Posted by Matt Hawes on 11/22/08 11:32 AM Last updated 11/22/08 5:30 PM   [Newer: Obama Selects Economic Team] [Older: Auto Bailout Stalled]

Dr. Paul's statement from November 20, 2008:

Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face.  That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place.

Except for a rare few, Members of Congress are unaware of Austrian Free Market economics.  For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics.  If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.

Today, a major economic crisis is unfolding.  New government programs are started daily, and future plans are being made for even more.  All are based on the belief that we’re in this mess because free-market capitalism and sound money failed.  The obsession is with more spending, bailouts of bad investments, more debt, and further dollar debasement.  Many are saying we need an international answer to our problems with the establishment of a world central bank and a single fiat reserve currency.  These suggestions are merely more of the same policies that created our mess and are doomed to fail.

At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve.  It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form.  Congress added fuel to the fire by various programs and institutions like the Community Reinvestment Act, Fannie Mae and Freddie Mac, FDIC, and HUD mandates, which were all backed up by aggressive court rulings.

The Fed has now doled out close to $2 trillion in subsidized loans to troubled banks and other financial institutions.  The Federal Reserve and Treasury constantly brag about the need for “transparency” and “oversight,” but it’s all just talk — they want none of it.  They want secrecy while the privileged are rescued at the expense of the middle class.

It is unimaginable that Congress could be so derelict in its duty.  It does nothing but condone the arrogance of the Fed in its refusal to tell us where the $2 trillion has gone.  All Members of Congress and all Americans should be outraged that conditions could deteriorate to this degree.  It’s no wonder that a large and growing number of Americans are now demanding an end to the Fed.

The Federal Reserve created our problem, yet it manages to gain even more power in the socialization of the entire financial system.  The whole bailout process this past year was characterized by no oversight, no limits, no concerns, no understanding, and no common sense.

Similar mistakes were made in the 1930s and ushered in the age of the New Deal, the Fair Deal, the Great Society and the supply-siders who convinced conservatives that deficits didn’t really matter after all, since they were anxious to finance a very expensive deficit-financed American empire.

All the programs since the Depression were meant to prevent recessions and depressions.  Yet all that was done was to plant the seeds of the greatest financial bubble in all history.  Because of this lack of understanding, the stage is now set for massive nationalization of the financial system and quite likely the means of production.

Read the rest here.

Posted 11/22/08 12:11 PM SomeFunkyDude Coral Springs, FL

How can this not make sense to anyone, does anyone in congress pay attention I wonder.

Posted 11/22/08 1:00 PM tb54701 Eau Claire, WI

I'm going to copy and paste this and send it to my Senators and Congressman and ask for a comment. I'm tired of people ignoring this message.

Posted 11/22/08 1:07 PM Pull.The.Plug Rosedale, MD

It's not in Congress's best interest to listen. It would take away all their power.

Posted 11/22/08 5:33 PM brader@hrw.com Austin, TX

This needs to placed in a medium where more Americans would have access to Dr. Paul's message.

Posted 11/22/08 6:32 PM swifty Birmingham, United Kingdom

This is an excerpt from an article written in July 1966 that explains the writers views on the importance of the gold standard and what lead to the great depression. "The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's. With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form -- from a growing number of welfare-state advocates -- was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state)." Who could have wrote such damning words about FIAT enabled deficit spending and its roll in the terrible suffering of the 1930's? Here is the full article (a must read in it's entirety) http://www.usagold.com/gildedopinion/greenspan.html

Posted 11/22/08 6:39 PM Cineman Ann Arbor, MI

These are the things people should be spreading around. But how? Perhaps print them off, get them copied and post them around your town. Put something headlined in large font like "About the Economy". Email them, with Ron Paul's name and a link to C4L. Everyone is being affected by the economy, so I would think they would be interested in reading anything that might open their eyes as to what is going on.

