"I am an imperfect messenger, but the message is perfect"
– Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
In every area which our society has decided to make the province of government, or where government itself has decided to intervene, it has distorted the free market, added costs that do not reflect economic reality, excluded competition, established political fiefdoms and created no-bid crony capitalism at great expense to the taxpayer.
Ron Paul has identified this problem and promised to follow his ideological consistent goal of working to allow free market forces to regulate or, where that is not feasible, to place the decision-making and control at lowest level of governmental unit closest to those who are affected by and can provide input into the decisions that impact citizens’ lives.
The five departments Ron Paul has decided to get rid of are Energy, Commerce, Interior, Education, and Housing and Urban Development along with reasonable cuts in military spending that do nothing to make America more secure, but instead make America less secure because the costs are unsustainable, wasteful, counter-productive or not in the interests of national security.
The Department of Energy held secret meeting prior to the invasion of Iraq, and the D.C. court decided there was no requirement for them to notify the public as to what planning was taking place. The Department of Energy is being run by oil interests and allows oil corporations -private businesses- to determine the actions of government in manner that promotes the interests of Big Oil. As more and more corporations form agreements with government behind closed doors or via special interest political contributions, the private individual always ends up suffering from higher prices. If the market suddenly made feasible an alternative fuel, does anyone believe oil corporations would not work through the Department of Energy to stymie new innovation?
In the Department of Commerce, bigger businesses often lobby for rules and regulations that prevent smaller businesses from being able to compete by stifling competition. According to former Commerce Secretary Robert Mosbacher, the Department of Commerce (DOC) is "nothing more than a hall closet where you throw in everything that you don't know what to do with." The General Accounting Office reported that DOC "faces the most complex web of divided authorities" of any government agency, sharing its "missions with at least 71 federal departments, agencies and offices." This department has a budget of $8 billion and 34,000 employees. Money via grants are not based on market efficacy, but instead are divvied out according to political considerations that are extremely wasteful.
Everyone says Ron Paul is against education because he wants to get rid of the Department of Education, but this is a lie. His goal is to leave the maximum amount of money at the local level so that individual school boards can decide how to best run their school without interference from Washington D.C. where bureaucrats devise unfunded mandates and are thousands of miles removed from the challenges a community faces in relation to educating their children.
The Department of the Interior has a budget of $12.2 billion and employs 70,000 employees at 2,400 different locations. None of the functions of this department are based on the constitution, accordingly, it creates many rules that deny property owners the right to use and develop their property because in some case a gnat that is on the endangered species list has flourished on someone’s property that has been designated a wet land. If government wants to save a gnat, then the government should be required to pay the landowner and assume ownership as opposed to denying him the use of his land without him any compensation whatsoever. This is an unconstitutional attack on private property that serves as the basis for a free society in which individual liberty and economic liberty are once again united.
The last department Dr. Ron Paul advocated abolishing is the Department of Housing and Urban Development. We all remember the individual who dressed as a pimp to get advice from ACORN on how to avoid paying taxes. Many ACORN employees were paid through HUD. Their budget is at $100 million and yet they have been unable to provide requested statistical information that shows any program efficacy at all. With HUD taxpayer money goes to developers who are politically connected, very rich, extremely expensive construction corporations. Ron Paul is not against public housing, but the way this program is administered and the extent to which it is politically corrupted. The end result is that less homes are built for the needy and a well-meaning program does nothing more then serve as a means of corporate welfare that helps the rich.
Ron Paul would abolish any federal agency whose powers were not 'enumerated' in the US Constitution. The "enumerated powers" clause of the US Constitution, specifically Article 1 Section 8 defines the powers of the US Congress. These "enumerated powers" do not authorize the creation of certain federal agencies, specifically the Dept. of Education, HUD, and many others. Ron Paul believes that each federal agency must be looked at through the lens of the enumerated powers clause of the US Constitution, and if that agency is not specifically authorized then it must be abolished.
These departments have been allowed to create regulations that violate the U.S. Constitution, deny due process and destroy individuals’ private property rights. These agencies stand the objective of law on its head because it leaves employers in the position of never knowing if they are subject to lawsuits because administrative judges interpretation of arcane rules hidden in ever-growing mountains of government regulation. These rules contain within themselves the full force of law without ever having to stand review of any legislative body.
Without any constraint on government and allowing it to use the Commerce Clause to expand its influence into every facet of human endeavor thereby establishing an excuse for unlimited government, Americans have found they have become poorer and less free. The decision we now face is unlimited government or an unprecedented role back of government tyranny and abuses.
"I am an imperfect messenger, but the message is perfect"
– Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
If you look at where Mitt Romney receives his campaign finances from, this video should be no surprise. Large Banks caused the mess we're in and Mitt Romney's intimate relationships with these banks are a tell sign that a President Romney would be a continuation of bad monetary policy.
"I am an imperfect messenger, but the message is perfect" – Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
As most of us already know, the Federal Reserve [Fed] came under expansive scrutiny in 2008 after the housing bubble burst and reaped havoc on our dollar. What most people don’t know is why the Federal Reserve came under fire. The absence of that knowledge creates a lack of conviction and rectifying our economic problems can only occur when both knowledge and conviction are achieved. The majority of Americans perceive our Federal Reserve as necessary and integral to our economy, as air is to our respiratory system. Most people don’t understand the immoral inner workings of the Fed nor do they understand the unconstitutionality of it. People are often surprised when they learn that the fed is privately owned.
In this document, I will take you over the failures of fiat money, the corruption it breeds and the negative effect it has on our savings. This document is for those who want to understand the Fed more deeply, I offer a moderate history of the Fed to hopefully elucidate the subject and display why the Federal Reserve must be restrained.
“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford
History of Fiat Currency
In 1775 the Continental Congress began issuance of a paper currency called the Continental in preparation of the war with Great Britain. Since the notion of taxation was highly ridiculed and the war costs were so high, they began printing Bills of Credit (short term public loans to the government) in order to fund the war.
