Paul Blames Federal Reserve for Weak Economy
KENNER, La. — Ron Paul, a Republican presidential contender and Texas congressman, said Monday that the Federal Reserve is to blame for the country’s weakening economy.
Paul highlighted his economic remedies — abolishing the federal income tax and returning to the gold standard, among them — on a three-city tour of Louisiana.
The libertarian-minded Paul was the only candidate to visit Louisiana on the eve of the state’s Republican caucuses Tuesday. The caucuses are an intermediary step in picking a favorite candidate. A presidential primary will take place on Feb. 9 and a state convention will convene on Feb. 16.
Paul blamed the Federal Reserve for the current economic conditions; stock markets worldwide fell Monday after Wall Street declined last week. On his Web site, he said the Fed has taken the United States “into a terrible crisis.”
Paul told an overflow crowd at a suburban New Orleans hotel Monday that the Fed has allowed the dollar to weaken, which in turn, he said, has hurt the middle class and led to inflation.
“I would enjoy being the next president to get rid of our central bank,” he told supporters. The crowd gave him a raucous welcome, chanting at one point, “Who dat? Who dat say they’re gonna beat Ron Paul?” — a riff on a popular football chant for the New Orleans Saints.
Paul, on his Web site Monday, said the economic policies of his opponents are based on ill-advised “print-and-spend” theories. He added that he would cure the economic crisis by ending the “hyper-expensive, hyper-dangerous empire all around the globe.”
Paul is a 10-term congressman from southeast Texas whose campaign differs on many points from most of his Republican rivals. He opposes the Iraq war and the death penalty, for instance, and votes against military appropriations.
He would also like to abolish the Education Department, Energy Department and Internal Revenue Service. He is against abortion and gun control.
In Nevada, Paul was a distant second to former Massachusetts Gov. Mitt Romney. Still, Paul called Nevada “a shot in the arm” and pledged to keep campaigning “all the way through a brokered convention.”
As of late, Paul has been raising hefty sums, pulling in about $20 million in the last quarter of 2007, according to his campaign.
He’s been running an Internet-driven campaign, trying to appeal to and excite younger and libertarian-minded voters. Monday marked another so-called “Money Bomb,” in which his campaign aims to raise as much money online as possible in one day.
Definitions:
A “civil” right is really a government privilege. If it is granted by government it can also be eliminated by government. Also, if it is granted by government it is severely regulated by government.
The Constitution addresses NATURAL rights. A natural right exist simply because you are alive. They are as natural as the dew covering the morning grass. The Constitution does NOT grant the people any rights. It points out to the people stewarding the Constitution in elected government positions that they can NOT legislate upon certain matters. The Declaration of Independence specifically states “they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
CREATOR: You pick it. God, Allah, Darwin, or Green Jelly, you pick, it’s your creator.
UNALIENABLE: Please do NOT confuse or pervert this word into “inalienable”.
Unalienable = NOT REMOVABLE. INALIENABLE = removable.
The Constitution is NOT a contract.
The Constitution is a LAW written by the People, approved by the several States, establishing a body politic whose purpose is to act when “called” upon for the mutual defense of the States and the Rights of the People.
The Constitution also establishes other specific responsibilities of the United States. The Constitution ONLY lists the few and specific things the US can do. The Constitution does NOT list the things the US is prohibited from doing. The US is prohibited from doing a billion trillion things. If “it” [<- for Billy Bob Clinton] is not specifically permitted by the Constitution “it” is left to the States or to the People.
Understand what freedom and liberty truly are. Freedom IS free, but there are liars and thieves that want to take it from you. Be [a]ware of the shysters.
PatriotOne
The 150 billion dumped on the economy benefits the banks and the government they get it first.By the time we get it, inflation on that diluted currency eats up not only that money but any we had before it was done. Get it. Please read [The creature From Jekyll Island.] It’s not too late!
As a physicist, I refuse to believe anyone who will not rule out a nuclear strike against Iran has anything worthwhile to say. They are obviously idiots. Dr. Paul is the only republican that is not insane.
I beg anyone who supports a republican other than Dr. Ron Paul to look here
http://www.youtube.com/watch?v=-KISiBHxv40
That cloud 29 seconds in is raw materials, fresh drinking water, and human bodies vaporizing.
