Jeff Tucker and Tom DiLorenzo discuss Henry Hazlitt's classic Economics in One Lesson during Mises University 2008:
YouTube
Tuesday, September 30, 2008
The (Near) Death of the State (Lew Rockwell)
Lew Rockwell may exaggerate slightly, but the failure of the bailout bill was indeed a tremendous victory:
I'm fully aware that Paulson and Bernanke have some nefarious scheme in mind to reverse the thrilling defeat of their criminal bailout package, a package shot down by independent members of Congress on both sides. But reflect for a few minutes on what it means that the House did this. It was a revolutionary act in the best sense of that term.
The entire establishment was united in favor of what was surely the most horrible and outrageous bill ever to come before Congress. The Fed, the Treasury, leadership of the Democrats and Republicans, the Wall Street Journal, and the New York Times, all the major think tanks, most talking heads, the wealthiest corporations, important academics — in short, the whole of the power elite — were united in favor of this awful thing that proposed the following: Americans were to be stripped of their earnings and their future to prop up failed enterprises.
Read the rest
I'm fully aware that Paulson and Bernanke have some nefarious scheme in mind to reverse the thrilling defeat of their criminal bailout package, a package shot down by independent members of Congress on both sides. But reflect for a few minutes on what it means that the House did this. It was a revolutionary act in the best sense of that term.
The entire establishment was united in favor of what was surely the most horrible and outrageous bill ever to come before Congress. The Fed, the Treasury, leadership of the Democrats and Republicans, the Wall Street Journal, and the New York Times, all the major think tanks, most talking heads, the wealthiest corporations, important academics — in short, the whole of the power elite — were united in favor of this awful thing that proposed the following: Americans were to be stripped of their earnings and their future to prop up failed enterprises.
Read the rest
Monday, September 29, 2008
Lipstick on a Bailout (Ron Paul)
Here's Ron Paul's latest Texas Straight Talk, which was published before today's vote but was inaccessible due to the House site being overwhelmed most of the day:
This time last week, the biggest bailout in the history of the world seemed to be a fait accompli. Last weekend, the Fed Chairman and the Secretary of the Treasury had harsh words of doom and gloom for Congressional leaders, with the rest of the administration parroting along, and by last Monday it seemed both parties were about to fall in line and vote our Republic away by socializing the banking industry through this bailout.
Foolish business behavior was about to be rewarded, and propped up a little longer, the bubble blown a little bigger, and our coming Depression made that much greater, but then something happened on the way to the House floor.
Citizens made their voices heard.
The real story behind the story in Congress this week was the thousands of calls and emails sent to Representatives, clogging up inboxes and even slowing down the House internet system. Slowly, like the Titanic turning around, sentiments on the Hill shifted, and we heard Congressmen capitulating and changing their tune a little, desperately trying to find ways to salvage the bailout without completely enraging their constituencies.
Now we hear about taxpayer protections, about golden parachutes, and about other nuances that hardly cover up the fact that we would be creating more money out of thin air and further devaluing the dollar! The problem is not HOW the government is spending this money; it’s the fact that the government is spending this money. We don’t have it. We are already nearly $10 trillion in debt, not including unfunded liabilities. We already spend about $1 trillion a year we don’t have on our overseas empire. Now nearly $1 trillion more is somehow supposed to magically appear and solve all our problems! No – creating more money might delay the inevitable for some well-connected banks on Wall Street, but in a few weeks we will find ourselves right back in this same position, but much poorer.
The unfortunate thing is that we’ve already spent at least $700 billion on other bailouts that did not solve the problem. And while all this negotiation was taking place, the auto industry was quietly bailed out, with no controversy, no discussion, to the tune of $25 billion.
Inevitably, it appears Congress will call their constituents’ bluff and the bailout will pass, because that is the habit Wall Street and Washington have fallen into. People are right to be concerned about our financial future. I’ve been talking for 30 some years about reasons we need to be concerned and change our ways. We find ourselves now in a position of no good options, and no silver bullets. But the worst thing we can do is to compound our problems by intensifying the mistakes of the past. We do have tough economic times ahead, no doubt, no matter what we do, even if we do nothing. The question, is will we have the courage to take our medicine now and get it over with, or will we prolong the misery for many years to come? I’m less and less optimistic about the answer to that question.
This time last week, the biggest bailout in the history of the world seemed to be a fait accompli. Last weekend, the Fed Chairman and the Secretary of the Treasury had harsh words of doom and gloom for Congressional leaders, with the rest of the administration parroting along, and by last Monday it seemed both parties were about to fall in line and vote our Republic away by socializing the banking industry through this bailout.
Foolish business behavior was about to be rewarded, and propped up a little longer, the bubble blown a little bigger, and our coming Depression made that much greater, but then something happened on the way to the House floor.
Citizens made their voices heard.
The real story behind the story in Congress this week was the thousands of calls and emails sent to Representatives, clogging up inboxes and even slowing down the House internet system. Slowly, like the Titanic turning around, sentiments on the Hill shifted, and we heard Congressmen capitulating and changing their tune a little, desperately trying to find ways to salvage the bailout without completely enraging their constituencies.
Now we hear about taxpayer protections, about golden parachutes, and about other nuances that hardly cover up the fact that we would be creating more money out of thin air and further devaluing the dollar! The problem is not HOW the government is spending this money; it’s the fact that the government is spending this money. We don’t have it. We are already nearly $10 trillion in debt, not including unfunded liabilities. We already spend about $1 trillion a year we don’t have on our overseas empire. Now nearly $1 trillion more is somehow supposed to magically appear and solve all our problems! No – creating more money might delay the inevitable for some well-connected banks on Wall Street, but in a few weeks we will find ourselves right back in this same position, but much poorer.
The unfortunate thing is that we’ve already spent at least $700 billion on other bailouts that did not solve the problem. And while all this negotiation was taking place, the auto industry was quietly bailed out, with no controversy, no discussion, to the tune of $25 billion.
Inevitably, it appears Congress will call their constituents’ bluff and the bailout will pass, because that is the habit Wall Street and Washington have fallen into. People are right to be concerned about our financial future. I’ve been talking for 30 some years about reasons we need to be concerned and change our ways. We find ourselves now in a position of no good options, and no silver bullets. But the worst thing we can do is to compound our problems by intensifying the mistakes of the past. We do have tough economic times ahead, no doubt, no matter what we do, even if we do nothing. The question, is will we have the courage to take our medicine now and get it over with, or will we prolong the misery for many years to come? I’m less and less optimistic about the answer to that question.
Bailout Fails! (Ron Paul)
Ron Paul celebrates the failure of the bailout bill in this YouTube, but says the economy will still continue to tank if the inflation of the money supply and insane congressional spending continue:
Hallelujah
Lew Rockwell celebrates the initial vote against the bailout:
What a heroic day! The people rose up against a coalition of every evil group in America: the central bank, Wall Street plutocrats, politicians, banksters, think tanks (including the pseudo-libertarian sort), big media, big academia, and big business, and won. Today we got a taste of what things may look like when the regime is finally toppled, and its theft and killing stopped. The Austrian economists are vindicated again, as is Rothbard's political analysis, and our pizza party for Mises's birthday today [t]ook on an especially festive air. The bad guys may yet beat us, but how sweet to see the CNBC types running around like chickens with their heads cut off. Now let's get to work to defend the free market and sound money, and finger the Fed and all who support it as the culprits. Oh, and by the way, congratulations, Ron Paul.
What a heroic day! The people rose up against a coalition of every evil group in America: the central bank, Wall Street plutocrats, politicians, banksters, think tanks (including the pseudo-libertarian sort), big media, big academia, and big business, and won. Today we got a taste of what things may look like when the regime is finally toppled, and its theft and killing stopped. The Austrian economists are vindicated again, as is Rothbard's political analysis, and our pizza party for Mises's birthday today [t]ook on an especially festive air. The bad guys may yet beat us, but how sweet to see the CNBC types running around like chickens with their heads cut off. Now let's get to work to defend the free market and sound money, and finger the Fed and all who support it as the culprits. Oh, and by the way, congratulations, Ron Paul.
Dr. Paul’s House floor remarks on the bailout
From Campaign for Liberty (the House site is completely shut down right now!):
Dr. Paul gave a quick speech on the House floor this morning concerning the bailout. Due to the nature of the debate today, he didn’t have time to read his full remarks, which were put into the congressional record and are featured below:
Update - Here’s the video of the remarks Dr. Paul delivered this morning:
Dr. Paul gave a quick speech on the House floor this morning concerning the bailout. Due to the nature of the debate today, he didn’t have time to read his full remarks, which were put into the congressional record and are featured below:
The process of this bailout reminds me of a panic-stricken swimmer thrashing in the water only making his situation worse. Even a “bipartisan deal”—whatever that is supposed to mean— will not stop the Congress from thrashing about.
The beneficiaries of the corrupt monetary system of the last three decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege.
The difficulties in our economy will continue because the Legislative and the Executive branches have not yet begun to address the real problems. The housing bubble’s collapse, as was the Dot Com bubble’s collapse, was predictable and is merely a symptom of the monetary system that brought us to this point.
Indeed, we do face a major crisis but it is much bigger than the freezing up of Wall Street and dealing with worthless assets on the books of major banks. The true crisis is the pending collapse of the fiat dollar system that emerged after the breakdown of the Bretton Woods agreement in 1971.
For 37 years the world built a financial system based on the dollar as the reserve currency of the world in an attempt to make the dollar serve as the new standard of value. However since 1971, the dollar has had no intrinsic value, as it is not tied to gold. The dollar is simply a fiat currency, which has fluctuated in value on a daily, if not hourly, bias. This worked to some degree until the market realized that too much debt and malinvestment existed and a correction was required.
Because of our economic and military strength, compared to other countries, trust in America’s currency lasted longer than deserved. This resulted in the biggest worldwide economic distortion in all of history. The problem is much bigger than the fears of a temporary decline on Wall Street if the bailout is not agreed to.
