Last week on Christmas Eve, after many backroom deals were made, the Senate passed the healthcare reform bill with a strictly partisan vote. I was pleased that my colleagues in the GOP are on the right side of this bill. Although this vote was a major step in healthcare reform becoming reality, they still have to reconcile the Senate bill with the House-passed version in conference committee. This could prove even more difficult and costly than the Senate vote.
There was a little bit of controversy surrounding one particular Senator who was initially against the bill, but then, coincidentally, a large amount of Medicare funding specifically for his state was tucked inside and he ended up voting for it. One wonders how much more of that will have to go on to achieve final passage.
But this is how politicians in Washington deal with problems: they throw your money at them. Healthcare reform is no different. The Senate version of the bill, at last count, will cost $871 billion. The House version tops $1 trillion. But they tell us this is for the health of Americans, and how dare we count the cost?
Such is the arrogance of politicians. There seems to be no end to the problems they feel capable and duty-bound to solve through legislative proclamation and plenty of your money. To hear them talk, one might think that a few words spoken on Capitol Hill would make problems just disappear. All it takes it good intentions.
But no good can come from 2400 pages of Washington’s good intentions.
I have observed quite the opposite throughout my political career in the House of Representatives, and fear that with this immense legislation, our healthcare problems are only just beginning. Over the last few decades, I have seen healthcare subjected to more and more creeping red tape that only creates bottlenecks and increases costs as new bureaucratic hurdles are put in place.
Politicians cannot solve the problems created by ever-increasing intervention by exponentially increasing their intervention. Similarly, they cannot improve the quality of healthcare and expand access to it for all Americans simply by legislative decree. If only it were that simple! The reality is the free market, when allowed to function, naturally increases access and drives prices down through competition. The free market keeps service providers accountable by allowing people to take their business elsewhere.
This government intervention will eventually create a near monopoly of providers in health insurance as smaller companies are squeezed out and innovation comes to a grinding halt due to formidable barriers to entry. The government will determine prices and levels of service that will apply to everyone, regardless of want or individual circumstances. The true insurance model of healthcare cost management, meaning major medical coverage only, will basically become illegal. Opting out of the system will incur heavy tax penalties.
Expanding government reach so deeply into this very sensitive area of our personal lives and such a major part of our economy means more opportunities for waste, fraud and abuse of the system. One need only remember the recent bailouts for an example of how government handles systemic waste, fraud and abuse.
So while the Senate patted itself on the back last week for delivering a Christmas gift to Americans, time will prove it was instead a great big lump of coal.
Wednesday
IRAN SANCTIONS ARE PRECURSOR TO WAR
Last week the House overwhelmingly approved a measure to put a new round of sanctions on Iran. If this measure passes the Senate, the United States could no longer do business with anyone who sold refined petroleum products to Iran or helped them develop their ability to refine their own petroleum. The sad thing is that many of my colleagues voted for this measure because they felt it would deflect a military engagement with Iran. I would put the question to them, how would Congress react if another government threatened our critical trading partners in this way? Would we not view it as asking for war?
This policy is pure isolationism. It is designed to foment war by cutting off trade and diplomacy. Too many forget that the quagmire in Iraq began with an embargo. Sanctions are not diplomacy. They are a precursor to war and an embarrassment to a country that pays lip service to free trade. It is ironic that people who decry isolationism support actions like this.
If a foreign government attempted to isolate the US economically, cut off our supply of gasoline, or starve us to death, would it cause Americans to admire that foreign entity? Or would we instead unite under the flag for the survival of our country?
We would not tolerate foreign covert operations fomenting regime change in our government. Yet our CIA has been meddling in Iran for decades. Of course Iranians resent this. In fact, many in Iran still resent the CIA’s involvement in overthrowing their democratically elected leader in 1953. The answer is not to cut off gasoline to the Iranian people. The answer is to stay out of their affairs and trade with them honestly. If our operatives were no longer in Iran, they would no longer be available as scapegoats for the regime to, rightly or wrongly, blame for every bad thing that happens. As bad as other regimes may be, it is up to their own people to deal with them so they can achieve true self-determination. When foreigners instigate regime change, the new government they institute is always perceived as serving the interest of the overthrowing country, not the people. Thus we take the blame for bad governance twice. Instead we should stay out of their affairs altogether.
With the exception of the military industrial complex, we all want a more peaceful world. Many are hysterical about the imminent threat of a nuclear Iran. Here are the facts: Iran has never been found out of compliance with the nuclear non-proliferation treaty (NPT) they signed. However, being surrounded by nuclear powers one can understand why they might want to become nuclear capable if only to defend themselves and to be treated more respectfully. After all, we don’t sanction nuclear capable countries. We take diplomatic negotiations a lot more seriously, and we frequently send money to them instead. The non-nuclear countries are the ones we bomb. If Iran was attempting to violate the non-proliferation treaty, they could hardly be blamed, since US foreign policy gives them every incentive to do so.
This policy is pure isolationism. It is designed to foment war by cutting off trade and diplomacy. Too many forget that the quagmire in Iraq began with an embargo. Sanctions are not diplomacy. They are a precursor to war and an embarrassment to a country that pays lip service to free trade. It is ironic that people who decry isolationism support actions like this.
If a foreign government attempted to isolate the US economically, cut off our supply of gasoline, or starve us to death, would it cause Americans to admire that foreign entity? Or would we instead unite under the flag for the survival of our country?
We would not tolerate foreign covert operations fomenting regime change in our government. Yet our CIA has been meddling in Iran for decades. Of course Iranians resent this. In fact, many in Iran still resent the CIA’s involvement in overthrowing their democratically elected leader in 1953. The answer is not to cut off gasoline to the Iranian people. The answer is to stay out of their affairs and trade with them honestly. If our operatives were no longer in Iran, they would no longer be available as scapegoats for the regime to, rightly or wrongly, blame for every bad thing that happens. As bad as other regimes may be, it is up to their own people to deal with them so they can achieve true self-determination. When foreigners instigate regime change, the new government they institute is always perceived as serving the interest of the overthrowing country, not the people. Thus we take the blame for bad governance twice. Instead we should stay out of their affairs altogether.
With the exception of the military industrial complex, we all want a more peaceful world. Many are hysterical about the imminent threat of a nuclear Iran. Here are the facts: Iran has never been found out of compliance with the nuclear non-proliferation treaty (NPT) they signed. However, being surrounded by nuclear powers one can understand why they might want to become nuclear capable if only to defend themselves and to be treated more respectfully. After all, we don’t sanction nuclear capable countries. We take diplomatic negotiations a lot more seriously, and we frequently send money to them instead. The non-nuclear countries are the ones we bomb. If Iran was attempting to violate the non-proliferation treaty, they could hardly be blamed, since US foreign policy gives them every incentive to do so.
Tuesday
THE FED'S MONEY MONOPOLY
Last week, in the name of protecting the little guy from Wall Street, the House passed HR 4173 to increase the little guy’s false sense of security in the financial system. This mammoth piece of legislation would massively increase government regulation and oversight in the banking industry under the misguided reasoning that more government could have stopped faulty lending practices, when in actuality it caused them. This bill would also greatly increase the powers of the Federal Reserve, which too many in Congress still see as savior rather than perpetrator in this mess.
One silver lining is that the amendment to audit the Fed is still attached to the bill, and if it survives the Senate, the Fed will no longer operate in secrecy. If any version of HR 4173 becomes law, the Fed will be intervening and bailing out more rather than less, as it will gain enormous new powers in addition to those it already has. Whatever happens, the Fed and its defenders have seen that people are becoming very wary of its methods of operation, and many are downright angry at its very existence. Never again will the Fed be immune from the scrutiny of its critics. This is very positive.
Because of legal tender laws that force acceptance of the dollar, the Fed has absolute power over the currency. This absolute power is leading to the absolute corruption of our currency. The money supply has doubled in the last year or so, which is extremely dangerous. The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility.
Every time hyperinflation rips through an economy, the middle class gets completely wiped out. It is very alarming to watch the purchasing power of an entire life savings reduced to that of a few pennies. Those savings represent years of real labor, real time, effort and sacrifice exchanged for corruptible pieces of paper that politicians and bankers can destroy at whim.
Legal tender laws force the people to become subject to this risk for the benefit of the rulers. Artificial demand for currency allows the authorities to create arbitrary amounts of it to pay for wasteful projects, like frivolous wars and an ever-expanding public sector. This saps the private economy of jobs and purchasing power, yet the temptation proves too great for politicians, time and time again. Our government is no different. Although our dollar has taken nearly a century to lose 98f its purchasing power, the fact that we are all obliged to participate in this slow burn of the economy on pain of imprisonment is anathema to the principles of liberty.
I introduced the Free Competition in Currency Act last week to free the people from these governmental threats. HR 4248 would repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain laws related to coinage. The prospect of people turning away from the dollar towards alternate currencies should provide incentive for Congress to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system.
One silver lining is that the amendment to audit the Fed is still attached to the bill, and if it survives the Senate, the Fed will no longer operate in secrecy. If any version of HR 4173 becomes law, the Fed will be intervening and bailing out more rather than less, as it will gain enormous new powers in addition to those it already has. Whatever happens, the Fed and its defenders have seen that people are becoming very wary of its methods of operation, and many are downright angry at its very existence. Never again will the Fed be immune from the scrutiny of its critics. This is very positive.
Because of legal tender laws that force acceptance of the dollar, the Fed has absolute power over the currency. This absolute power is leading to the absolute corruption of our currency. The money supply has doubled in the last year or so, which is extremely dangerous. The banks seem to be hoarding liquidity now but once these dollars make their way into the economy, hyperinflation and economic chaos will be a real possibility.
Every time hyperinflation rips through an economy, the middle class gets completely wiped out. It is very alarming to watch the purchasing power of an entire life savings reduced to that of a few pennies. Those savings represent years of real labor, real time, effort and sacrifice exchanged for corruptible pieces of paper that politicians and bankers can destroy at whim.
Legal tender laws force the people to become subject to this risk for the benefit of the rulers. Artificial demand for currency allows the authorities to create arbitrary amounts of it to pay for wasteful projects, like frivolous wars and an ever-expanding public sector. This saps the private economy of jobs and purchasing power, yet the temptation proves too great for politicians, time and time again. Our government is no different. Although our dollar has taken nearly a century to lose 98f its purchasing power, the fact that we are all obliged to participate in this slow burn of the economy on pain of imprisonment is anathema to the principles of liberty.
I introduced the Free Competition in Currency Act last week to free the people from these governmental threats. HR 4248 would repeal legal tender laws, prohibit taxation on certain coins and bullion, and repeal certain laws related to coinage. The prospect of people turning away from the dollar towards alternate currencies should provide incentive for Congress to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency and keep us from launching unconstitutional wars that burden our economy to excess. With a sound currency, everyone is better off, not just those who control the monetary system.
RON PAUL TO OBAMA
Former 2008 Republican Presidential candidate and Congressman from Texas Ron Paul recently spoke with Russia Today about President Barack Obama's Nobel Peace Prize and the author of "End the Fed" believes the President should have turned it down.
“He should have turned it down,” says Republican Congressman Ron Paul of Texas on Russia Today this week as U.S. President Barack Obama claimed his Nobel Peace Prize award in Oslo, Norway on Friday.
As the 44th President of the United States adds 30,000 more troops to Afghanistan and authorizing the Central Intelligence Agency to increas unmanned drones in Afghanistan and Pakistan, which expands the war into Pakistan, many feel that Obama did not deserve the prestigious award because he is not promoting peace with his actions.
The Nobel committee said the former Illinois Senator was awarded the prize because of his efforts to increase diplomacy around the world and co-operation with other nations.
The author of “Revolution: A Manifesto” and “A Foreign Policy of Freedom,” Dr. Paul, added, “He’s expanding the war and the people should be embarrassed. I mean how can you believe in preventive war, that is, believe in the principle of starting wars and expanding wars and getting a peace prize. I mean I don’t see any signs of peace. I see the world as more dangerous. More dangerous with the former administration and the danger expands with this administration.”
A recent poll, according to Politico, shows that only 26 per cent of Americans believe Pres. Obama should have won the Nobel Peace Prize.
“He should have turned it down,” says Republican Congressman Ron Paul of Texas on Russia Today this week as U.S. President Barack Obama claimed his Nobel Peace Prize award in Oslo, Norway on Friday.
As the 44th President of the United States adds 30,000 more troops to Afghanistan and authorizing the Central Intelligence Agency to increas unmanned drones in Afghanistan and Pakistan, which expands the war into Pakistan, many feel that Obama did not deserve the prestigious award because he is not promoting peace with his actions.
The Nobel committee said the former Illinois Senator was awarded the prize because of his efforts to increase diplomacy around the world and co-operation with other nations.
The author of “Revolution: A Manifesto” and “A Foreign Policy of Freedom,” Dr. Paul, added, “He’s expanding the war and the people should be embarrassed. I mean how can you believe in preventive war, that is, believe in the principle of starting wars and expanding wars and getting a peace prize. I mean I don’t see any signs of peace. I see the world as more dangerous. More dangerous with the former administration and the danger expands with this administration.”
A recent poll, according to Politico, shows that only 26 per cent of Americans believe Pres. Obama should have won the Nobel Peace Prize.
Saturday
LEAVE AFGHANISTAN
Statement before the Foreign Affairs Committee, United States House of Representatives, December 10, 2009
Mr. Speaker thank you for holding these important hearings on US policy in Afghanistan. I would like to welcome the witnesses, Ambassador Karl W. Eikenberry and General Stanley A. McChrystal, and thank them for appearing before this Committee.
I have serious concerns, however, about the president’s decision to add some 30,000 troops and an as yet undisclosed number of civilian personnel to escalate our Afghan operation. This “surge” will bring US troop levels to approximately those of the Soviets when they occupied Afghanistan with disastrous result back in the 1980s. I fear the US military occupation of Afghanistan may end up similarly unsuccessful.
