voting for the Constitution done to help prevent this mess? Has he written any bills to try to help? Long ago a manager told me, "don't come to me with a problem unless you also have a proposed solution". I'm kinda saying the same thing here unless you folk who are up on Rep. Paul can school me on what he's done.

Looks like he's done a lot of sensationalizing on what's happening right now. It's one thing to point out the flaws in the system and work with people to help them understand why things are off. This guy is a marketing bull in a china shop. Nobody with any sense about them will recognize that Paulson/Tres sec is going to get "dictatorial" powers. Nothing more than another turn off, but it sure does a good job of getting his little army of believers all in a snit.

[Thunderbroom]

 

Okay, so he has voted for the Constitution. But does that answer my question? What's voting for the Constitution done to help prevent this mess? Has he written any bills to try to help? Long ago a manager told me, "don't come to me with a problem unless you also have a proposed solution". I'm kinda saying the same thing here unless you folk who are up on Rep. Paul can school me on what he's done.

 

 

I honestly can't answer your question Craig, but I'm gonna guess that IF he has attempted to write legislation that his own party has likely blocked it since he's an outsider of extreme proportions within Congress. My understanding is you can write bills all day long but have to have the backing of the appropriate committee and sponsorship to get it to move forward.

[Thunderbroom]

 

Looks like he's done a lot of sensationalizing on what's happening right now. It's one thing to point out the flaws in the system and work with people to help them understand why things are off. This guy is a marketing bull in a china shop. Nobody with any sense about them will recognize that Paulson/Tres sec is going to get "dictatorial" powers. Nothing more than another turn off, but it sure does a good job of getting his little army of believers all in a snit.

 

 

Since there is no deal as of now, we (you and I) are speculating at best.

[Craig Vecchione]

 

I honestly can't answer your question Craig, but I'm gonna guess that IF he has attempted to write legislation that his own party has likely blocked it since he's an outsider of extreme proportions within Congress. My understanding is you can write bills all day long but have to have the backing of the appropriate committee and sponsorship to get it to move forward.

 

 

 

If this is the case, and I'm stating this as a hypothetical since neither of us know whether your guess is correct, then it implies he is ineffective and should either change parties or leave office entirely. While many of us would love nothing more than a Congress that does nothing, that attitude is born of the ineptitude displayed daily by Congress over the past many years. In reality they should be competent legislators who can lead this country and properly represent their states. Yes, I'm laughing too as I write this. But the fact remains that *if* a Congressman can't get a good bill passed, he's not a very good Congressman. That's all the do....write, sponsor, co-sponsor and vote on bills. If they can't do that effectively, they need to go.

[Thunderbroom]

 

then it implies he is ineffective and should either change parties or leave office entirely.

 

 

His constituents (who include lug) continue to reelect him because arguably they support his stance. Why is this a problem?

[ThudMaker]

If this is the case, and I'm stating this as a hypothetical since neither of us know whether your guess is correct, then it implies he is ineffective and should either change parties or leave office entirely. While many of us would love nothing more than a Congress that does nothing, that attitude is born of the ineptitude displayed daily by Congress over the past many years. In reality they should be competent legislators who can lead this country and properly represent their states. Yes, I'm laughing too as I write this. But the fact remains that *if* a Congressman can't get a good bill passed, he's not a very good Congressman. That's all the do....write, sponsor, co-sponsor and vote on bills. If they can't do that effectively, they need to go.

Well in fairness to Paul, his constituents love him. He must be getting the job done in their eyes, which is his job. Personally, I like him and I also like most of his positions. He just doesn't appear to have much of an ability to work with other elected officials, and he lacks the charisma necessary for a large group of people to follow him. It's too bad, because he could be a real game changer on the conservative end of the Republican party.

[catphish]

 

Well in fairness to Paul, his constituents love him. He must be getting the job done in their eyes, which is his job. Personally, I like him and I also like most of his positions. He just doesn't appear to have much of an ability to work with other elected officials, and he lacks the charisma necessary for a large group of people to follow him. It's too bad, because he could be a real game changer on the conservative end of the Republican party.

 

 

Agreed. If the libertarian party could find that inspiring figure head who could down play the fringe whacko membership, and deal effectively with the members of the two major parties, they would be a legitimate threat.

[toolbar]

 

Okay, so he has voted for the Constitution. But does that answer my question? What's voting for the Constitution done to help prevent this mess? Has he written any bills to try to help? Long ago a manager told me, "don't come to me with a problem unless you also have a proposed solution". I'm kinda saying the same thing here unless you folk who are up on Rep. Paul can school me on what he's done.

 

 

Just a sample:

 

http://www.govtrack.us/congress/person.xpd?id=400311&tab=bills

http://en.wikipedia.org/wiki/Legislation_sponsored_by_Ron_Paul

[ThudMaker]

 

Just a sample: http://www.govtrack.us/congress/person.xpd?id=400311&tab=bills

This was one that should gain more traction. . . . .

 

H.J.Res. 46: Proposing an amendment to the Constitution of the United States to deny United States citizenship to individuals born in the United States to parents who are neither United States citizens nor persons who owe permanent allegiance to the United States.

 

It's a pretty simple concept that would help with border security and the illegal alien problem we have, too.

[RSBro]

 

This was one that should gain more traction. . . . . H.J.Res. 46: Proposing an amendment to the Constitution of the United States to deny United States citizenship to individuals born in the United States to parents who are neither United States citizens nor persons who owe permanent allegiance to the United States. It's a pretty simple concept that would help with border security and the illegal alien problem we have, too.

 

 

I remember when that was brought up. Was, and still is, a great idea.