Money’s most important function is to serve as a means of exchange—a measurement of value. If this crucial yardstick is not stable, it becomes impossible for investors, entrepreneurs, savers, and consumers to make correct decisions; these mistakes create the bubble that must eventually be corrected.
Just imagine the results if a construction company was forced to use a yardstick whose measures changed daily to construct a skyscraper. The result would be a very unstable and dangerous building. No doubt the construction company would try to cover up their fundamental problem with patchwork repairs, but no amount of patchwork can fix a building with an unstable inner structure. Eventually, the skyscraper will collapse, forcing the construction company to rebuild—hopefully this time with a stable yardstick. This 700 billion package is more patchwork repair and will prove to be money down a rat hole and will only make the dollar crisis that much worse.
But what politicians are willing to say that the financial “skyscraper”—the global financial and monetary system-is a house of cards. It is not going to happen at this juncture. They’re not even talking about this. They talk only of bailouts, more monetary inflation, more special interest spending, more debt, and more regulations. There is almost no talk of the relationship of the Community Reinvestment Act, HUD, and government assisted loans to the housing bubble. And there is no talk of the oversight that is desperately needed for the Federal Reserve, the Exchange Stabilization Fund, and all the activities of the President’s Working Group on financial markets. When these actions are taken we will at last know that Congress is serious about the reforms that are really needed.
In conclusion, there are three good reasons why Congress should reject this legislation:
a. It is immoral—Dumping bad debt on the innocent taxpayers is an act of theft and is wrong.
b. It is unconstitutional—There is no constitutional authority to use government power to serve special interests.
c. It is bad economic policy—By refusing to address the monetary system while continuing to place the burdens of the bailout on the dollar, we can be certain that in time, we will be faced with another, more severe crisis when the market figures out that there is no magic government bailout or regulation that can make a fraudulent monetary system work.
Monetary reform will eventually come, but, unfortunately, Congress’ actions this week make it more likely the reform will come under dire circumstances, such as the midst of a worldwide collapse of the dollar. The question then will be how much of our liberties will be sacrificed in the process. Just remember what we lost in the aftermath of 9-11.
The best result we can hope for is that the economic necessity of getting our fiscal house in order will, at last, force us to give up our world empire. Without the empire we can then concentrate on rebuilding the Republic.
Update - Here’s the video of the remarks Dr. Paul delivered this morning:
Sunday, September 28, 2008
Absent Without Leave (BJ Lawson)
Email from BJ Lawson:
My opponent is a disgrace.
Other than a brief canned statement in local media on Friday, he has published nothing on the administration's bailout proposal. He has contributed nothing to the discussion or debate on the most significant financial crisis of our lifetimes.
As of this evening, his Congressional Web site is devoid of any information on the topic, with no updates since September 23rd. How is he serving the people?
A brief survey of Congressional Web sites across the political spectrum shows that other representatives are aggressively communicating with their constituents: Virginia Foxx, Dennis Kucinich, Marcy Kaptur, and Ron Paul all have prominent statements and updates on the debate.
What does my opponent do?
He closes his office:
http://blog.lawsonforcongress.com/2008/09/27/the-height-of-arrogance/
... and doesn't even answer the phones.
Folks, the survival of our economic system is at stake. This has not been a good weekend for the rule of law, or good government:
http://blog.lawsonforcongress.com/2008/09/28/a-bipartisan-drama-resuscitating-a-dying-republic/
Please let your friends and neighbors know that it is time to hold our elected officials accountable. We desperately need principled change in November.
Sincerely,
William "BJ" Lawson
Congressional Candidate, North Carolina's 4th District
My opponent is a disgrace.Other than a brief canned statement in local media on Friday, he has published nothing on the administration's bailout proposal. He has contributed nothing to the discussion or debate on the most significant financial crisis of our lifetimes.
As of this evening, his Congressional Web site is devoid of any information on the topic, with no updates since September 23rd. How is he serving the people?
A brief survey of Congressional Web sites across the political spectrum shows that other representatives are aggressively communicating with their constituents: Virginia Foxx, Dennis Kucinich, Marcy Kaptur, and Ron Paul all have prominent statements and updates on the debate.
What does my opponent do?
He closes his office:
http://blog.lawsonforcongress.com/2008/09/27/the-height-of-arrogance/
... and doesn't even answer the phones.
Folks, the survival of our economic system is at stake. This has not been a good weekend for the rule of law, or good government:
http://blog.lawsonforcongress.com/2008/09/28/a-bipartisan-drama-resuscitating-a-dying-republic/
Please let your friends and neighbors know that it is time to hold our elected officials accountable. We desperately need principled change in November.
Sincerely,
William "BJ" Lawson
Congressional Candidate, North Carolina's 4th District
The Height of Arrogance (BJ Lawson)
BJ Lawson on the impending bailout:
The proposed $700 million bailout is unlikely to increase trust between banks, will threaten our sovereign credit rating, and may even collapse our currency.
It only attempts to protect favored banks, and ignores the reality that trillions of dollars in bad debt must be liquidated before we can recover from this crisis. For every lender there is a borrower, and our borrowers have simply assumed too much debt relative to their income.
Objections from a variety of perspectives are expressed by others:
Read the rest
The proposed $700 million bailout is unlikely to increase trust between banks, will threaten our sovereign credit rating, and may even collapse our currency.It only attempts to protect favored banks, and ignores the reality that trillions of dollars in bad debt must be liquidated before we can recover from this crisis. For every lender there is a borrower, and our borrowers have simply assumed too much debt relative to their income.
Objections from a variety of perspectives are expressed by others:
- Dallas Federal Reserve Governor Richard Fisher - Bank Rescue Plan Would Worsen Fiscal Chasm
- Former Treasury Secretary Paul O’Neill - Bush Doesn’t Get Financial Crisis
- Former FDIC Chair William Isaac - A Better Way to Aid Banks
- BB&T CEO John Allison - Paulson Plan Aimed at Helping “Poorly Run” Banks
- NYU economist Nouriel Roubini - Why the Treasury TARP Bailout is flawed
- New IMF Study Contradicts Bailout Bill Premise and Details
- Over 150 economists - Hundreds of Economists Urge Congress Not to Rush on Rescue Plan
Read the rest
Dropping From Heaven? (Lew Rockwell)
Lew Rockwell on Henry Paulson and the Crime of '08:
Murray Rothbard used to stress the careers of high federal officials before they held office. "They do not drop from Heaven," he noted. Such analysis is considered beyond the pale by the establishment, since it is so explanatory. Henry Paulson, appointed by Bush- himself the scion of a political-Wall Street family - to the the US Treasury in 2006 (and replacing a non-Wall Streeter), had been CEO of Goldman Sachs. He brought other Goldman Sachers with him. Clearly, they were put there to do exactly what they have done: bailout Goldman Sachs and its allies on Wall Street if the expected Fed-generated troubles arrived.
Murray Rothbard used to stress the careers of high federal officials before they held office. "They do not drop from Heaven," he noted. Such analysis is considered beyond the pale by the establishment, since it is so explanatory. Henry Paulson, appointed by Bush- himself the scion of a political-Wall Street family - to the the US Treasury in 2006 (and replacing a non-Wall Streeter), had been CEO of Goldman Sachs. He brought other Goldman Sachers with him. Clearly, they were put there to do exactly what they have done: bailout Goldman Sachs and its allies on Wall Street if the expected Fed-generated troubles arrived.
Saturday, September 27, 2008
Ron Paul Interviewed by Scott Horton
Scott Horton from AntiWar.com Radio interviewed Dr. Paul yesterday:
As part of Antiwar Radio’s week long series on the economic crisis in association with the Campaign for Liberty, Rep. Ron Paul discusses the current financial crisis, payoffs to special interests and arm-twisting in congress to get the next 700 billion dollar bailout through, the role of the war budget in helping to inflate the dollar bubble, the difficulty in getting the media and politicians to understand Austrian monetary theory, how the Fed’s policies send false signals to people in business, leading to bad investments across various markets, necessitating a correction (recession) for prices to reflect reality again, the inflation/heroin junky analogy, the Fed bureaucrats’ inflated belief in themselves, his proposal to re-legalize competing currencies in the free market, the possibility of creating a new Gold Commission [.pdf], and some limited success in teaching congressmen some things about it.
MP3 here. (20:09)
Dr. Ron Paul is a Republican member of Congress, representing Texas District 14 and author of these great books.
As part of Antiwar Radio’s week long series on the economic crisis in association with the Campaign for Liberty, Rep. Ron Paul discusses the current financial crisis, payoffs to special interests and arm-twisting in congress to get the next 700 billion dollar bailout through, the role of the war budget in helping to inflate the dollar bubble, the difficulty in getting the media and politicians to understand Austrian monetary theory, how the Fed’s policies send false signals to people in business, leading to bad investments across various markets, necessitating a correction (recession) for prices to reflect reality again, the inflation/heroin junky analogy, the Fed bureaucrats’ inflated belief in themselves, his proposal to re-legalize competing currencies in the free market, the possibility of creating a new Gold Commission [.pdf], and some limited success in teaching congressmen some things about it.
MP3 here. (20:09)
Dr. Ron Paul is a Republican member of Congress, representing Texas District 14 and author of these great books.
Lew Rockwell on Michael Reagan show
Lew Rockwell had a nice appearance on Michael Reagan's radio show to talk about the floundering economy and the bailouts. Here's the link, or listen below:
Friday, September 26, 2008
BJ Lawson YouTubes
A couple of nice BJ Lawson YouTubes (or more accurately, YouTubes on why David Price needs to be fired):
David Price: Nobody Home
David's Price Part 1: NBAF
David Price: Nobody Home
David's Price Part 1: NBAF
Scott Horton Interviews Lew Rockwell
Lew Rockwell, president of the Ludwig von Mises Institute, discusses Thomas Jefferson’s theory of inflationary money and the business cycle, the history of fiat money in America and around the world from Marco Polo’s adventures through Massachusetts Bay Colony, the Revolutionary War, 1812-14, Andrew Jackson’s battle with Biddle, Lincoln’s greenbacks, the Gilded Age, progressive era tyranny of Woodrow Wilson, passage of the Federal Reserve Act, the World Wars, Great Depression, Cold War, Terror War, the multi-trillion dollar bailout, end of the empire, and the heroic Ron Paul.