In late 1986 Soviet armed forces commander, Marshal Sergei Akhromeev, told then-Soviet General Secretary Mikhail Gorbachev, "Military actions in Afghanistan will soon be seven years old. There is no single piece of land in this country which has not been occupied by a Soviet soldier. Nonetheless, the majority of the territory remains in the hands of rebels.” Soon Gorbachev began the Soviet withdrawal from its Afghan misadventure. Thousands were dead on both sides, yet the occupation failed to produce a stable national Afghan government.
Eight years into our own war in Afghanistan the Soviet commander’s words ring eerily familiar. Part of the problem stems from a fundamental misunderstanding of the situation. It is our presence as occupiers that feeds the insurgency. As would be the case if we were invaded and occupied, diverse groups have put aside their disagreements to unify against foreign occupation. Adding more US troops will only assist those who recruit fighters to attack our soldiers and who use the US occupation to convince villages to side with the Taliban.
Proponents of the president’s Afghanistan escalation cite the successful “surge” in Iraq as evidence that this second surge will have similar results. I fear they might be correct about the similar result, but I dispute the success propaganda about Iraq. In fact, the violence in Iraq only temporarily subsided with the completion of the ethnic cleansing of Shi’ites from Sunni neighborhoods and vice versa – and all neighborhoods of Christians. Those Sunni fighters who remained were easily turned against the foreign al-Qaeda presence when offered US money and weapons. We are increasingly seeing this “success” breaking down: sectarian violence is flaring up and this time the various groups are better armed with US-provided weapons. Similarly, the insurgents paid by the US to stop their attacks are increasingly restive now that the Iraqi government is no longer paying bribes on a regular basis. So I am skeptical about reports on the success of the Iraqi surge.
Likewise, we are told that we have to “win” in Afghanistan so that al-Qaeda cannot use Afghan territory to plan further attacks against the US. We need to remember that the attack on the United States on September 11, 2001 was, according to the 9/11 Commission Report, largely planned in the United States (and Germany) by terrorists who were in our country legally. According to the logic of those who endorse military action against Afghanistan because al-Qaeda was physically present, one could argue in favor of US airstrikes against several US states and Germany! It makes no sense. The Taliban allowed al-Qaeda to remain in Afghanistan because both had been engaged, with US assistance, in the insurgency against the Soviet occupation.
Nevertheless, the president’s National Security Advisor, Gen. James Jones, USMC (Ret.), said in a recent interview that less than 100 al-Qaeda remain in Afghanistan and that the chance they would reconstitute a significant presence there was slim. Are we to believe that 30,000 more troops are needed to defeat 100 al-Qaeda fighters? I fear that there will be increasing pressure for the US to invade Pakistan, to where many Taliban and al-Qaeda have escaped. Already CIA drone attacks on Pakistan have destabilized that country and have killed scores of innocents, producing strong anti-American feelings and calls for revenge. I do not see how that contributes to our national security.
The president’s top advisor for Afghanistan and Pakistan, Richard Holbrooke, said recently, “I would say this about defining success in Afghanistan and Pakistan. In the simplest sense, the Supreme Court test for another issue, we’ll know it when we see it.” That does not inspire much confidence.
Supporters of this surge argue that we must train an Afghan national army to take over and strengthen the rule and authority of Kabul. But experts have noted that the ranks of the Afghan national army are increasingly being filled by the Tajik minority at the expense of the Pashtun plurality. US diplomat Matthew Hoh, who resigned as Senior Civilian Representative for the U.S. Government in Zabul Province, noted in his resignation letter that he “fail[s] to see the value or the worth in continued U.S. casualties or expenditures of resources in support of the Afghan government in what is, truly, a 35-year-old civil war.” Mr. Hoh went on to write that “[L]ike the Soviets, we continue to secure and bolster a failing state, while encouraging an ideology and system of government unknown and unwanted by [the Afghan] people.”
I have always opposed nation-building as unconstitutional and ineffective. Afghanistan is no different. Without a real strategy in Afghanistan, without a vision of what victory will look like, we are left with the empty rhetoric of the last administration that “when the Afghan people stand up, the US will stand down.” I am afraid the only solution to the Afghanistan quagmire is a rapid and complete US withdrawal from that country and the region. We cannot afford to maintain this empire and our occupation of these foreign lands is not making us any safer. It is time to leave Afghanistan.
Mr. Speaker thank you for holding these important hearings on US policy in Afghanistan. I would like to welcome the witnesses, Ambassador Karl W. Eikenberry and General Stanley A. McChrystal, and thank them for appearing before this Committee.
I have serious concerns, however, about the president’s decision to add some 30,000 troops and an as yet undisclosed number of civilian personnel to escalate our Afghan operation. This “surge” will bring US troop levels to approximately those of the Soviets when they occupied Afghanistan with disastrous result back in the 1980s. I fear the US military occupation of Afghanistan may end up similarly unsuccessful.
In late 1986 Soviet armed forces commander, Marshal Sergei Akhromeev, told then-Soviet General Secretary Mikhail Gorbachev, "Military actions in Afghanistan will soon be seven years old. There is no single piece of land in this country which has not been occupied by a Soviet soldier. Nonetheless, the majority of the territory remains in the hands of rebels.” Soon Gorbachev began the Soviet withdrawal from its Afghan misadventure. Thousands were dead on both sides, yet the occupation failed to produce a stable national Afghan government.
Eight years into our own war in Afghanistan the Soviet commander’s words ring eerily familiar. Part of the problem stems from a fundamental misunderstanding of the situation. It is our presence as occupiers that feeds the insurgency. As would be the case if we were invaded and occupied, diverse groups have put aside their disagreements to unify against foreign occupation. Adding more US troops will only assist those who recruit fighters to attack our soldiers and who use the US occupation to convince villages to side with the Taliban.
Proponents of the president’s Afghanistan escalation cite the successful “surge” in Iraq as evidence that this second surge will have similar results. I fear they might be correct about the similar result, but I dispute the success propaganda about Iraq. In fact, the violence in Iraq only temporarily subsided with the completion of the ethnic cleansing of Shi’ites from Sunni neighborhoods and vice versa – and all neighborhoods of Christians. Those Sunni fighters who remained were easily turned against the foreign al-Qaeda presence when offered US money and weapons. We are increasingly seeing this “success” breaking down: sectarian violence is flaring up and this time the various groups are better armed with US-provided weapons. Similarly, the insurgents paid by the US to stop their attacks are increasingly restive now that the Iraqi government is no longer paying bribes on a regular basis. So I am skeptical about reports on the success of the Iraqi surge.
Likewise, we are told that we have to “win” in Afghanistan so that al-Qaeda cannot use Afghan territory to plan further attacks against the US. We need to remember that the attack on the United States on September 11, 2001 was, according to the 9/11 Commission Report, largely planned in the United States (and Germany) by terrorists who were in our country legally. According to the logic of those who endorse military action against Afghanistan because al-Qaeda was physically present, one could argue in favor of US airstrikes against several US states and Germany! It makes no sense. The Taliban allowed al-Qaeda to remain in Afghanistan because both had been engaged, with US assistance, in the insurgency against the Soviet occupation.
Nevertheless, the president’s National Security Advisor, Gen. James Jones, USMC (Ret.), said in a recent interview that less than 100 al-Qaeda remain in Afghanistan and that the chance they would reconstitute a significant presence there was slim. Are we to believe that 30,000 more troops are needed to defeat 100 al-Qaeda fighters? I fear that there will be increasing pressure for the US to invade Pakistan, to where many Taliban and al-Qaeda have escaped. Already CIA drone attacks on Pakistan have destabilized that country and have killed scores of innocents, producing strong anti-American feelings and calls for revenge. I do not see how that contributes to our national security.
The president’s top advisor for Afghanistan and Pakistan, Richard Holbrooke, said recently, “I would say this about defining success in Afghanistan and Pakistan. In the simplest sense, the Supreme Court test for another issue, we’ll know it when we see it.” That does not inspire much confidence.
Supporters of this surge argue that we must train an Afghan national army to take over and strengthen the rule and authority of Kabul. But experts have noted that the ranks of the Afghan national army are increasingly being filled by the Tajik minority at the expense of the Pashtun plurality. US diplomat Matthew Hoh, who resigned as Senior Civilian Representative for the U.S. Government in Zabul Province, noted in his resignation letter that he “fail[s] to see the value or the worth in continued U.S. casualties or expenditures of resources in support of the Afghan government in what is, truly, a 35-year-old civil war.” Mr. Hoh went on to write that “[L]ike the Soviets, we continue to secure and bolster a failing state, while encouraging an ideology and system of government unknown and unwanted by [the Afghan] people.”
I have always opposed nation-building as unconstitutional and ineffective. Afghanistan is no different. Without a real strategy in Afghanistan, without a vision of what victory will look like, we are left with the empty rhetoric of the last administration that “when the Afghan people stand up, the US will stand down.” I am afraid the only solution to the Afghanistan quagmire is a rapid and complete US withdrawal from that country and the region. We cannot afford to maintain this empire and our occupation of these foreign lands is not making us any safer. It is time to leave Afghanistan.
Friday
WHAT I THINK.....PAT BUCHANAN
The decades-long campaign of Ron Paul to have the Government Accountability Office do a full audit of the Federal Reserve now has 313 sponsors in the House.
Sometimes perseverance does pay off.
If not derailed by the establishment, the audit may happen.
Yet, many columnists and commentators are aghast.
An auditors' probe, they wail, would imperil the Fed's independence and expose it to pressure from Congress to keep interest rates low and money flowing when the need of the nation and economy might call for tightening.
They cite Paul Volcker, who to squeeze double-digit inflation out of the economy in the late Carter and early Reagan years, drove the prime rate to 21 percent, causing the worst recession since the Depression. Volcker, they claim, prepared the ground for the Reagan tax cuts and seven fat years of prosperity.
That decade, America created 20 million jobs – and another 22 million in the Clinton era. Without Volcker putting the economy through the wringer, it could not have happened. And had he been forced to explain his decisions, Congress would have broken his policy.
Such is the cast for Fed independence.
But if true, what does this say about our republic?
Is it not an admission that, though Congress was created by the Constitution, and the Fed is a creation of Congress, our elected representatives cannot be trusted with the money supply, cannot be trusted with control of the nation's central bank? To have decisions made in the national interest, we need folks who do not have to answer to voters.
If this be true, the republic is closer to its end than its beginning, when Thomas Jefferson said, "In questions of power, let us hear no more of trust in men, but rather bind them down from mischief with the chains of the Constitution."
Others contend that were it not for the independence and vision of Fed Chair Ben Bernanke, the economy might have gone over the cliff and into the abyss after the Lehman Brothers collapse in October 2008.
What opponents of Paul's audit are thus saying is that elected legislators must be kept out of the temple where the great decisions about the economy are made, that these decisions must rest with bankers and economists answerable, as is the Supreme Court, to themselves and no one else.
But has the performance of the Fed been so brilliant any intrusion upon its privacy is sacrilege?
Among the failures of the Fed is the Great Depression. As Milton Friedman related in his "Monetary History of the United States," for which he won a Nobel Prize for Economics, the Fed hugely expanded the money supply in the mid-to-late 1920s.
Following a path of least resistance, the money flowed into the equity markets, where stocks could be bought on 10 percent margin. The market soared, and a huge bubble was created. When it popped, scores of thousands of investors conducted a run on the banks to get their money out to meet their margin calls.
Thousands of banks, short on cash, closed. One-third of the money supply was wiped out, and the Fed failed to replenish the lost blood. Thus did the Fed cause the Great Depression.
Smoot and Hawley were framed.
Moreover, every bubble from the dot-com of the late 1990s to housing this decade is a result of Fed policy. For unless there is an excess of money sloshing around, funds that surge into one market, be it housing, stocks or Third World loans, have to come out of another.
Moreover, if the Fed has not failed dismally in its duty to keep prices stable, how come candy bars and Cokes that cost a nickel in the 1950s cost 50 or 75 cents today, and new Cadillacs that sold for $3,200 in the late 1940s cost $55,000 or $60,000 now? Who is responsible for inflation, if not the Fed?
Moreover, it is now conceded that the Fed, in the early years of this 21st century, kept interest rates near 1 percent for too long, and created the bubble that popped in 2008 and almost brought down our own and the global economies.
Because the Fed can create money out of thin air, we have been able to wage wars on credit, shovel out trillions in foreign aid, World Bank and International Monetary Fund loans, and run humongous budget and trade deficits that have brought our country to the brink of ruin.
And if Bernanke is a genius, how is it he didn't see the train wreck coming and had to double-time it to the Hill with Hank Paulson to plead for $700 billion to bail out AIG, Fannie and Freddie, and buy all that rotten paper on the books of Citibank & Co.?
The greatest economy the world had ever seen has been horribly mismanaged and virtually ruined by the decisions of presidents, Congress and the Federal Reserve. Main Street has been wiped as Wall Street was bailed out. Why?
Bring on the auditors!
Sometimes perseverance does pay off.
If not derailed by the establishment, the audit may happen.
Yet, many columnists and commentators are aghast.
An auditors' probe, they wail, would imperil the Fed's independence and expose it to pressure from Congress to keep interest rates low and money flowing when the need of the nation and economy might call for tightening.
They cite Paul Volcker, who to squeeze double-digit inflation out of the economy in the late Carter and early Reagan years, drove the prime rate to 21 percent, causing the worst recession since the Depression. Volcker, they claim, prepared the ground for the Reagan tax cuts and seven fat years of prosperity.
That decade, America created 20 million jobs – and another 22 million in the Clinton era. Without Volcker putting the economy through the wringer, it could not have happened. And had he been forced to explain his decisions, Congress would have broken his policy.
Such is the cast for Fed independence.
But if true, what does this say about our republic?
Is it not an admission that, though Congress was created by the Constitution, and the Fed is a creation of Congress, our elected representatives cannot be trusted with the money supply, cannot be trusted with control of the nation's central bank? To have decisions made in the national interest, we need folks who do not have to answer to voters.
