Entries from October 2009 ↓

This is from Forbes Nov 16th (not on news stands yet)

Read the new article from our great leader. After you read the "truth"...then read the comments....very Interesting...

by Ron Paul, 10.29.09

The large-scale government intervention in the economy is going to end badly

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

Continue at Forbes

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In this Audit the Fed update, Ron Paul explains what is happening with HR 1207 in the Monetary Policy Subcommittee, describes his plan to protect HR 1207 in the full Financial Services Committee, and provides ideas on actions we can take to keep the bill from being watered down.

The 13 Democrats on the House Financial Services Committee mentioned by Dr. Paul are:

Rep. John Adler, NJ (202) 225-4765, Web Contact: Link
Rep. Travis Childers, MS (202) 225-4306, Web Contact: Link
Rep. Steve Driehaus, OH (202) 225-2216, Web Contact: Link
Rep. Alan Grayson, FL (202) 225-2176, Web Contact: Link
Rep. Rubén Hinojosa, TX (202) 225-2531, Web Contact: Link
Rep. Suzanne Kosmas, FL (877) 956-7627, Web Contact: Link
Rep. Dan Maffei, NY (202) 225-3701, Web Contact: Link
Rep. Brad Miller, NC (202) 225-3032, Web Contact: Link
Rep. Walt Minnick, ID (202) 225-6611, Web Contact: Link
Rep. Ed Perlmutter, CO (202)-225-2645, Web Contact: Link
Rep. David Scott, GA (202) 225-2939, Web Contact: Link
Rep. Brad Sherman, CA (202) 225-5911, Web Contact: Link
Rep. Jackie Speier, CA (202) 225-3531, Web Contact: Link

Transcript

Ron Paul: I’d like to give you an update on HR 1207. For the last couple of weeks I have been talking with Mel Watt, the chairman of the monetary policy sub-committee in dealing with HR 1207. And it seemed like there were reasonable discussions but I never expected a whole lot to come from this. I never expected as much support from Mel Watt as I believe I can, and hopefully still get from Barney Frank. But the way the process works is a sub-committee does get first crack at it. What happens in the full committee is a different story and we don’t know exactly what will happen. But there is no doubt that Mel Watt is not interested in HR 1207. And I don’t think he’s all that bashful about speaking for the Federal Reserve because that was in the conversation quite frequently, that he was trying to satisfy all parties including the Fed. But that shouldn’t surprise any of us. They’re very, very powerful and very, very influential.

But when he took HR 1207 and marked it up and sent it back to me, obviously, it was something I could not support. Although there were two items in it that were rather minor that both he and I have agreed to, but it’s not as significant as it should be. The one part, though, was that having a timeframe on when we could look at certain procedures of the Federal Reserve, and that was accepted. But the fact that they took away the audit itself, those numbers don’t mean a whole lot, except in one area – and that’s dealing with the 13(3) lending facilities that the Federal Reserve has more or less conceded that they’re going to have to reveal what has happened there. But that is minor. As a matter of fact, HR 1207 doesn’t even mention 13(3), we’re mainly talking about an overall audit of overall monetary policy and arrangements oversees.

So that, ironically, actually helps the Fed – putting a time limit. I believe they more or less have conceded that we would get to know what’s happening with their lending facilities, but with the time lag on there of 6 months, it actually helps them. So what happens so often in legislation is you start out with one goal and you end up making things actually worse. And that’s what they’re trying to do. This will actually help the Fed under current circumstances. So my job and our job is to stick to what we want and that is a true audit.

Now, it is likely to come up soon and next week we’re supposed to start working on the overall reform package for all the financial institutions. And because Mel Watt is the sub-committee chairman he gets to ensure his provision in there on what we’re going to do with the Fed. Now, when he does that I will have the opportunity to replace it and amend what he’s done with HR 1207, and obviously I will be doing that.

Now, it looks like we have the upper hand, at least on the surface we do. From the banking committee we have all the Republican members who have co-sponsored the bill. We have 13 Democrats, so we have a good solid majority in the committee that should support us. That’s not always the way things work. Sometimes people support legislation for political reasons back home, and at the same time when they have to vote on it, they vote differently when their arms get twisted.

I believe it’s going to boil down to how strong a position Barney Frank takes on this. And I plan to talk to him. I’m still talking with him and with cordial relations and I’m sure he’s going to have to take a position one way or the other. So, I don’t think he’s as strongly opposed to what I am doing as Mel Watt is. So the amendment will come up so if people can influence their congressmen and say you can figure out which 13 are already co-sponsors, they have to be urged. I only urge courtesy and not threats or anything like that, that the end of the world is going to come if they don’t do it what you tell them to do. I still think we have to work through this the best we can diplomatically.

