A Fresh Approach To Solving The Crisis

In this globalized world we must remember that it’s not just the US that’s going down, it’s the whole world. Have you seen any good news from any country in the last six months or so? Strain yourself and you might dredge some iota of optimism from somewhere, but in general it’s wishful thinking.

President Obama wants a “fresh” approach to the financial crisis, but buying toxic debt and stimulus packages sound like the old school approach to me. Have any bailouts or stimulus packages ever worked before? I think the Obama administration is just as insane as the previous one (if you believe the classic definition of the word). We actually do need a fresh approach to this crisis for everybody’s sake. 

I believe that if a company needs bailing out it is already beyond saving and will not contribute to the stabilizing of the economy in the future. Only successful banks and companies can possibly nurse the US back to health. I have to say that the bailout of GM was an extremely temporary measure and you can guarantee that management will be back for more soon. Have the bailouts created any jobs, helped working families, done anything at all? When you look at the dire employment situation you would have to say no.

The old system has failed but no-one wants to see it die. They will continue to support obscene payouts to banks instead of looking for fresh ideas which is what we desperately need. The burden of all this spending will be a tax burden that the ordinary citizen cannot bear. Everything that is being done now is exacerbating an already awful situation.

We must cut out wasteful spending and start to use money in a more reasonable, prudent way. We also must allow markets to get through this crisis with a more competitive philosophy by allowing failed banks and businesses to actually shut down rather than trying to turn them into toxic zombies that endanger the entire world.

This article was written by pianoneil. You too can write for RonPaul.com by joining us here.

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What Would Ron Paul Do?

In his latest column, Ron Paul once again prescribes the only cure that could save America: Cut taxes, cut spending, bring our troops home, downsize government, abolish the Federal Reserve, return to sound money and start living within our means. — tmartin

Cures for Our Economic Disease

by Ron Paul

I have recently had several opportunities on various news programs to discuss the economy and what is wrong with the so-called economic stimulus package. I have said over and over what we shouldn’t be doing, and now I’d like to explain what we should be doing.

But to improve the situation, you must first have a solid grasp of how we got here. Government policies and central planning created the housing bubble, now going bust. About a decade ago the government made expanded homeownership and affordable housing a public goal. Through Fannie Mae, Freddie Mac and the secondary mortgage market the government incentivized creative, low down-payment, more widely available mortgage products, and discouraged the market-proven lending standards of the past. The Federal Reserve kept interest rates artificially low, which added more fuel to this fire. Many related sectors temporarily flourished because of this, and many people got into homes they otherwise could not have afforded. The increased demand for housing sent prices soaring until in many markets housing became even more unaffordable, necessitating even more creative mortgages, and impossibly leveraging homeowners. Many risky investment vehicles such as mortgage-backed securities, derivatives, credit default swaps grew out of this unsustainable situation. As the foreclosures began, the house of cards started to tumble. Too many people have confused the symptoms and the pain of the bust with the problematic policies that caused the bubble, which is really what needs to be treated.

First of all, just as the best cure for a hangover is not to drink so much, the best cure for a recession is a recession. It is time to sober up and return to free market sanity, risk and reward, supply and demand, without political intervention. Politicians are good at catering to the needs of special interests, but very bad at determining what needs to take place in the market. Government should stick to punishing fraud and enforcing contracts. When they use the tax code, bureaucratic departments and their manipulative rules and regulations to dictate social and economic behavior, we end up with distortions and malinvestments. Bailing out banks, continuing failed Fed policies and strapping the taxpayer with toxic debt will worsen the pain, and punish the innocent.

If Congress really wanted to do something helpful, it would cut taxes. Ideally, we would repeal the income tax altogether and get the IRS off the economy’s back, which would be a huge boon. We should also cut spending. Cut every unconstitutional department and program, every wasteful governmental encroachment on the people’s liberty and money, starting with our massive overseas empire. The cost of our empire is bringing us to our knees, just as the Soviets’ empire did to them. Congress should also abolish the Federal Reserve and take back its responsibilities to ensure sound money, safe from the manipulations of powerful banking interests.

These things would constitute real change, real economic stimulus. The plans being bandied about Washington are just more of the same. As long as no one seriously considers the cure, we are unfortunately destined to prolong the disease.

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Ron Paul: End The Fed, Stop Inflation, Restore Sound Money

In a speech to the Mises Circle in Houston, Ron Paul recounts how the “biggest bubble of all history” was created, inflated, reinflated, and papered over, until it finally burst. He says that there is only a small amount of confidence left in the dollar, and describes the rapidly growing support for the movement to end the Fed. Finally, he expresses his hopes and fears for the future, and explains that building an intellectual consensus among people who can make a real difference is more effective than trying to achieve an electoral majority.

Source: Mises Institute / Mises Circle in Houston
Event: Our Enemy, Inflation
Date: 1/24/2009

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Going Back To The Gold Standard?