If this be true, the republic is closer to its end than its beginning, when Thomas Jefferson said, "In questions of power, let us hear no more of trust in men, but rather bind them down from mischief with the chains of the Constitution."
Others contend that were it not for the independence and vision of Fed Chair Ben Bernanke, the economy might have gone over the cliff and into the abyss after the Lehman Brothers collapse in October 2008.
What opponents of Paul's audit are thus saying is that elected legislators must be kept out of the temple where the great decisions about the economy are made, that these decisions must rest with bankers and economists answerable, as is the Supreme Court, to themselves and no one else.
But has the performance of the Fed been so brilliant any intrusion upon its privacy is sacrilege?
Among the failures of the Fed is the Great Depression. As Milton Friedman related in his "Monetary History of the United States," for which he won a Nobel Prize for Economics, the Fed hugely expanded the money supply in the mid-to-late 1920s.
Following a path of least resistance, the money flowed into the equity markets, where stocks could be bought on 10 percent margin. The market soared, and a huge bubble was created. When it popped, scores of thousands of investors conducted a run on the banks to get their money out to meet their margin calls.
Thousands of banks, short on cash, closed. One-third of the money supply was wiped out, and the Fed failed to replenish the lost blood. Thus did the Fed cause the Great Depression.
Smoot and Hawley were framed.
Moreover, every bubble from the dot-com of the late 1990s to housing this decade is a result of Fed policy. For unless there is an excess of money sloshing around, funds that surge into one market, be it housing, stocks or Third World loans, have to come out of another.
Moreover, if the Fed has not failed dismally in its duty to keep prices stable, how come candy bars and Cokes that cost a nickel in the 1950s cost 50 or 75 cents today, and new Cadillacs that sold for $3,200 in the late 1940s cost $55,000 or $60,000 now? Who is responsible for inflation, if not the Fed?
Moreover, it is now conceded that the Fed, in the early years of this 21st century, kept interest rates near 1 percent for too long, and created the bubble that popped in 2008 and almost brought down our own and the global economies.
Because the Fed can create money out of thin air, we have been able to wage wars on credit, shovel out trillions in foreign aid, World Bank and International Monetary Fund loans, and run humongous budget and trade deficits that have brought our country to the brink of ruin.
And if Bernanke is a genius, how is it he didn't see the train wreck coming and had to double-time it to the Hill with Hank Paulson to plead for $700 billion to bail out AIG, Fannie and Freddie, and buy all that rotten paper on the books of Citibank & Co.?
The greatest economy the world had ever seen has been horribly mismanaged and virtually ruined by the decisions of presidents, Congress and the Federal Reserve. Main Street has been wiped as Wall Street was bailed out. Why?
Bring on the auditors!
Wednesday
WHAT I THINK........GARY
Washington has been so out of touch with principles and reality for so long, that they probably think voting for the bill initiated by Ron Paul to edit the Federal Reserve would be political feather in the cap of Ron Paul. But it looks like that isn’t going to be so, as it wasn’t allowed to stand alone, and has been tacked on to another bill which Paul couldn’t allow himself to vote for, so it looks like he’ll be voting against his own bill, which of course, has quickly become something more.
Having said that, the bill itself, assuming it remains as it is, will be a very positive step forward to reining in the Federal Reserve, which has become an unaccountable, secret organization which make deals with foreign governments and foreign central banks with impunity, while making decisions which go far beyond its charter; things like bailing out whatever industry they feel like bailing out, even if they’ve never been delegated the authority to do so. Sectors like the insurance and auto industry, which aren’t in any way under the umbrella of the Federal Reserve.
What the Ron Paul legislation will do, is subject the Federal Reserve to a full audit for the first time in history, via the Government Accountability Office. Unfortunately, as mentioned earlier, it has been grouped together with a finance reform bill which Paul doesn’t believe in. So being a truly principled man, he’ll vote against it, even with his legislation included. The good news for Paul’s bill is, more than likely Paul will be outvoted and the bill will pass, with Paul’s legislation included.
Paul rejects the notion that this will somehow interfere with the independence of the Federal Reserve, as his primary focus in the bill is to force the highly secretive Federal Reserve out into the open so lawmakers and the public can see what they have been doing behind closed doors with foreign nations and domestically. In other words, Paul is asking for transparency at the financial institution through this bill.
As Paul has rightly noted though, it must be big what the Fed is trying to hide, as the opposition is so strong it seems whatever is attempted to be hidden will not be approved of by Americans or its political representatives.
Paul stated in a recent interview: “What they’re talking about when they say they want no political influence, what they’re talking about is they just want secrecy. Why would they be so nervous about us finding this out? It tells you there’s something big going on.”
With the Federal Reserve picking and choosing who they decided to allow to be bailed out, this has also triggered a red flag with Paul, who wants to know through the audit of the Federal Reserve why certain businesses were chosen to be saved and others not. He wants to know why the Federal Reserve went beyond its authority and bailed out those in the auto and insurance industries.
One of the ideas the Federal Reserve has been using to combat the bill is that there could be a perception by outsiders and the public that political pressure could undermine the independence of the Federal Reserve, creating economic stability. Let’s see, you mean like we’re living in today without an audit of the Federal Reserve.
It couldn’t get much worse than we’ve been experiencing over the last couple of years in America, so how would keeping things as they are help in any way concerning the Federal Reserve? They wouldn’t, which is why a full audit of the Federal Reserve is a great thing, even if it is attached to a bill full of other misguided proposals.
So, yes, Ron Paul will vote against his own bill, but for the reason that it has been mingled together with something else Ron Paul doesn’t believe in. Too bad we don’t have a large number of politicians who understand the forces they’re dealing with and yet stick to what they believe in as Ron Paul does.
Having said that, the bill itself, assuming it remains as it is, will be a very positive step forward to reining in the Federal Reserve, which has become an unaccountable, secret organization which make deals with foreign governments and foreign central banks with impunity, while making decisions which go far beyond its charter; things like bailing out whatever industry they feel like bailing out, even if they’ve never been delegated the authority to do so. Sectors like the insurance and auto industry, which aren’t in any way under the umbrella of the Federal Reserve.
What the Ron Paul legislation will do, is subject the Federal Reserve to a full audit for the first time in history, via the Government Accountability Office. Unfortunately, as mentioned earlier, it has been grouped together with a finance reform bill which Paul doesn’t believe in. So being a truly principled man, he’ll vote against it, even with his legislation included. The good news for Paul’s bill is, more than likely Paul will be outvoted and the bill will pass, with Paul’s legislation included.
Paul rejects the notion that this will somehow interfere with the independence of the Federal Reserve, as his primary focus in the bill is to force the highly secretive Federal Reserve out into the open so lawmakers and the public can see what they have been doing behind closed doors with foreign nations and domestically. In other words, Paul is asking for transparency at the financial institution through this bill.
As Paul has rightly noted though, it must be big what the Fed is trying to hide, as the opposition is so strong it seems whatever is attempted to be hidden will not be approved of by Americans or its political representatives.
Paul stated in a recent interview: “What they’re talking about when they say they want no political influence, what they’re talking about is they just want secrecy. Why would they be so nervous about us finding this out? It tells you there’s something big going on.”
With the Federal Reserve picking and choosing who they decided to allow to be bailed out, this has also triggered a red flag with Paul, who wants to know through the audit of the Federal Reserve why certain businesses were chosen to be saved and others not. He wants to know why the Federal Reserve went beyond its authority and bailed out those in the auto and insurance industries.
One of the ideas the Federal Reserve has been using to combat the bill is that there could be a perception by outsiders and the public that political pressure could undermine the independence of the Federal Reserve, creating economic stability. Let’s see, you mean like we’re living in today without an audit of the Federal Reserve.
It couldn’t get much worse than we’ve been experiencing over the last couple of years in America, so how would keeping things as they are help in any way concerning the Federal Reserve? They wouldn’t, which is why a full audit of the Federal Reserve is a great thing, even if it is attached to a bill full of other misguided proposals.
So, yes, Ron Paul will vote against his own bill, but for the reason that it has been mingled together with something else Ron Paul doesn’t believe in. Too bad we don’t have a large number of politicians who understand the forces they’re dealing with and yet stick to what they believe in as Ron Paul does.
WHAT I THINK......TOMOEH MURAKAMI TSE
Ron Paul is used to going it alone. During 20 years in Washington, the libertarian Republican congressman from Texas has proposed doing away with personal income taxes, federal antitrust laws and the minimum wage. He's advocated pulling the United States out of the United Nations, NATO and the International Monetary Fund.
Those efforts have mostly been legislative non-starters. Many of his bills fail to attract a single co-sponsor.
But one of his perennial causes is headed to the House floor Wednesday with widespread support: to audit the Federal Reserve. That measure, which he first introduced in 1983, has the backing of more than 300 legislators and last month won bipartisan approval in the House Financial Services Committee.
The proposal would subject the Fed to unprecedented scrutiny by allowing the Government Accountability Office to audit all central bank operations, including its decisions on interest rates, lending to individual banks and transactions with foreign central banks. Fed officials and many private economists have argued strenuously against the measure, saying it would threaten economic stability by undermining the central bank's independence from political pressure.
"I'd like to know who they bail out and why," said Paul, who brought together a small cult following across the political spectrum in the last presidential election. "I'd like to know how much they pay for securities that they buy. Did they overpay? Why did Goldman Sachs come out well and Lehman Brothers go bankrupt?"
Author of 'End the Fed'
That Paul's proposal has garnered so much support despite opposition from the Obama administration is not so much a testament to his political prowess. Rather, it reflects populist discontent over an institution increasingly blamed for its failure to head off the financial crisis and for its role in rescuing large financial firms that helped cause it.
"He's been dogged about it and stayed with it," said Steve H. Hanke, an economics professor at Johns Hopkins University. "The lesson in salesmanship is illustrated by Paul's actions. However, the consuming public is obviously ready to buy now. . . . There's just a great deal of skepticism out there. And in that environment, a bill that would require more transparency and less secrecy gets some traction."
But Paul's critique of the Fed goes well beyond the lessons of the financial bailout. He believes market forces alone, not the Fed, should set interest rates. His best-selling book is called "End the Fed." He has a separate bill to abolish the Fed altogether. (He is the lone sponsor.)
Paul said in an interview that his measure is strictly about transparency at the "all-powerful" Federal Reserve.
"What they're talking about when they say they want no political influence, what they're talking about is they just want secrecy," Paul said. "Why would they be so nervous about us finding this out? It tells you there's something big going on."
Leaders at the Fed have repeatedly stressed to Congress their increased efforts at transparency. Fed officials have noted that the central bank is disclosing more information than ever about its operations and balance sheet, which has expanded by more than $1 trillion as the Fed has carried out unprecedented actions to stabilize the financial system. Fed officials have also said they would work with Congress to provide additional information about how taxpayer funds are being used.
First elected to Congress in 1976, Paul has earned the nickname Dr. No from colleagues for his record of voting against almost anything he sees as intruding on free markets or amounting to government overreach.
He was one of only a few Republicans to vote against the war in Iraq. He opposed federal aid to Hurricane Katrina victims. He has called for abolishing the Internal Revenue Service, and during his career as an obstetrician-gynecologist in Texas, Paul saw some patients for free rather than accept Medicare or Medicaid, he recalled. None of his five grown children took out federal student loans.
Paul's principled, outside-the-mainstream stance has left him with few legislative victories. Of the nearly 200 bills Paul has proposed in the latest three congressional sessions, only two have made it to the House floor. His Fed audit bill, now part of broader legislation overhauling the regulation of financial markets, is by far the most popular.
Driven by beliefs
His bill's opponents do not suggest that Paul is driven by anything other than his beliefs.
Paul said his views on government, the economy and monetary policy developed gradually. He enrolled in his first economics class at Gettysburg College, where he graduated in 1957 with a degree in biology. While in medical school, he continued to read Ludwig von Mises and F.A. Hayek, Austrian economists who opposed central economic planning.
In the 1970s, the Nixon administration suspended the dollar's convertibility into gold and made the decision to impose import surcharges and wage and price controls. Then came the collapse of the Bretton Woods system of fixed exchange rates, which had defined the global economy since the aftermath of World War II.
Despite his unusual success in advancing the proposal, however, Paul is unlikely to cast a rare "yes" vote for it. That's because it is part of the bill proposing broad new financial regulation, something Paul simply cannot approve.
Those efforts have mostly been legislative non-starters. Many of his bills fail to attract a single co-sponsor.
But one of his perennial causes is headed to the House floor Wednesday with widespread support: to audit the Federal Reserve. That measure, which he first introduced in 1983, has the backing of more than 300 legislators and last month won bipartisan approval in the House Financial Services Committee.
The proposal would subject the Fed to unprecedented scrutiny by allowing the Government Accountability Office to audit all central bank operations, including its decisions on interest rates, lending to individual banks and transactions with foreign central banks. Fed officials and many private economists have argued strenuously against the measure, saying it would threaten economic stability by undermining the central bank's independence from political pressure.
"I'd like to know who they bail out and why," said Paul, who brought together a small cult following across the political spectrum in the last presidential election. "I'd like to know how much they pay for securities that they buy. Did they overpay? Why did Goldman Sachs come out well and Lehman Brothers go bankrupt?"
Author of 'End the Fed'
That Paul's proposal has garnered so much support despite opposition from the Obama administration is not so much a testament to his political prowess. Rather, it reflects populist discontent over an institution increasingly blamed for its failure to head off the financial crisis and for its role in rescuing large financial firms that helped cause it.
"He's been dogged about it and stayed with it," said Steve H. Hanke, an economics professor at Johns Hopkins University. "The lesson in salesmanship is illustrated by Paul's actions. However, the consuming public is obviously ready to buy now. . . . There's just a great deal of skepticism out there. And in that environment, a bill that would require more transparency and less secrecy gets some traction."