Like I said, I’m not surprised this has happened, but let’s say we are successful and we get it amended, we still ought to bring it to the House floor, and then they’ll have a chance to water it down again. It goes through rules committee, that’s another place. It has to go through the Senate; it’s going to have a harder time in the Senate. Then it has to go to a conference committee and that’s another problem. And then it has to go to the President. And even if it goes through all that, we still have the courts to deal with, and courts have never been friendly to those of us who want honest money. They were never friendly to the people who held gold clause contracts and believe the government shouldn’t renege on their promises.

But, nevertheless, this is crucial. This is really important. This whole thing might take a year or two to play out, but it might only take a year for the dollar to play out. So this is why it is so crucial. If the dollar doesn’t last very long and something has to come up to replace the dollar or have a new system, we have to be in that debate and that means we have to pursue this. So it is crucial that instead of becoming a little bit discouraged with this and think that this is very strange, this is really rather typical. The special interests comes in at the last minute and this time it’s the special interest banks, and the big corporations who love to have inflationary programs that finance the military-industrial complex. And they will have to come to a decision on what they’re going to do.

So I would say that the process is working more or less the way I expected. This is going to be a very important week. But the whole issue of sound money and limited government and liberty and the Constitution – actually, that concern is not going to go away no matter what happens, in the next couple of weeks or so. But we will gain a lot of momentum if we can at least restore the language of HR 1207 in the banking reform bill which will be in the House Committee next week.

Related posts:

1. Update on HR 1207, Ron Paul’s Bill to Audit the Federal Reserve Date: 4/27/2009 Transcript: Ron Paul: I’d like to give...
2. Last Call for HR 1207 – Audit the Fed Ron Paul’s legislation HR 1207, The Federal Reserve Transparency...
3. Ron Paul’s Bill To Audit The Federal Reserve Now Has 92 Co-Sponsors Ron Paul’s bill to audit the Federal Reserve (HR...

By Matt Hawes

In his latest C4L video, Congressman Paul reports on a recent House Foreign Affairs Committee hearing concerning Iran as well as a House Financial Services Committee hearing on financial regulations, and addresses the GDP.

http://www.youtube.com/watch?v=s4-VtBz_djg

In his latest video update, Ron Paul reports on a recent House Foreign Affairs Committee hearing concerning Iran as well as a House Financial Services Committee hearing on financial regulations. He also comments on the latest GDP data.

Date: 10/30/2009

Transcript

Ron Paul: I’m Congressman Ron Paul and this is a weekly update for the Campaign for Liberty.

Update on the House Foreign Affairs Committee

We were quite busy this week in Washington, a lot of hearings and a lot of activity. First off, we had very significant hearings in the Foreign Affairs Committee. This was somewhat different because in the past with previous chairmen of this committee, they would frequently bring up resolutions which I considered very, very important and they’d bring them to the floor, under suspension, with no announcement, no hearings and no mark up in committee and sometimes, they’d bring it up under unanimous consent. Well, at least, Howard Berman, the chairman, brought this to the committee and we did have a bit of a debate and a vote. Unfortunately, there were only four of us that were actually opposed to the bill, and this is the bill that’s to put much stronger sanctions on the Iranians and it is to prevent petroleum-refined products getting into Iran. And the debate was the same old story. You know, “they’re a great danger to the world and if we don’t stop them, someday they might get a nuclear weapon.” So it was war propaganda. It reminded me, and I said so in the committee, it reminded me of some of the talk that happened before we went into Iraq.

But nevertheless, I tried my best to make the point that it won’t be of any benefit to us or to them. It will aggravate and anger the people. The people will not be turning against the [Iranian] leadership, which are out on the fringes. They’ll turn their anger and hostility toward us. But it is a significant event because it represents the continued and perpetual determination to alienate the Iranians and it’s a big debate over nuclear activity and whether or not they might have a nuclear weapon someday. It’s a significant event, but quite frankly, I think our policies of intervention in that area of the country causes more trouble than the Iranian government itself. They are a Third World nation. They don’t have intercontinental ballistic missiles. They have no nuclear weapons. In 2003, our CIA said they quit any effort to make a nuclear weapon. But I’m sure they have an incentive to make a nuclear weapon, but most of the incentive is the fact that we have an interventionist foreign policy. The Pakistanis have nuclear weapons. The Chinese have nuclear weapons. The Indians have nuclear weapons. The Israelis have nuclear weapons. We’re surrounding their country. We have nuclear weapons. So it’s not the most outlandish thought in the world for a country like that wanting to have those weapons.