Posted 11/22/08 8:13 PM BruceKoerber Cedar Rapids, IA

November 21, 2008 Copernicus And Austrian Economics! What a revolution it was to suggest in the first decade of the 1500’s that the sun, and not the earth, was at the center of our ‘universe.’ Using the scientific methods of astronomy Copernicus exposed as fallacious the ideas then considered to be true. It is easy to see that these superstitions were impediments to advancements in human progress, since minds were prejudiced against examining existing systems of belief. These kinds of biases against the search for truth explain very well the characteristics of that dark age through which humanity had to struggle. And now we are in the dark ages of economics! The current fallacies and ‘superstitions’ of empirical economics are a severe burden on an unsuspecting humanity. The fallacious economic doctrines have been promulgated worldwide causing a universal ignorance to weigh heavily on all of the various societies in what can only be described as a backward and ignorant world civilization. Austrian economics shines brightly in this darkness. Using the scientific methodology of subjectivism the irrelevance and absurdity of empiricism is exposed. These economic superstitions propagated by the Keynesians, the historicists, the socialists, and the empiricists of all genre, are in danger of being discarded and so the high priests of these fallacious doctrines do whatever they can to censor the discoveries of true science. They are foolish to think that they can conceal reality. What oppressive measures can ultimately succeed in preventing the people worldwide from discovering that the earth revolves around the sun or that human beings are subjective by nature? The answer is none, there are no measures that can keep humans (truth-seekers) from what is their destiny. Prosperity is our destiny and that will come about when we leave the ignorance of the dark ages of economics behind in the dustbin of archaic superstitions.

Posted 11/23/08 07:51 AM MO Show Me Gal Cameron, MO

I attended the End the Fed Protest Rally in Kansas City. Without actually counting, there were about 150-200 people present. My State Representative Jim Guest (a Ron Paul supporter) and Constitution Party V.P. candidate Darrell Castle spoke at the event as well as a local Libertarian Congressional candidate Dave Browning. We marched from the Federal Reserve Building around the WWI Memorial (the only one in the country I beleive)and to the IRS Building. It was a good day weatherwise for November for the March and we had a good group of folks show up. FOX 4 news in Kansas City ran a short video story of the event on their 9 PM and 10 PM newscast. (FOX 4 TV station is only a short distance from where we marched.--Next year maybe we should protest in front of the Television Stations!:)) I have searched for the story on the FOX 4 website and have not found it. I did email the station and requested that they post the story on their website. As far as I know no other local station carried any coverage of the event.

Posted 11/23/08 07:53 AM MO Show Me Gal Cameron, MO

Oops--My Bad, I clicked the wrong Blog for my previous post, but then you probably figured that out.:)

Posted 11/23/08 07:59 AM Cineman Ann Arbor, MI

If you go to my blog entitled "Austrians Were Right" or simply copy and paste the following link into your browsers, you can download the pdf I made of Ron Paul's statement. I printed a couple copies off and posted them around, although the text is very small. (It's quite a long statement). I think if people are interested in it, they'll read it. If not, they won't. Anyway, here is the link: http://tinyurl.com/5ujtbt

Posted 11/23/08 09:23 AM coolwise Sun Valley, NV

Our Congressman are inept, don't understand, or don't care because they are paid to be so by the special interest (not ours) and lobbyist of banks and corporations. Let it known to them that you are educated, do understand and does care our Republic. Let the r3OVLution grow forward. I sent this article to my Congressman and Senators.

Posted 11/23/08 2:24 PM xfolkboat West Brookfield, MA

Even the Financial Times has an editorial about a return to a gold-linked dollar. http://www.ft.com/cms/s/0/ba673d22-b977-11dd-99dc-0000779fd18c.html I hope the ink works.

Posted 11/24/08 06:10 AM Naulon Los Angeles, CA

Thank God for Ron Paul. Send this to everyone on your mailing list!