Why don’t we hear more about Ron Paul on Fox news channel????
Thank you for the coverage Fox! Finally you decide to cover him. He really is the best candidate for the job. Having studied economics for 30 yrs., he really knows how it works. Go Ron Paul
Ron Paul is the ONLY candidate who is talking about this! About time people started catching on. RP is getting my vote in November. The mainstream media will only be able to keep his name down for so long, and as our economy keeps circling the drain people are going to start DEMANDING REAL ANSWERS. And for that reason (among many others) Ron Paul needs to get elected. Our country depends on it………..
It’s not 1861 yet! After this one look out.
http://www.youtube.com/watch?v=E9VhD4SccSE
Ron Paul is the only candidate I have EVER believed in, much less donated to. Thanks for covering his views. He is usually ignored by mainstream media, which gives voters spoonfed options.This is the start of a r3VO7ution !
THE NATURE OF INFLATION
Earlier this month, for the first time in history, the price of oil hit $100 a barrel. Oil prices have increased 5-fold in the last six years, starting from a low of less than $20 a barrel in early 2002. In 2007 alone, crude oil prices jumped nearly 60 percent. Analysts blame a weak dollar and rising demand for the spike in prices. Rising oil prices have brought into sharp focus the economic challenges facing our nation. In recent years the value of the US dollar has dropped, consumer debt has reached an all-time high, and we’ve entered into a nationwide housing crisis in which about one out of every 100 mortgages could end in foreclosure.
While some experts speculate that we may be headed for a recession, others say its already here. Top economists from two major Wall Street firms - Merrill Lynch and Goldman Sachs - recently predicted that the US economy would go into a recession this year. They cited a rise in unemployment and lower than expected retail sales as indicators. On Tuesday recession fears prompted the Federal Reserve to take emergency measures - reducing the federal funds rate from 4.25 percent down to 3.5 percent. It’s the fourth time the Fed has cut rates since mid-September.
The Hidden Tax
The black horseman of the Book of Revelation speaks of a condition wherein a man’s daily wages are so poor, he can barely support himself, much less his family. For the first time in the history of mankind we are seeing a condition which could fulfill that prophecy: global monetary inflation.
Inflation is essentially a massive, hidden tax imposed on citizens without their understanding or consent. Suppose you earn $10 for something you sold or a service you performed. You receive a $10 bill in exchange for your work. It represents the value of your hard work. It also means that at current market prices, your $10 will buy x amount of goods. Along comes government, which prints another $10 bill. It looks just like yours and spends just like yours. The only difference is that government did nothing to create its $10. Remember, you had to work for yours. At first, both $10 bills buy the same amount of goods. But after awhile, merchants notice there is more money “out there” and with it, more demand for their products. So they raise their prices. Suddenly, your $10 is worth $5 less than it was before. It is not the products and services which have become worth more; the currency is worth less than it was before.
Some economists say that inflation is a normal part of a healthy economy. This is false. It only exists when a monetary system has no sound base. We are also told that the boom and bust cycle is a normal part of all economic activity. It isn’t. It’s only part of an inflating money supply, and today that inflation is worldwide.
Economists say inflation between 3% and 5% is normal to moderate - a sign of a healthy, expanding economy. But let’s assume 5% inflation over the lifetime of an individual. That 5% devaluation applies not only to the money earned this year, but to all money saved from previous years. At the end of year one, a dollar is worth 95 cents. At the end of year two, 95 cents is reduced again by 5%, being worth 90 cents and so on. By the time a person has worked 20 years, government will have confiscated by inflation 64% of every dollar the person saved over those years - not by taxes but by inflation. By the time the person has worked 45 years, the hidden tax will be 90%. The government will take virtually everything a person saves over their entire lifetime, not counting what they will pay in income taxes!
For all those who can not understand why we support Ron Paul, please let George Soros explain it to you. Replace “authorities” with “the Fed”. Published today in the Financial Times.
The worst market crisis in 60 years
By George Soros
Published: January 22 2008 19:57 | Last updated: January 22 2008 19:57
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.
Every time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism. Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.
Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.
The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.
Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market. Investment banks’ commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.
Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.
Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
The writer is chairman of Soros Fund Management