But Paul's critique of the Fed goes well beyond the lessons of the financial bailout. He believes market forces alone, not the Fed, should set interest rates. His best-selling book is called "End the Fed." He has a separate bill to abolish the Fed altogether. (He is the lone sponsor.)
Paul said in an interview that his measure is strictly about transparency at the "all-powerful" Federal Reserve.
"What they're talking about when they say they want no political influence, what they're talking about is they just want secrecy," Paul said. "Why would they be so nervous about us finding this out? It tells you there's something big going on."
Leaders at the Fed have repeatedly stressed to Congress their increased efforts at transparency. Fed officials have noted that the central bank is disclosing more information than ever about its operations and balance sheet, which has expanded by more than $1 trillion as the Fed has carried out unprecedented actions to stabilize the financial system. Fed officials have also said they would work with Congress to provide additional information about how taxpayer funds are being used.
First elected to Congress in 1976, Paul has earned the nickname Dr. No from colleagues for his record of voting against almost anything he sees as intruding on free markets or amounting to government overreach.
He was one of only a few Republicans to vote against the war in Iraq. He opposed federal aid to Hurricane Katrina victims. He has called for abolishing the Internal Revenue Service, and during his career as an obstetrician-gynecologist in Texas, Paul saw some patients for free rather than accept Medicare or Medicaid, he recalled. None of his five grown children took out federal student loans.
Paul's principled, outside-the-mainstream stance has left him with few legislative victories. Of the nearly 200 bills Paul has proposed in the latest three congressional sessions, only two have made it to the House floor. His Fed audit bill, now part of broader legislation overhauling the regulation of financial markets, is by far the most popular.
Driven by beliefs
His bill's opponents do not suggest that Paul is driven by anything other than his beliefs.
Paul said his views on government, the economy and monetary policy developed gradually. He enrolled in his first economics class at Gettysburg College, where he graduated in 1957 with a degree in biology. While in medical school, he continued to read Ludwig von Mises and F.A. Hayek, Austrian economists who opposed central economic planning.
In the 1970s, the Nixon administration suspended the dollar's convertibility into gold and made the decision to impose import surcharges and wage and price controls. Then came the collapse of the Bretton Woods system of fixed exchange rates, which had defined the global economy since the aftermath of World War II.
Despite his unusual success in advancing the proposal, however, Paul is unlikely to cast a rare "yes" vote for it. That's because it is part of the bill proposing broad new financial regulation, something Paul simply cannot approve.
Monday
WHO WANTS WAR?
If anyone still doubted that this administration’s foreign policy would bring any kind of change, this week’s debate on Afghanistan should remove all doubt. The President’s stated justifications for sending more troops to Afghanistan and escalating war amount to little more than recycling all the false reasons we began the conflict. It is so discouraging to see this coming from our new leadership, when the people were hoping for peace. New polls show that 49 percent of the people favor minding our own business on the world stage, up from 30 percent in 2002. Perpetual war is not solving anything. Indeed continually seeking out monsters to destroy abroad only threatens our security here at home as international resentment against us builds. The people understand this and are becoming increasingly frustrated at not being heard by the decision-makers. The leaders say some things the people want to hear, but change never comes.
One has to ask, if the people who elected these leaders so obviously do not want these wars, who does? Eisenhower warned of the increasing power and influence of the military industrial complex and it seems his worst fears have come true. He believed in a strong national defense, as do I, but warned that the building up of permanent military and weapons industries could prove dangerous if their influence got out of hand.
After all, if you make your money on war, peace does you no good. With trillions of dollars at stake, there is tremendous incentive to keep the decision makers fearful of every threat in the world, real or imagined, present or future, no matter how ridiculous and far-fetched. The Bush Doctrine demonstrates how very successful the war lobby was philosophically with the last administration. And they are succeeding just as well with this one, in spite of having the so-called “peace candidate” in office.
We now find ourselves in another foreign policy quagmire with little hope of victory, and not even a definition of victory. Eisenhower said that only an alert and informed electorate could keep these war racketeering pressures at bay. He was right, and the key is for the people to ensure that their elected leaders follow the Constitution. The Constitution requires a declaration of war by Congress in order to legitimately go to war. Bypassing this critical step makes it far too easy to waste resources on nebulous and never-ending conflicts. Without clear goals, the conflicts last forever and drain the country of blood and treasure.
The drafters of the Constitution gave Congress the power to declare war precisely because they feared allowing the executive unfettered discretion in military affairs. They understood that making it easy for leaders to wage foreign wars would threaten domestic liberties.
Responses to attacks on our soil should be swift and brief. Wars we fight should always be defensive, clearly defined and Constitutional. The Bush Doctrine of targeting potential enemies before they do anything to us is dangerously vague and easily abused. There is nothing left to win in Afghanistan and everything to lose. Today’s military actions are yet another futile exercise in nation building and have nothing to do with our nation’s security, or with 9/11. Most experts agree that Bin Laden and anyone remotely connected to 9/11 left Afghanistan long ago, but our troops remain. The pressures of the war racketeers need to be put in check before we are brought to our knees by them. Unfortunately, it will require a mighty effort by the people to get the leadership to finally listen.
One has to ask, if the people who elected these leaders so obviously do not want these wars, who does? Eisenhower warned of the increasing power and influence of the military industrial complex and it seems his worst fears have come true. He believed in a strong national defense, as do I, but warned that the building up of permanent military and weapons industries could prove dangerous if their influence got out of hand.
After all, if you make your money on war, peace does you no good. With trillions of dollars at stake, there is tremendous incentive to keep the decision makers fearful of every threat in the world, real or imagined, present or future, no matter how ridiculous and far-fetched. The Bush Doctrine demonstrates how very successful the war lobby was philosophically with the last administration. And they are succeeding just as well with this one, in spite of having the so-called “peace candidate” in office.
We now find ourselves in another foreign policy quagmire with little hope of victory, and not even a definition of victory. Eisenhower said that only an alert and informed electorate could keep these war racketeering pressures at bay. He was right, and the key is for the people to ensure that their elected leaders follow the Constitution. The Constitution requires a declaration of war by Congress in order to legitimately go to war. Bypassing this critical step makes it far too easy to waste resources on nebulous and never-ending conflicts. Without clear goals, the conflicts last forever and drain the country of blood and treasure.
The drafters of the Constitution gave Congress the power to declare war precisely because they feared allowing the executive unfettered discretion in military affairs. They understood that making it easy for leaders to wage foreign wars would threaten domestic liberties.
Responses to attacks on our soil should be swift and brief. Wars we fight should always be defensive, clearly defined and Constitutional. The Bush Doctrine of targeting potential enemies before they do anything to us is dangerously vague and easily abused. There is nothing left to win in Afghanistan and everything to lose. Today’s military actions are yet another futile exercise in nation building and have nothing to do with our nation’s security, or with 9/11. Most experts agree that Bin Laden and anyone remotely connected to 9/11 left Afghanistan long ago, but our troops remain. The pressures of the war racketeers need to be put in check before we are brought to our knees by them. Unfortunately, it will require a mighty effort by the people to get the leadership to finally listen.
HEALTHCARE FREEDOM OF HEALTHCARE BUREAUCRACY?
The U.S. Preventive Task Force caused quite a stir recently when they revised their recommendations on the frequency and age for women to get mammograms. Many have speculated on the timing for this government-funded report, with the Senate vote on health care looming, and cost estimates being watched closely. Just the hint that the government would risk women’s health to cut costs is causing outrage on both sides of the aisle.
Even the administration is alarmed at its own panel’s recommendation. One official, the Secretary of Health and Human Services, Kathleen Sebelius told women to ignore the new guidelines, keep doing what they are doing and make the best decisions for themselves after consulting with their doctors.
This sounds like an excellent idea to me. As a physician myself, I understand the importance of ensuring that patients are able to consult their doctors and make their own decisions without interference from government bureaucrats or government-favored corporations.
However, I am confused by the administration’s reasoning and apparent change of heart. Have they reversed their position on healthcare reform and now decided that patients and doctors should be in control of individual healthcare decisions? Or are they still in the healthcare central planning business? The healthcare reform plans currently aim to empower Congress to dictate to insurers minimal standards of coverage. Those government standards will ultimately be determined by politicians and bureaucrats, not individual patients and doctors.
It is naive to think that recommendations by an authoritative government panel will never be used to deny services to people that want them. It is sad to think that people will be forced to spend their hard-earned money for a one-size fits all, government mandated healthcare delivery model, but then have to scrape together additional funds to pay out of pocket for healthcare they really want or need – that is, if the government allows them to at all. After all, the federal government currently forbids Medicare beneficiaries from spending their own money on services covered by Medicare, if for whatever reason they need to. Why wouldn’t the government eventually apply these kinds of restrictions to everyone, if they are successful with this takeover? Beware of the supposed gifts offered to you by government, for when it gives you things with one hand, the other hand takes away your liberty and independence.
It remains to be seen what provisions will be in the final bill. We do know we have no funds to pay for it except for debt and money printed out of thin air. We know that the nation’s creditors are getting very nervous about the government’s continuous spending sprees and bailouts. We know this healthcare bill, like all government programs, will be expensive.
There will be a day of reckoning when the credit stops and the bills for all this spending come due. When that day comes and politicians and bureaucrats have to deal with reality, it will be very uncomfortable to find yourself in their liability column, which is where healthcare reform will put many more Americans.
Even the administration is alarmed at its own panel’s recommendation. One official, the Secretary of Health and Human Services, Kathleen Sebelius told women to ignore the new guidelines, keep doing what they are doing and make the best decisions for themselves after consulting with their doctors.
This sounds like an excellent idea to me. As a physician myself, I understand the importance of ensuring that patients are able to consult their doctors and make their own decisions without interference from government bureaucrats or government-favored corporations.
However, I am confused by the administration’s reasoning and apparent change of heart. Have they reversed their position on healthcare reform and now decided that patients and doctors should be in control of individual healthcare decisions? Or are they still in the healthcare central planning business? The healthcare reform plans currently aim to empower Congress to dictate to insurers minimal standards of coverage. Those government standards will ultimately be determined by politicians and bureaucrats, not individual patients and doctors.
It is naive to think that recommendations by an authoritative government panel will never be used to deny services to people that want them. It is sad to think that people will be forced to spend their hard-earned money for a one-size fits all, government mandated healthcare delivery model, but then have to scrape together additional funds to pay out of pocket for healthcare they really want or need – that is, if the government allows them to at all. After all, the federal government currently forbids Medicare beneficiaries from spending their own money on services covered by Medicare, if for whatever reason they need to. Why wouldn’t the government eventually apply these kinds of restrictions to everyone, if they are successful with this takeover? Beware of the supposed gifts offered to you by government, for when it gives you things with one hand, the other hand takes away your liberty and independence.
It remains to be seen what provisions will be in the final bill. We do know we have no funds to pay for it except for debt and money printed out of thin air. We know that the nation’s creditors are getting very nervous about the government’s continuous spending sprees and bailouts. We know this healthcare bill, like all government programs, will be expensive.
There will be a day of reckoning when the credit stops and the bills for all this spending come due. When that day comes and politicians and bureaucrats have to deal with reality, it will be very uncomfortable to find yourself in their liability column, which is where healthcare reform will put many more Americans.
Monday
WHAT I THINK......SCOTT LANMAN
The Federal Reserve’s shield from congressional audits of interest-rate decisions took a blow from lawmakers who want to open the central bank’s books to greater congressional scrutiny.
The House Financial Services Committee yesterday advanced a proposal to remove a three-decade ban on audits of monetary policy and carry out an examination of the central bank. The plan was offered by Representative Ron Paul, a Republican from Texas who has called for the abolition of the Fed, and based on a bill with more than 300 co-sponsors.
Lawmakers say the Fed hasn’t adequately accounted for putting taxpayer funds at risk, including aid to companies such as Citigroup Inc. and American International Group Inc. Fed Chairman Ben S. Bernanke has opposed the Paul legislation, saying it may open the door to interference in monetary policy.
Yesterday’s vote is “probably not going to be helpful in terms of keeping inflation expectations low and supporting the dollar,” said Michael Feroli, a JPMorgan Chase & Co. economist in New York and former Fed researcher. The central bank “should do whatever it takes to stop this from going forward and eroding confidence in the Fed’s independence,” he said.
The broader bill on financial regulation is subject to a vote by the committee, then must be approved by the House and Senate and signed into law by President Barack Obama.
“This is the bill that would allow the people to win over the special interests,” Paul said during debate on the measures yesterday. “There is no doubt that the individuals opposing this amendment represent the secrecy of the Federal Reserve.” An audit “shouldn’t hurt them in any way,” he said.
‘May Be Revisited’
Barney Frank, the Massachusetts Democrat who chairs the committee and opposed the Paul measure, said the issue “may be revisited” when the legislation reaches the House floor.
“It’s going to be seen as weakening the independence of monetary policy with consequent negative implications,” Frank told reporters after the vote. “People are going to be worried about the impact on the dollar, on the interest rate.”
The dollar strengthened to $1.4925 per euro late yesterday from $1.4963. The dollar has weakened 6.5 percent against the euro this year.
Paul, who wrote a best-selling book this year titled “End the Fed,” said provisions in his amendment would limit interference in monetary policy. The measure, co-sponsored by Representative Alan Grayson, a Democrat from Florida, would exclude any unreleased transcripts or minutes of Fed policy meetings. It calls for an audit of the Fed and its 12 regional banks by the Government Accountability Office within a year after enactment.
Limited Audits
The committee voted first, 43-26, to substitute Paul’s proposal for a Democratic measure to retain the ban on audits of monetary policy while requiring more limited audits. About one- third of Democrats joined the unanimous Republicans on the vote. Then, in a voice vote, the committee attached the Paul measure to the broader bill.
Frank said he expects to finish the legislation in committee on Dec. 1, delaying a vote he had scheduled for yesterday until after lawmakers return from the Thanksgiving holiday. He supported a competing measure from Representative Mel Watt, a North Carolina Democrat, to retain the ban on auditing monetary policy.
