Excellent article on the cause of the crisis ...

[gonegolfin]

I provided the link to this article in another thread. But I thought it would be better to bring it into its own topic.

Ron Paul gets it. Recession is a natural part of the business cycle. Especially so in the unfortunate Central Bank/Fractional Reserve System that we have. Prices must be allowed to correct and find their natural equilibrium, not find an artificial floor established by irresponsible monetary policy that inevitably results in another bubble. The excesses and mis-allocation of capital (malinvestment) must be purged in a truly free market system. This is paramount in bringing the economy back into balance. Creating more money and taking on more debt does just the opposite and benefits a minority. Namely, it benefits the folks that spend the the newly created money first, before prices react to the upside as the new money works its way through the economy (keeping aside the obvious benefit of an outright handout in the case of the proposed Treasury bailout). If we pass any sort of bailout, we are going to make the problem worse (somewhat better in the short term, much worse in the long term). Government intervention into our markets will create more instability in the future.

Commentary: Bailouts will lead to rough economic ride - CNN.com

Brian

 

[Bern80]

Even now I still wish he would have been the Republican candidate. Almost to the point that I may not vote for anybody this time around. Neither candidate is going to make these tough decisions. Unfortunately that is Ron Paul's problem, more than any other candidate he said what is right and not what people want to hear. No one who wants to get elected can afford to do that. No politician for example can afford to look a home buyer in the eye and say 'what the hell do you think you're doing?'

That leads me back to my question earlier. What would happen if the government did nothing right now? What if they just stayed out of it. All kinds of people on here are arguing the opposite of Paul, that de-regulation is what caused this. I don't know maybe it's time for some tough love though. You can't deny there is truth in what he says. A bailout is going to keep the market from correcting and it needs to be correcting for the inflated price of things like homes. We are complaing and pissing and moaning about how tough things are on people right now, but the policies being enacted may ultimately have the exact opposite desired effect.

 

[Paulie]

Even now I still wish he would have been the Republican candidate. Almost to the point that I may not vote for anybody this time around. Neither candidate is going to make these tough decisions. Unfortunately that is Ron Paul's problem, more than any other candidate he said what is right and not what people want to hear. No one who wants to get elected can afford to do that. No politician for example can afford to look a home buyer in the eye and say 'what the hell do you think you're doing?'

That leads me back to my question earlier. What would happen if the government did nothing right now? What if they just stayed out of it. All kinds of people on here are arguing the opposite of Paul, that de-regulation is what caused this. I don't know maybe it's time for some tough love though. You can't deny there is truth in what he says. A bailout is going to keep the market from correcting and it needs to be correcting for the inflated price of things like homes. We are complaing and pissing and moaning about how tough things are on people right now, but the policies being enacted may ultimately have the exact opposite desired effect.

If the government did nothing it would hurt. It's going to hurt regardless, so why not let it hurt now, with less pain then the long-run alternative of printing hundreds of billions of dollars in an unprecedented operation rife with moral hazard.

This will happen again someday because no one was held accountable for their decisions.

All this new money is going to make its way into yet another asset bubble...of WHAT would be anyone's guess. Maybe this time around will be a REAL oil bubble, with prices much higher than the paltry $140 we saw earlier this summer. That was NOTHING compared to what we could conceivably see.

I somewhat tend to doubt that precious metals could become a bubble, because with as much new money as we're probably going to be seeing in the coming years, gold and silver are rock solid investments. Buy and HOLD, don't buy and sell.

As far as Paul, I don't think most voters really want the truth. They don't want answers. They want a politician who will beat around the bush, and tell them what they WANT to hear. They also obviously want the media to whore them out to them 24/7. That seems to really turn people on for some reason.

 

[Zoomie1980]

I provided the link to this article in another thread. But I thought it would be better to bring it into its own topic.

Ron Paul gets it. Recession is a natural part of the business cycle. Especially so in the unfortunate Central Bank/Fractional Reserve System that we have. Prices must be allowed to correct and find their natural equilibrium, not find an artificial floor established by irresponsible monetary policy that inevitably results in another bubble. The excesses and mis-allocation of capital (malinvestment) must be purged in a truly free market system. This is paramount in bringing the economy back into balance. Creating more money and taking on more debt does just the opposite and benefits a minority. Namely, it benefits the folks that spend the the newly created money first, before prices react to the upside as the new money works its way through the economy (keeping aside the obvious benefit of an outright handout in the case of the proposed Treasury bailout). If we pass any sort of bailout, we are going to make the problem worse (somewhat better in the short term, much worse in the long term). Government intervention into our markets will create more instability in the future.

Commentary: Bailouts will lead to rough economic ride - CNN.com

Brian

Paul's ideas on fiscal and domestic policy are things I believe in, but I will never buy his isolationism.

 

[Zoomie1980]

If the government did nothing it would hurt. It's going to hurt regardless, so why not let it hurt now, with less pain then the long-run alternative of printing hundreds of billions of dollars in an unprecedented operation rife with moral hazard.