But I hope that we come to our senses, but right now, we have a President that seems to be determined to follow the foreign policy of neoconservatives. Fortunately, though, he is trying to have some negotiations and trying to talk to the Iranian government, but quite frankly, I think behind the scenes they’re really planning to continue this more aggressive foreign policy. Someday, when this country comes to its senses or we go broke, I’m sure this policy will change.

Update on the House Financial Services Committee

This week we also had significant hearings in the Financial Services Committee and this brought Secretary of the Treasury Geithner to our committee, and of course, I had my five minutes of questioning with him. The reason for the hearings is to start looking at this bill that the chairman of Financial Services, Barney Frank, is bringing forth, which is 280 pages of more and more regulations of the financial system. The point I made with Secretary Geithner was that regulations can hardly solve the problem if you’re only treating the symptoms of a flawed monetary policy.

I used a quote he made earlier this year where he said that, “The number one problem that led us to our troubles was the fact that we had too low interest rates too long,” and I tried to throw that back to him saying, “Well, that’s the kind of language that I use and I believe that is the case and you can’t solve that problem by just doing more of the same,” pointing out to him that it doesn’t make much sense to admit that the interest rates were too low too long and then turn around and endorse a program that we’ve endorsed for the past year and that is if one percent interest rates were too low, taking them to zero is hardly going to help, at the same time doubling the money supply. I mean, low interest rates and excessive monetization of debt either is a problem or it isn’t. Of course, he danced around that issue.

On a follow-up question that I had for him, which might have even been more significant, but unfortunately for him the time ran out, and that is that he did admit that they were making negotiations with the international organizations trying to internationalize all our regulations and of course, I made a statement I don’t even like the regulations coming out of Washington, DC, let alone having them internationalized and under the UN and IMF.

But I did mention the fact that that very day I read that the United Nations are talking about a new reserve standard. Because I think most people admit that the dollar reserve standard is dead, although the dollar is not dead and the dollar is still limping along, but the reserve standard that built the very friable, fragile financial system that has already collapsed is not going to be rebuilt with the dollar. So my question to him was, “in these conversations you have about regulations, how often do you talk about and what are your conversations at these meetings about a new reserve standard?” Well, his answer was, of course, the time had ran out, he didn’t have time to answer, but that he suggested we get together and have a conversation. I doubt if that would happen, but if he invites me to discuss this, I would just for educational benefits, not that I think he’s going to convert me or I’m going to convert him, but it is a significant question. What are they going to replace the dollar with? Will it be the international paper reserve standard? Or will we wake up and once again realize that the only truly reserve standard that would work for a sound economic system throughout the world would be something that would be backed by more than government promises, and he was indicating that this has to be a worldwide approach and my answer, of course, was that if we do the right thing for us, it will be the right thing for the world and others would follow us. So if it’s a bad idea to spend too much money and borrow too much money and print too much money and we just quit, not only would it benefit us, it would benefit the whole world. But we have a long way to go. I think that will come after we have a greater collision with the dollar.

Comments on the GDP

Along this line, we also h­ad a report this week that showed that the GDP grew a little faster than I expected. It was up over three percent and the market responded by jumping up. The Dow Jones was up 200 points, which quickly corrected itself the next day. But the response was wonderful. “The GDP is up!” but when you think about it, why is the GDP up? Government printed a lot of money and passed it out and people bought cars and bought houses, even though they were buying them for artificial reasons. You know, they were stimulated. We don’t need to stimulate people to prop up prices of houses and building more houses. We need more of a natural correction, but they pass out money that they printed and it goes into the GDP. How can you believe that the GDP has much meaning if the government participates in spending money and calling that economic growth.

That probably is what changed the markets the next day because it was realized this isn’t real growth, this is just artificial. This is just gimmickry to claim the economy is growing by merely the government pursuing these giveaway programs. Eventually, the markets are always smarter than the government. The government can get away with it for a long time. They can get away with pretending there’s true value in our money and that this system will work, but in time it will be known exactly what true value is and the people and the markets will demand correction. That’s what we’re in the process of doing. The need for the correction is there. The resistance is just overwhelming in Washington and Wall Street to “do anything,” but they’ll just don’t allow the correction to occur. They consider that sound economic policy. I consider it foolish economic policy in doing exactly opposite of what they should do and we should have a lot better understanding how free markets work, how sound money works and have a lot more confidence that we will be all a lot better off if we follow those policies.