MP3 here. (57:33)
Lew Rockwell is the founder and President of the Ludwig von Mises Institute in Auburn, Alabama, Vice President of the Center for Libertarian Studies in Burlingame, California, and publisher of the political Web site LewRockwell.com. He served as Ron Paul’s congressional chief of staff between 1978 and 1982. Check out his new podcast show here.
What to Do? (BJ Lawson)
BJ Lawson has a plan:
This is a rather long post. Here’s the executive summary:
Read the rest of the story
This is a rather long post. Here’s the executive summary:
Practically speaking, what should we do? As unpleasant as deflation sounds, collapsing our currency is worse. We must not collapse our currency to bail out corrupt institutions who benefited from unsound practices. A bailout attempt must not tip us over into a run on the currency. With an existing $9.7 trillion debt and $53 billion in long-term entitlement liabilities, we are not the world’s best credit risk to abruptly increase our borrowing.
If pain is inevitable, how can we temper the economic turbulence to come?
Here is a plan that I would support:
- Eliminate capital gains taxes on real estate purchases to encourage existing private capital to buy underlying real assets.
- Affirm that all voluntary barter transactions between two individuals (human individuals, not “corporate persons” or legal entities) are tax-free, regardless of the medium of exchange.
The first step will help stem the fall in real estate prices without increasing debt or bailing out irresponsible borrowers or lenders.
The second step will restore a more reasonable balance of power between individual Americans who have been pistol-whipped in this economic mess, and the corporations who benefit from an unsustainable system.
Together, they will reduce near-term economic dislocations, while providing a platform for sustainable community-based growth over the long term.
This moment in American history calls for principled leadership by an irate minority in Congress who is willing to stand up for the American people. The human people, the individuals — not corporations who already run Washington through their lobbying machines.
Read the rest of the story
Hocus Pocus Among Us (Emmett Harris)
Emmett Harris summarizes the financial situation quite well:
The magical money machine in Washington has produced yet another wonder of fiduciary slight of hand. This time it was Treasury Secretary Henry Paulson taking his turn in front of the crowd, inspiring awe as he pulled close to a trillion dollars out of his hat.
Like alchemists and sorcerers of old, Paulson wishes to conjure value from nothing. The aim is to transform tottering mortgage holdings into secure assets by merely changing what name appears at the top of the balance sheet unfortunate enough to have them as a constituent part. If the risk of mortgage defaults was there before, it doesn’t disappear because the pea has turned up under another cup. The risks now reside with the U.S. taxpayers, and the true magnitude will only become apparent over the next several years.
But the show doesn’t end there. The massive amount of new debt required to pay for the bailout has effects of its own.
Read the rest
The magical money machine in Washington has produced yet another wonder of fiduciary slight of hand. This time it was Treasury Secretary Henry Paulson taking his turn in front of the crowd, inspiring awe as he pulled close to a trillion dollars out of his hat.
Like alchemists and sorcerers of old, Paulson wishes to conjure value from nothing. The aim is to transform tottering mortgage holdings into secure assets by merely changing what name appears at the top of the balance sheet unfortunate enough to have them as a constituent part. If the risk of mortgage defaults was there before, it doesn’t disappear because the pea has turned up under another cup. The risks now reside with the U.S. taxpayers, and the true magnitude will only become apparent over the next several years.
But the show doesn’t end there. The massive amount of new debt required to pay for the bailout has effects of its own.
Read the rest
The Bailout Reader
The Mises Institute has put together a great Bailout Reader:
The events taking place in the financial market offer an illustration of the soundness of the Austrian theory of money, banking, and credit cycles, and Mises.org is your source not only for analysis of these events but also the economic theory that helps explain what is happening and what to do about it. There are many thousands of articles available, and also the full text of thousands of books as well as journal articles. It is impossible to draw attention to the full range of literature one can use to understand the crisis.
However, below we offer a brief look into the topics most discussed in these times, with extended treatments of each in the sidebar. Mises.org also offers both a blog and a community forum for reading and discussing them all.
It's never been more important to spread a sound view of money and banking, not only as a protection against the fallacies of "stabilization" and "reflation" but also as way to see what kind of reforms are essential now.
Click here for the Bailout Reader
The events taking place in the financial market offer an illustration of the soundness of the Austrian theory of money, banking, and credit cycles, and Mises.org is your source not only for analysis of these events but also the economic theory that helps explain what is happening and what to do about it. There are many thousands of articles available, and also the full text of thousands of books as well as journal articles. It is impossible to draw attention to the full range of literature one can use to understand the crisis.However, below we offer a brief look into the topics most discussed in these times, with extended treatments of each in the sidebar. Mises.org also offers both a blog and a community forum for reading and discussing them all.
It's never been more important to spread a sound view of money and banking, not only as a protection against the fallacies of "stabilization" and "reflation" but also as way to see what kind of reforms are essential now.
Click here for the Bailout Reader
Bush the Socialist Destroyer (Lew Rockwell)
Lew Rockwell on the criminal president and the credit scandal:
Anyone who has read a good economics book would be quickly reduced to laughter and tears by George Bush's ridiculous economic address to the nation. He put on his 9-11 suit and tried to warn Americans about the impending disaster: that their access to an infinite stream of paper money might be imperiled if they don't cough up hundreds of billions immediately. It is very tempting to go line by line and shout back.
And this is why he nationalized airport security, created huge new bureaucracies, spent more than any president in American history, centralized control of education, put up more protectionist barriers than Clinton and Bush Sr. combined, bailed out airlines, presided over the Sarbanes-Oxley reign of terror, unleashed antitrust regulators, intensified health-care controls, and pretty much used every headline as an excuse to demand more money and power?
Read the rest
Anyone who has read a good economics book would be quickly reduced to laughter and tears by George Bush's ridiculous economic address to the nation. He put on his 9-11 suit and tried to warn Americans about the impending disaster: that their access to an infinite stream of paper money might be imperiled if they don't cough up hundreds of billions immediately. It is very tempting to go line by line and shout back.
"I'm a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business."
And this is why he nationalized airport security, created huge new bureaucracies, spent more than any president in American history, centralized control of education, put up more protectionist barriers than Clinton and Bush Sr. combined, bailed out airlines, presided over the Sarbanes-Oxley reign of terror, unleashed antitrust regulators, intensified health-care controls, and pretty much used every headline as an excuse to demand more money and power?
Read the rest
Thursday, September 25, 2008
Militarizing the Police (Will Grigg)
Will Grigg on how the job of the police has morphed into the militarized notion that "civilians" must be compelled to submit to the will of the state:
The seamless integration of the military and law enforcement into a single "Internal Security Force" is the defining characteristic of a fully realized police state. Once this fusion is accomplished, the question becomes not "whether" a police state exists, but rather how acute its institutional violence against the subject population will become.
That condition now exists in the country that still calls itself -- without any apparent irony -- the United States of America.
Much alarm has been raised over the admittedly alarming news that beginning October 1, the U.S. Army's Northern Command will deploy a specialized, combat-tested unit as an "on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks."
This "dwell-time" domestic deployment of the 3rd Infantry Division's 1st Brigade Combat Team will permit its soldiers to "use some of the [skills] they acquired in the war zone" to deal with "civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack."
In the context of our descent into rank imperial corruption, this small but significant development could be seen by some as the moment our rulers crossed the Rubicon. But that metaphorical boundary has been in our rear-view mirror for quite some time.
Read the rest
The seamless integration of the military and law enforcement into a single "Internal Security Force" is the defining characteristic of a fully realized police state. Once this fusion is accomplished, the question becomes not "whether" a police state exists, but rather how acute its institutional violence against the subject population will become.
That condition now exists in the country that still calls itself -- without any apparent irony -- the United States of America.
Much alarm has been raised over the admittedly alarming news that beginning October 1, the U.S. Army's Northern Command will deploy a specialized, combat-tested unit as an "on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks."
This "dwell-time" domestic deployment of the 3rd Infantry Division's 1st Brigade Combat Team will permit its soldiers to "use some of the [skills] they acquired in the war zone" to deal with "civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive, or CBRNE, attack."
In the context of our descent into rank imperial corruption, this small but significant development could be seen by some as the moment our rulers crossed the Rubicon. But that metaphorical boundary has been in our rear-view mirror for quite some time.
Read the rest
Fred Reed Throws Sombrero in Ring
Fred Reed reluctantly realizes that, well, he has to become president:
I see that I shall have to come out of retirement and become President. It is the only hope for the country and the world. That I am willing to undergo the humiliation of the office is a measure of the depth of my sense of duty. Though perhaps I will do it under an assumed name.
First things first. I will need a stirring bumper sticker, this being the key to high office. What? I’m considering “Fred! Piss Poor but Look at the Rest.” Or “A Fred in Every Pot,” or perhaps “Better Fred than Dead”? Or “Tippecanoe and Frederick Too.” The possibilities are endless. In any event, election is a mere detail. Given the competition, the country will flock to my standard. Or wish it had.
Read the rest
I see that I shall have to come out of retirement and become President. It is the only hope for the country and the world. That I am willing to undergo the humiliation of the office is a measure of the depth of my sense of duty. Though perhaps I will do it under an assumed name.