This will happen again someday because no one was held accountable for their decisions.

All this new money is going to make its way into yet another asset bubble...of WHAT would be anyone's guess. Maybe this time around will be a REAL oil bubble, with prices much higher than the paltry $140 we saw earlier this summer. That was NOTHING compared to what we could conceivably see.

I somewhat tend to doubt that precious metals could become a bubble, because with as much new money as we're probably going to be seeing in the coming years, gold and silver are rock solid investments. Buy and HOLD, don't buy and sell.

As far as Paul, I don't think most voters really want the truth. They don't want answers. They want a politician who will beat around the bush, and tell them what they WANT to hear. They also obviously want the media to whore them out to them 24/7. That seems to really turn people on for some reason.

The problem with Paul is that I WANT to fight Taliban, Russians, Chinese, Indians, etc..and he doesn't.

 

[editec]

The solution is to take over ALL the assets of the banks in trouble or none of them.

either let the economy go into free fall or fix it honestly in a way that actually doesn't screw the american commweal..

Looks like none of us are going to get what we want.

All we're going to get is a lot of bad paper for our $700,000,000,000.

Meanwhile the guys who created this mess and took enormous pays for screwing it all up?

They retire on their ill-got gains for a while, but they'll be back.

 

[gonegolfin]

The solution is to take over ALL the assets of the banks in trouble or none of them.

either let the economy go into free fall or fix it honestly in a way that actually doesn't screw the american commweal..

Looks like none of us are going to get what we want.

All we're going to get is a lot of bad paper for our $700,000,000,000.

Meanwhile the guys who created this mess and took enormous pays for screwing it all up?

They retire on their ill-got gains for a while, but they'll be back.

I think the number is going to be considerably higher.

Brian

 

[gonegolfin]

An update Ron Paul sent to his mailing list ...


Wednesday, September 24, 2008

Dear Friends,

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."

That describes the current bailout package to a T. And we're being told it's unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.

• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.

• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

There goes your country.

Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

In liberty,
Ron Paul

I provided the link to this article in another thread. But I thought it would be better to bring it into its own topic.

Ron Paul gets it. Recession is a natural part of the business cycle. Especially so in the unfortunate Central Bank/Fractional Reserve System that we have. Prices must be allowed to correct and find their natural equilibrium, not find an artificial floor established by irresponsible monetary policy that inevitably results in another bubble. The excesses and mis-allocation of capital (malinvestment) must be purged in a truly free market system. This is paramount in bringing the economy back into balance. Creating more money and taking on more debt does just the opposite and benefits a minority. Namely, it benefits the folks that spend the the newly created money first, before prices react to the upside as the new money works its way through the economy (keeping aside the obvious benefit of an outright handout in the case of the proposed Treasury bailout). If we pass any sort of bailout, we are going to make the problem worse (somewhat better in the short term, much worse in the long term). Government intervention into our markets will create more instability in the future.

Commentary: Bailouts will lead to rough economic ride - CNN.com

Brian

 

[dilloduck]

An update Ron Paul sent to his mailing list ...


Wednesday, September 24, 2008

Dear Friends,

Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.

The events of the past week are no exception.

The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."

That describes the current bailout package to a T. And we're being told it's unavoidable.

The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!

• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.

• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.

• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.

There goes your country.

Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.

Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.

Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

In liberty,
Ron Paul

And people are shocked when I tell them that I wont vote for either party this year.

 

[busara]

And people are shocked when I tell them that I wont vote for either party this year.

youre not voting dem or repub?!?!?

 

[Bern80]

And people are shocked when I tell them that I wont vote for either party this year.

I'm real close to being with you on that one. I'm getting more livid and depressed by the minute reading this stuff.

Depressed because it isn't ever going to change as far as I can tell. No politician can afford to tell the people what they need to hear. And given what has become of the mentality of this country, almost no one would vote for such a candidate even if they did.

 

[dilloduck]

I'm real close to being with you on that one. I'm getting more livid and depressed by the minute reading this stuff.

Depressed because it isn't ever going to change as far as I can tell. No politician can afford to tell the people what they need to hear. And given what has become of the mentality of this country, almost no one would vote for such a candidate even if they did.

I think the hip that both parties connect at is beginning to be exposed--notice how they don't get into a good mudslinging contest with each other on this one. They BOTH know they are complicit in screwing people around. Ron Paul ain't my hero but he's telling it like it is. He's a DUMB ASS for not going third party this year. What an opportunity this would be.

 

[gonegolfin]

All this new money is going to make its way into yet another asset bubble...of WHAT would be anyone's guess. Maybe this time around will be a REAL oil bubble, with prices much higher than the paltry $140 we saw earlier this summer. That was NOTHING compared to what we could conceivably see.