“Perception is very important in monetary policy,” Frank said. He said he was concerned that “inflationary expectations will be given a boost if we adopt the Paul” measure.
The Fed’s powers and rate-setting independence are under threat on several fronts in Congress. Separately yesterday, the Senate Banking Committee began debate on legislation that would strip the Fed of bank-supervision powers and give lawmakers greater say in naming the officials who vote on monetary policy.
Lax Oversight
Paul and other lawmakers have accused the Fed of lax oversight of banks and failing to avert the financial crisis. He said Watt’s measure instead would put further restrictions on the power of the government to audit the Fed, contrary to its sponsor’s assertion.
“This actually takes away some auditing authority,” said Paul. “This amendment eliminates all the benefits that people see coming from” Paul’s legislation, he said.
Watt cautioned against succumbing to popular anger at the Fed during debate on the measures.
“Everybody would like to beat up on the Fed and call them the bad guys,” Watt said. “So if we make this decision on a political basis, I know what the result will be.”
Also yesterday, lawmakers attached, by voice vote, a separate Republican measure to audit all Fed emergency-loan actions “during the current economic crisis.” Legislators may need to work out how to combine the amendments when the bill goes to the House floor.
The House Financial Services Committee yesterday advanced a proposal to remove a three-decade ban on audits of monetary policy and carry out an examination of the central bank. The plan was offered by Representative Ron Paul, a Republican from Texas who has called for the abolition of the Fed, and based on a bill with more than 300 co-sponsors.
Lawmakers say the Fed hasn’t adequately accounted for putting taxpayer funds at risk, including aid to companies such as Citigroup Inc. and American International Group Inc. Fed Chairman Ben S. Bernanke has opposed the Paul legislation, saying it may open the door to interference in monetary policy.
Yesterday’s vote is “probably not going to be helpful in terms of keeping inflation expectations low and supporting the dollar,” said Michael Feroli, a JPMorgan Chase & Co. economist in New York and former Fed researcher. The central bank “should do whatever it takes to stop this from going forward and eroding confidence in the Fed’s independence,” he said.
The broader bill on financial regulation is subject to a vote by the committee, then must be approved by the House and Senate and signed into law by President Barack Obama.
“This is the bill that would allow the people to win over the special interests,” Paul said during debate on the measures yesterday. “There is no doubt that the individuals opposing this amendment represent the secrecy of the Federal Reserve.” An audit “shouldn’t hurt them in any way,” he said.
‘May Be Revisited’
Barney Frank, the Massachusetts Democrat who chairs the committee and opposed the Paul measure, said the issue “may be revisited” when the legislation reaches the House floor.
“It’s going to be seen as weakening the independence of monetary policy with consequent negative implications,” Frank told reporters after the vote. “People are going to be worried about the impact on the dollar, on the interest rate.”
The dollar strengthened to $1.4925 per euro late yesterday from $1.4963. The dollar has weakened 6.5 percent against the euro this year.
Paul, who wrote a best-selling book this year titled “End the Fed,” said provisions in his amendment would limit interference in monetary policy. The measure, co-sponsored by Representative Alan Grayson, a Democrat from Florida, would exclude any unreleased transcripts or minutes of Fed policy meetings. It calls for an audit of the Fed and its 12 regional banks by the Government Accountability Office within a year after enactment.
Limited Audits
The committee voted first, 43-26, to substitute Paul’s proposal for a Democratic measure to retain the ban on audits of monetary policy while requiring more limited audits. About one- third of Democrats joined the unanimous Republicans on the vote. Then, in a voice vote, the committee attached the Paul measure to the broader bill.
Frank said he expects to finish the legislation in committee on Dec. 1, delaying a vote he had scheduled for yesterday until after lawmakers return from the Thanksgiving holiday. He supported a competing measure from Representative Mel Watt, a North Carolina Democrat, to retain the ban on auditing monetary policy.
“Perception is very important in monetary policy,” Frank said. He said he was concerned that “inflationary expectations will be given a boost if we adopt the Paul” measure.
The Fed’s powers and rate-setting independence are under threat on several fronts in Congress. Separately yesterday, the Senate Banking Committee began debate on legislation that would strip the Fed of bank-supervision powers and give lawmakers greater say in naming the officials who vote on monetary policy.
Lax Oversight
Paul and other lawmakers have accused the Fed of lax oversight of banks and failing to avert the financial crisis. He said Watt’s measure instead would put further restrictions on the power of the government to audit the Fed, contrary to its sponsor’s assertion.
“This actually takes away some auditing authority,” said Paul. “This amendment eliminates all the benefits that people see coming from” Paul’s legislation, he said.
Watt cautioned against succumbing to popular anger at the Fed during debate on the measures.
“Everybody would like to beat up on the Fed and call them the bad guys,” Watt said. “So if we make this decision on a political basis, I know what the result will be.”
Also yesterday, lawmakers attached, by voice vote, a separate Republican measure to audit all Fed emergency-loan actions “during the current economic crisis.” Legislators may need to work out how to combine the amendments when the bill goes to the House floor.
AUDIT THE FED ATTACHED AS AN AMENDMENT
I was pleased last week when we won a vote in the Financial Services Committee to include language from the Audit the Fed bill HR1207 in the upcoming financial regulatory reform bill. As it stands now, if HR 3996 passes, because of this action, the Federal Reserve’s entire balance sheet will be opened up to a GAO audit. We will at last have a chance to find out what happened to the trillions of dollars the Fed has been giving out.
Finally, the blanket restrictions on GAO audits of the Fed that have existed since 1978 will be removed. All items on the Fed’s balance sheet will be auditable, including all credit facilities, all securities purchase programs, and all agreements with foreign central banks. To calm fears that we might be trying to substitute congressional action for Fed mischief in tinkering with monetary policy, we agreed to a 180 day lag time before details of the Fed’s market actions are released and included language to state explicitly that nothing in the amendment should be construed as interference in or dictation of monetary policy by Congress or the GAO. This left no reasonable objections standing and the amendment passed with a vote of 43 to 26.
This was a major triumph for transparency and accountability in government. With unprecedented turmoil in the financial markets, the people are demanding to know and understand the extent of the Federal Reserve’s involvement in the creation of out-of-control business cycles, who they are helping, and how. We need information. The excuses for not giving out this information are flimsy at best, and the passage of this amendment is a major step to finally getting at the truth.
Of course I could not have done this without the help and support of many other members who have been strong allies in this fight. Having over 300 cosponsors was obviously helpful.
However, as great as this victory is, we have to remember that this amendment is attached to a bill that would give sweeping new powers to the Federal Reserve. The Fed has taken its mandate to maintain stable prices and full employment and used its immense power to help elite friends at the great expense of everyone else. The answer is not to increase their powers and ability to interfere in the economy, but that is what the legislation will do. It is a disaster waiting to happen, and unfortunately it looks as if it will pass.
At least with the Audit the Fed amendment attached to the bill, the Fed will not be able to do its destructive work in secret. The people will know exactly who the beneficiaries are of this immoral system of money management.
Finally, the blanket restrictions on GAO audits of the Fed that have existed since 1978 will be removed. All items on the Fed’s balance sheet will be auditable, including all credit facilities, all securities purchase programs, and all agreements with foreign central banks. To calm fears that we might be trying to substitute congressional action for Fed mischief in tinkering with monetary policy, we agreed to a 180 day lag time before details of the Fed’s market actions are released and included language to state explicitly that nothing in the amendment should be construed as interference in or dictation of monetary policy by Congress or the GAO. This left no reasonable objections standing and the amendment passed with a vote of 43 to 26.
This was a major triumph for transparency and accountability in government. With unprecedented turmoil in the financial markets, the people are demanding to know and understand the extent of the Federal Reserve’s involvement in the creation of out-of-control business cycles, who they are helping, and how. We need information. The excuses for not giving out this information are flimsy at best, and the passage of this amendment is a major step to finally getting at the truth.
Of course I could not have done this without the help and support of many other members who have been strong allies in this fight. Having over 300 cosponsors was obviously helpful.
However, as great as this victory is, we have to remember that this amendment is attached to a bill that would give sweeping new powers to the Federal Reserve. The Fed has taken its mandate to maintain stable prices and full employment and used its immense power to help elite friends at the great expense of everyone else. The answer is not to increase their powers and ability to interfere in the economy, but that is what the legislation will do. It is a disaster waiting to happen, and unfortunately it looks as if it will pass.
At least with the Audit the Fed amendment attached to the bill, the Fed will not be able to do its destructive work in secret. The people will know exactly who the beneficiaries are of this immoral system of money management.
Wednesday
WHAT I THINK.......GARY
For those who understand what has happened in reference to regulators before and during the current economic crisis, the idea of taking authority and responsibility away from the Federal Reserve and placing it within a new super regulatory agency, as is being proposed, is ignorant, to be kind.
Ron Paul has it right when he introduced legislation which would require a complete audit of the Federal Reserve in order to see what deals they’ve been making, how they distributed money, and how they’ve been interacting with foreign governments and banking institutions.
Now that Paul’s bill has been pretty much gutted and useless (although Paul is attempting to get it reinstated with its original language), the idea of simply creating what would essentially be another Federal Reserve under a different name, but with evidently broader powers, is a futile attempt at trying to fix an economic system, that for the most part, hasn’t received the proper diagnosis yet.
This is shown in the introduction by Chris Dodd’s Banking Committee of 1,136 pages of draft regulations, which would basically transfer power from the Federal Reserve and the FDIC to this new supervisory, regulatory agency, which the sitting president and a board would appoint members to.
What the new agency would purportedly do would be to look for and find so-called too big to fail banks and then provide a thorough oversight of the financial institution. Supposedly a mechanism would be put in place which would help to wind down those financial institutions that aren’t banks in order to lower amount of money taxpayers would have to pay for to keep them afloat.
Just that last idea alone continues to show that this new agency is already set to fail, if it’s allowed to be created, as politicians continue to ignore the fact that taxpayers aren’t and shouldn’t be required to bail out businesses, and as long as that’s assumed to be an important part of the economic story, no meaningful changes will happen.
Here’s another couple of reasons we need to forget about the continuing drive toward more regulation, which has already been proven to have failed: those reasons are called Fannie and Freddie! Already these two government-backed entities have cost taxpayers about $112 billion to keep them going. Yet we’re being led to believe more oversight and regulation will change things?
Some in the government have been attempting to make it look like loose regulations have been a big part of the problem, but in fact the banking and financial industry, while admittedly had been loosed some concerning regulations, is still one of the more regulated industries in the country, and adding more regulations isn’t going to take care of what isn’t the real problem.
If you have a broken leg it isn’t going to help to have chemotherapy as a treatment for you. It’s not relevant and isn’t going to help you in any way. Yet that is precisely what is being done when attempts to create this new supervisory agency are being put forth.
Another thing to consider is the Savings & Loan crisis which generated tons of new regulations to keep something like that from happening again. You see where that got us.
So when Chris Dodd stood before the cameras recently and stated that the Federal Reserve, as far as protecting consumers and regulation were an “abysmal failure,” it’s laughable when taken in the light of Fannie and Freddie, along with the regulations instituted following the Savings & Loan crisis.
I am no defender of the Federal Reserve and believe they should be abolished, but not in order to create a new agency which will no doubt create the same problems by misunderstanding what the financial disease is.
What is that financial disease? It has been the monetary policies implemented by the Federal Reserve for decades, which isn’t even being talked about or focused on by those in government, even though Ron Paul, the most informed politician on financial matters and economics, continues to hammer at them and repeat over and over that this is the source of the past and existing economic problems we face.
Until monetary policy and the Federal Reserve become the real focus of our economic problems, nothing will be changed in any way, and we’ll be doomed to repeat this over and over again until they are.
Ron Paul has it right when he introduced legislation which would require a complete audit of the Federal Reserve in order to see what deals they’ve been making, how they distributed money, and how they’ve been interacting with foreign governments and banking institutions.
Now that Paul’s bill has been pretty much gutted and useless (although Paul is attempting to get it reinstated with its original language), the idea of simply creating what would essentially be another Federal Reserve under a different name, but with evidently broader powers, is a futile attempt at trying to fix an economic system, that for the most part, hasn’t received the proper diagnosis yet.
This is shown in the introduction by Chris Dodd’s Banking Committee of 1,136 pages of draft regulations, which would basically transfer power from the Federal Reserve and the FDIC to this new supervisory, regulatory agency, which the sitting president and a board would appoint members to.
What the new agency would purportedly do would be to look for and find so-called too big to fail banks and then provide a thorough oversight of the financial institution. Supposedly a mechanism would be put in place which would help to wind down those financial institutions that aren’t banks in order to lower amount of money taxpayers would have to pay for to keep them afloat.
Just that last idea alone continues to show that this new agency is already set to fail, if it’s allowed to be created, as politicians continue to ignore the fact that taxpayers aren’t and shouldn’t be required to bail out businesses, and as long as that’s assumed to be an important part of the economic story, no meaningful changes will happen.
Here’s another couple of reasons we need to forget about the continuing drive toward more regulation, which has already been proven to have failed: those reasons are called Fannie and Freddie! Already these two government-backed entities have cost taxpayers about $112 billion to keep them going. Yet we’re being led to believe more oversight and regulation will change things?
Some in the government have been attempting to make it look like loose regulations have been a big part of the problem, but in fact the banking and financial industry, while admittedly had been loosed some concerning regulations, is still one of the more regulated industries in the country, and adding more regulations isn’t going to take care of what isn’t the real problem.
If you have a broken leg it isn’t going to help to have chemotherapy as a treatment for you. It’s not relevant and isn’t going to help you in any way. Yet that is precisely what is being done when attempts to create this new supervisory agency are being put forth.
Another thing to consider is the Savings & Loan crisis which generated tons of new regulations to keep something like that from happening again. You see where that got us.