First things first. I will need a stirring bumper sticker, this being the key to high office. What? I’m considering “Fred! Piss Poor but Look at the Rest.” Or “A Fred in Every Pot,” or perhaps “Better Fred than Dead”? Or “Tippecanoe and Frederick Too.” The possibilities are endless. In any event, election is a mere detail. Given the competition, the country will flock to my standard. Or wish it had.
Read the rest
My Answer to the President (Ron Paul)
Message from Ron Paul:
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
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
Crop Seeding in America (George F. Smith)
George F. Smith overcame his public "schooling" and learned the truth about money and inflation, and with help from folks like Ron Paul, Strike the Root, LewRockwell.com, and the Mises Institute, you can too:
Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it.
~ Rep. Ron Paul, TX, before the U.S. House of Representatives, February 15, 2006
The gold standard did not collapse. Governments abolished it in order to pave the way for inflation.
~ Ludwig von Mises, The Theory of Money and Credit, 1953
The quotes from Paul and Mises are political heresy, yet they hint at why government crises have long dominated the headlines. Why doesn’t the public understand this? Libertarians often observe that government doesn’t work, but clearly, it does some things right or those statements would be conventional knowledge. Put another way, why is the idea of sound money so foreign to most people? Why do they trust the state’s inflatable notes and the inflationist in charge of them, then wonder why the economy blows up? Given its record, why do they trust the state at all?
Year in and year out, government schools produce students who either (a) could care less about monetary issues, or (b) have state-approved ideas of them. Government crop management weeds out potential trouble-makers.
Read the rest
Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it.
~ Rep. Ron Paul, TX, before the U.S. House of Representatives, February 15, 2006
The gold standard did not collapse. Governments abolished it in order to pave the way for inflation.
~ Ludwig von Mises, The Theory of Money and Credit, 1953
The quotes from Paul and Mises are political heresy, yet they hint at why government crises have long dominated the headlines. Why doesn’t the public understand this? Libertarians often observe that government doesn’t work, but clearly, it does some things right or those statements would be conventional knowledge. Put another way, why is the idea of sound money so foreign to most people? Why do they trust the state’s inflatable notes and the inflationist in charge of them, then wonder why the economy blows up? Given its record, why do they trust the state at all?
Year in and year out, government schools produce students who either (a) could care less about monetary issues, or (b) have state-approved ideas of them. Government crop management weeds out potential trouble-makers.
Read the rest
The Herbert Hoover Playbook (Lew Rockwell)
Lew Rockwell writes:
The feds continue to follow the economic path that turned the 1929 bust into the sixteen-year Great Depression: artificially keeping prices high, and bailing out failing businesses, when the excesses of the boom must be cleaned out before we can have prosperity. That is, prices must be free to fall to reflect reality, and there must be no more wealth destruction through subsidizing the losers. Yet it's hardly news, as they debate welfare for Goldman Sachs, that congressmen have voted to bailout the losers called GM, Ford, and Chrysler. It's just more confirmation, as if we needed it, and officials are willing to engage in hyperinflation rather than allow the market to take its moral and rational course. To all of you who do not see the state as essentially a criminal enterprise, a "gang of thieves writ large," as Murray Rothbard put it: time to take another look.
The feds continue to follow the economic path that turned the 1929 bust into the sixteen-year Great Depression: artificially keeping prices high, and bailing out failing businesses, when the excesses of the boom must be cleaned out before we can have prosperity. That is, prices must be free to fall to reflect reality, and there must be no more wealth destruction through subsidizing the losers. Yet it's hardly news, as they debate welfare for Goldman Sachs, that congressmen have voted to bailout the losers called GM, Ford, and Chrysler. It's just more confirmation, as if we needed it, and officials are willing to engage in hyperinflation rather than allow the market to take its moral and rational course. To all of you who do not see the state as essentially a criminal enterprise, a "gang of thieves writ large," as Murray Rothbard put it: time to take another look.
David Price: Lawmaker or Lawpasser? (BJ Lawson)
BJ Lawson takes the gloves off against his opponent:
I have tried to maintain a sense of decorum and respect for the August Institutions that comprise Our Nation’s Government. I have tried valiantly to speak respectfully of My Opponent, who has Served His Country as a Public Servant for twenty of the past twenty-two years.
But the cognitive dissonance required to maintain that respect is rapidly eroding.
Yesterday, my opponent was interviewed by Bill LuMaye, a popular talk show host on AM 680 WPTF. You can tell my opponent is running for re-election — he has been on Mr. LuMaye’s show about four times in the past two months. My opponent was asked to talk about the financial crisis, and the Paulson/Bernanke bailout plan.
Here’s where I have a problem: all my opponent was able to accomplish in thirty minutes was wringing his hands in sober tones about how terrible the current crisis is, stating how we need to do some kind of bailout, and then blaming The Administration for putting this questionable bailout plan in front of him.
I have one question for my opponent: Are you a Lawmaker, or a Lawpasser?
Read the rest (and also see his excellent comments below the post)
I have tried to maintain a sense of decorum and respect for the August Institutions that comprise Our Nation’s Government. I have tried valiantly to speak respectfully of My Opponent, who has Served His Country as a Public Servant for twenty of the past twenty-two years.But the cognitive dissonance required to maintain that respect is rapidly eroding.
Yesterday, my opponent was interviewed by Bill LuMaye, a popular talk show host on AM 680 WPTF. You can tell my opponent is running for re-election — he has been on Mr. LuMaye’s show about four times in the past two months. My opponent was asked to talk about the financial crisis, and the Paulson/Bernanke bailout plan.
Here’s where I have a problem: all my opponent was able to accomplish in thirty minutes was wringing his hands in sober tones about how terrible the current crisis is, stating how we need to do some kind of bailout, and then blaming The Administration for putting this questionable bailout plan in front of him.
I have one question for my opponent: Are you a Lawmaker, or a Lawpasser?
Read the rest (and also see his excellent comments below the post)
Wednesday, September 24, 2008
More Great Interviews
Hat tip to Campaign for Liberty for these great Antiwar Radio podcasts with Scott Hornton:
Bob Murphy and Mark Thornton:
Robert Blumen:
Peter Schiff:
Bob Murphy and Mark Thornton:
Robert Blumen:
Peter Schiff:
More Great Lew Rockwell Podcasts
The Bogus Financial Crisis with Bob Higgs:
Intellectual "Property" with Stephan Kinsella:
(click here for all LRC podcasts)
Intellectual "Property" with Stephan Kinsella:
(click here for all LRC podcasts)
Shield and Strength: The Power of Love, Part 2 (Glen Allport)
Glen Allport on why love and freedom, especially in early childhood (and including in the womb and in childbirth), are essential in improving the human condition:
"It would seem that given a good start in life, almost any kind of stress can be withstood later on."
— Arthur Janov, The Feeling Child, 1973, p. 144
Strength and Warmth, Amidst Devastation and Pain
Occasionally the power of early love, in particular, shines through in breathtaking fashion. I was moved to begin Part One of this column several months ago after watching God Grew Tired of Us (see also here for the film's official website, with trailer). The Rottentomatoes review page for the film includes this in its summary of the story:
Pause a moment, please, to consider what you just read. Imagine a government intentionally bombing a huge group of starving, displaced children – after having murdered their parents and driven the children out into the wilderness. This horror in the Sudan did not end in the 1980s; see here and here for more recent examples. Furthermore, mass murder, accomplished in a variety of ways, is a shockingly common activity for governments. My columns focus on love and freedom in part because a widespread increase in those qualities is the only antidote to such State-enabled orgies of hatred and violence. In addition, love and freedom provide the necessary foundation for positive, healthy life generally.
Read the rest
"It would seem that given a good start in life, almost any kind of stress can be withstood later on."
— Arthur Janov, The Feeling Child, 1973, p. 144
Occasionally the power of early love, in particular, shines through in breathtaking fashion. I was moved to begin Part One of this column several months ago after watching God Grew Tired of Us (see also here for the film's official website, with trailer). The Rottentomatoes review page for the film includes this in its summary of the story:
"In the late 1980s, 27,000 Sudanese 'lost boys' – some just toddlers – marched barefoot over thousands of miles of barren desert, seeking safe haven from the brutal civil war raging in their homeland. Half died from bombing raids and starvation..."
Pause a moment, please, to consider what you just read. Imagine a government intentionally bombing a huge group of starving, displaced children – after having murdered their parents and driven the children out into the wilderness. This horror in the Sudan did not end in the 1980s; see here and here for more recent examples. Furthermore, mass murder, accomplished in a variety of ways, is a shockingly common activity for governments. My columns focus on love and freedom in part because a widespread increase in those qualities is the only antidote to such State-enabled orgies of hatred and violence. In addition, love and freedom provide the necessary foundation for positive, healthy life generally.
Read the rest
Ron Paul on Fox Business News 9/24/08
Ron Paul appeared on Fox News this evening to talk about the hearings, proposed bailouts, and the tanking economy:
YouTube
YouTube
Ron Paul Statement Before Financial Services Committee
Statement found on Dr. Paul's congressional site.
Congressman Ron Paul
Statement before the Financial Services Committee
Full Committee Hearing
“The Future of Financial Services: Exploring Solutions for the Market Crisis”
September 24, 2008
Mr. Chairman,
It is truly a shame that, less than two decades after the fall of communism, the lessons of price control are completely lost on most Washington power-brokers. The Treasury proposal before Congress is nothing more than a form of price control, an attempt to keep asset prices artificially elevated. The root of our recent economic boom, as in any other business cycle, was government intervention into the market under the guise of lowering the interest rate, which is itself a price. The function that prices play in the market in equalizing supply and demand, and the distortions that necessarily accompany each government effort at pricefixing, are forgotten by too many in Washington.
One of the primary causes for the length and severity of the Great Depression in this country was the federal government's attempts at keeping prices artificially elevated. A typical example of getting causation backward, the federal government assumed that falling prices caused the depression, whereas in reality the falling prices were the result of the economic depression, and were necessary to bring the economy back into equilibrium. In its attempt to keep agricultural prices high, the federal government began to pay farmers to destroy their crops, while unemployed people lined up at soup kitchens around the country.