This proved problematic as by 1776, due to inflation (diluting the money supply), the Bills of Credit depreciated to 66% of initial value. In an attempt to combat the depreciation the states made paper currencies legal tender for all purchases and debts, enacted price controls and continued to print more money. In 1778 state and federal directed Procurement Officers (soldiers) to seize and pillage the people giving certificates of debt in return, which also quickly diminished in value. By 1780, hyperinflation led Congress to the conclusion that further printing was futile; the money supply had been diluted to just 1% of its original value in 6 years.
The overall failure of the paper Continental led our founders to authoring Article 1 Section 10 of our Constitution, which declared that only gold and silver were to be legal tender. This law was designed to protect us from the immorality of a devaluating currency; the theft of wealth at the behest of others.
The Federal Reserve Act
"This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson] signs this bill, the invisible government of the monetary power will be legalized....the worst legislative crime of the ages is perpetrated by this banking and currency bill." Charles A. Lindbergh, Sr., 1913
On December 23 of 1913 under Woodrow Wilson, the Federal Reserve Act was instated, which, at the peril of our Constitution, was granted legal authority to issue Federal Reserve notes. This system would be built around the ideology of macroeconomics, (later labeled Keynesian economics post 1936). Initially, as a safeguard, the dollar was fixed on the value of gold and was to be redeemable in gold at a rate of $20.67 per ounce. This assured low inflation and placed natural market restrictions on the Fed by allowing the market to influence the economy (although notably hindered by intervention).
During that time the Federal Reserve comptroller assured the people that it was mathematically impossible to have economic recessions, claiming that this form of economic planning was superiorly more sophisticated; perfect. However according to the National Bureau of Economic Research, this notion was quickly invalidated as between 1918 and 1919 we experienced our first bubble and recession.
Bubbles
Bubbles form when the Federal Reserve lowers interest rates below the natural levels of a market, it influences expansion of investments well beyond sustainable levels. This distorts the signals that business uses to assess risk. These distortions then lead businesses to believe that consumers have the savings to back up their investments. However, artificially low (below market) interest rates don’t generate new wealth to make good on investments. So when the bubble pops these fallacies are realized in lost investments.
The bubbles and economic recessions continued, just as they had with every other central bank. Bubbles occurred in 1918 to 1919, 1920 to 1921, 1923 to 1924, 1926 to 1927, and 1929 to 1933. As you might be aware, 1933 was the year that President Franklin D. Roosevelt issued Executive order 6102 which not only restricted Americans from owning gold but ordered the seizure of gold. The gold fixed value of the dollar was then immediately changed from $20.67 to $35 per ounce. The Bubbles continued, 1937 to 1938, 1945, 1948 to 1949, 1953 to 1954, 1960 to 1961, and 1969 to 1970. Then things changed with a new Chairman of the Federal Reserve.
When Arthur Burns was appointed Chairman of the Fed (1970-78), he pushed for more secrecy by ending minutes keeping during meetings, allowing for concealment in meetings. He also made arguments for elasticity in our dollar by removing the “restriction” of the gold standard. On August 15, 1971 he got his wish.
We went off the gold standard and introduced ultimate elasticity to the Fed. This afforded them the ability to control the value of the dollar at their whim. This allso allowed the fed to interject the business cycle to make economic booms last longer, which in turn allowed the recessions last longer. The presence of real market restricts the boom from perpetuity, that is, every period of economic euphoria must be respected by an equal period of economic misery.
The recessions from 1918 to 1970 were relatively short and went fairly unnoticed due to the dollars fixed value. Once elasticity was granted and was perverted over time by intervention through inflation and low interest rates, the severity of the recessions were much more notable. Post gold fixed bubbles include 1973 to 1975, 1980, 1981 to 1982, 1990 to 1991 and 2000 to 2007, which brings us to our current crises.
The Great Bubble
The great bubble was largely attributed to the bad policies of Alan Greenspan who was the chairman of the Federal Reserve from 1987 until 2006. Greenspan intervened in the recession that should’ve followed the dot-com bubble. Instead of accepting the natural recession that should have occurred in 2001, the Fed began expanding the Housing Market. This didn’t negate the previous bubble; it merely stalled it by creating a bigger bubble. The Fed arrogantly continued its efforts to stop recession through low interest rates and actual interest rates fell below historical averages. At that point the Fed had abandoned all monetary rules in attempts to prop the market.
Alan Greenspan slashed the federal fund targets from 6.5% in January of 2001 all the way down to 1% by June 2003. He fixed the rates at an artificial low of 1% for a full year, which encouraged more bad investments and caused a massive expansion of the bubble. Then, by June of 2006, Greenspan had raised it back to 5.25%, a move that popped the bubble and unleashed the havoc of three overdue recessions.
“The few who understand the system, will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class.” - Rothschild Brothers of London, 1863
Surly a man of Alan Greenspan’s intelligence saw what was happening as he undoubtedly understands basic economics and the business cycle. Bearing that leads to the question, what motive would Greenspan have for knowingly doing this? All one has to do is look to who gets the money, and the answer is obvious. Alan Greenspan was protecting the fed’s banking, big business and political interest by skirting the financial burden on the people, essentially socializing loss.
“Inflation is the most evasive and aggressive form of taxation it transfers wealth from the middle class to the privileged rich”. – Ron Paul
Corruption
The Federal Reserve is falsely known as a politically neutral part of our government. This cannot be further from the truth on either count. As a private institution the Fed succumbs to the interest of its controllers and shareholders. The Federal Reserve, being the most secret institution in our country, can give undisclosed money to corporations and influence politics by adjusting (loosening) rates during elections. An example of this, which can be found in Ron Paul’s best-selling book “End The Fed”, is Arthur Burns (Fed Chairman 1970-78) attempt at seducing President Carter in 1976.