Posted 11/24/08 08:51 AM fedfree Harrisonburg, VA

I was trying to figure out what caused the financial crisis? So I started thinking about the biggest change that has happened to our economy in the last two years and no one is talking about it. If congress raises the minimum wage above what the market can bare what will happen? All the minimum wage critics predicted that exactly what is happening would happen. In July 2009 another minimum wage increase will take place and with the resulting rise in the cost of living I will be joining the list of foreclosures. I could go on and on but let me just say let free markets reign. If only Ron Paul could amend the fair labor act to amend this amendmant I could sleep at night.

Posted 11/24/08 09:25 AM tb54701 Eau Claire, WI

Response to this statement from Sen. Kohl of WI: November 24, 2008 Thank you for sharing your views with me about our country's economic challenges. Congress and the Administration are taking a diverse set of actions to address the financial crisis, and I welcome this opportunity to discuss these measures with you. The Treasury Department has begun implementing the Troubled Asset Relief Program (TARP), authorized by the Emergency Economic Stabilization Act (EESA) of 2008, with plans to purchase up to $250 billion in preferred stock in targeted financial institutions. This investment will infuse capital into the financial system, facilitating vitally needed lending throughout the economy. The Treasury will have the ability to profit from this investment like any stockholder, and participating financial institutions will have to conform to standards limiting executive compensation set forth by Congress in the EESA. One of the goals of the EESA is to minimize home foreclosures, and the Treasury Department is examining ways to limit foreclosures on mortgages purchased by the government while still protecting the taxpayer investment. Furthermore, financial institutions participating in EESA programs must also commit to limiting foreclosures and preserving homeownership. As mandated by Congress in the act, the Financial Stability Oversight Board has been established to ensure proper implementation of the program. Candidates are being considered for nomination as the Special Inspector General for TARP, and the General Accounting Office has established a physical presence at the Treasury Department to independently monitor its activities. Understanding the causes of the financial crisis is critical to enacting sound reforms, and Congress has held several hearings to better understand the situation. The Senate Banking Committee has heard from Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and other experts inside and outside the Federal Government on the state of the economy and federal stabilization efforts. Separately, the House Oversight and Government Reform Committee questioned executives from Lehman Brothers and AIG during hearings investigating the failures of these companies. The Committee also heard testimony from executives of the three leading credit rating companies, who made huge profits from assessments of dubious mortgage-based investments which grossly underestimated their risk. This Committee has also scheduled hearings on the role of hedge funds, as well as the failures of Fannie Mae and Freddie Mac, with executives from these companies scheduled to testify. Many regulatory reforms are under discussion, and I am carefully considering each proposal. Subprime loans were given far too freely to homebuyers unlikely to be able to make their payments, and I support action to ensure responsibility from both lenders and borrowers. Credit default swap markets, which trade insurance-like securities meant to manage the risk of loan defaults, are under investigation by Federal and New York State prosecutors for possible manipulation by traders. The SEC is also considering expanding its regulatory activities to include these markets. There is more than enough blame to go around for the financial crisis, and certainly Congress deserves its share. Poorly regulated markets and lax Congressional oversight prevented detection of growing systemic risks in the economy. Fannie Mae and Freddie Mac were chartered by Congress to expand homeownership, but Congress failed to ensure that these enterprises stayed true to their mission. This lax regulation and oversight was encouraged by the huge sums of money given by employees of these corporations and other financial institutions to politicians in both parties. To prevent a similar crisis in the future, Congress must be more accountable to the American people and not big corporations. Much work lies ahead to stabilize our economy, and I am grateful for the input I receive from people back home in Wisconsin. I will keep your thoughts in mind as I consider measures to address the economic crisis, and please feel free to contact me again in the future if I can be of any further assistance to you. Sincerely, Herb Kohl U.S. Senator

Posted 11/24/08 10:43 AM Cineman Ann Arbor, MI

http://tinyurl.com/5ujtbt