Category Archives: Politics

Ron Paul – Imagine

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Imagine for a moment that somewhere in the middle of Texas there was a large foreign military base, say Chinese or Russian.  Imagine that thousands of armed foreign troops were constantly patrolling American streets in military vehicles.  Imagine they were here under the auspices of “keeping us safe” or “promoting democracy” or “protecting their strategic interests.”

Imagine that they operated outside of US law, and that the Constitution did not apply to them.  Imagine that every now and then they made mistakes or acted on bad information and accidentally killed or terrorized innocent Americans, including women and children, most of the time with little to no repercussions or consequences.  Imagine that they set up check points on our soil and routinely searched and ransacked entire neighborhoods of homes.  Imagine if Americans were fearful of these foreign troops, and overwhelmingly thought America would be better off without their presence. 

Imagine if some Americans were so angry about them being in Texas that they actually joined together to fight them off, in defense of our soil and sovereignty, because leadership in government refused or were unable to do so.  Imagine that those Americans were labeled terrorists or insurgents for their defensive actions, and routinely killed, or captured and tortured by the foreign troops on our land.  Imagine that the occupiers’ attitude was that if they just killed enough Americans, the resistance would stop, but instead, for every American killed, ten more would take up arms against them, resulting in perpetual bloodshed.  Imagine if most of the citizens of the foreign land also wanted these troops to return home.  Imagine if they elected a leader who promised to bring them home and put an end to this horror.

Imagine if that leader changed his mind once he took office.

The reality is that our military presence on foreign soil is as offensive to the people that live there as armed Chinese troops would be if they were stationed in Texas.  We would not stand for it here, but we have had a globe straddling empire and a very intrusive foreign policy for decades that incites a lot of hatred and resentment towards us.  

According to our own CIA, our meddling in the Middle East was the prime motivation for the horrific attacks on 9/11.   But instead of re-evaluating our foreign policy, we have simply escalated it.  We had a right to go after those responsible for 9/11, to be sure, but why do so many Americans feel as if we have a right to a military presence in some 160 countries when we wouldn’t stand for even one foreign base on our soil, for any reason?  These are not embassies, mind you, these are military installations.  The new administration is not materially changing anything about this.  Shuffling troops around and playing with semantics does not accomplish the goals of the American people, who simply want our men and women to come home.  50,000 troops left behind in Iraq is not conducive to peace any more than 50,000 Russian soldiers would be in the United States. 

Shutting down military bases and ceasing to deal with other nations with threats and violence is not isolationism.  It is the opposite.  Opening ourselves up to friendship, honest trade and diplomacy is the foreign policy of peace and prosperity.  It is the only foreign policy that will not bankrupt us in short order, as our current actions most definitely will.  I share the disappointment of the American people in the foreign policy rhetoric coming from the administration.  The sad thing is, our foreign policy WILL change eventually, as Rome’s did, when all budgetary and monetary tricks to fund it are exhausted

Ron Paul

Brought to you by Alan’s Money Blog:
http://alansmoneyblog.com

Ron Paul – Is Spending the Answer?

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This week, Congress and the administration once again showed their lack of economic understanding, as they ramped up spending to record levels.  On the surface, maybe it does look to some like the economic crisis is a liquidity problem, that the economy is in trouble because money is not changing hands at the pace it once did in the boom years. They believe that to get back to a booming economy money needs to start changing hands again – and the quickest way to do this is for the federal government to massively expand spending to pump new money into the system.  If this is the extent of their understanding, no wonder they call for spending, taxing, bailouts and inflation.

If spending was the solution, we never would have had a problem.  During the last eight years, we’ve blown up the size of government and certainly had no want of spending on foreign or domestic policy.  The Bush administration increased spending almost 20% in its first term, and nearly doubled the national debt by the end of the second term.  Certainly the case cannot be made that lack of government spending created the problem or can be the solution. 

This is mirrored in American households.  According to CNN private sector debt is 365% of private sector gross domestic product.  Many relied simply on steady and continued increase in home values to enable spending and secure more debt.  That trend has proven unsustainable and many Americans are adjusting their finances accordingly.  For the first time, household debt is beginning to fall as consumers wake up to the realities of paying off debt and living within their means.

Wouldn’t it be great if the government would do the same?

A lot of capital and liquidity is out there waiting in the wings as the new administration is bringing about government uncertainty, a concept discussed by Robert Higgs as prolonging the Great Depression.  In other words, it is a foregone conclusion that government will act.  But, like a chicken with its head cut off, no one knows which way it will run, just that it will flail about wildly until it collapses.

Why start a business, when businesses could face the brunt of an increase in future taxation?  Similarly, why hire a new employee if tax policy will just force you to fire them later on to stay afloat?  Why buy a house, when you have no idea how future government meddling in the housing market will affect its value?  Why spend at the shopping mall, or buy a new car when you don’t know how tax policy will affect your family budget, or if your job will come under the axe because your employer’s tax burden is increased?

I argue these kinds of questions and concerns contribute to the weakening economy.  This type of tax policy keeps capital out of third world nations, and now is keeping capital in hiding here in the US.  People are concerned about security and savings again, retrenching their household and business budgets.  The economy could be helped if the government would just get out of the way and restore sound monetary and fiscal policies.