It is well documented that Arthur Burns, in an attempt to be reappointed, cut discount rates and accelerated money growth to alter the perception of the economy. He told Carter that reappointment would make him out to be a high minded statesman and suggested that if reappointed he (Arthur Burns) would stop criticizing everything near and dear to him (Carter). He failed and his intervention in the market brought on the worst bout of price inflation in a century and caused the democrats to lose the office to Regan.
People like this are the masters of our economy?
"Give me control of a nation's money and I care not who makes its laws" -Mayer Amschel Bauer Rothschild (Rothschild family is the largest Fed shareholder)
The Audit
Although they do have regular audits, the auditors are extremely limited in what they can actually audit which makes them irrelevant altogether. Contrary to Herman Cain’s claim that calling the Fed will provide all the answers, the reality is that all past requests for information have always been met with arrogance from Fed chairmen, turning them down, as if the requests were outrageous.
In 2009 Ron Paul introduced the Federal Reserve Transparency Act (H.R.1207), which requested a full audit of the Federal Reserve, the first in its 100 year history. It gained wide attention and support but what passed was Senator Bernard Sanders lite version titled Federal Reserve Sunshine Act (s.604), which demanded a partial audit, and here are their findings. (unelected.com)
The list of institutions that received the most money from the Federal Reserve can be found on page 131 of the GAO Audit and are as follows:
Citigroup: $2.5 trillion ($2,500,000,000,000)
Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
This secret stimulus inflates our dollar, essentially a tax on the people; our money went to these thieves by way of devaluation of our savings.
Ben Bernanke & Quantitative Easing:
Ben Bernanke is the current chairman of the Fed. He continues with the bad practices that Greenspan used. He continues the inflation of our currency and devaluation of the dollar, a direct tax on the people’s savings and earnings. Ben Bernanke believes that he can “fix” our current economic crisis by printing money; stimulus through quantitative easing. Essentially treating the illness with what caused it in the first place.
Quantitative Easing (QE) is another form of stimulus, an injection of money into our supply. QE happens as a result of artificially low interest rates. To better understand this process I urge you to watch this film QE Explained. This is Ben Bernanke’s secret (and only) weapon, and its proliferating the problem.
Private Counterfiters:
"Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders." The Honorable Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s
Each of the twelve Federal Reserve Banks is organized into a corporation with shares. Those shares are sold to the commercial banks and thrifts operating within each of the twelve Fed Bank's district. The shareholders get to elect six of the nine the board of directors for their regional Federal Reserve Bank, they also elect the president. I urge you to look over which banks got bailed out and contrast them to the list below. Corporate interests at its finest.
The shareholders are kept mostly confidential, however author Eustace Mullins exposed some of the members in his bombshell book titled “Secrets of the Federal Reserve” Citibank, Chase Manhattan, Morgan Guaranty Trust, Chemical Bank, Manufacturers Hanover Trust, Bankers Trust Company, National Bank of North America, and the Bank of New York to name a few.
The Fed is guilty of secretly counterfeiting money and creating credit for private, corporate and political interest.
Conclusion:
The flaws of the Fed, the great depression and the current crisis can be proven syllogistically and down to central economic planning, the departure from the gold standard and Keynesian economics. The benefits of an elastic fiat currency allow for rich men to prop up their interests (often overseas) at the expense of the American people. It’s a morally corrupt system that claims ethical high ground, this moral high ground drives us into socialism.
It’s the American people’s job to stop encouraging the Fed’s abuses by demanding benefits from congressmen that can only be produced by printing fiat money. We are neglecting our future and our children’s future and selling it out for the short term benefits of today. We encourage the Fed by supporting wars which could only be funded with an elastic money supply.
Often people make the reference that we should not “throw the baby out with the bathwater”. This is an ignorant notion as it cannot apply to a private institute with private interests. If the baby is the American Peoples interest, the baby has long since left the bathwater.
As most Americans go about their daily life they seem to miscalculate the dire situation we face; impending global financial meltdown. It should be well understood by now that in 2007 there were very intelligent economists from the Austrian school that predicted the housing market collapse in vivid detail. Those same Austrians are predicting a greater collapse in the near future; the collapse of the dollar. Which would be the worst crises, economic or otherwise, the world has ever seen. Remember in 2007 when America laughed at the Austrians predictions? Will we risk making the same mistake again?
In light of this knowledge America has a distinct choice to make, one or the other: 4 more years of Obama and possible global market collapse or just 4 years.
4 More Years of Obama
If the American people vote for Newt Gingrich or Mitt Romney it will be 4 more years of Obama. This is not a difficult notion to arrive at. America is upset, voters wanted change in ’08 and they need change now. However, neither of the two candidates offers any real change for America nor do they offer a departure from our current path to collapse. They both advocate big government, large scale militarism and they both cater to large corporations rather than to the people (meaning they can be bought). They both also have skeletons in their closet which Obama and his $1 Billion can easily exploit.
The independents would not vote for Gingrich or Romney, nor would the democrats… but let me get to the point, nor would the Paulites which are roughly 15% of the republican vote. This may be frustrating or seem irrational to you. It may anger you to no end… but it doesn’t change the fact at hand. The fact is that 95% of Ron Paul supporters, when asked, say they will not vote for the Republican nominee if Ron Paul does not take the nomination. This alone spells certain doom for the GOP in 2012.
However if the Republican Party chose Ron Paul as the nominee he would win most of the independents, a large percentage of democrats (see ‘blue republicans’), and the GOP. Ron Paul has no skeletons in his closet for Obama to exploit. His voting record is constitutionally pristine and he doesn’t cater to large corporations for money.
Just 4 Years
In just 4 years the Austrian economist Dr. Ron Paul could balance our budget and return us to financial sanity, he could pave the way for the return to prosperity. Not for just us but for the whole world. So I ask America. Why risk financial collapse when the solution lies in this wish 76 year old man?