Related posts:

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http://www.c-span.org/Wat...

Ron Paul: “I probably dislike [the current system] as much as Michael Moore does. But he’s complaining about it being part of capitalism. It has nothing to do with capitalism. This is corporatism, the corporations. I agree with him.”

Show: Larry King Live
Channel: CNN
Date: 10/29/2009

Larry King:… Ron Paul, Republican of Texas. He ran for president this last election. He is here to react to what we’ve just heard. Concerning healthcare, Mr. Moore believes that universal healthcare is everyone’s right. He threatens that the Democrats will lose seats if they don’t support it. What is your stand on it, Congressman?

Ron Paul: I think it’s a fallacy to say that people have a right to somebody else’s services. Now, you have a right to your life and you have a right to your liberty and you have a right to earn a living. You ought to have a right to keep it, but you have a responsibility to take care of yourself because you don’t have a right to get something from government because government has nothing, so the government has to take it from somebody and give it to you, so it’s a failed policy. It is a form of socialism and socialism doesn’t work. It leaves to a big kind of…

Larry King: So if you have no money and you fall down on the street with a heart attack, you have no money and no one should take care of you? The government should not provide an ambulance or treat you?

Ron Paul: Well, no, but we don’t have a history in this country of that happening, even before government started managing healthcare. I practiced medicine in both circumstances in the early sixties. We didn’t have managed care and I worked in a Catholic hospital. I made $3 an hour and nobody was ever turned away and there were many, many church hospitals and you had Shriner’s Hospitals and a lot of free care was given. Today, even with managed care, they complain about, “Oh, somebody doesn’t have health insurance and somebody is going to die because they don’t have health insurance.”

But really, people don’t get turned away. I mean, accidents happen. Man is imperfect, but for the most part, anybody including anybody illegal can go to the emergency room and they always get taken care of. They just don’t get thrown out in the street.

Larry King: Are you saying you like the current system?

Ron Paul: No, I probably dislike it as much as Michael Moore does. But he’s complaining about it being part of capitalism. It has nothing to do with capitalism. This is corporatism, the corporations. I agree with him. Corporations run things; the drug companies’ lobbyists, the insurance companies’ lobbyists and the hospital managements’ lobbyists, the AMA lobbyists and that’s all managed care and we have a system where money and bigness influences the government, but that’s corporatism. That’s not capitalism. But we want our free markets…

Larry King: Okay, how do you change that?

Ron Paul: Allow free markets to work. There is an example of free markets and I might have even heard it on CNN today of the example of somebody that was going to charged $100,000 for surgery and they went to Singapore and got it for $25,000 and the main reason they gave why they could afford to do it was that they didn’t have horrendous malpractice payments to make and there was a market. There was a market necessity. Patients are leaving this country. They’re going to India, but that’s the market working. So we have put our charity hospitals out of business, at the same time, because of inflation and management and all the mischief of government, we have pushed these prices up. Pumping money into a system doesn’t improve quality. It increases prices. Look at our educational system. We pump it with money, prices go up. The quality of education goes up and the quality of medicine has not gone up by just pumping more money in.

Larry King: Lyndon Johnson once said, “The probable answer is that the government is going to have to be half-capitalistic and half-socialistic. You have to have some social security, i.e. socialism. You have to take care of those who don’t have. Pure capitalism can’t work.” Would you agree with that?

Ron Paul: No, not really. It’s sort of like I practice OB-GYN and I never could tell my patients they have a touch of pregnancy and you know, you’re either pregnant or you’re not. You either have government intervention messing up the markets or you don’t. You either believe in freedom and believe in voluntary choices. I mean, just look at this disaster with the swine flu vaccine. They take over the whole project. We pump in billions of dollars and they come up with shortages. Distribution is lousy and they’re talking about forcing people to take them in places like New York and no one has even proved that it’s necessary yet. We have still a lot of deaths from ordinary flu far surpassing swine flu, so managed central economic planning in anything fails and especially in medicine it fails.

Larry King: But Congressman, everyone in line getting it, who is getting it free is not standing there complaining about government involvement.

