In my opinion Ron Paul is the most financially knowledgeable politician I’ve ever heard speak. This was forwarded to me yesterday by someone on his website’s mailing list and I thought some people on here may be interested. Enjoy! ************ FW: My Answer to the President 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
Good post. Why isn’t he the republican candidate for presidency? Why have a war maverick and a hockey mom beat this guy out in the nomination?
ancientmtk Wrote: ------------------------------------------------------- > Good post. Why isn’t he the republican candidate > for presidency? Why have a war maverick and a > hockey mom beat this guy out in the nomination? I voted for him in the Texas Republican primary, after McCain had already locked it up. I think he got about 10% in my state, which is far more than Bob Barr will get when I vote for him in the national election.
Ron Paul ftw too bad Mccain or Obama will both bring this country down
I voted for him as well. He lost because he wouldn’t give bread and circuses to the masses using other people’s (confiscated) money. Much easier to buy votes with unfunded liabilities and debt for our grandchildren to pay than to win them on principle.
I was very impressed with him during the debate. Sad that this guy can’t get much vote!
Wonder why the media does not allow him any air time. Who controls the media anyways?
It is always ironic to see paultards on this forum. Hey, if you believe in gold based currency, great. It is then just the whole modern finance idea is magic, based on imaginary money changing hands and we are just shuffling papers. Good job, way to cut a branch on which you are sitting.
CFAchief Wrote: ------------------------------------------------------- > It is always ironic to see paultards on this > forum. Hey, if you believe in gold based currency, > great. It is then just the whole modern finance > idea is magic, based on imaginary money changing > hands and we are just shuffling papers. Good job, > way to cut a branch on which you are sitting. Paultards? There is nothing retarded about wanting a sound currency. The federal reserve is responsible for so much of the current problem, both directly and indirectly, it’s mind boggling. I think Ron Paul effectively explained it, so I won’t repeat points already made. Setting aside the current situation, central banking and the fiat money system has had and will continue to have a catastrophic impact on our currency. A dollar in 1900 was worth about 5 cents in 2000, this was not the case from 1800 to 1900. When more money is injected into the system, but total wealth remains constant, the Federal Reserve is stealing from the American people. Why do you think most families require two incomes? It isn’t because of the womens rights movement, it’s because real wages haven’t kept pace with the rampant inflation in our lifetime and our parents lifetime. This bailout will be funded through more taxes, more debt being issued, and the printing of money, none of which are a good thing. This doesn’t even address prior bailouts by the Fed which led to all of the moral hazard in our system. Ron Paul is spot on with regard to financial matters and I would encourage you to look into with an open mind.
CFAchief Wrote: ------------------------------------------------------- > It is always ironic to see paultards on this > forum. Hey, if you believe in gold based currency, > great. It is then just the whole modern finance > idea is magic, based on imaginary money changing > hands and we are just shuffling papers. Good job, > way to cut a branch on which you are sitting. So you support mugabe?
Ron Paul is wrong and anyone who wants a gold backed currency is never going to make it through the CFA because their knowledge of economics is clearly sub par at best.
"The financial meltdown the economists of the Austrian School predicted has arrived. " Yes sir.
Well I have an MA in Econ, am a level 3 candidate, and have been reading Austrian economics for 4-5 years. So if Greenman is serious, he can go and print himself some money.
ancientmtk Wrote: ------------------------------------------------------- > Good post. Why isn’t he the republican candidate > for presidency? Why have a war maverick and a > hockey mom beat this guy out in the nomination? So the Ron Paulophiles can be like the Austrian School and say ‘hey everybody look at me I’m so smart told you so nanny nanny booo boo’ in a few years (duh).
jmh530 Wrote: ------------------------------------------------------- > Well I have an MA in Econ, am a level 3 candidate, > and have been reading Austrian economics for 4-5 > years. So if Greenman is serious, he can go and > print himself some money. Zing! +1
good to see the closet ron paulites come out of the cfa woodwork. i am not even american ,but i am a big fan.been following him since 2003 (thanks to financialsense.com and lew rockwell). the modern economists with their mathematical models will never accept austrian economics .its ok,academia is as fundamentalist as jihadi bombers. btw, ron paul doesnt say we go back to a gold standard -he says, its easier(today) to have competing currencies -we will see how long the fed’s monoploy can be maintained if it keeps inflating.sound money always trumps fiat trash.
greenman101 Wrote: ------------------------------------------------------- > Ron Paul is wrong and anyone who wants a gold > backed currency is never going to make it through > the CFA because their knowledge of economics is > clearly sub par at best. not only are you wrong about RP’s argument on sound money today,but also about CFA candidates -clearly because I read the economics taught in CFA only to understand the mass taught view -which does have some useful points but not much information on why it is wrong to model human action thru math models
greenman101 Wrote: ------------------------------------------------------- > Ron Paul is wrong and anyone who wants a gold > backed currency is never going to make it through > the CFA because their knowledge of economics is > clearly sub par at best. Not to mention lack of knowledge of history & civics. RP needs to study more of the great democracies of the world before he esposes his libertarian non-sense.
I love how people opposed to him never seem to make a pesuasive argument against him but simply dismiss him. Why not make a case?
accountant23 Wrote: ------------------------------------------------------- > I love how people opposed to him never seem to > make a pesuasive argument against him but simply > dismiss him. Why not make a case? its been done. RP fans are just as fundamentalist and out of touch as he is.