Can’t we try the Austrian philosophy on monetary policy for just 4 years? Can’t we go back to sound money for just 4 years? Can’t we engage in peaceful trade instead of militarism for just 4 years? Can’t we cut back on government for just 4 years? Can’t we end crony-capitalism for just 4 years? Can’t we hang up our war hammers and our petty reservations for just 4 years so we can get through this mess?
The funny thing is, regardless how you vote, if we don’t fix our financial problem the collapse is inevitable. That means our government shrinks anyway and our militarism and foreign aid ends anyway.
Ron Paul or No One.
For a deeper understanding of Ron Paul and his philosophies please this series.
As most Americans go about their daily life they seem to miscalculate the dire situation we face; impending global financial meltdown. It should be well understood by now that in 2007 there were very intelligent economists from the Austrian school that predicted the housing market collapse in vivid detail. Those same Austrians are predicting a greater collapse in the near future; the collapse of the dollar. Which would be the worst crises, economic or otherwise, the world has ever seen. Remember in 2007 when America laughed at the Austrians predictions? Will we risk making the same mistake again?
In light of this knowledge America has a distinct choice to make, one or the other: 4 more years of Obama and possible global market collapse or just 4 years.
4 More Years of Obama
If the American people vote for Newt Gingrich or Mitt Romney it will be 4 more years of Obama. This is not a difficult notion to arrive at. America is upset, voters wanted change in ’08 and they need change now. However, neither of the two candidates offers any real change for America nor do they offer a departure from our current path to collapse. They both advocate big government, large scale militarism and they both cater to large corporations rather than to the people (meaning they can be bought). They both also have skeletons in their closet which Obama and his $1 Billion can easily exploit.
The independents would not vote for Gingrich or Romney, nor would the democrats… but let me get to the point, nor would the Paulites which are roughly 15% of the republican vote. This may be frustrating or seem irrational to you. It may anger you to no end… but it doesn’t change the fact at hand. The fact is that 95% of Ron Paul supporters, when asked, say they will not vote for the Republican nominee if Ron Paul does not take the nomination. This alone spells certain doom for the GOP in 2012.
However if the Republican Party chose Ron Paul as the nominee he would win most of the independents, a large percentage of democrats (see ‘blue republicans’), and the GOP. Ron Paul has no skeletons in his closet for Obama to exploit. His voting record is constitutionally pristine and he doesn’t cater to large corporations for money.
Just 4 Years
In just 4 years the Austrian economist Dr. Ron Paul could balance our budget and return us to financial sanity, he could pave the way for the return to prosperity. Not for just us but for the whole world. So I ask America. Why risk financial collapse when the solution lies in this wish 76 year old man?
Can’t we try the Austrian philosophy on monetary policy for just 4 years? Can’t we go back to sound money for just 4 years? Can’t we engage in peaceful trade instead of militarism for just 4 years? Can’t we cut back on government for just 4 years? Can’t we end crony-capitalism for just 4 years? Can’t we hang up our war hammers and our petty reservations for just 4 years so we can get through this mess?
The funny thing is, regardless how you vote, if we don’t fix our financial problem the collapse is inevitable. That means our government shrinks anyway and our militarism and foreign aid ends anyway.
Ron Paul or No One.
For a deeper understanding of Ron Paul and his philosophies please this series.
"I am an imperfect messenger, but the message is perfect" – Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
"I am an imperfect messenger, but the message is perfect" – Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
$25 billion per year in foreign aid seems like a drop in the bucket to our annual $2.7 trillion dollars national revenue, however, one should put into perspective that our budget is over $3 trillion per year and our national debt is over $15 trillion. A rational person understands that this is simply unsustainable, in its most basic math. However, this is the obvious argument and I don't find it necessary to dwell upon the obvious. I will, however, stay on the argument of economics for the time being as I feel we are missing something that should resonate with American’s and is consistently ignored. That argument is a rudimentary economics lesson written by William Graham Sumner, called the forgotten man.
The Forgotten Man Applied
As we all understand, the $25 billion dollars has to, at some point, come from the productive sector of society; the taxpayers, whom we will call group A. This money is then provided as financial aid to foreign bureaucrats to their benefit alone, we’ll call this party, group B. We, as a species, have a predilection for considering only what we can immediately see in front of us. We can see the charity of group A (albeit a forced charity) and we can see the benefits reaped by group B. However, no one stops to consider that what we cannot see, which is group C; the forgotten man.
Group C is the car manufacturer, the clothing maker, electronics manufacturer, the bread maker, the paper miller, the restaurant owner, the bookseller, the small businessman; the list goes on ad infinitum. Since our government took the money from group A and gave it to group B, group C was never realized. Essentially we are giving charity to the foreign group B at the loss of what group C would have had to offer. Let me stress the magnitude of productive loss and potential unemployment we suffer due to this forced “charity”.
Putting this into a perspective that we all can relate to, let us say that a $1 million a year company employs 75 people, some have more some have less. These 75 people have to care for 75 families, let’s assume families of 3 for this example. So this single $1 million dollar company directly affects 225 people’s lives. Now let’s extrapolate this figure to $25 billion. That’s roughly 1,875,000 workers who take care of a total 5,625,000 family members. Not all of these workers encounter job loss per say, but productivity loss eventually becomes job loss.
Since 1970 we have spent well over a trillion dollars on foreign aid (link). Irrefutably, this money never went to the forgotten man, denying hundreds of thousands of jobs; perhaps entire industries from ever coming into existance.
Immorality of Foreign Aid
Since this document is regarding Ron Paul's views, perhaps its said best in his own words. Please listen to this 8 minute chapter from Ron Paul's audiobook "Liberty Defined" for his personal view on foreign aid.