A similar situation exists today, where many mortgage-backed securities and other similar assets are horribly overvalued. The market response would be to allow these assets to be sold on the market at whatever price they would bring. This would result in a shakeout of bad debt and a shorter, sharper correction than would otherwise occur. Unfortunately, the political will to allow banks to take the responsibility for their lending actions is at times lacking.
Many here in Congress are asking where the money for this bailout will come from, and indeed it is a good question. $700 billion does not just materialize out of the ether, but then again neither do the hundreds of billions of dollars that we spend every year to fund our imperial war machine. We must the face the fact that our country is dead broke, and not just that, we are facing over $10 trillion in debt, and tens of trillions more in unfunded liabilities. This $700 billion bailout will only increase that debt, and increase the amount of money we pay merely to service the interest on that debt. The end result of this is higher taxes on our children and grandchildren, and the full-scale destruction of the dollar.
The only viable solution to this financial crisis is to keep the government from intervening any further. The Federal Reserve has already loaned hundreds of billions of dollars through its numerous lending facilities, and the Congress has passed legislation authorizing further hundreds of billions of dollars to bail out Fannie and Freddie, yet each successive crisis event seems to be advertised as larger and more severe than the previous one. It is time that this Congress put its foot down, reject the administration's proposal, and allow the bust to work itself out so that our economic hangover is not as severe as it might otherwise be.
Statement before the Financial Services Committee
Full Committee Hearing
“The Future of Financial Services: Exploring Solutions for the Market Crisis”
September 24, 2008
Mr. Chairman,
It is truly a shame that, less than two decades after the fall of communism, the lessons of price control are completely lost on most Washington power-brokers. The Treasury proposal before Congress is nothing more than a form of price control, an attempt to keep asset prices artificially elevated. The root of our recent economic boom, as in any other business cycle, was government intervention into the market under the guise of lowering the interest rate, which is itself a price. The function that prices play in the market in equalizing supply and demand, and the distortions that necessarily accompany each government effort at pricefixing, are forgotten by too many in Washington.
One of the primary causes for the length and severity of the Great Depression in this country was the federal government's attempts at keeping prices artificially elevated. A typical example of getting causation backward, the federal government assumed that falling prices caused the depression, whereas in reality the falling prices were the result of the economic depression, and were necessary to bring the economy back into equilibrium. In its attempt to keep agricultural prices high, the federal government began to pay farmers to destroy their crops, while unemployed people lined up at soup kitchens around the country.
A similar situation exists today, where many mortgage-backed securities and other similar assets are horribly overvalued. The market response would be to allow these assets to be sold on the market at whatever price they would bring. This would result in a shakeout of bad debt and a shorter, sharper correction than would otherwise occur. Unfortunately, the political will to allow banks to take the responsibility for their lending actions is at times lacking.
Many here in Congress are asking where the money for this bailout will come from, and indeed it is a good question. $700 billion does not just materialize out of the ether, but then again neither do the hundreds of billions of dollars that we spend every year to fund our imperial war machine. We must the face the fact that our country is dead broke, and not just that, we are facing over $10 trillion in debt, and tens of trillions more in unfunded liabilities. This $700 billion bailout will only increase that debt, and increase the amount of money we pay merely to service the interest on that debt. The end result of this is higher taxes on our children and grandchildren, and the full-scale destruction of the dollar.
The only viable solution to this financial crisis is to keep the government from intervening any further. The Federal Reserve has already loaned hundreds of billions of dollars through its numerous lending facilities, and the Congress has passed legislation authorizing further hundreds of billions of dollars to bail out Fannie and Freddie, yet each successive crisis event seems to be advertised as larger and more severe than the previous one. It is time that this Congress put its foot down, reject the administration's proposal, and allow the bust to work itself out so that our economic hangover is not as severe as it might otherwise be.
Ron Paul's statement before Joint Economic Committee
From Ron Paul's congressional site:
Congressman Ron Paul
Statement before the Joint Economic Committee
“The Economic Outlook”
September 24, 2008
Mr. Chairman, I believe that our economy faces a bleak future, particularly if the latest $700 billion bailout plan ends up passing. We risk committing the same errors that prolonged the misery of the Great Depression, namely keeping prices from falling. Instead of allowing overvalued financial assets to take a hit and trade on the market at a more realistic value, the government seeks to purchase overvalued or worthless assets and hold them in the unrealistic hope that at some point in the next few decades, someone might be willing to purchase them.
One of the perverse effects of this bailout proposal is that the worst-performing firms, and those who interjected themselves most deeply into mortgage-backed securities, credit default swaps, and special investment vehicles will be those who benefit the most from this bailout. As with the bailout of airlines in the aftermath of 9/11, those businesses who were the least efficient, least productive, and least concerned with serving consumers are those who will be rewarded for their mismanagement with a government handout, rather than the failure of their company that is proper to the market. This creates a dangerous moral hazard, as the precedent of bailing out reckless lending will lead to even more reckless lending and irresponsible behavior on the part of financial firms in the future.
This bailout is a slipshod proposal, slapped together haphazardly and forced on an unwilling Congress with the threat that not passing it will lead to the collapse of the financial system. Some of the proposed alternatives are no better, for instance those which propose a government equity share in bailed-out companies. That we have come to a point where outright purchases of private sector companies is not only proposed but accepted by many who claim to be defenders of free markets bodes ill for the future of American society.
As with many other government proposals, the opportunity cost of this bailout goes unmentioned. $700 billion tied up in illiquid assets is $700 billion that is not put to productive use. That amount of money in the private sector could be used to research new technologies, start small business that create thousands of jobs, or upgrade vital infrastructure. Instead, that money will be siphoned off into unproductive assets which may burden the government for years to come. The great French economist Frederic Bastiat is famous for explaining the difference between what is seen and what is unseen. In this case the bailout's proponents see the alleged benefits, while they fail to see the jobs, businesses, and technologies not created due to this utter waste of money.
The housing bubble has burst, unemployment is on the rise, and the dollar weakens every day. Unfortunately our leaders have failed to learn from the mistakes of previous generations and continue to lead us down the road toward economic ruin.
Statement before the Joint Economic Committee
“The Economic Outlook”
September 24, 2008
Mr. Chairman, I believe that our economy faces a bleak future, particularly if the latest $700 billion bailout plan ends up passing. We risk committing the same errors that prolonged the misery of the Great Depression, namely keeping prices from falling. Instead of allowing overvalued financial assets to take a hit and trade on the market at a more realistic value, the government seeks to purchase overvalued or worthless assets and hold them in the unrealistic hope that at some point in the next few decades, someone might be willing to purchase them.
One of the perverse effects of this bailout proposal is that the worst-performing firms, and those who interjected themselves most deeply into mortgage-backed securities, credit default swaps, and special investment vehicles will be those who benefit the most from this bailout. As with the bailout of airlines in the aftermath of 9/11, those businesses who were the least efficient, least productive, and least concerned with serving consumers are those who will be rewarded for their mismanagement with a government handout, rather than the failure of their company that is proper to the market. This creates a dangerous moral hazard, as the precedent of bailing out reckless lending will lead to even more reckless lending and irresponsible behavior on the part of financial firms in the future.
This bailout is a slipshod proposal, slapped together haphazardly and forced on an unwilling Congress with the threat that not passing it will lead to the collapse of the financial system. Some of the proposed alternatives are no better, for instance those which propose a government equity share in bailed-out companies. That we have come to a point where outright purchases of private sector companies is not only proposed but accepted by many who claim to be defenders of free markets bodes ill for the future of American society.
As with many other government proposals, the opportunity cost of this bailout goes unmentioned. $700 billion tied up in illiquid assets is $700 billion that is not put to productive use. That amount of money in the private sector could be used to research new technologies, start small business that create thousands of jobs, or upgrade vital infrastructure. Instead, that money will be siphoned off into unproductive assets which may burden the government for years to come. The great French economist Frederic Bastiat is famous for explaining the difference between what is seen and what is unseen. In this case the bailout's proponents see the alleged benefits, while they fail to see the jobs, businesses, and technologies not created due to this utter waste of money.
The housing bubble has burst, unemployment is on the rise, and the dollar weakens every day. Unfortunately our leaders have failed to learn from the mistakes of previous generations and continue to lead us down the road toward economic ruin.
Time is running out (Ron Paul)
Letter from Ron:
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!
• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
In liberty,
Ron Paul
P.S. All week long, Scott Horton’s excellent Antiwar Radio program, which I highly recommend, will devote its first hour (12:00-1:00pm ET) to the financial crisis. Today, my former economic adviser, Peter Schiff, will be on the program. We’ll stream these programs at the Campaign for Liberty website. Listen in!
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!
• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
In liberty,
Ron Paul
P.S. All week long, Scott Horton’s excellent Antiwar Radio program, which I highly recommend, will devote its first hour (12:00-1:00pm ET) to the financial crisis. Today, my former economic adviser, Peter Schiff, will be on the program. We’ll stream these programs at the Campaign for Liberty website. Listen in!
Tuesday, September 23, 2008
Lew Rockwell talks with Bill Sardi
In his latest podcast, Lew Rockwell talks with pro-liberty health guru Bill Sardi about the seriously flawed health care system:
Spam Du Jour: “I am Ministry of the Treasury…”
Here's a funny email that's making the rounds:
From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP
Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
A Public School Agenda? Of Course! (Jim Fedako)
Fellow homeschooler Jim Fedako says the public school's agenda is certainly not education:
Let me be honest and forthright: I have an agenda – I always do.
You can be certain that I am typing with a purpose in mind. I am typing in order to satisfy a much sought-after end. My end – my reason – is the hope that this article will influence a few, turning them toward the path of liberty.