So when Chris Dodd stood before the cameras recently and stated that the Federal Reserve, as far as protecting consumers and regulation were an “abysmal failure,” it’s laughable when taken in the light of Fannie and Freddie, along with the regulations instituted following the Savings & Loan crisis.
I am no defender of the Federal Reserve and believe they should be abolished, but not in order to create a new agency which will no doubt create the same problems by misunderstanding what the financial disease is.
What is that financial disease? It has been the monetary policies implemented by the Federal Reserve for decades, which isn’t even being talked about or focused on by those in government, even though Ron Paul, the most informed politician on financial matters and economics, continues to hammer at them and repeat over and over that this is the source of the past and existing economic problems we face.
Until monetary policy and the Federal Reserve become the real focus of our economic problems, nothing will be changed in any way, and we’ll be doomed to repeat this over and over again until they are.
Monday
COMPETITION WITH THE GOVERNMENT?
Last Saturday many concerned Americans watched in horror as the House passed the healthcare reform bill. If this bill makes it through the Senate, it would massively overhaul the way healthcare is delivered in this country. Today, obviously, we don’t have a perfect system, but this legislation takes all the mistakes we are making with healthcare and makes them worse. Most of what is wrong with healthcare stems from decades of government intervention and the resulting unintended consequences.
But the government’s prescription for the ills caused by intervention is always more intervention. We see this not only in healthcare policy, but also in foreign policy, in economic policy, and in monetary policy - basically, in all areas of public policy. It was even claimed that the House bill would increase competition in healthcare, and thereby improve the private sector’s business model for insurance.
It is fascinating that politicians would use the language of the free market in this way to justify more corporatism. This demonstrates a couple of things. One, that politicians truly do not understand the very basic tenets of a free market. By definition, a free market is free from government intervention. But once a little intervention is accepted as legitimate, politicians will blame the problems created by their intervention on the free market and present themselves as saviors that must intervene even more.
It also demonstrates that politicians know that Americans still believe the free market is a good thing. People know and understand that competition among businesses is better for the consumer than a monopoly. However, competition between a private business and a government or government-favored entity is not real competition.
In real competition, your competitor can go bankrupt if they do a bad job. Everyone knows a government program is forever, no matter how poorly it performs. In real competition, efficiency is necessary for survival. In government programs, waste is rewarded as budgets are often determined by how much money a department is able to consume in a year. In real competition, one business does not have regulatory or taxation authority over its competitors. In real competition, businesses get sued and punished for breaking contracts and defrauding people, and are kept accountable in this way. But just try to sue the government when you are unjustly harmed by it!
The reason real competition is a good thing is because good businesses get bad ones out of the consumer’s way. Can the government put someone out of business? Most certainly! But it will have the opposite effect: an otherwise good business will be replaced by a poorly performing government agency, or a government-favored monolithic business that behaves almost like a government agency.
If Washington really wanted to give consumers more choices they would remove legislative and regulatory barriers to competition across state lines for health insurers. They would remove barriers for new and innovative models of healthcare and tort reform. They wouldn’t have run so many church and charitable hospitals out of business. Washington is keenly interested in healthcare reform, but it is certainly not going to increase competition or to expand your options for healthcare.
But the government’s prescription for the ills caused by intervention is always more intervention. We see this not only in healthcare policy, but also in foreign policy, in economic policy, and in monetary policy - basically, in all areas of public policy. It was even claimed that the House bill would increase competition in healthcare, and thereby improve the private sector’s business model for insurance.
It is fascinating that politicians would use the language of the free market in this way to justify more corporatism. This demonstrates a couple of things. One, that politicians truly do not understand the very basic tenets of a free market. By definition, a free market is free from government intervention. But once a little intervention is accepted as legitimate, politicians will blame the problems created by their intervention on the free market and present themselves as saviors that must intervene even more.
It also demonstrates that politicians know that Americans still believe the free market is a good thing. People know and understand that competition among businesses is better for the consumer than a monopoly. However, competition between a private business and a government or government-favored entity is not real competition.
In real competition, your competitor can go bankrupt if they do a bad job. Everyone knows a government program is forever, no matter how poorly it performs. In real competition, efficiency is necessary for survival. In government programs, waste is rewarded as budgets are often determined by how much money a department is able to consume in a year. In real competition, one business does not have regulatory or taxation authority over its competitors. In real competition, businesses get sued and punished for breaking contracts and defrauding people, and are kept accountable in this way. But just try to sue the government when you are unjustly harmed by it!
The reason real competition is a good thing is because good businesses get bad ones out of the consumer’s way. Can the government put someone out of business? Most certainly! But it will have the opposite effect: an otherwise good business will be replaced by a poorly performing government agency, or a government-favored monolithic business that behaves almost like a government agency.
If Washington really wanted to give consumers more choices they would remove legislative and regulatory barriers to competition across state lines for health insurers. They would remove barriers for new and innovative models of healthcare and tort reform. They wouldn’t have run so many church and charitable hospitals out of business. Washington is keenly interested in healthcare reform, but it is certainly not going to increase competition or to expand your options for healthcare.
Wednesday
FROM RON PAUL
On the Green Zone in Iraq:
“That’s where our military lives high on the hog. That’s where they have tennis courts and swimming pools and alcohol. And the Muslims, who now are starting to feel like maybe they have something to say about this, said no more alcohol in the Green Zone. And one of our officers said, ‘Well, it looks like we might as well go home.’”
On the healthcare reform package
“[It is] to take from one group and give to another. They call it free, of course. Of course, you know there is no such thing as anything really coming free, especially from the government. The government can only take from one group and give to another.”
On Austrian economics and the free market
“I would say that if we want to live in a free society … we should study Austrian economics, understand how it works and understand why it’s in the best interest of the people to believe in free markets because that’s where you get the greatest amount of prosperity and the best distribution no matter what they tell you about how much government you need to make it in their system.”
On individual liberty
“When it comes to individual liberty such as personal habits and how you spend your life and your time, sexual lives, gambling lives and all kinds of things that you might do personally, but it is always you that you’re hurting. There are some people who say ‘No, you can’t do that. We want to tell you exactly what’s going to make you a better person.’ So then another gang from Congress and Washington and politicians come in and say ‘A-ha! We’re going to make you a better person, we’re going to regulate your habits and regulate all your lifestyles. We’re going to regulate what you smoke and what you drink and everything else because you’re not smart enough to do that.’”
On wearing motorcycle helmets
“I think it’s a pretty good idea to wear a [motorcycle] helmet, but I would hope to think that people are smart enough to figure that out. But the reason you have to wear a helmet now is that you end up in the emergency room, it might cost some more and therefore the nanny state says you lose your personal choice.”
On ‘Cash for Clunkers’
“You’re taking the cars away from the poor people who might be able to buy them. And it turns out that most of the cars that were trashed were American cars and they all ended up buying foreign cars. It makes no sense. I would say that we as a people dealing with our own money can do a much better job.”
On the stimulus package
“Why couldn’t we have just suspended, at least, the income tax? Say ‘OK, folks, go to work and you don’t have to pay any taxes for the next two years’… It would have been a bigger stimulus … I think that would have been a much better way of dealing with it.”
On a dollar crisis
“Can you imagine what’s going to happen when there’s a dollar crisis and we’re in the midst of the dollar rapidly depreciating? That is big stuff."
On foreign policy
“We have a terrible choice in our foreign policy. We have two choices: we go to a country and they do exactly as we tell them and they’re obedient [then] we give them a lot of money. But if they don’t do it we send over the bombs. And I say there’s a third option: why don’t we just mind our own business and get along.”
On democracy
“[They say] we have to spread democracy -- even if it’s through the barrel of a gun. But democracy sometimes is a questionable decision to hold because democracy sometimes can backfire on you and when the majority becomes the dictator and takes away your rights it’s not such a great idea.”
On capitalism
“People say ‘Ahhh, this is proof capitalism failed.’ But I tell you what, that’s one argument we better learn how to refute. Because the free market hasn’t failed. I don’t particularly like the word ‘capitalism.’ I like to use the word [sic] ‘free market.’ Free markets haven’t failed.”
“That’s where our military lives high on the hog. That’s where they have tennis courts and swimming pools and alcohol. And the Muslims, who now are starting to feel like maybe they have something to say about this, said no more alcohol in the Green Zone. And one of our officers said, ‘Well, it looks like we might as well go home.’”
On the healthcare reform package
“[It is] to take from one group and give to another. They call it free, of course. Of course, you know there is no such thing as anything really coming free, especially from the government. The government can only take from one group and give to another.”
On Austrian economics and the free market
“I would say that if we want to live in a free society … we should study Austrian economics, understand how it works and understand why it’s in the best interest of the people to believe in free markets because that’s where you get the greatest amount of prosperity and the best distribution no matter what they tell you about how much government you need to make it in their system.”
On individual liberty
“When it comes to individual liberty such as personal habits and how you spend your life and your time, sexual lives, gambling lives and all kinds of things that you might do personally, but it is always you that you’re hurting. There are some people who say ‘No, you can’t do that. We want to tell you exactly what’s going to make you a better person.’ So then another gang from Congress and Washington and politicians come in and say ‘A-ha! We’re going to make you a better person, we’re going to regulate your habits and regulate all your lifestyles. We’re going to regulate what you smoke and what you drink and everything else because you’re not smart enough to do that.’”
On wearing motorcycle helmets
“I think it’s a pretty good idea to wear a [motorcycle] helmet, but I would hope to think that people are smart enough to figure that out. But the reason you have to wear a helmet now is that you end up in the emergency room, it might cost some more and therefore the nanny state says you lose your personal choice.”
On ‘Cash for Clunkers’
“You’re taking the cars away from the poor people who might be able to buy them. And it turns out that most of the cars that were trashed were American cars and they all ended up buying foreign cars. It makes no sense. I would say that we as a people dealing with our own money can do a much better job.”
On the stimulus package
“Why couldn’t we have just suspended, at least, the income tax? Say ‘OK, folks, go to work and you don’t have to pay any taxes for the next two years’… It would have been a bigger stimulus … I think that would have been a much better way of dealing with it.”
On a dollar crisis
“Can you imagine what’s going to happen when there’s a dollar crisis and we’re in the midst of the dollar rapidly depreciating? That is big stuff."
On foreign policy
“We have a terrible choice in our foreign policy. We have two choices: we go to a country and they do exactly as we tell them and they’re obedient [then] we give them a lot of money. But if they don’t do it we send over the bombs. And I say there’s a third option: why don’t we just mind our own business and get along.”
On democracy
“[They say] we have to spread democracy -- even if it’s through the barrel of a gun. But democracy sometimes is a questionable decision to hold because democracy sometimes can backfire on you and when the majority becomes the dictator and takes away your rights it’s not such a great idea.”
On capitalism
“People say ‘Ahhh, this is proof capitalism failed.’ But I tell you what, that’s one argument we better learn how to refute. Because the free market hasn’t failed. I don’t particularly like the word ‘capitalism.’ I like to use the word [sic] ‘free market.’ Free markets haven’t failed.”
Tuesday
HEALTHCARE REFORM IS ECONOMIC MALPRACTICE
As Washington continues debating healthcare reform the rest of the country is primarily concerned about jobs and the economy. It is still uncertain what policies will be implemented, but I am certain about one thing: It will only further devastate our economy and our dollar.
The leadership has come up with a proposal they are confident will be what they consider fiscally responsible, only to have it scored as nearly twice as expensive by the nonpartisan Congressional Budget Office. Estimates of past healthcare spending programs have been off by as much as 100 percent so there is no telling what the actual cost will be.
The past century should have taught us one thing: that government intervention is expensive. Government programs lend themselves so easily to waste, fraud and abuse. Combine that with overall inefficiency and it all adds up to a hefty price tag for the taxpayer, with not much leftover for actual services. An outright takeover of an entire sector of the economy, especially one as important as healthcare, is something that we just cannot afford for the government to do right now. Not to mention the fact that it is completely unconstitutional. But Washington insists on torturing the numbers and tinkering around the edges rather than facing this truth. If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government’s reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won’t come from higher taxes, it won’t come from rationing of care, and it won’t come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar’s back.
Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness.
Ironically, enactment of the health care bill could help the cause of liberty by hastening the day when Congress is forced by economic circumstances to stop increasing the welfare-warfare state and return to the Constitution.
There are many problems with our current healthcare system, to be sure. There are many tragic stories to be told. However, we need to look at the root of our problems in order to address them properly. More government intervention and bureaucracy injected into healthcare will take a flawed system and make immeasurably worse.
The leadership has come up with a proposal they are confident will be what they consider fiscally responsible, only to have it scored as nearly twice as expensive by the nonpartisan Congressional Budget Office. Estimates of past healthcare spending programs have been off by as much as 100 percent so there is no telling what the actual cost will be.
The past century should have taught us one thing: that government intervention is expensive. Government programs lend themselves so easily to waste, fraud and abuse. Combine that with overall inefficiency and it all adds up to a hefty price tag for the taxpayer, with not much leftover for actual services. An outright takeover of an entire sector of the economy, especially one as important as healthcare, is something that we just cannot afford for the government to do right now. Not to mention the fact that it is completely unconstitutional. But Washington insists on torturing the numbers and tinkering around the edges rather than facing this truth. If healthcare reform does indeed pass, we should not be under the illusion that it will be free. The money to pay for it will have to come from somewhere. They say they will get the money from cutting waste, fraud and abuse, but all of that is seemingly intrinsic to government programs. Since they want to expand the government’s reach we have to assume we will be trading waste, fraud and abuse for waste, fraud and abuse with a bigger budget. The powers that be have insisted the money won’t come from higher taxes, it won’t come from rationing of care, and it won’t come from higher premiums. This can only then put more pressure on the Fed to print the money out of thin air. We already have a weakening dollar. They are accelerating everything that weakened it in the past. Adding this new, monumental pressure could very well be the straw that will break the dollar’s back.