"I am an imperfect messenger, but the message is perfect"
– Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
The business cycle, first realized by Ludwig Von Mises in the 1920’s and later developed by Freidrich A. Hayek, is a phenomenon that happens through Keynesian intervention of the markets. In a business cycle you have a boom or period of economic euphoria and a bust, period of economic agony. The business cycle is propelled by the central bank’s (Federal Reserve) manipulating or “propping” the market through low interest rates which forms bubbles. It should be noted that in a true free market economy the business cycle would simply not exist, that is, there would be no cyclical boom or bust (depression).
Bubbles form when the Federal Reserve lowers interest rates below the natural levels of a market, it influences expansion of investments well beyond sustainable levels. This manipulation distorts the signals that business uses to assess risk and these distortions then lead businesses to believe that consumers have the savings to back up their investments. However, artificially low (below market) interest rates don’t generate new wealth to make good on investments. So when the bubble pops these fallacies are realized in lost investments, this is called correction.
Regardless of government interference the powerful true market is always at work and like gravity, the true market pulls the cycle back towards the median in a sensation we call correction. This correction inhibits business cycle bubbles from perpetual expansion and further attempts at avoiding correction through stimulus or quantitative easing only prolongs the agony, the correction must always occur.
This is precisely how the housing market collapsed in 2008 and Ron Paul’s understanding of the business cycle, through Austrian studies, is what allowed him to foresee the disaster several years before it occurred (you can watch his predictions here: 1983, 2001, 2002, 2003, 2007).
For a deeper understanding on why we must change our monetary policy please listen to this audio from one of Ron Paul's mentors, Murray Rothbard, titled "Economic Depressions: Their Cause and Cure".
"I am an imperfect messenger, but the message is perfect" – Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
An argument I encounter time and again is that Ron Paul’s fiscal plan is just too extreme to accept. To those who subscribe to such a notion I offer the burden of knowledge, because without question you don’t understand the urgency of the matter. Not unlike the frog who boils himself to death when the water in the pot is gradually brought to a boil. We have long been blind to the subtle changes around us which, like the frog, will ensure our own doom. Economically, we are nearing the boiling point; a precipice.
The Road to Hyper-Inflation
It began upon the installation of the Federal Reserve central bank in 1913, which introduced government micromanipulation of our money supply; or Keynesian economics. This greatly accelerated in 1971 when America unceremoniously departed from the gold standard at the behest of then Chairmen of the Federal Reserve Arthur Burns in an effort to introduce elasticity to the money supply. This gave the private Federal Reserve an unlimited ability to expand our money supply along with unlimited secrecy.
Furthermore it allowed the Fed to interject the business cycle to make economic booms last longer, which in turn caused the recessions last longer. The Federal Reserve does this by way of inflation (inflation is the act of injecting money into the money supply resulting in the depreciation of the dollar). Despite the Fed’s efforts to prop the boom, the presence of the real market restricts the boom from perpetuity, that is, every period of economic euphoria must be respected by an equal period of economic misery.
The great bubble was largely attributed to the bad policies of Alan Greenspan who was the chairman of the Federal Reserve from 1987 until 2006. Greenspan intervened in the recession that should’ve followed the dot-com bubble. Instead of accepting the natural recession that should have occurred in 2001, the Fed began expanding the Housing Market. This didn’t negate the previous bubble; it merely stalled it by creating a bigger bubble. The Fed arrogantly continued its efforts to stop recession through low interest rates and actual interest rates fell below historical averages. At that point the Fed had abandoned all monetary rules in attempts to prop the market.
The housing market collapsed as a direct result of government intervening in the business cycle. In January of 2001, Alan Greenspan slashed the federal fund targets from 6.5% all the way down to 1% by June 2003. He fixed the rates at an artificial low of 1% for a full year, which encouraged tremendous bad investments and caused a massive expansion of the bubble. Then, by June of 2006, Greenspan had raised it back to 5.25%, a move that popped the bubble and unleashed the havoc of three overdue recessions.
However the unforgiving travesty has truly occurred since the financial market collapse in 2008. Instead of taking the needed hands off approach by letting the market correct itself, we have continued with the Keynesian manipulation of the business cycle with Ben Bernanke’squantitative easing efforts (now inflating the student loan bubble). What’s worse is we have now become addicted to a hyper-accelerated devaluation of the dollar through the immense injection of money from the TARP bailouts, secret handouts by the Fed (here and here) and Obama’s continued bailout efforts, most of which we haven’t experience the effects of yet, but we will. All of this injected money has resulted in dramatic devaluation of the dollar (see graph).
Hyper-Inflation
Is it really so hard to imagine inflation of our dollar on the level that Zimbabwe experienced in recent years? Zimbabwe had subscribed to the same monetary model that we use; central economic planning and Keynesian micromanipulation, and in recent years experienced inflation of 23,000,000%. We need to wake up to the warning signals before it is too late. As the crisis gets worse our Federal Reserve will work harder to prop the market, just as the Central Bank of Zimbabwe did and the Central Bank of Germany did with the German Mark in the 1920s. The devaluation is exponential, meaning at first the inflation will go unnoticed, though, once it is notice able it will be much to late to stop. Compare graphs, notice a similarity? (please listen to the audio file at the end of this article for a deeper understanding of how hyper-inflation happens.)
Extreme Measures for Extreme Times
So you might still be asking yourself, “Why administer such extreme cuts? If the problem is inflation then why don’t we just go back to a gold standard and avoid the loss of federal jobs?” The answer is simply because we cannot afford to. The elasticity of our dollar has led us to a predilection to over-spending, it is a reality that we currently spend much more than our government takes in. Raising taxes to meet that demand would be devastating to our private sector as consumer spending would be reduced, the need for production would drop, followed by the demand for workers.