Ron Paul is interviewed about “dumping the faith-based Federal Reserve system”. He talks about the history of the gold standard and the dollar, and proposes a transition period where free-market gold currencies could openly compete against the dollar.

Channel: Fox Business
Date: 1/30/2009

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Ron Paul on C-SPAN’s Washington Journal

Ron Paul takes caller questions on C-SPAN, covering the financial crisis, the TARP bailout, the stimulus package, the Republican party, and his ongoing efforts to spread the idea of liberty.

Source: Washington Journal
Channel: C-SPAN
Date: 1/29/2009

Transcript:

Reporter: Former presidential candidate and physician, Representative Ron Paul, of Texas’ 14th district and member of the financial service committee, our final guest this morning. Mr. Paul, I was thinking when I was listening to some of Senator Sanders’ answers that there are many areas where your views intersect. Both of you are strong critics of NAFTA, neither of you voted for the TARP program and yet your prescriptions for how to fix the economy couldn’t be more different. What do you think will work with what ails United States right now?

Ron Paul: Nothing’s going to work unless you understand how we got into the problem. A lot of people object to me saying that because they [don't] want to do what we have to do right now. But as a physician I was always taught that you have to know what caused the disease to know how to give the treatment. And if you look at that you’ll find out that it was too much government from my viewpoint, too much spending, too much debt, too much inflation by the Federal Reserve, too much interference in the marketplace, too much price fixing of interest rates, too much propping up of certain industries like housing, and then you get a bubble. You have to understand how a bubble is formed and then you can expect, you know, the collapse of a bubble, which we as Austrian economists have predicted would happen, and it did. So therefore what you want to do is if you know if there’s a lot of pain and suffering and malinvestment and excessive debt, the treatment is you got to get rid of it. That means you have to liquidate the debt and remove all the mistakes, the malinvestment, which politically it means, take more of a hands-off position. And that, of course, nobody can do that. Politicians are trained to do stuff. But government can do things to improve things. They could lower spending, they could lower taxes, they could deregulate, they could regulate the Federal Reserve which we don’t, we could regulate the treasury when they are given $350 billion to spend. So the regulation is directed in a different manner but we’re doing exactly the opposite. We are doing more like we did in the Depression. The Federal Reserve and excessive government caused the boom of the 20s and the depression of the 30s by not allowing the correction, not allowing the treatment. The treatment is the liquidation. There is some pain with that but the pain is a result of the mistakes made previously. The question is only now do you have short-term pain that lasts for a years, or do you keep propping the bad system up and allow this pain and agony to grow and lengthen. And that’s what we’re doing and that’s why we’re in great danger now of taking a very very serious recession and turning it into a depression.

Reporter: What we are seeing in the very short period of time, the second half of the TARP, the second tranche $350 billion. The Senate price tag on the stimulus package $880 billion and news that the treasury secretary is likely to announce a large package which may include the creation of something called a bad bank. What do you see as the outcome of these measures? Where are we going with this? (more…)

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Ron Paul Debates MSNBC’s Panel of Experts

In a seemingly unbridgeable clash of two widely divergent world views, Ron Paul talks with three experts on MSNBC’s Morning Joe, repeating his assertion that we’re on the wrong path and that printing more money will eventually destroy the dollar.

Source: Morning Joe
Channel: MSNBC
Date: 1/27/2009

Transcript:

Host: Educate please this “panel of experts” here. And I say that with quotes around it. About, why this sort of throwing money at the issue bailing, bailing, bailing out, may be potentially reckless and damaging for the future of this nation’s economy.

Ron Paul: Well, in order to understand that, you have to understand how we got into this mess. We got into this mess by spending too much, borrowing too much and inflating too much. Government was too big and we had too many regulations. We had rejected the market economy for decades now. We had rejected the notion of sound money for decades. And we got into a mess this way. So what is the proposal? Spend more money, borrow more money, print more money, regulate more so. So, it makes no sense whatsoever. So we’re going to make the problems much worse. We’re doing exactly what we did in the 1930s. We are determined to take a serious recession and turn it into a depression if we don’t change our ways. When governments spend money, they spend it in a non-productive manner. And every penny the government spends, they have to take it out of a productive source of money. The money has to come from somewhere. Everybody talks about the money that’s going to be spent, and about how many wonderful things will happen, but they never say, where does that $825 billion dollars come from? That’s the question they have to ask and they have to find an answer to that to fully understand why what we’re doing is absolutely wrong.

Expert #1: Alright. Alright

Host: OK. OK.

Expert #1: Congressman, let me ask you. I understand where you’re coming from here, I think, sort of. You know, but the house is already on fire and I think no matter who…

Host: Yeah, I mean look at these headlines.