Foreign creditors are already nervous about continuing to invest in the US because of our skyrocketing debt. The explosion of debt that is certain to accompany the enactment of this national health care bill can only add to that nervousness.
Ironically, enactment of the health care bill could help the cause of liberty by hastening the day when Congress is forced by economic circumstances to stop increasing the welfare-warfare state and return to the Constitution.
There are many problems with our current healthcare system, to be sure. There are many tragic stories to be told. However, we need to look at the root of our problems in order to address them properly. More government intervention and bureaucracy injected into healthcare will take a flawed system and make immeasurably worse.
BE PREPARED FOR THE WORST
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.
This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?
What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.
Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.
The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.
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.
This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?
What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.
Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.
The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.
Monday
WHAT I THINK......BOB IVRY
Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been “gutted” while moving toward a possible vote in the Democratic-controlled House.
The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff.
The Fed, led by Chairman Ben S. Bernanke, has come under greater congressional scrutiny while attempting to end the financial crisis by bailing out financial firms and more than doubling its balance sheet to $2.16 trillion in the past year. The central bank is also buying $1.25 trillion of securities tied to home loans.
Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.
Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.
Original Language
Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language.
Representative Barney Frank, a Democrat from Massachusetts and chairman of the committee, said in interview that he intends to ensure legislation would provide a time lag between FOMC actions and the reporting of them.
Such a provision would “lessen the market impact,” he said on Oct. 20. “The importance is to see that there are no abuses and to judge what they did.”
The legislation will probably be included in a broader Democratic package of financial-regulation changes in the House, Frank said.
The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff.
The Fed, led by Chairman Ben S. Bernanke, has come under greater congressional scrutiny while attempting to end the financial crisis by bailing out financial firms and more than doubling its balance sheet to $2.16 trillion in the past year. The central bank is also buying $1.25 trillion of securities tied to home loans.
Paul, a member of the House Financial Services Committee, said Mel Watt, a Democrat from North Carolina, has eliminated “just about everything” while preparing the legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee.
Keith Kelly, a spokesman for Watt, declined to comment and said Watt wasn’t immediately available for an interview. Watt’s district includes Charlotte, headquarters of Bank of America Corp., the biggest U.S. lender.
Original Language
Paul said he intends to introduce an amendment to the bill when it comes to the House floor for a vote restoring the legislation’s original language.
Representative Barney Frank, a Democrat from Massachusetts and chairman of the committee, said in interview that he intends to ensure legislation would provide a time lag between FOMC actions and the reporting of them.
Such a provision would “lessen the market impact,” he said on Oct. 20. “The importance is to see that there are no abuses and to judge what they did.”
The legislation will probably be included in a broader Democratic package of financial-regulation changes in the House, Frank said.
GOVERNMENT STATISTICS AND LIES
There has been a lot of talk in Washington recently about senior citizens, mostly about how various healthcare reform models would help or hurt them. But there is another critical issue that has quietly devastated seniors financially over the last few decades. It concerns how the cost of living is calculated. How does the administration justify not giving a cost of living increase to Social Security recipients this year?
According to the official Consumer Price Index calculation, life has gotten cheaper for the first time in decades. If the government can show statistically that the cost of living has gone down, not up, then they can make the case for not giving a cost of living increase to social security recipients. But does this match reality? Using older calculations of CPI, the cost of living has actually increased – by roughly 5 percent!
The CPI (Consumer Price Index) is a calculation based on the average price of a fixed basket of goods that was initially designed to help businesses adjust for inflation. The government eventually started using it to determine cost of living adjustments for entitlement programs. Couple that with politicians’ discovery that they could raid the social security trust fund to pay for new spending programs, and you have a perfect storm to deny seniors what they were promised, while hiding the true size of the deficit. For politicians, it is a win-win.
For seniors, it is a different story. Economist John Williams of Shadow Government Statistics has estimated that if the original methodology of CPI had not changed, Social Security checks would be nearly double what they are today. This represents a lot of money that politicians have been able to literally steal from seniors, to spend on their own wasteful programs. One example of how they do this is to substitute hamburger for steak, which lowers the average price of that basket of goods. But living on hamburger, or maybe dog food, instead of steak does not represent a constant standard of living. This renders the measurement virtually meaningless, even though politically it comes in very handy.
I have introduced legislation to keep politicians in Washington from ever raiding the Social Security trust fund again. HR 219 The Social Security Preservation Act would assure that all monies collected by the Social Security Trust Fund would only be used in payments to beneficiaries, or be placed in interest bearing certificates of deposit. This would at least stop the bleeding of the fund, and take away some incentive to tease and torture the numbers in order to give seniors the minimal amount. This would also cut off a source of funding for government growth, so it is not likely to get easy support from many politicians.
It is bad enough that Washington imposes high payroll taxes on American workers. The least Congress could do is use the tax dollars for their stated purpose. Instead, seniors will have a harder and harder time trying to survive on a fixed income in an economy based on variables and deception. For them, it is too late to start over. Today’s young people will be forced to pay into the system for years to come. The first step towards solving the impending crisis facing Social Security is to stop politicians from raiding the trust fund and to significantly cut federal government spending.
According to the official Consumer Price Index calculation, life has gotten cheaper for the first time in decades. If the government can show statistically that the cost of living has gone down, not up, then they can make the case for not giving a cost of living increase to social security recipients. But does this match reality? Using older calculations of CPI, the cost of living has actually increased – by roughly 5 percent!
The CPI (Consumer Price Index) is a calculation based on the average price of a fixed basket of goods that was initially designed to help businesses adjust for inflation. The government eventually started using it to determine cost of living adjustments for entitlement programs. Couple that with politicians’ discovery that they could raid the social security trust fund to pay for new spending programs, and you have a perfect storm to deny seniors what they were promised, while hiding the true size of the deficit. For politicians, it is a win-win.
For seniors, it is a different story. Economist John Williams of Shadow Government Statistics has estimated that if the original methodology of CPI had not changed, Social Security checks would be nearly double what they are today. This represents a lot of money that politicians have been able to literally steal from seniors, to spend on their own wasteful programs. One example of how they do this is to substitute hamburger for steak, which lowers the average price of that basket of goods. But living on hamburger, or maybe dog food, instead of steak does not represent a constant standard of living. This renders the measurement virtually meaningless, even though politically it comes in very handy.
I have introduced legislation to keep politicians in Washington from ever raiding the Social Security trust fund again. HR 219 The Social Security Preservation Act would assure that all monies collected by the Social Security Trust Fund would only be used in payments to beneficiaries, or be placed in interest bearing certificates of deposit. This would at least stop the bleeding of the fund, and take away some incentive to tease and torture the numbers in order to give seniors the minimal amount. This would also cut off a source of funding for government growth, so it is not likely to get easy support from many politicians.
It is bad enough that Washington imposes high payroll taxes on American workers. The least Congress could do is use the tax dollars for their stated purpose. Instead, seniors will have a harder and harder time trying to survive on a fixed income in an economy based on variables and deception. For them, it is too late to start over. Today’s young people will be forced to pay into the system for years to come. The first step towards solving the impending crisis facing Social Security is to stop politicians from raiding the trust fund and to significantly cut federal government spending.
Saturday
LET THE GREENBACK PROVE ITSELF
A growing number of Americans are becoming aware of the Federal Reserve System, what it is, how it has precipitated our financial crisis, and how it continues to pursue policies that delay economic recovery and weaken the dollar.
The Fed's actions, combined with the federal government's bailout bills and stimulus packages, have struck a nerve in the American people.
Recent polls have shown that more than 75 percent of Americans support efforts to audit the Fed, something which my bill, HR 1207, the Federal Reserve Transparency Act, aims to do. HR 1207 has the support of 304 members of Congress, and the Senate version of the bill, S. 604, is supported by 31 U.S. senators.
Fed Chairman Ben Bernanke has embarked on an ambitious program of monetary expansion, more than doubling the monetary base to almost $1.9 trillion and doubling the size of its balance sheet to over $2 trillion, placing the American economy in a precarious position.
If all this excess money begins to be loaned out, the Fed risks creating a hyperinflationary crisis similar to 1920s Germany. If the Fed contracts this money, it risks harming the banks it desperately wants to see bailed out.
It is imperative that the American people know what the Fed is up to, how much money it loans to banks and what types of agreements it enters into with foreign banks and governments. Just about all of this information is exempt from audit or oversight. The Fed's actions directly affect the value of the dollar, which is coming under increasing pressure from our foreign creditors. If we do not wish to see a complete collapse of the dollar, the Fed needs to be subject to a strict audit of its actions, if not an outright abolition of its charter.
While I would like nothing more than to see the Federal Reserve abolished, it is not absolutely necessary to do so with direct legislation.
The Fed's influence comes about because of its monopolization of the creation of money. If we could abolish the government monopoly on the creation of money, the Federal Reserve would be forced to clean up its act or go out of business. Economists know that monopolies lead to reduced output and higher prices, a suboptimal allocation of resources. This applies as well to the market for circulating currency as it does to markets for any other good.
In the previous Congress I introduced legislation that would eliminate the three major barriers to competition in currency and break the Fed's stranglehold on money.
The first barrier: Legal tender laws, which Congress does not have the Constitutional authority to enact. Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency.
Gresham's Law describes this phenomenon, which can be summed up in one phrase: Bad money drives out good money. In the absence of legal tender laws, Gresham's Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society.
The second barrier: laws that prohibit the operation of private mints. Certain sections of U.S. code classified as anti-counterfeiting statutes were in fact intended to shut down private mints that had been operating in California. There is no reason to ban private companies from minting gold and silver coins to compete with the dollar.
All currencies are based on trust, trust that the issuing authority will not debase the currency. If it becomes known that the issuer of a particular currency is minting underweight coins, people will stop accepting that currency and that company will go out of business. If someone else attempts to counterfeit that currency and pass those coins, there are sufficient counterfeiting laws on the books to prosecute those counterfeiters.
Merchants and individuals are free to choose which currencies they accept, and in the absence of legal tender laws I believe that alternative currencies will gain more traction.
Stores today can accept whatever currency they like. In Washington, DC a few years ago, some stores began accepting euros from international tourists. Harrod's in London accepts pounds, euros, and dollars. There is no legal requirement in the United States for a store to accept dollars for non-debt transactions.
If you walk into a 7-11 to buy a soda, the clerk doesn't have to accept your dollars, he could demand euros, silver, or copper. But because legal tender laws backing the dollar have caused the dollar to drive other currencies out of circulation, it is easier for stores to accept dollars.
However, most stores also accept credit cards, personal checks, and debit cards, none of which are legal tender. Some stores are moving to credit card-only transactions to minimize costs, which they are allowed to do.
Under a system of competing currencies, it would be to the advantage of stores to accept as many currencies as they could, in order to attract a wide range of customers. Stores that only accepted one currency would see their customer base shrink. The use of credit cards could simplify things just as it does today when Americans travel to Europe. They pay in euros with their credit card, and their card company bills in dollars. The market will find a solution to any problems that might arise.
The final barrier to competing currencies: Laws that assess capital gains and sales taxes on gold and silver coins. Under federal law, coins are considered collectibles, and are liable for capital gains taxes. These taxes actually tax monetary debasement. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases because of a weak dollar, the federal government considers this an increase in wealth and assesses taxes.
Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals. For individuals who may wish to use gold and silver in everyday transactions, this can quickly become a complicated and costly burden.
The long-term strength of the dollar will only be weakened by maintaining the Fed's monopoly on our monetary system. Our foreign creditors are already moving to dethrone the dollar as the world's currency.
The prospect of American citizens also turning away from the dollar toward alternate currencies should provide an impetus to the U.S. government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and provide stability to the financial system. With a sound currency, everyone is better off, not just those who control the monetary system.
The Fed's actions, combined with the federal government's bailout bills and stimulus packages, have struck a nerve in the American people.
Recent polls have shown that more than 75 percent of Americans support efforts to audit the Fed, something which my bill, HR 1207, the Federal Reserve Transparency Act, aims to do. HR 1207 has the support of 304 members of Congress, and the Senate version of the bill, S. 604, is supported by 31 U.S. senators.
Fed Chairman Ben Bernanke has embarked on an ambitious program of monetary expansion, more than doubling the monetary base to almost $1.9 trillion and doubling the size of its balance sheet to over $2 trillion, placing the American economy in a precarious position.
If all this excess money begins to be loaned out, the Fed risks creating a hyperinflationary crisis similar to 1920s Germany. If the Fed contracts this money, it risks harming the banks it desperately wants to see bailed out.
It is imperative that the American people know what the Fed is up to, how much money it loans to banks and what types of agreements it enters into with foreign banks and governments. Just about all of this information is exempt from audit or oversight. The Fed's actions directly affect the value of the dollar, which is coming under increasing pressure from our foreign creditors. If we do not wish to see a complete collapse of the dollar, the Fed needs to be subject to a strict audit of its actions, if not an outright abolition of its charter.
While I would like nothing more than to see the Federal Reserve abolished, it is not absolutely necessary to do so with direct legislation.
The Fed's influence comes about because of its monopolization of the creation of money. If we could abolish the government monopoly on the creation of money, the Federal Reserve would be forced to clean up its act or go out of business. Economists know that monopolies lead to reduced output and higher prices, a suboptimal allocation of resources. This applies as well to the market for circulating currency as it does to markets for any other good.
In the previous Congress I introduced legislation that would eliminate the three major barriers to competition in currency and break the Fed's stranglehold on money.
The first barrier: Legal tender laws, which Congress does not have the Constitutional authority to enact. Historically, legal tender laws have been used by governments to force their citizens to accept debased and devalued currency.
Gresham's Law describes this phenomenon, which can be summed up in one phrase: Bad money drives out good money. In the absence of legal tender laws, Gresham's Law no longer holds. If people are free to reject debased currency, and instead demand sound money, sound money will gradually return to use in society.