It should be noted that these cuts must apply to our militarism in order for us to return to fiscal sanity. We cannot have such a presence in the Middle East while in financial chaos, it's simply impractical and damaging to our recovery. It should be noted that it was only possible to afford such military expansion through our elastic money supply and deficit spending, both of which we must do away with. With a sound currency this type of foreign policy would not be possible, though, nor would be possible noticeable depressions and recessions. But fret not, those of you who lust for militarism, Ron Paul’s budget of $500 billion per year will still far exceed that of any other countries military budget. To be sure, we will reign in our military either way either by choice or, like Rome, by collapse.
Ron Paul’s plan would not bring us back to the Stone Age, nor back to Colonial Times. His plan would reduce spending back to 2006 levels while balancing the budget by 2016. Paul's plan would also guarantee that we never have a crisis like this again which is not a bad exchange if you ask me. It would come with about a year of necessary short lived agony, but we must be adults and take the medicine or risk total hyper-inflation and a world wide financial collapse. After the markets correct themselves we would, without doubt, experience greater prosperity than we’ve experienced in the last 100 years. We would no longer succumb to the hidden inflationary tax nor would we be tricked into malinvestment by the Fed. Most of all, our dollar would remain the reserve currency of the world, which provides us many benefits that we take for granted. Only Ron Paul's plan offers us this and only Paul's plan will work.
Ron Paul was right in his predictions predating the market collapse of 2008, and he is right now.
For a deeper understanding on why we must change our monitary policy please listen to this audio from one of Ron Paul's mentors, Murray Rothbard, titled "Economic Depressions: Their Cause and Cure".
I find it hard to understand how someone could ever subscribe to the ideology of treating the illness with what caused it. Lawrence it seems you've spent a great deal of time with a magnifying glass to the situation, when all one needs to do is take a step back and look at the entire picture. The business cycle.
Essentially, what your advocating is exactly what Alan Greenspan did in 2000 to combat the collapse of the Dot-Com bubble, which itself was formed using your approach of high risk investing. Micromanaging the situation through Keynesian models will only result in redundancy.. To properly stabilize the economy we must understand how we arrived at our current crisis; we must understand the business cycle.
Bubbles form when the Federal Reserve lowers interest rates below the natural levels of a market, it influences expansion of investments well beyond sustainable levels. This distorts the signals that business uses to assess risk. These distortions then lead businesses to believe that consumers have the savings to back up their investments. However, artificially low (below market) interest rates don’t generate new wealth to make good on investments. So when the bubble pops these fallacies are realized in lost investments.
The great bubble was largely attributed to the bad policies of Alan Greenspan who was the chairman of the Federal Reserve from 1987 until 2006. Greenspan intervened in the recession that should’ve followed the dot-com bubble. Instead of accepting the natural recession that should have occurred in 2001, the Fed began expanding the Housing Market. This didn’t negate the previous bubble; it merely stalled it by creating a bigger bubble. The Fed arrogantly continued its efforts to stop recession through low interest rates and actual interest rates fell below historical averages. At that point the Fed had abandoned all monetary rules in attempts to prop the market.
Alan Greenspan slashed the federal fund targets from 6.5% in January of 2001 all the way down to 1% by June 2003. He fixed the rates at an artificial low of 1% for a full year, which encouraged more bad investments and caused a massive expansion of the bubble. Then, by June of 2006, Greenspan had raised it back to 5.25%, a move that popped the bubble and unleashed the havoc of three overdue recessions.
Treating the problem with the problem is exactly what got us into our financial crisis; microeconomics, Keynesianism and the Federal Reserve abusing our elastic money supply. To "fix" the housing market we need to stop setting the stage for bad investments and when the business cycle begins to decline, as it must, let it. Furthermore, in order to insure we never experience this magnitude of economic downfall again we must get back to a sound money and limit, if not dismantle, the Federal Reserve.
As most of us know Presidential front-runner Ron Paul has released
a spending plan that will cut $1 trillion in government spending his first year
in office. The plan essentially reduces the size of government back to 2006
levels and promises to balance the budget by 2016. I’d like to take readers
over what his plan means to us as American citizens.
SPENDING:
“Cuts $1 trillion in spending during the first year of Ron Paul’s
presidency, eliminating five cabinet departments (Energy, HUD, Commerce,
Interior, and Education), abolishing the Transportation Security Administration
and returning responsibility for security to private property owners,
abolishing corporate subsidies, stopping foreign aid, ending foreign wars, and
returning most other spending to 2006 levels.”
Regarding the departments his plan eliminates
(Energy, HUD, Commerce, Interior and Education), a simple Google search would
unveil the tremendous waste and inefficiencies they produce. For example, let’s
take the Department of Education, which was instated in 1979. Taxpayers pay
around $100 billion per year to the Federal Government for them to simply send it back to the states, well not all of it comes back we waste roughly 10% in administration. Although the DOE was created to raise test scores and provide the best education possible. Since its creation our tests scores have
plummeted over 30% in some fields, at $25,000 per student it’s safe to say...
this money can be spent more wisely.
We are all familiar with the
atrocities committed by the Transportation Security Administration [TSA], between diaper searches, groping of genitalia
and an overall thuggish attitude all Americans should be furious with this tax
funded program. However, many American’s justify this behavior as a necessary
evil to ensure security. Ron Paul’s philosophy is “if a private company can
secure the transportation of millions of dollars across the country, why
couldn’t a private company secure the transportation of people?” essentially
encouraging private enterprise to take over airline security. Let the airline’s
hire private companies that specialize in security and surveillance and we’ll
keep our tax dollars. The CIA can
assist these companies where National Security comes into question by
monitoring international travelers. America, we don’t have to trade our
personal freedoms to be secure.