Expert #1: No matter how the fire begins. The house is on fire. The house is on fire. So let’s take one industry specifically. Let’s take the automotive industry in this country. Are you saying, spend no money on the automobile industry in this country that American automobile manufacturing, let it disappear? (more…)

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Did Bin Laden Bring America To Its Knees?

We are handling our economy exactly as terrorist mastermind Osama Bin Laden wanted us to. His plan was to bog us down overseas, bankrupt our country and diminish our morale, says Ron Paul. The Congressman suggests the following solution:

  1. Change our foreign policy so that we can bring our troops home
  2. Get back to where the budget is in order
  3. Abolish the income tax and lower taxes dramatically
  4. Abolish the Federal Reserve

Source: CNN Money
Date: 1/27/2009

Transcript:

Poppy Harlow: A former presidential candidate and a Republican congressman from Texas, Ron Paul, has some serious opinions about the economy and just how it should be handled. He even says we’re doing just what Osama Bin Laden wanted us to do. Let’s bring him in to talk about that. Congressman, thanks for being here, I appreciate it. Well right, let’s just address that off the bat. We are handling our economy like Osama Bin Laden would like us to?

Ron Paul: Yes, he actually said it that he would like to drag us into a war in the Middle East. That he was pleasantly surprised that we did as much as we did after 9/11, because his plan is to bog us down and bankrupt our country and diminish our morale and he’s doing exactly the same thing because we were his ally when he used the same strategy against the Soviets. So, this is not strange, we should easily understand it, and he’s doing a very good job. We are bankrupt and he is participating in it and laughing at us.

Poppy Harlow: You know what, whether you are in favor or not in favor of big government, one thing is certain, this country is bleeding jobs. On Monday, more than 70,000 job cuts announced, more than 200,000 job cuts announced so far this year alone in just the past couple of weeks, and pretty much everyone would argue you’ve got to spend to create jobs, so, there really is a divide there. Are you proposing that we not spend in order to create jobs? (more…)

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Ron Paul: Crisis not caused by Free Markets

Ron Paul is interviewed on CNN American Morning and explains that “The best regulation is through the free market and to blame the free market for this calamity is an [...] intellectual error that has to be changed.”

Source: CNN American Morning
Date: 1/27/2009

Transcript:

Kirin Chetry: Timothy Geithner has his work cut out for him, certainly more than 70,000 job cuts yesterday alone. Today we’re already talking about companies like Corning announcing layoffs. So what can the president do about the deepening recession? Joining me now from Washington is Republican Congressman and former presidential candidate Ron Paul. Good morning Congressman, great to talk to you this morning. You know, some Libertarians called the first financial bailout the “PATRIOT Act of Finance”. Now we’re looking at a stimulus package that is going to be even bigger by all accounts. And a lot of economists seem to say that a massive spending package is needed to get the economy moving again. You’re against it, explain.

Ron Paul: Well, it’s because it’s the government that is spending. If the people were spending it that would be fine. But the government, they, the government never does anything productive. They have to take money from productive individuals and spend it in a non-productive way, so it’s just digging a bigger hole and a bigger debt and that is our problem. This stimulus package is going to cost each and every American $6,700 of more debt, so how can that be beneficial? If debt was the answer, we would have never had our problem because we’ve been doing, you know, a lot of deficit financing in the past eight years and it got us into the trouble. So all this plan of more government stimulus and more inflation, it’s absolutely the wrong way to go. We’re doing exactly what we did in the 1930s. So we are taking a recession and working very hard at trying to turn it into a depression.

Kirin Chetry: When we’re talking about 7.2% unemployment on the national average, 10% in some states that have been hit hard especially in the manufacturing sector, what is the answer then for so many people who are out of work? (more…)

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Ron Paul: Afghanistan Will Be Obama’s War

Source: Campaign for Liberty
Date: 1/25/2009

Transcript:

Thanks for joining us. In the last couple days, the most frequently asked question to me has been, what do I think about Obama and his foreign policy? Is there reason to be optimistic that we’ll have positive changes around the world and especially in the Middle East?

He has spoken out clearly in the campaign what his policy would be in Iraq: he wants to bring the troops home and he wants to get them out of there in 16 months. And he may draw down on those troops, but quite frankly I don’t believe for a minute that he will ever take down and remove that very offensive embassy in Iraq, nor close the military bases. So overall I don’t think the policies would change. I think if the violence escalates, which is a very significant possibility, he would be sending troops in if he had to. Americans are still being killed in Iraq and there’s still a long way to go before there’s real peace in Iraq because the Sunnis are well-armed and they are not happy by being pushed out by the Shiites, so time will tell us about that.

But Obama was very explicit about his foreign policy in Afghanistan. He said we should escalate in Afghanistan; we should have more troops in Afghanistan. And that’s where the battle is, that’s where the battle with the Al-Qaeda is, is in Afghanistan. But when he talks about Afghanistan, he talks about Pakistan as well and it’s very weak. The American missiles sent off by our CIA with drones, ended up killing 22 civilians. So they said there were possibly a few Al-Qaeda suspects there, but some women and children were killed as well.