Are you shocked or offended that I have an agenda? Is it wrong – no, is it necessarily evil when a man has an agenda; when a man has a given end for which he will use some means to obtain? Certainly not. We all have agendas that guide our actions. And we accept the presence of our own personal agendas without question or concern.
When discussing the evils of government-run education, many folks say that I have a personal agenda. Well, no kidding. If I wake in the morning, I have an agenda. The rhetorical use of the word agenda in a pejorative sense implies that others do not have agendas – this being a false assertion. Those folks have at least one agenda that gets them out of bed in the morning: to continue forcing me to pay for their government school nonsense.
So why it is that many – nay, most Americans – take offense to the idea that public schools have an agenda? Why is it that folks who recognize their own agendas cannot recognize that the individuals running the school system have agendas too? Why can’t these folks accept that those who fought some 150 years ago for the adoption of government-run schools had an evil agenda? Or that many today use government schools for vile intentions? Why not? Yes, why not, indeed?
Read the rest
Let me be honest and forthright: I have an agenda – I always do.
You can be certain that I am typing with a purpose in mind. I am typing in order to satisfy a much sought-after end. My end – my reason – is the hope that this article will influence a few, turning them toward the path of liberty.
Are you shocked or offended that I have an agenda? Is it wrong – no, is it necessarily evil when a man has an agenda; when a man has a given end for which he will use some means to obtain? Certainly not. We all have agendas that guide our actions. And we accept the presence of our own personal agendas without question or concern.
When discussing the evils of government-run education, many folks say that I have a personal agenda. Well, no kidding. If I wake in the morning, I have an agenda. The rhetorical use of the word agenda in a pejorative sense implies that others do not have agendas – this being a false assertion. Those folks have at least one agenda that gets them out of bed in the morning: to continue forcing me to pay for their government school nonsense.
So why it is that many – nay, most Americans – take offense to the idea that public schools have an agenda? Why is it that folks who recognize their own agendas cannot recognize that the individuals running the school system have agendas too? Why can’t these folks accept that those who fought some 150 years ago for the adoption of government-run schools had an evil agenda? Or that many today use government schools for vile intentions? Why not? Yes, why not, indeed?
Read the rest
The Triumvirate and the Plunderbund (Will Grigg)
Will Grigg on the evil, power mad trio of Bush, Paulson, and Bernanke:
A foolish consistency, we are told, is the hobgoblin of little minds, and -- this side of Sean Hannity, at least -- it's difficult to find anyone more consistently foolish, or more obviously small-minded, than George W. Bush.
During the nearly eight years his presidency has blighted our country, the Bushling has been a roving epicenter of disaster. And he has greeted each crisis with an indecent, if throughly predictable, eagerness to expand his own power, and that of the embedded oligarchy that produced him.
With the embarrassing enthusiasm of a dim-witted schoolchild, he strikes resolute poses and utters the same handful of banalities that translate into one perfectly consistent demand: Shut up and submit.
Read the rest
A foolish consistency, we are told, is the hobgoblin of little minds, and -- this side of Sean Hannity, at least -- it's difficult to find anyone more consistently foolish, or more obviously small-minded, than George W. Bush.During the nearly eight years his presidency has blighted our country, the Bushling has been a roving epicenter of disaster. And he has greeted each crisis with an indecent, if throughly predictable, eagerness to expand his own power, and that of the embedded oligarchy that produced him.
With the embarrassing enthusiasm of a dim-witted schoolchild, he strikes resolute poses and utters the same handful of banalities that translate into one perfectly consistent demand: Shut up and submit.
Read the rest
Bailouts will lead to rough economic ride (Ron Paul)
Ron Paul writes an op-ed for CNN (isn't it interesting that Dr. Paul is getting more attention from the media now that he was proven right?):
Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Read the rest
Many Americans today are asking themselves how the economy got to be in such a bad spot.
For years they thought the economy was booming, growth was up, job numbers and productivity were increasing. Yet now we find ourselves in what is shaping up to be one of the most severe economic downturns since the Great Depression.
Unfortunately, the government's preferred solution to the crisis is the very thing that got us into this mess in the first place: government intervention.
Read the rest
Monday, September 22, 2008
A New Alliance (Ron Paul)
Ron Paul takes Bob Barr's advice and chooses a candidate to support:
The press conference at the National Press Club had a precise purpose. It was to expose, to as many people as possible, the gross deception of our presidential election process. It is controlled by the powerful elite to make sure that neither candidate of the two major parties will challenge the status quo. There is no real choice between the two major parties and their nominees, only the rhetoric varies. The amazingly long campaign is designed to make sure the real issues are ignored. The quotes I used at the press conference from insider Carroll Quigley and the League of Women voters strongly support this contention.
Calling together candidates from the liberal, conservative, libertarian and progressive constituencies, who are all opposed to this rigged process, was designed to alert the American people to the uselessness of continuing to support a process that a claims that one’s only choice is to choose the lesser of two evils and reject a principle vote that might challenge the status quo as a wasted vote.
Read the rest
The press conference at the National Press Club had a precise purpose. It was to expose, to as many people as possible, the gross deception of our presidential election process. It is controlled by the powerful elite to make sure that neither candidate of the two major parties will challenge the status quo. There is no real choice between the two major parties and their nominees, only the rhetoric varies. The amazingly long campaign is designed to make sure the real issues are ignored. The quotes I used at the press conference from insider Carroll Quigley and the League of Women voters strongly support this contention.
Calling together candidates from the liberal, conservative, libertarian and progressive constituencies, who are all opposed to this rigged process, was designed to alert the American people to the uselessness of continuing to support a process that a claims that one’s only choice is to choose the lesser of two evils and reject a principle vote that might challenge the status quo as a wasted vote.
Read the rest
Predictions vs. Reality in Iraq (Ron Paul)
For his latest Texas Straight Talk, Ron Paul writes about the continuing debacle in Iraq and laments the fact that his "radical" predictions of 2002 were not nearly radical enough:
On September 10, 2002 I asked 35 questions regarding war with Iraq. The war resolution passed on October 16, 2002. Now today, as some of my colleagues try to reestablish credentials regarding spending restraint, I want to call attention to my 18th question from six years ago:
“Are we willing to bear the economic burden of a 100 billion dollar war against Iraq, with oil prices expected to skyrocket and further rattle an already shaky American economy? How about an estimated 30 year occupation of Iraq that some have deemed necessary to "build democracy" there?”
Many scoffed at my “radical” predictions at the time, regarding them as hyperbole. Six years later, I am forced to admit that I was wrong. My “radical” predictions were in fact, not “radical” enough.
I warned of a draining 30-year occupation. Now, politicians glibly talk about a 100-year occupation as if it is no big deal. On cost, according to estimates from the Congressional Research Service, we have already burned through around $550 billion in Iraq, at a rate of about $2 billion per week. Economist Joseph Stiglitz’s estimates are even higher, at $12 billion a month. It is a total price tag quickly heading into the trillions, if we don’t stop bombing and rebuilding bridges in Iraq that lead us nowhere but bankruptcy! Bridges in this country are crumbling along with our economy, while some howl about earmarks. Earmarks are a drop in the bucket compared to war and occupation.
Yes, I was wrong about Iraq. I knew it would be bad. I didn’t know it would be this bad.
The American people deserve better. Being asked to endorse such a farce is beyond insulting. Clearly, the rosy predictions of the neo-Conservatives from before the war are not coming true. Far from it! With a straight face, one official estimated the TOTAL cost of reconstruction in Iraq would be just $1.7 billion. Turns out that we spend more than that in ONE WEEK. Our friends are not pitching in to cover the cost. Expenses are not being covered by oil from a grateful and liberated Iraqi people. Rather, big corporate interests are benefitting, the price of oil has more than quadrupled, and the American economy is on its knees and sinking fast.
No one predicted the exact course of this war before it started. But to continue to listen to the foreign policy advice of those that were the MOST offbase will only lead to more foreign policy disasters. We need to keep this in mind as we think about Russia, Iran, Cuba and other countries. Keep in mind - the doomsday predictions on the Iraq War from six years ago, sound like a cakewalk today. While what leaders in the administration had predicted, reads like a fairytale. Ask yourself, when listening to the same foreign policy “experts” explaining situations around the world and suggesting policy positions: In light of the facts of today, and the predictions of yesterday, how expert have they shown themselves to be?
Passing HR 2605 to sunset authorization for the use of force in Iraq is the first step to stopping this bloody war, and the consequent bleeding of our treasuries. Serious fiscal conservatives will support it, as will those who have been paying attention to foreign policy predictions and reality.
On September 10, 2002 I asked 35 questions regarding war with Iraq. The war resolution passed on October 16, 2002. Now today, as some of my colleagues try to reestablish credentials regarding spending restraint, I want to call attention to my 18th question from six years ago:
“Are we willing to bear the economic burden of a 100 billion dollar war against Iraq, with oil prices expected to skyrocket and further rattle an already shaky American economy? How about an estimated 30 year occupation of Iraq that some have deemed necessary to "build democracy" there?”
Many scoffed at my “radical” predictions at the time, regarding them as hyperbole. Six years later, I am forced to admit that I was wrong. My “radical” predictions were in fact, not “radical” enough.
I warned of a draining 30-year occupation. Now, politicians glibly talk about a 100-year occupation as if it is no big deal. On cost, according to estimates from the Congressional Research Service, we have already burned through around $550 billion in Iraq, at a rate of about $2 billion per week. Economist Joseph Stiglitz’s estimates are even higher, at $12 billion a month. It is a total price tag quickly heading into the trillions, if we don’t stop bombing and rebuilding bridges in Iraq that lead us nowhere but bankruptcy! Bridges in this country are crumbling along with our economy, while some howl about earmarks. Earmarks are a drop in the bucket compared to war and occupation.
Yes, I was wrong about Iraq. I knew it would be bad. I didn’t know it would be this bad.