One of the most curious things is that
even in our current state of economic crisis, rising food prices, foreclosed homes and unemployment at depression levels, we still manage to find it within ourselves
to invade other countries and prop up future dictators. Our foreign aid involves taking money from the lower
and middle classes here in America and giving it to rich bureaucrats in 3rd world countries. It should resonate as absurdity when one finds that we often
fund both sides of a war, at the same time our country has families starving, we have
businesses here that can’t afford to operate and we have protesters in the
street, maybe it’s time to end this. Ron Paul calls for the end of all overseas
spending on militarism and I believe most Americans would too if they really
understood why we are over there. It’s not about terrorism and it’s not about
“helping” the people of those countries. It's about large corporations and greedy people making money.
With these government cuts comes some inevitable Federal job loss. Ron Paul has taken this into consideration and has created a system where these jobs are phased out rather than slashed immediately. Keep in mind, it is impossible for government to make a job without taking one from the private sector (read Henry Hazlitt). That said, the smaller the Federal Workforce the larger the private sector work force. Private sector jobs are more integral than Federal jobs to a strong economy as the private sector are the producers.
ENTITLEMENTS:
“Honors our promise to our seniors and veterans, while allowing
young workers to opt out. Block grants Medicaid and other welfare programs to
allow States the flexibility and ingenuity they need to solve their own unique
problems without harming those currently relying on the programs.”
This is fairly self-explanatory, Ron
Paul will honor the promises we’ve made to our veterans and to those who have
been paying into social security. Other entitlement programs will be phased out
without harming those currently relying on the programs. Keep in mind that
Social Security was projected to run out by 2024, so Ron Paul is the only
candidate with a solid plan to fix that issue for seniors.
CUTTING
GOVERNMENT WASTE:
“Makes a 10% reduction in the federal workforce, slashes
Congressional pay and perks, and curbs excessive federal travel. To stand with
the American People, President Paul will take a salary of $39,336, approximately
equal to the median personal income of the American worker.”
This is only to expected from a man
like Ron Paul who, unlike 90% of other Congressmen, has never accepted a
Congressional pension, money from lobbyist or any other government junket to
the tune of millions of dollars. Ron Paul has always kept a tight budget and he
commonly returns unused portion of office budget to the US Treasury. He has a
long record of showing respect to our money.
TAXES:
“Lowers the corporate tax rate to 15%, making America competitive
in the global market. Allows American companies to repatriate capital without additional
taxation, spurring trillions in new investment. Extends all Bush tax cuts. Abolishes the Death Tax.
Ends taxes on personal savings, allowing families to build a nest egg.”
Unlike the other candidates, Ron Paul understands how the economy
works. He is regarded as a champion of Austrian economics and is noted as an
economic historian. Most American’s don’t understand the power of taxation; the
cascading effect that occurs on our industry and workforce. Let’s look at how Ron
Paul’s lower corporate tax, for example, would create jobs.
By allowing American companies to repatriate capital without being
taxed in multiplicity, it would encourage trillions of dollars in new
investments. When we, as businesses or individuals, keep our tax dollars it
results in spending and investing. Spending leads higher production demands,
while investing leads to efficiency and lower consumer prices, lower consumer
prices leads to more consumer spending. This spending spurs intense demand on both
finished and raw materials, ultimately demand for workers explodes. This one
element would create hundreds of thousands of jobs, Ron Paul knows that.
Once America is on its feet, Ron Paul, as stated time and time
again, would move to abolish the federal income tax.
REGULATION:
“Repeals ObamaCare, Dodd-Frank, and
Sarbanes-Oxley. Mandates REINS-style requirements for thorough congressional review and authorization
before implementing any new regulations issued by bureaucrats. President Paul
will also cancel all onerous regulations previously issued by Executive Order.”
Anyone who owns a business or knows someone who owns a business
understands that our regulatory system is not only burdensome but is a primary
cause of unemployment. Ron Paul isn’t for getting rid of important regulations,
however, too many arbitrary regulations leads to job loss. We need to set the
stage for prosperity, if it’s easier in America for a small business to
succeed, than America goes back to work. Furthermore, deregulation coupled with
Ron Paul’s lowered corporate tax will invite production back into America.
MONETARY
POLICY:
“Conducts a full audit of the Federal Reserve and implements
competing currency legislation to strengthen the dollar and stabilize inflation.”
In 1971, at the behest of then Federal Reserve Chairman Arthur
Burns,
we departed from the gold standard and invited elasticity to our monetary
policy. This gave the Fed ultimate control through inflation and the abuse of
this power by Alan Greenspan is specifically what led us to our current crisis.
What’s worse is the $16 trillion dollars that was secretly given to large banks,
some foreign, was just put on the back of the taxpayer. The fact that more
politicians aren’t calling for a full audit should be a red flag to where their
loyalties lay, the people deserve to know where their money has gone. I recently wrote an expose on Herman Cain’s involvement
with the Federal Reserve and why it should concern us all, for those unfamiliar
with the Herman Cain or the Fed I urge you to read it.
Ron Paul, I am confident, will get the Federal Reserve under
control and get us back on a gold standard. He will also set the stage for
competing currencies, this will end the possibility of future abuses to our
business cycle and we will enjoy a prosperity that the people have never known.
CONCLUSION:
“Dr. Paul is the only candidate with a plan to cut spending and
truly balance the budget. This is the only plan that will deliver what America
needs in these difficult times: Major regulatory relief, large spending cuts,
sound monetary policy, and a balanced budget.”
We should all take into consideration that Ron Paul bested 99.9%
of the economic thinkers by accurately predicting our current economic crisis years
before it happened. Ron Paul’s plan is economically sound and will lead us to a
near future of prosperity along with safeguards to stop future crisis. Ron Paul
is not alone in his synopsis and proposed treatment; many other noted economists
have shown strong support of these ideas for decades.
Those of you who can’t bring yourselves to terms with a certain
portion of the plan keep in mind; Ron Paul offers a 3 year recovery while the inadequacy
of plans presented by other candidates would almost certainly guarantee at
least 10 years more of recession along with a high probability of re-occurrence.
