Friday, Sep 26, 2008
Update e-mail from Ron Paul (He aint happy)
Ron Paul's Campaign for Liberty: My Answer to the President
Also visit the Campaign For Liberty Website - Full e-mail in the first comment.
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.
Posted by planning4acrash @ 02:55 AM (515 views) Add Comment
15 Comments
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1. planning4acrash said...
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
2. cornishman said...
3. sold out said...
Ron Paul schools benanke on the bail out plan
http://www.youtube.com/watch?v=dv6rQ0U01Yc&eurl=http://www.infowars.com/?p=4841
4. Dbc Reed said...
Yes but RP is now being more orthodox in his approach.He is not calling for the return of the Gold Standard nor did he with Bernanke in the youtube clip posted yesterday( which I suspect ,I have n't checked,is the one sold out is referring to above).His present approach ,that American interest rates were kept artificially low in order to extend the benefits of home ownership to poorer people, is more mainstream.There is an interesting story in the New York Times for 30.Sept 1999 headed
Fannie Mae eases credit to aid mortgage lenders (accessible on Google as such) that alleges that mainly Clinton but also "mortgage companies have been pressing Fanny Mae to help them make more loans to so-called subprime borrowers."
5. Markus said...
Don't talk sense! That's against the rules!
6. planning4acrash said...
Ron Paul, during the news about the bailout votes, on Alex Jones Tv"Economic Terrorism"1/2
Ron Paul on Alex Jones Tv"Economic Terrorism"2/2
7. Dbc Reed said...
No reference again to returning to Gold Standard-just references to decreasing government expenditure in latest Alex Jones /youtube clip.Most of savings are sensible especially on military adventures.He even wants to stop the harassment of Cuba .But is now the right time to call for cuts to Welfare spending? With a recession pending?
The previous posting which referred to New York Times of 30.9.1999 does not seem to be recoverable from Google in the way indicated,so the full quote is:
Fannie Mae eases credit to aid mortgage lenders
Fannie Mae, the nation's biggest underwriter of home mortgages,has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stockholders to maintain its phenomenal growth in profits.
In addition,banks ,thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called sub-prime borrowers.
8. planning4acrash said...
Sold out, thought I'd post the embed link to your "Ron Paul Schools Bernanke on the Bail Out"
9. planning4acrash said...
Dbc Reed, absolutely agree, but, in a real political environment, he would he head to head with Kucinich and Nader, both of whom would wrestle social net exemptions. Ron Paul believes in a free market, as I do, but he recognises that, like a sick patient, and he is a doctor, that the economy needs a transition, where the public are to a certain extent bailed out, or should I say, be compensated for the fraud. Ron would argue that the free market will provide such justice if allowed to do so, and that it can provide greater justice than any government intervention.
Personally, I would rather see taxes cut than welfare going up, because you are the best person to decide what is best for you!
10. planning4acrash said...
Further economic news from Alex Jones Show today:
Bob Chapman from The International Forecaster
Part 1
Part 2
Part 4 (Can't find part 3 on youtube)
Webster Tarpley also on the show, but It hasn't been posted yet.
11. Planning4acrash said...
From Bob Chapman's The International Forecaster
A 700 Billion Bailout With No Review or Oversight Whatsoever
Half a Trillion Bailout For The Creators of the Market Crisis
12. planning4acrash said...
From Bob Chapman's The International Forecaster
A 700 Billion Bailout With No Review or Oversight Whatsoever
Half a Trillion Bailout For The Creators of the Market Crisis
13. p. doff said...
P4ac
Please will you stop spamming this site with Alex Jones cr@p. Haven't you got anything more useful to do today/this week?
14. Planning4acrash said...
Thanks for the tip p. doff. I anticipated that by consolidating all that usefull info on one thread. I look forward to your first useful post. Clearly you have heaps of wisdom stored up there, so I look forward to your contribution.
15. planning4acrash said...
Thanks for the tip p. doff. I anticipated that by consolidating all that usefull info on one thread. I look forward to your first useful post. Clearly you have heaps of wisdom stored up there, so I look forward to your contribution.