Ron Paul: Yeah, but I have a daughter that practices medicine and I was just talking to her about it and she says, “Oh, yeah, dad. I can give shots and it’s for free, but we don’t have anything.” So when something is free and you don’t have it, it’s irrelevant and some of the people who don’t want it are being forced to take it. We have lost our faith and confidence and understanding of how free markets work. We turned it upside down by saying anytime corporations get benefits, we call it capitalism and freedom and it is corporatism. It’s the military-industrial complex. It’s all the special interests and this is where Michael Moore gets it all wrong. He works, he believes diligently in free markets because he believes in the First Amendment, he believes in making films. He doesn’t believe in prior restraints, so why should he condemn capitalism?

Larry King: Right.

Ron Paul: Because he is condemning corporatism. I condemn it, too. Special privileges to corporation is a big problem.

Larry King: Maybe it’s semantics. More with Congressman Paul right after the break. Don’t go away.

Michael Moore: I think capitalism as it is defined now has completely failed. Yeah, it hasn’t really failed the rich. It has actually helped them, the wealthiest one percent now have more financial wealth than the bottom 95 percent combined, so it’s a really good system for a few people.

Larry King: Hi, Ron, do you disagree with that statistic that Michael Moore just pointed out?

Ron Paul: No, and I’m not complaining about as much as he does, but I think I understand it differently because when a country embarks on deficit financing and inflationism, you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich and when we get into trouble, then the corporations come for their bailout and they get the benefits and the little people don’t.

So yes, there is some truth to that, but it’s the failure of the free market to exist, that is our problem. It isn’t the fact that we don’t have enough government, we have way too much government. The government created this monster. If he doesn’t like what we have, he has to look at what we’ve been doing for 30 or 40 years, it’s called interventionism. It’s called Keynesism. It’s called inflationism. It’s called Big Government. That’s the problem.

Larry King: Here’s what Michael Moore said about Afghanistan. I’ll ask Congressman Paul what he thinks about the war there. Watch.

Michael Moore: Al Qaeda has left there. They booked out of the neighborhood, Larry. They’re long gone, okay? They’re in Pakistan. They’re in parts of Africa. They’re elsewhere in the Middle East. You know, they’re here in the US. I mean there are real Internet operations now as Matthew Hull, the State Department individual who resigned last month over the Afghanistan policy. You should go online and read his letter of resignation. You’ll see he explains it very clearly that for one to deal with Al-Qaeda, the last place we need to be right now is in Afghanistan. That’s just a crazy, crazy making place. It’s unwinnable. It’s immoral. It’s illegal. It’s wrong and what is our CIA doing paying the brother of the president of Afghanistan who is involved in this opium trade that’s funding the Taliban. I mean, where… when does this stop?

Larry King: Congressman, you’re a strong critic of Iraq. Are you a critic of the Afghanistan policy as well?

Ron Paul: Yeah, I sure am. My position is we shouldn’t have gone in and we should just come home, but earlier on, Michael was saying that he was hopeful and sympathetic to what Obama was doing. I don’t think he’s quite willing to criticize Obama like Bush, but I am and yes, there have been a token effort of bringing some troops home from Iraq. Iraq is a mess, but at the same time, we’re sending in contractors to replace the troops and paying them a lot more money, subsidizing the military-industrial complex and Obama ought to be condemned for that. You can’t just pick out, so anytime you support Obama in any of those policies, they’re bombing Pakistan right now, killing civilians and we’re on the verge now of attacking or at least putting on more sanctions on Iran, which will lead to hostilities if we’re not careful because we’re talking about the Iranians just like we used to talk about the Iraqis, putting on tougher and tougher sanctions, making the people suffer, hoping the people are going to overthrow their leaders, and not realizing the tougher the sanctions you put on the people, the more you drive them into supporting their leaders.

Larry King: So you would get out of Afghanistan and Iraq posthaste?

Ron Paul: I would, and my saying during the campaign was “we just marched in, we can just march home.” Nothing good can come of it and it’s an undeclared war. It’s an immoral war. We don’t have any money. The longer we’re there, the worse it’s going to get and we just need to come home. We can’t nation-build and besides, I will win this argument because we are bankrupt and we can’t afford it, so it’s going to end badly if we don’t come to our senses and just say, “Let’s quit this militarism around the world.” I mean, we’re in 130 countries with 700 bases around the world and we cannot sustain these and it is, it’s pumped up by both the Left and the Right in the Congress, “Oh, we can’t do away with this weapon. It will be bad for jobs.” There is conservative Keynesism and Liberal Keynesism, always government management, which always fails and gives us the financial crisis that we’re in.

Larry King: Right. The always thoughtful Congressman Ron Paul of Texas. Thanks. Thanks, Ron.

Ron Paul: Thank you very much.

Larry King: Always good having you with us.

Ron Paul: Thank you.

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