I have heard many people say that with our economy in turmoil that brining home nearly a million troops would be disastrous to our unemployment. That somehow having our troops overseas is economically beneficial, ignoring the obvious costliness of the war. This notion is derived from the negligence of the arguer only looking at one side of the process, that is, soldiers being turned loose on the labor market.
Take into consideration the hundreds of billions we spend on these wars per year. This money doesn’t come into existence from thin air; it’s taken from the tax payers. Now as long as the government does not intervene by trying to provide compensation for the soldiers through taxing the people, the taxpayers retain more wealth than previously. This means that the taxpayers have additional funds to spend on products, food and businesses. This creates demand and ultimately higher productivity, more workers are needed. This process, as history shows, is rather fast.
Once demand puts the soldiers (now civilians) back to work, they not only become self-supporting they, with a steady paycheck, begin consuming more and the need for production rises further. Higher overall productive output results in increased national wealth. That said, we would be in a much better economic state after our troops come home.
This thought process is rudimentary economics and can be found in Henry Hazlitt's book titled, "Economics in one Lesson".
"I am an imperfect messenger, but the message is perfect" – Ron Paul
One thing is certain of Dr. Ron Paul, he is not a sound-bite candidate. That is, he often speaks over the heads of voters which causes a lack of understanding. It is in my personal opinion that Ron Paul cannot be understood in the 30 seconds allocated to him in debates. His ideas must be studied; however, once one does understand Dr. Paul, they often stick around.
I find it amusing the similarities between Obama’s “Change” platform that won him the presidency versus Ron Paul’s noninterventionist ideology, and how they garner very different responses. The popular “Anti-War” platform, not dissimilar to George Bush Jr.’s winning platform in 2000, has been used for years. Presidential candidates often speak of a humble foreign policy and peaceful trade; ralling the people together on the notion of peace and ride the waves of praise all the way into the White House. This could only lead one to the conclusion: the people of the Unites States are tired of war and want real change.
I’ll never forget the images from the 2008 election during Obama’s acceptance speech of so many people crying and hugging, rejoicing in the prospect of “Change”. The idea of peace and trade even won Obama the 2009 Nobel Peace Prize for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples", which has only become controversy since his election as our military presence has grown exponentially and our image around the world only desecrated. Notwithstanding, the American people obviously trusted that Obama would bring home the troops.
So curious is the distinct contrast in people’s reaction to these nearly identical messages, but why? Both of these men in suits champion a noble and humane ideology. However, when Dr. Ron Paul mentions the notion of “minding our own business”, a notion well understood by children on the playground, or “staying out of other countries affairs” he is dismissed as the crazy isolationist loon or Uncle Ronny.
Let’s establish now that he’s certainly not being discredited as Ron the“Crazy Uncle” due to his philosophy on economics, as it’s general knowledge that he predicted the housing bubble collapse of 2008 way back in 2001 (see video) and has been warning us of a full economic collapse since the 1980’s (see video) due to quantitative easing and inflation, not to mention he’s the only candidate with a strategy to actually fix the economy. Ron Paul has announced a plan to cut the deficit by $1 trillion dollars immediately, he understand the severity of the issues.
So one must ask the question, why exactly is he being discriminated with such a similar stance on war to Obama and Bush Jr.? His superior economic understanding trumps that of ANY president we've had in probably the last century. Is there a dynamic that we are missing? I understand that there is more to it than meets the eye.
Part of this dynamic is that Dr. Paul isn’t just another “man in a suit”. Unlike the other nominees, when he speaks he speaks with substance, not simply campaign winning rhetoric and canned responses. As previously stated by Doug Wead, Ron Paul’s campaign advisor, Ron doesn’t rehearse responses, that are specifically designed to appeal to you, with coaches behind the scenes. He constructs his answers right there, in the hot seat, and in front of millions of people. Furthermore, unlike George Bush Jr. and Barrak Obama, Ron Paul’s rock solid and principled voting record that spans 30 years suggests that he would actually follow through and produce real, moral and logical transformations that would shake the establishment. Changes that the establishment simply will not have. But then, what exactly is the establishment and how does it alter the general public opinion? This is the other part of the dynamic.
The establishment is the federal government, large corporations, the military and “The Big 6”. To quote www.freepress.net on the subject, “The U.S. media landscape is dominated by massive corporations that, through a history of mergers and acquisitions, have concentrated their control over what we see, hear and read.” What that actually means is that they are able to depict events, by a series of tiny manipulations or misrepresentations, to best suit their interests.
How this relates to “Crazy Uncle” Ron is very simple, let’s take General Electric for example. They own many things including mainstream news outlets like NBC, MSNBC, USA , CNBC, etc, etc. They produce many electronic devices such as explosion detection systems for the Military and aviation systems for the Navy. General Electric (NBC) also makes many of the engines for the Military fighters, helicopters and transports. But what they make the most money from is weapons and ammunition. You can’t have munitions sales without a war (preferably perpetual war) and you simply can’t have a war with Ron Paul as president.*
So even in championing the same anti-war message, Ron Paul, through many small manipulations and misrepresentations in data, becomes the “Crazy Uncle” whereas the obvious lapdog Obama becomes a Nobel Peace Prize winner for speaking essentially the same message, the difference was intent. Ron Paul intends to end these wars, Obama never intended to. (Which may be why he gets more donations from the Military troops than all of the GOP candidates combined.)
Break the paradigm, seek alternative press and support Ron Paul in 2012.
*Ron Paul’s stance on war is that you don’t go to into needless wars. If war is necessary, however, you don’t go without a declaration and congressional approval. The declaration must also include the definition of the enemy so the war can actually be won unlike the war on terror, you can never win a war on an inanimate object. Once that’s established you get your troops in, you win and you come home. No nation building and No endless wars.
"I am an imperfect messenger, but the message is perfect" 
