Here's Congressman Ron Paul's January 22, 2009 statement on H.J. Res 3, the Disapproval of Obligations Under the Emergency Economic Stabilization Act of 2008:
I thank the gentlelady for yielding, and Mr. Speaker, I rise in support of this resolution because I don't believe the bailouts can work, and more spending isn't the answer.
Actually, we should have talked more about prevention of a problem like we have today than trying to deal with the financial cancer that we are dealing with. But the prevention could have come many decades ago. And many free-market economists predicted, even decades ago, that we would have a crisis like this. But those warnings were not heeded, and even in the last 10 years there have been dire warnings by people who believe in sound money and not in the inflationary system that we have that we will come to this point.
Over those decades we were able to bail out to a degree and patch over and keep the financial bubble going. But today, we are in a massive deflationary crisis, and we only have two choices. One is to continue to do what we are doing: inflate more, spend more, and run up more deficits. But it doesn't seem to be working because it won't work because the confidence has been lost. The confidence in the post-Bretton Woods system of the dollar fiat standard, it is gone. This whole effort to refinance in this manner just won't work.
Now, the other option is to allow the deflation to occur, allow the liquidation of bad debt and to allow the removal of all of the bad investments; but that politically is unacceptable, so we are really in a dilemma because nobody can take a hands-off position. Politicians have to feel relevant. And, therefore, they have to do something. But there is no evidence that this is going to work.
Now we hear that there is a proposal, and we read about it in the paper, and I don't know who came up with this, but it is the idea of having a bad bank. Let us create a government bad bank, and this bad bank is to take the bad debt from the bad bankers and dump these assets onto the good citizens. Well, I think that is a very bad idea. I mean, it doesn't make any sense for the innocent American citizen to bear the burden.
But others will say no, we will bail out the citizens as well. But ultimately, it is the little guy that loses on this. The bankers got $350 billion, and we can't account for it and their assets don't look that much better, and yet the American people are still suffering. It didn't create any more new jobs. The attempt now will be maybe to redirect this. But, unfortunately, it will not be any more successful.
The fallacy here is we are trying to keep prices high when prices should come down. What do we have against poor people? Lower the price of houses, get them down. A $100,000 house, get them down to $20,000. Let a poor person buy these houses. That is what we want.
But this is a remnant of the philosophy of the 1930s when it was thought we were in trouble because the farmers weren't getting enough money for their crops. So people were starving in the streets, and guess what the policy was that came out of Washington: plow under the crops and then maybe the prices will go up. Diminish the supply, and it will solve our problem. It didn't work then, it won't work today.