And believe me, that doesn’t go well on his diplomatic mission to work better with those individuals and our enemies in the Middle East. A matter of fact, that’s the incentive for the Al-Qaeda to develop and grow. And as long as we have that policy over there, we can expect things to get much worse. Just the same, just as well, right now Karzai was very unhappy with the Americans today, and American missiles had killed some Afghans, and he is just holding on by his strings, you know, to the presidency of Afghanistan. And that is likely to come to an end.

So really and truly, policies have not changed there, it’s exactly the same. Escalation of war, Afghanistan will be Obama’s war. But I wish I could say that well, let’s look forward, the attitude has changed, we’re gonna be out of Iraq and we’re gonna wind down in Afghanistan, but we’re in there and we are determined to have a long term presence in the Middle East. There’s a lot of things that drives that policy and we all know about it.

The number one probably is oil, that has a lot to do with it. The neocon philosophy has a lot to do with it, Israel has a lot to do with it, as well as this idea that we have to be over there for our national security reason to fight the Al-Qaeda, but quite frankly, I am convinced, and so many other Americans are, that the reason we have to worry about the Al-Qaeda is because we’re over there. The more we’re over there and the more Muslims we kill, the greater the incentive there will be for Al-Qaeda to try to come and kill us.

We need a significant change in foreign policy. We don’t need more of the same. We need less influence of the neocons. We don’t need a perpetuation of the foreign policy of the neoconservatives, and that policy of course is, a non-interventionist, pro-American, pro-Constitution foreign policy which means we ought to mind our own business, come home and take care of our own business here at home. And besides, financially, that’s what we must do, soon.

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Fool Me Once…

In his latest column Ron Paul compares the new $825 billion “stimulus package” to the much-hated 2008 TARP bailout, where a bunch of failed bankers extorted hundreds of billions of dollars from a scared Congress operating under the influence of vicious lies, empty promises, and even threats of civil unrest and martial law. Unfortunately, it seems that Congress didn’t learn anything from that experience: the new stimulus package fans the voracious appetite of big government, obliterates what is left of our privacy, and scatters the wealth around as if there were no tomorrow. — tmartin

Stimulus For Who?

by Ron Paul

This week the House is expected to pass an $825 billion economic stimulus package. In reality, this bill is just an escalation of a government-created economic mess. As before, a sense of urgency and impending doom is being used to extract mountains of money from Congress with minimal debate. So much for change. This is déjà vu. We are again being promised that its passage will help employment, help homeowners, help the environment, etc. These promises are worthless. This time around especially, Congress should know better than to pass anything of this magnitude without first reading the fine print. There are many red flags that I have found in this bill.

At least $4 billion is allocated to expanding the police state and the war on drugs through Byrne grants, which even the Bush administration opposed, and the COPS program, both of which are corrupt and largely ineffective programs.

To help Big Brother keep a better eye on us and our children, $20 billion would go towards health information technology, which would create a national system of electronic medical records without adequate privacy protection. These records would instead be subject to the misnamed federal “medical privacy” rule, which allows government and state-favored special interests to see medical records at will. An additional $250 million is allocated for states to nationalize individual student data, expanding Federal control of education and eroding privacy.

$79 billion bails out states that haphazardly expanded their budgets during the bubble years, but refuse to retrench and cut back, as their taxpayers have had to, during recession years.

$200 million expands Americorps. $100 million goes to “faith-and-community” based organizations for social services, which will further insinuate the government into charity and community service. Private charities are much more efficient and effective because they are directly accountable to donors, while public programs tend to get rewarded for failure. With its money, the Federal Government brings its incompetence and its whims, while creating foolish dependence. This is sad to see.

Of course the bill is rife with central planning projects. $4 billion for job training, much of which will be used to direct workers into “green jobs”. $200 million to “encourage” electric cars, $2 billion to support US manufacturers of advanced batteries and battery systems, which is yet another function of government I can’t find in the Constitution. Not to mention $500 million for energy efficient manufacturing demonstration projects, $70 million for a Technology Innovation Program for “research in potentially revolutionary technologies” in which government, not supply and demand, will pick winners and losers. $746 million for afterschool snacks, $6.75 billion for the Department of Commerce, including $1 billion for a census.

This bill delivers an additional debt burden of $6,700 to every American man, woman and child.

There is a lot of stimulus and growth in this bill - that is, of government. Nothing in this bill stimulates the freedom and prosperity of the American people. Politician-directed spending is never as successful as market-driven investment. Instead of passing this bill, Congress should get out of the way by cutting taxes, cutting spending, and reining in the reckless monetary policy of the Federal Reserve.

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