The American people deserve better. Being asked to endorse such a farce is beyond insulting. Clearly, the rosy predictions of the neo-Conservatives from before the war are not coming true. Far from it! With a straight face, one official estimated the TOTAL cost of reconstruction in Iraq would be just $1.7 billion. Turns out that we spend more than that in ONE WEEK. Our friends are not pitching in to cover the cost. Expenses are not being covered by oil from a grateful and liberated Iraqi people. Rather, big corporate interests are benefitting, the price of oil has more than quadrupled, and the American economy is on its knees and sinking fast.
No one predicted the exact course of this war before it started. But to continue to listen to the foreign policy advice of those that were the MOST offbase will only lead to more foreign policy disasters. We need to keep this in mind as we think about Russia, Iran, Cuba and other countries. Keep in mind - the doomsday predictions on the Iraq War from six years ago, sound like a cakewalk today. While what leaders in the administration had predicted, reads like a fairytale. Ask yourself, when listening to the same foreign policy “experts” explaining situations around the world and suggesting policy positions: In light of the facts of today, and the predictions of yesterday, how expert have they shown themselves to be?
Passing HR 2605 to sunset authorization for the use of force in Iraq is the first step to stopping this bloody war, and the consequent bleeding of our treasuries. Serious fiscal conservatives will support it, as will those who have been paying attention to foreign policy predictions and reality.
Sunday, September 21, 2008
Understanding the Crisis (Lew Rockwell)
Lew Rockwell shows how Austrian Economics explains the financial mess we're in, and why the work of the Mises Institute is so important:
What caused this? It is a simple question, and yet answers are all over the map, as you might expect. Here's mine in two words: fiat money.
The word "fiat" means "out of nothing." Money out of nothing is money that is eventually worth nothing. The possibility of precisely that happening emerged in August 15, 1971. Since Nixon severed the last tie of the dollar to gold, the world's monetary system has not been restrained by anything physical. We've depended on the discretion of central bankers. We can't trust that, and this crisis shows precisely why.
Of course there are subsidiary factors: the lifting of restrictions on Freddie and Fannie; subsidized lending; the Fed's artificially low interest rates; the Community Reinvestment Act; financial "deregulation"; the war; Bush profligacy; debt. There is much more besides. But fighting each of these forces individually is like battling down flies at the garbage dump. The core issue is that there is nothing to restrain money creation.
Read the rest
What caused this? It is a simple question, and yet answers are all over the map, as you might expect. Here's mine in two words: fiat money.
The word "fiat" means "out of nothing." Money out of nothing is money that is eventually worth nothing. The possibility of precisely that happening emerged in August 15, 1971. Since Nixon severed the last tie of the dollar to gold, the world's monetary system has not been restrained by anything physical. We've depended on the discretion of central bankers. We can't trust that, and this crisis shows precisely why.
Of course there are subsidiary factors: the lifting of restrictions on Freddie and Fannie; subsidized lending; the Fed's artificially low interest rates; the Community Reinvestment Act; financial "deregulation"; the war; Bush profligacy; debt. There is much more besides. But fighting each of these forces individually is like battling down flies at the garbage dump. The core issue is that there is nothing to restrain money creation.
Read the rest
Militarized Cops (Lew Rockwell and Will Grigg)
In his latest podcast, Lew Rockwell talks with Will Grigg about the militarized police state we find ourselves in:
Entreating the Beast (Will Grigg)
Will Grigg on the abhorrent United Nations and its International Criminal Court, which, with the proposed kidnapping of Mahmoud Ahmadenijad for "trial," continues its legacy of facilitating war and genocide:
Iranian President Mahmoud Ahmadenijad, we are insistently told by advocates of further military adventurism in the Persian Gulf region, is the most recent version of Hitler Revisited, harboring an implacable desire to annihilate Israel.
The regime in Tehran doesn't occupy an acre of land beyond its borders, and displays no desire to acquire any through aggression or other means. Yet we are told that Iran is a threat to the entire world, and must be contained by Washington through the use of economic impediments and covert operations that are tantamount to an undeclared war.
Thus it may be considered odd that Ahmadenijad has made a point of avowing his government's "friendship" for the Israeli people, despite its irreducible antagonism toward the government ruling that country. Even if one assumes that such statements are fashioned from the purest hypocrisy, they do complicate matters for those who seek to shoehorn the Iranian leader into Hitler's jackboots.
This is not to say, of course, that such people will relent.
Read the rest
Iranian President Mahmoud Ahmadenijad, we are insistently told by advocates of further military adventurism in the Persian Gulf region, is the most recent version of Hitler Revisited, harboring an implacable desire to annihilate Israel.The regime in Tehran doesn't occupy an acre of land beyond its borders, and displays no desire to acquire any through aggression or other means. Yet we are told that Iran is a threat to the entire world, and must be contained by Washington through the use of economic impediments and covert operations that are tantamount to an undeclared war.
Thus it may be considered odd that Ahmadenijad has made a point of avowing his government's "friendship" for the Israeli people, despite its irreducible antagonism toward the government ruling that country. Even if one assumes that such statements are fashioned from the purest hypocrisy, they do complicate matters for those who seek to shoehorn the Iranian leader into Hitler's jackboots.
This is not to say, of course, that such people will relent.
Read the rest
Time to Fight the Real War on Terror (BJ Lawson)
BJ Lawson on the real terrorists who have caused this continuing meltdown of the financial system:
The terrorists we must fight are not crouched in caves thousands of miles away.
The terrorists we must fight are threatening us with financial weapons of mass destruction that are destroying our economic system.
As described by Warren Buffet in his 2003 letter to Berkshire Hathaway shareholders, the financial industry has created new types of derivatives that he described as “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
As summarized in this BBC article:
Does any of this sound familiar? It should. We’re living it.
Read the rest
The terrorists we must fight are not crouched in caves thousands of miles away.
The terrorists we must fight are threatening us with financial weapons of mass destruction that are destroying our economic system.
As described by Warren Buffet in his 2003 letter to Berkshire Hathaway shareholders, the financial industry has created new types of derivatives that he described as “financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”
As summarized in this BBC article:
Contracts devised by ‘madmen’
“Derivatives generate reported earnings that are often wildly overstated and based on estimates whose inaccuracy may not be exposed for many years” - Warren Buffett
“Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers … which can trigger serious systemic problems.” - Warren Buffett
Derivatives are financial instruments that allow investors to speculate on the future price of, for example, commodities or shares - without buying the underlying investment.
Derivates like futures, options and swaps were developed to allow investors hedge risks in financial markets - in effect buy insurance against market movements -, but have quickly become a means of investment in their own right.
Outstanding derivatives contracts - excluding those traded on exchanges such as the International Petroleum Exchange - are worth close to $85 trillion, according to the International Swaps and Derivatives Association.
Some derivatives contracts, Mr Buffett says, appear to have been devised by “madmen”.
He warns that derivatives can push companies onto a “spiral that can lead to a corporate meltdown”, like the demise of the notorious hedge fund Long-Term Capital Management in 1998.
Does any of this sound familiar? It should. We’re living it.
Read the rest
Ron Paul with Wolf Blitzer 9/21/08
Ron Paul appeared on CNN with Wolf Blitzer this morning to talk about the insane government bailouts and the unwindwing financial catastrophe:
YouTube
YouTube
Friday, September 19, 2008
Setup for a Crash (BJ Lawson)
BJ Lawson comments on the SEC's disastrous decision to ban short selling of certain financial stocks:
Nothing like a midnight press release from the SEC to let us know that all is well:
I visited China in the summer of 2007 while everything was bubbly and beautiful in their equities markets. Our group met with a representative of the Shenzhen stock exchange, who told us how the Chinese government had taken steps to ensure that China’s markets would always be stable and prosperous. The government knows who is buying and selling every position, so they can identify “market manipulators.” Most importantly, the government has outlawed short selling.
How has this transparency and forbidding short selling helped the Chinese market over the past year?
It’s lost over 60% from its peak. Without any short sellers.
Short sellers simply borrow existing shares, paying for the privilege, and sell them in the open market. They have carrying costs, and must eventually buy the shares back. The fact that they must buy to complete the transaction means that they provide support for stocks during declines — when stocks are going down, short sellers are often the ones buying back to close their positions.
Without short sellers looking to close their positions, declines can be precipitous. In moments of panic, short sellers are the only buyers — so without them, markets can simply crash with no bids offered.
There is a form of short selling, termed “naked” short selling, that is and should be illegal. Naked short sellers don’t actually borrow shares to sell — they literally sell something that they don’t own, without actually borrowing “real” shares. In that case, they are simply counterfeiting stock and dumping it on the market. That’s fraudulent, and must be prosecuted.
The SEC should be prosecuting naked short selling, not eliminating short selling.
This step by the SEC may cause a pop as short sellers rush to close their positions, but it will not prevent insolvent financial firms from facing their ultimate judgment as stockholders eager to exit sell into any strength.
When judgment comes, it will be precipitous.
Nothing like a midnight press release from the SEC to let us know that all is well:
SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets
FOR IMMEDIATE RELEASE
2008-211
Commission Also Takes Steps to Increase Market Transparency and Liquidity
Washington, D.C., Sept. 19, 2008 — The Securities and Exchange Commission, acting in concert with the U.K. Financial Services Authority, took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market and strengthen investor confidence. The U.K. FSA took similar action yesterday.
Additional Materials
- SEC Order Halting Short Selling in Financial Stocks
- SEC Order Requiring Institutional Money Managers to Report New Short Sales
- SEC Order Easing Restrictions on Issuers to Re-Purchase Their Securities
- Form SH
- Form SH Instructions
The Commission’s action will apply to the securities of 799 financial companies. The action is immediately effective.
SEC Chairman Christopher Cox said, “The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets. The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
I visited China in the summer of 2007 while everything was bubbly and beautiful in their equities markets. Our group met with a representative of the Shenzhen stock exchange, who told us how the Chinese government had taken steps to ensure that China’s markets would always be stable and prosperous. The government knows who is buying and selling every position, so they can identify “market manipulators.” Most importantly, the government has outlawed short selling.