Ron Paul – On Transparency of the Fed

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This week the Federal Reserve responded to the American people’s increased concerns over our monetary policy by presenting new initiatives aimed at enhancing the Fed’s transparency and accountability. As someone who has called for more openness from the Fed for over 30 years, I was pleased to see the Fed acknowledge the legitimacy of this need. 

The Federal Reserve controls the flow of money and credit in our economy because Congress has abdicated its responsibility over the nation’s currency.  This process therefore occurs centrally, and almost completely outside the system of checks and balances.  Because of legal tender laws, people are left with no real choice, except to build their lives and futures around this monopoly currency, vulnerable to powerful central bankers.  The Founding Fathers intended only gold and silver to be used as currency, however, inch by inch over the decades, this country has backed away from this important restraint.  Our money today has no link whatsoever to gold or silver.  For many reasons, this is extremely dangerous, and has a lot to do with the boom and bust cycles that have resulted in the crisis in which we find ourselves today. 

The Fed is now pledging to reveal to the public more about its economic predictions, and calls this greater transparency.  This is little more than window-dressing, at best, utterly useless at worst.  Many analysts, especially those familiar with the Austrian school of economics, saw the current economic crisis coming years ago when the Federal Reserve was still telling the American people their policies were as good as gold.  So while it might be nice to know what fantasy-infused outlook the Fed has on the economy, I am much more interested in what they are doing as a result of their faulty, haphazard interpretation of data. For instance, what arrangements do they have with other foreign central banks?  What the Fed does on that front could very well affect or undermine foreign policy, or even contribute to starting a war. 

We also need to know the source and destination of funds provided through the Fed’s emergency funding facilities.  Information such as this will provide a more accurate and complete picture of the true cost of these endless bailouts and spending packages, and could very likely affect the decisions being made in Congress.  But with so much of the Fed’s business cloaked in secrecy, these latest initiatives will not even scratch the surface of the Fed’s opaque operations.  People are demanding answers and explanations for our economic malaise, and we should settle for nothing less than the whole truth on monetary policy.

The first step is to pass legislation I will soon introduce requiring an audit of the Federal Reserve so we can at least get an accurate picture of what is happening with our money.  If this audit reveals what I suspect, and Congress has finally had enough, they can also pass my legislation to abolish the Federal Reserve and put control of the economy’s lifeblood, the currency, back where it Constitutionally belongs.  If Congress refuses to do these two things, the very least they could do is repeal legal tender laws and allow people to choose a different currency in which to operate.  If the Fed refuses to open its books to an audit, and Congress refuses to demand this, the people should not be subject to the whims of this secretive and incompetent organization.

Brought to you by Alan’s Money Blog:
http://alansmoneyblog.com

Ron Paul – Freedom From Government

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President Obama signed an executive order last week continuing the faith-based initiatives program created by former President Bush.  When the program was created, I warned that giving taxpayer money to private religious organizations would eventually lead to political control and manipulation of them.  This week has provided some evidence that this was a justified concern. 

The logic behind funding faith-based initiatives seemed reasonable to some.  Private organizations are much more effective in charitable endeavors than government programs and bureaucracies.  Therefore, why not “outsource” some of the government’s welfare-state activities to these worthy organizations?  This appealed to many conservatives, especially after the follow-up executive order exempting recipients from discriminatory hiring laws, which assured many that taking federal funds would not jeopardize their control over their own operations.  But beware the government program started under an administration you like, for it may look a lot different under the one you don’t.   Exemptions that Bush gave, Obama can take away. 

But now, dependencies on federal money have been set, operations have been expanded accordingly, and many charities are waiting breathlessly for the administration to tell them what new conditions they will have to meet.  With the stroke of a pen, religious charities might not be able to take into consideration a job applicant’s faith, sexual orientation or lifestyle if they wish to remain eligible for that taxpayer money that was so enticing a few years ago.  Similarly, if FOCA (Freedom of Choice Act) is passed, will Catholic Church hospitals be forced to offer abortion services to retain their federal funding?  Can they remain solvent without it? 

This is the major problem with basing a private business model on the receipt of government funds.  This money does not come without control, or the future possibility of control.  We are seeing parallel control grabs in industries that have recently been the recipients of taxpayer largess.  Government officials are now discussing executive compensation on Wall Street, banking, and in the auto industry.  How much is too much to pay someone?  When is a bonus deserved?  But because politicians have bought their way into these industries, these are now political decisions.  It is easy to utilize class envy to whip up public support for these interventions, but government always slides down the slippery slope.   Politicians are also discussing other aspects of these businesses in which they are not expert, such as, what should lending standards be?  What sort of cars should we direct the auto industry to make?  Once government money infiltrates a balance sheet, “taxpayers” meaning “politicians” have a say in how you operate.

Money is the Trojan horse that government uses to infiltrate and infect organizations.  Funding that, on the outset, is designed to strengthen and support, will bureaucratize and regulate in the end.  It is sad to see charities now having reason to focus on lobbying, regulatory compliance and paper pushing to get and retain money taken by force, rather than beefing up private, voluntary fundraising activities.  Those tempted to join Washington’s ongoing bailout bonanza should instead take the famed advice of former First Lady Nancy Reagan on the acceptance of harmful and addictive substances and “Just Say No” to government money.  This is the best protection from government control.

Ron Paul

Brought to you by Alan’s Money Blog:
http://alansmoneyblog.com

Ron Paul – Cures for Our Economic Disease

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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.

Ron Paul

Brought to you by Alan’s Money Blog:
http://alansmoneyblog.com