With what has been proposed thus far (various bailout proposals), we truly do not know if, in fact, there will be any new money created. This is why I still fear deflation as a possibility. You have seen me write about the sterilization operations conducted by the Fed in its newly conceived lending operations - late 2007 and 2008 (sterilizing nearly every dollar that has been lent out such that reserves only increase enough to keep the fed funds rate at its target). These operations have had virtually no impact on the monetary base because as with each lending operation conducted by the Fed, reserves were being drained via Fed treasury sales from their own portfolio. The Fed was lending out cash or treasuries themselves for bad debt. Now the Fed balance sheet is full of bad debt that the free market did not want to buy. This drainage of reserves (sterilization) also reduced the amount of cash that the healthier banks could lend as they were lending to the government (treasuries) instead of lending cash out into the economy. This is a perfect example where government debt crowds out investment in the economy. Note that most of the increases in our money supply are actually created by the banks (fractional reserve lending) and not the Fed itself. The banks generate growth in the economy by making credit available. Right now, credit is not very available.

With this additional $700 billion proposal (or whatever its costs), our government will first attempt to sell treasury debt to finance it. Now, this could precipitate a run on the Dollar which would be very inflationary (and we could eventually lose reserve currency status). But again, selling treasury debt in and of itself is not expanding the money supply (mentioned in another thread).

Now, if treasury is not able to completely finance this by selling treasury debt, then quantitative easing by the Fed (creating new money) is the only answer. Also, if foreign investors lose confidence in the Dollar, they may not only refrain from financing this operation, they may dump some or all of their existing Dollar based holdings. Again, quite inflationary.

But nothing that has happened thus far or been proposed in the bailout package(s) actually increases the money supply. I think that whether or not new money is created will be determined by foreign investors of our debt and the bond market in general. I do expect that foreigners will demand a much higher rate of interest for their purchases (it may take some time for this to develop). Thus, we see higher interest rates whether we sell treasury debt, we create new money, or a combination of the two.

Do you follow me? Thus far, Helicopter Ben has not been Helicopter Ben. The Fed has been more like the Fed of the Great Depression era when they allowed deflation to happen. Of course, the circumstances are different now. Foreign investors are going to play a huge role in deciding whether inflation or deflation occurs. As will credit and interest rate derivatives.

Brian

 

[sealybobo]

I provided the link to this article in another thread. But I thought it would be better to bring it into its own topic.

Ron Paul gets it. Recession is a natural part of the business cycle. Especially so in the unfortunate Central Bank/Fractional Reserve System that we have. Prices must be allowed to correct and find their natural equilibrium, not find an artificial floor established by irresponsible monetary policy that inevitably results in another bubble. The excesses and mis-allocation of capital (malinvestment) must be purged in a truly free market system. This is paramount in bringing the economy back into balance. Creating more money and taking on more debt does just the opposite and benefits a minority. Namely, it benefits the folks that spend the the newly created money first, before prices react to the upside as the new money works its way through the economy (keeping aside the obvious benefit of an outright handout in the case of the proposed Treasury bailout). If we pass any sort of bailout, we are going to make the problem worse (somewhat better in the short term, much worse in the long term). Government intervention into our markets will create more instability in the future.

Commentary: Bailouts will lead to rough economic ride - CNN.com

Brian

Too bad he has to say it in a way that the sheeple of this country won't get it.

What he is saying is tha this is just another unconstitutional power/money grab by the rich. This is socializing the losses and privatizing the profits.

How come most people here that say the GOP let them down and were going to vote for NADER or Barr didn't stick with Paul?

 

[gonegolfin]

Too bad he has to say it in a way that the sheeple of this country won't get it.

What he is saying is tha this is just another unconstitutional power/money grab by the rich. This is socializing the losses and privatizing the profits.

How come most people here that say the GOP let them down and were going to vote for NADER or Barr didn't stick with Paul?

You do realize that neither Obama nor McCain gets it either, don't you?

Brian

 

[dilloduck]

You do realize that neither Obama nor McCain gets it either, don't you?

Brian

Bobo ? Are you kidding me--partisan hack all the way.

 

[Ravi]

I dunno, Ron Paul is possibly overreacting. Congress doesn't seem about to roll over and give into Bush for a change.

We shall see.

 

[gonegolfin]

I dunno, Ron Paul is possibly overreacting. Congress doesn't seem about to roll over and give into Bush for a change.

We shall see.

Ron Paul is not overreacting. Unfortunately, Congress will pass something, just not the Treasury proposal. It will be big. It will be horrible for our economy in the intermediate to longer term, for all of the reasons that I (and Paul) has stated. It will be extremely inefficient as the overhead will be extremely costly (the implementation complexities of all of the plans I have seen are unreal and actually the norm for our government). And it will reinforce more strongly than ever a really bad precedent (moral hazard) on an incredible scale.

Brian

 

[dilloduck]

And it will reinforce more strongly than ever a really bad precedent (moral hazard) on an incredible scale.

Brian

The ABSOLUTELY worst message to come out of all this. Actually rewarding greed, ignorance and stupidity. Pitiful.

 

[Ravi]

I guess the stockholders will be happy.