How has this transparency and forbidding short selling helped the Chinese market over the past year?
It’s lost over 60% from its peak. Without any short sellers.
Short sellers simply borrow existing shares, paying for the privilege, and sell them in the open market. They have carrying costs, and must eventually buy the shares back. The fact that they must buy to complete the transaction means that they provide support for stocks during declines — when stocks are going down, short sellers are often the ones buying back to close their positions.
Without short sellers looking to close their positions, declines can be precipitous. In moments of panic, short sellers are the only buyers — so without them, markets can simply crash with no bids offered.
There is a form of short selling, termed “naked” short selling, that is and should be illegal. Naked short sellers don’t actually borrow shares to sell — they literally sell something that they don’t own, without actually borrowing “real” shares. In that case, they are simply counterfeiting stock and dumping it on the market. That’s fraudulent, and must be prosecuted.
The SEC should be prosecuting naked short selling, not eliminating short selling.
This step by the SEC may cause a pop as short sellers rush to close their positions, but it will not prevent insolvent financial firms from facing their ultimate judgment as stockholders eager to exit sell into any strength.
When judgment comes, it will be precipitous.
Does Wall Street Have a Death Wish? (Bob Higgs)
Bob Higgs on how the flailing Fed and complicit state agencies are leading the economy towards the abyss of full-fledged fascism:
After several days of violent fluctuations, the world’s stock markets registered a massive increase in share prices on Thursday afternoon and on Friday, September 18 and 19, 2008. Why? As the Associated Press put it, “investors stormed back into the market, relieved that the government plans to restore calm to the financial system by rescuing banks from billions of dollars in bad debt. The Dow Jones industrials rose about 365 points, giving them a massive gain of about 775 over two days.”
Other stock markets also rose tremendously: on Friday the S&P 500 closed up more than 49 points, or about 4 percent; the Nasdaq closed up almost 75 points, or 3.4 percent.
Exactly what the government will do remains to be determined. Officials from the Treasury and the Fed and members of Congress intend to spend the weekend hammering out the details. Be afraid, be very afraid.
Read the rest
After several days of violent fluctuations, the world’s stock markets registered a massive increase in share prices on Thursday afternoon and on Friday, September 18 and 19, 2008. Why? As the Associated Press put it, “investors stormed back into the market, relieved that the government plans to restore calm to the financial system by rescuing banks from billions of dollars in bad debt. The Dow Jones industrials rose about 365 points, giving them a massive gain of about 775 over two days.”
Other stock markets also rose tremendously: on Friday the S&P 500 closed up more than 49 points, or about 4 percent; the Nasdaq closed up almost 75 points, or 3.4 percent.
Exactly what the government will do remains to be determined. Officials from the Treasury and the Fed and members of Congress intend to spend the weekend hammering out the details. Be afraid, be very afraid.
Read the rest
Ron Paul on Fannie and Freddie in 2003
Five years ago, Ron Paul predicted the Fannie and Freddie collapse and bailout, as seen in this video from the Financial Services hearing on September 10, 2003 (also see his written statement to the committee):
Thursday, September 18, 2008
Ron Paul on Glen Beck 9/18/08
Open Letter to Christian US Troops in Iraq and Afghanistan (Stan Goff)
Stan Goff tells Christian soldiers to stop killing for the state:
I write this open letter to troops, brothers and sisters – of all branches – who profess the faith of Christ. I write you to ask that you remember your baptism, because at that baptism you declared your renunciation of evil.
Note the preposition. I didn't say faith in Christ, I said faith of Christ.
Christian is a diminutive term; it means "little Christ." To be a Christian is not to merely have faith in Christ. That's too easy, and Jesus of Nazareth was not about easy. To be Christian is to aspire to have the faith of Christ.
Christ's call is not to go along with the program, say the magic words, then be rescued from death. Christ did not merely command belief. Christ commands you to follow him. That command does not wait until death for it to become effective in your life. "Love your enemy." This is not an etching at some altar that you visit; it is your path laid before you by the footsteps of Christ in this world. This is an action religion, not an abracadrabra religion.
Christ tells us to take up the cross. That means be willing to risk all, to suffer all when suffering can heal the brokenness in the world. The brokenness of 1st-Century Palestine was not altogether different from the brokenness of the world now.
Read the rest
I write this open letter to troops, brothers and sisters – of all branches – who profess the faith of Christ. I write you to ask that you remember your baptism, because at that baptism you declared your renunciation of evil.
Note the preposition. I didn't say faith in Christ, I said faith of Christ.
Christian is a diminutive term; it means "little Christ." To be a Christian is not to merely have faith in Christ. That's too easy, and Jesus of Nazareth was not about easy. To be Christian is to aspire to have the faith of Christ.
Christ's call is not to go along with the program, say the magic words, then be rescued from death. Christ did not merely command belief. Christ commands you to follow him. That command does not wait until death for it to become effective in your life. "Love your enemy." This is not an etching at some altar that you visit; it is your path laid before you by the footsteps of Christ in this world. This is an action religion, not an abracadrabra religion.
Christ tells us to take up the cross. That means be willing to risk all, to suffer all when suffering can heal the brokenness in the world. The brokenness of 1st-Century Palestine was not altogether different from the brokenness of the world now.
Read the rest
Dispossession by Decree (Will Grigg)
Will Grigg says the Fannie and Freddie bailout by the U.S. Treasury was bad enough, but the Federal Reserve's bailout of AIG is even worse. An excerpt:
Perhaps I was too distracted to notice, but I don't recall a spontaneous outpouring of public demand for a taxpayer-financed bailout of Fannie and Freddie, the costs of which will eventually run into the trillions of dollars. In that case, however, there is an almost imperceptibly thin thread of public accountability, since Congress -- acting with the desperate haste it displays only when carrying out an errand on behalf of the Power Elite -- passed a patently unconstitutional measure "authorizing" the Secretary of the Treasury to bail out Fannie and Freddie.
This means that the electorate, which installed and tolerates Congress, shares some responsibility for this crime.
However, it's impossible to blame the electorate for the most recent act of mega-larceny, the Federal Reserve's $85 billion bailout of the American International Group. This was done by the FED -- an nominally private entity that exercises immense political and economic power without constitutional standing or accountability of any kind. Congress didn't appropriate the necessary funds for that bailout. Nor was the money set aside through executive action, the entirely illegal method now commonly used to commit the United States to immensely expensive undertakings such as wars of aggression against distant, helpless countries.
The FED's action amounts to the $85 billion purchase of a private company, on behalf of the federal government, using public funds -- without political accountability of any kind. Outrageous as it is, this action may have the healthy, if thoroughly unintended, consequence of illustrating just who actually runs our political system and economy.
Read the rest
Perhaps I was too distracted to notice, but I don't recall a spontaneous outpouring of public demand for a taxpayer-financed bailout of Fannie and Freddie, the costs of which will eventually run into the trillions of dollars. In that case, however, there is an almost imperceptibly thin thread of public accountability, since Congress -- acting with the desperate haste it displays only when carrying out an errand on behalf of the Power Elite -- passed a patently unconstitutional measure "authorizing" the Secretary of the Treasury to bail out Fannie and Freddie.
This means that the electorate, which installed and tolerates Congress, shares some responsibility for this crime.
However, it's impossible to blame the electorate for the most recent act of mega-larceny, the Federal Reserve's $85 billion bailout of the American International Group. This was done by the FED -- an nominally private entity that exercises immense political and economic power without constitutional standing or accountability of any kind. Congress didn't appropriate the necessary funds for that bailout. Nor was the money set aside through executive action, the entirely illegal method now commonly used to commit the United States to immensely expensive undertakings such as wars of aggression against distant, helpless countries.
The FED's action amounts to the $85 billion purchase of a private company, on behalf of the federal government, using public funds -- without political accountability of any kind. Outrageous as it is, this action may have the healthy, if thoroughly unintended, consequence of illustrating just who actually runs our political system and economy.
Read the rest
Honesty! (BJ Lawson)
BJ Lawson on the dangerous combination of fractional reserve banking and debt-based money:
Finally, tonight, as we sail towards economic catastrophe, a glimmer of hope. Honesty:
Well, that’s not exactly true. Ron Paul knows what to do. Michael Shedlock knows what to do. But at least we’re finally at the place where Congress is ready to admit its relative ignorance.
Not only do they not know what to do, they don’t even know what the problem is.
First, it’s time to admit the real problem — fractional reserve banking (where banks lend out more money then they have on deposit for lending) and debt-based money (where money is created through loans that must be paid back with interest). These two ingredients are amphetamines for our economic system.
Read that again — amphetamines. Easy credit is a dangerous, addictive drug. Our economy becomes hooked on easy credit. When we first get access to cheap credit the economy accelerates, but eventually we develop a tolerance. Eventually we need more and more cheap credit to get the same stimulatory effect.
Read the rest
Finally, tonight, as we sail towards economic catastrophe, a glimmer of hope. Honesty:The U.S. Congress is unlikely to pass new legislation to overhaul financial regulations this year because “no one knows what to do,” Senate Majority Leader Harry Reid said today.
Well, that’s not exactly true. Ron Paul knows what to do. Michael Shedlock knows what to do. But at least we’re finally at the place where Congress is ready to admit its relative ignorance.
Not only do they not know what to do, they don’t even know what the problem is.
First, it’s time to admit the real problem — fractional reserve banking (where banks lend out more money then they have on deposit for lending) and debt-based money (where money is created through loans that must be paid back with interest). These two ingredients are amphetamines for our economic system.
Read that again — amphetamines. Easy credit is a dangerous, addictive drug. Our economy becomes hooked on easy credit. When we first get access to cheap credit the economy accelerates, but eventually we develop a tolerance. Eventually we need more and more cheap credit to get the same stimulatory effect.
Read the rest
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