The second barrier: laws that prohibit the operation of private mints. Certain sections of U.S. code classified as anti-counterfeiting statutes were in fact intended to shut down private mints that had been operating in California. There is no reason to ban private companies from minting gold and silver coins to compete with the dollar.
All currencies are based on trust, trust that the issuing authority will not debase the currency. If it becomes known that the issuer of a particular currency is minting underweight coins, people will stop accepting that currency and that company will go out of business. If someone else attempts to counterfeit that currency and pass those coins, there are sufficient counterfeiting laws on the books to prosecute those counterfeiters.
Merchants and individuals are free to choose which currencies they accept, and in the absence of legal tender laws I believe that alternative currencies will gain more traction.
Stores today can accept whatever currency they like. In Washington, DC a few years ago, some stores began accepting euros from international tourists. Harrod's in London accepts pounds, euros, and dollars. There is no legal requirement in the United States for a store to accept dollars for non-debt transactions.
If you walk into a 7-11 to buy a soda, the clerk doesn't have to accept your dollars, he could demand euros, silver, or copper. But because legal tender laws backing the dollar have caused the dollar to drive other currencies out of circulation, it is easier for stores to accept dollars.
However, most stores also accept credit cards, personal checks, and debit cards, none of which are legal tender. Some stores are moving to credit card-only transactions to minimize costs, which they are allowed to do.
Under a system of competing currencies, it would be to the advantage of stores to accept as many currencies as they could, in order to attract a wide range of customers. Stores that only accepted one currency would see their customer base shrink. The use of credit cards could simplify things just as it does today when Americans travel to Europe. They pay in euros with their credit card, and their card company bills in dollars. The market will find a solution to any problems that might arise.
The final barrier to competing currencies: Laws that assess capital gains and sales taxes on gold and silver coins. Under federal law, coins are considered collectibles, and are liable for capital gains taxes. These taxes actually tax monetary debasement. The purchasing power of gold may remain relatively constant, but as the nominal dollar value increases because of a weak dollar, the federal government considers this an increase in wealth and assesses taxes.
Thus, the more the dollar is debased, the more capital gains taxes must be paid on holdings of gold and other precious metals. For individuals who may wish to use gold and silver in everyday transactions, this can quickly become a complicated and costly burden.
The long-term strength of the dollar will only be weakened by maintaining the Fed's monopoly on our monetary system. Our foreign creditors are already moving to dethrone the dollar as the world's currency.
The prospect of American citizens also turning away from the dollar toward alternate currencies should provide an impetus to the U.S. government to regain control of the dollar and halt its downward spiral. Restoring soundness to the dollar will remove the government's ability and incentive to inflate the currency, and provide stability to the financial system. With a sound currency, everyone is better off, not just those who control the monetary system.
Thursday
WHAT I THINK......C.J. MALONEY
I don’t know what had me more surprised – a combination of 8.30 on a Saturday morning with a room full of college students all bright-eyed and bushy-tailed – or the fact that I, a relative nobody, had been invited to participate as a "featured speaker" for the event. "The event," in this case, was the second annual New York Students for Liberty Conference held this past October 10th at Columbia University, a joint production brought about by the trio of the school’s libertarian club, the Students for Liberty, and the Ivy League Alliance for Liberty.
The litany of speakers was an impressive one – if you excluded me. Yet there I sat with my wife and 125 or so others, sipping the first of my doctor’s recommended daily dose of ten cups of coffee and a few Red Bulls (caffeine: the trendy drug of choice to those responsible for a four-year-old). The only reason I was allowed to step behind a podium was due to the kind invitation of J.D. Fernandez, vice president of Columbia University’s Libertarian Club, probably since demoted to janitor.
While I am not enamored of the whole idea of college in general I do like hanging around libertarians – they’re a fun bunch. The libertarians grab the best from both major parties, casting aside the bloodthirsty war-lust of the Republicans and ignoring the prissy, self-righteous moralizing of the Democrats. While they might not be the party in power, they certainly throw the best parties, and that has to count for something.
It’s often quipped that a libertarian is a Republican who likes to smoke pot, and I was not surprised to hear "pot brownies" and "marijuana" 75 or so times before I’d reached my second cup. Granted, you’ll also hear the same at a Democratic or Republican gathering, too, but the participants at such soirées likely don’t cheer happily at the mention of the demon drug’s name.
Outside the conference room, among the booths pitching Reason magazine, Bastiat, and the Mises Institute was a table bearing calendars that featured attractive young women holding signs that urged us to end the war on drugs and to throw in the Fed for good measure. The calendars were helping announce the Ladies of Liberty Alliance, a female-oriented libertarian organization recently birthed by Allison Gibbs.
Ms. Gibbs once worked for the Department of Defense as a microbiologist (Department of Defense and microbiologist topping my list of "words you don’t like to see together") until one day she up and quit, right into the teeth of a deep economic depression, because she didn’t want a job funded by the taxpayer. I’d never before met anyone who had done such a thing and doubt I ever will again.
As one would imagine an Ivy League shindig is a well-appointed one, food and drink were provided. Maybe they followed Cartman’s advice on South Park, "you gotta serve punch and pie!" as last year’s regional conference attracted 15 people – for this year’s almost 200 signed on and 125 actually attended.
The anti-bailout and anti-war rallies I’ve attended only reach 125 people if you count the 100 cops ringed about all the chanting. It’s sad, the progressive strong point is now almost solely libertarian; the Democratic "left" having largely abandoned the field.
I went to NYU for grad school and not once during my entire time there had I even heard of Mises, and they certainly aren’t teaching him at Columbia. It made me wonder where all these kids had come from. My answer came soon enough as I listened to the first couple of speakers. I could hear the constant chirping of the Ron Paul movement’s official bird – the soft ticking of keyboards.
Everything was being twittered, blogged, and filmed, bringing me back a few years to my time hanging around Dr. Paul’s primary campaign. Going through the day, almost every kid I asked, "how’d you fall in with this bunch" had the same two words for an answer – Ron Paul. If you are wondering where Ron Paul nation disappeared to, they haven’t. They’re hanging about your college campus.
I sat in the back of the room in admiring silence; my brain slack-jawed surprised to be surrounded by youth who listened raptly to speakers on Hayek, Mises, and Rothbard, their heads nodded with approval as Reason magazine’s Damon Root condemned Jim Crow Mississippi as "lawless." They get it; they understand why Ron Paul’s ideas are so revolutionary and radical.
It was a long day, running from the one morning’s start to leaving the after bar the next morning, and at one point late in the proceedings a young woman stood up and announced "capitalism is cool." What she really meant to say is "freedom is cool" meaning freedom is fun, because it gives you a choice; and as Lenny Bruce always reminded us, that’s what it’s all about.
And it’s not only the freedom of speech and religion and the right to strap a surface to air missile across your truck’s rear windshield, that’s all just a part of it. Libertarianism is anything you want it to be, it includes the freedom to foolishly throw it all away as and if you please, rather than be forced to let some politically connected shit-head throw it away for you as he pleases. But above all, mostly, it’s the freedom to be left alone.
We were sitting outside the after bar, the younger set smoked cigarettes with their drinks; I led the orchestra’s cigar section. Off leaning against the side of the building a young attendee announced his conversion to libertarianism by vomiting most of the after midnight hours away. I looked up to a tired, pot-bellied man smoking a cigarette, he asked me sheepishly if I could move three feet closer to the street, to smoke a little further away from the building.
His name was James, I think, and he owned the bar. He launched into an unprovoked litany of complaints about all the "rules and regulations" he needed to constantly keep up on, lest the City Council send its agents to shut down the bar – the one that he’s just opened to fulfill a life-long dream. My smoking had caught his attention; he apologized, because they’d been repeatedly fining him for allowing his customers to smoke too close to the front of his bar.
More than anything it’s the relentless crusading of the tea-drinkers; the lily-white, ill-tempered agents of good, healthy clean living that drove me into the arms of libertarianism. It’s the libertarian concern for the workingman, a concern that does not manifest itself in the twisted, elitist urge to make him "better" so endemic to the mislabeled "progressives," but manifested instead in the simple, Christian act of leaving him alone. Libertarianism today is a rear guard action, fought to protect our weekends from the legions of moralistic, do-gooder assholes America produces in such abundance.
The same kind that put a pot-bellied, apologetic bar owner smack dab next to my outside table rather than tending to his business inside, because he’s forced to be there, forced to smoke outside his own goddamn bar because our city’s self-righteous midget of a mayor quit smoking – so now we all have to. When I think about that bar, all our city’s bars, in fact, Washington Irving’s take on the pub springs to mind. "That temple of true liberty, the inn" he called those of his time, and I lament how we’ve sunk so low.
We left early, as forty-year-olds always do. Everybody else stayed behind – for the younger set now, as always, the night was there to be lived through, a time to wring out every drop of dark until daylight sent you to a diner. I drove home; I always drive, and knew that back there the bar was dew cheeked and full of that bright-eyed hopeful earnestness that only the young can hold.
All these Ron Paul kids have yet to come to terms with the fact that they live in a thoroughly socialist world, and that strikes me as just fine. If there’s any chance we’re going to get out of this mess we’re in, we’d better pray they never do.
The litany of speakers was an impressive one – if you excluded me. Yet there I sat with my wife and 125 or so others, sipping the first of my doctor’s recommended daily dose of ten cups of coffee and a few Red Bulls (caffeine: the trendy drug of choice to those responsible for a four-year-old). The only reason I was allowed to step behind a podium was due to the kind invitation of J.D. Fernandez, vice president of Columbia University’s Libertarian Club, probably since demoted to janitor.
While I am not enamored of the whole idea of college in general I do like hanging around libertarians – they’re a fun bunch. The libertarians grab the best from both major parties, casting aside the bloodthirsty war-lust of the Republicans and ignoring the prissy, self-righteous moralizing of the Democrats. While they might not be the party in power, they certainly throw the best parties, and that has to count for something.
It’s often quipped that a libertarian is a Republican who likes to smoke pot, and I was not surprised to hear "pot brownies" and "marijuana" 75 or so times before I’d reached my second cup. Granted, you’ll also hear the same at a Democratic or Republican gathering, too, but the participants at such soirées likely don’t cheer happily at the mention of the demon drug’s name.
Outside the conference room, among the booths pitching Reason magazine, Bastiat, and the Mises Institute was a table bearing calendars that featured attractive young women holding signs that urged us to end the war on drugs and to throw in the Fed for good measure. The calendars were helping announce the Ladies of Liberty Alliance, a female-oriented libertarian organization recently birthed by Allison Gibbs.
Ms. Gibbs once worked for the Department of Defense as a microbiologist (Department of Defense and microbiologist topping my list of "words you don’t like to see together") until one day she up and quit, right into the teeth of a deep economic depression, because she didn’t want a job funded by the taxpayer. I’d never before met anyone who had done such a thing and doubt I ever will again.
As one would imagine an Ivy League shindig is a well-appointed one, food and drink were provided. Maybe they followed Cartman’s advice on South Park, "you gotta serve punch and pie!" as last year’s regional conference attracted 15 people – for this year’s almost 200 signed on and 125 actually attended.
The anti-bailout and anti-war rallies I’ve attended only reach 125 people if you count the 100 cops ringed about all the chanting. It’s sad, the progressive strong point is now almost solely libertarian; the Democratic "left" having largely abandoned the field.
I went to NYU for grad school and not once during my entire time there had I even heard of Mises, and they certainly aren’t teaching him at Columbia. It made me wonder where all these kids had come from. My answer came soon enough as I listened to the first couple of speakers. I could hear the constant chirping of the Ron Paul movement’s official bird – the soft ticking of keyboards.
Everything was being twittered, blogged, and filmed, bringing me back a few years to my time hanging around Dr. Paul’s primary campaign. Going through the day, almost every kid I asked, "how’d you fall in with this bunch" had the same two words for an answer – Ron Paul. If you are wondering where Ron Paul nation disappeared to, they haven’t. They’re hanging about your college campus.
I sat in the back of the room in admiring silence; my brain slack-jawed surprised to be surrounded by youth who listened raptly to speakers on Hayek, Mises, and Rothbard, their heads nodded with approval as Reason magazine’s Damon Root condemned Jim Crow Mississippi as "lawless." They get it; they understand why Ron Paul’s ideas are so revolutionary and radical.
It was a long day, running from the one morning’s start to leaving the after bar the next morning, and at one point late in the proceedings a young woman stood up and announced "capitalism is cool." What she really meant to say is "freedom is cool" meaning freedom is fun, because it gives you a choice; and as Lenny Bruce always reminded us, that’s what it’s all about.
And it’s not only the freedom of speech and religion and the right to strap a surface to air missile across your truck’s rear windshield, that’s all just a part of it. Libertarianism is anything you want it to be, it includes the freedom to foolishly throw it all away as and if you please, rather than be forced to let some politically connected shit-head throw it away for you as he pleases. But above all, mostly, it’s the freedom to be left alone.
We were sitting outside the after bar, the younger set smoked cigarettes with their drinks; I led the orchestra’s cigar section. Off leaning against the side of the building a young attendee announced his conversion to libertarianism by vomiting most of the after midnight hours away. I looked up to a tired, pot-bellied man smoking a cigarette, he asked me sheepishly if I could move three feet closer to the street, to smoke a little further away from the building.
His name was James, I think, and he owned the bar. He launched into an unprovoked litany of complaints about all the "rules and regulations" he needed to constantly keep up on, lest the City Council send its agents to shut down the bar – the one that he’s just opened to fulfill a life-long dream. My smoking had caught his attention; he apologized, because they’d been repeatedly fining him for allowing his customers to smoke too close to the front of his bar.
More than anything it’s the relentless crusading of the tea-drinkers; the lily-white, ill-tempered agents of good, healthy clean living that drove me into the arms of libertarianism. It’s the libertarian concern for the workingman, a concern that does not manifest itself in the twisted, elitist urge to make him "better" so endemic to the mislabeled "progressives," but manifested instead in the simple, Christian act of leaving him alone. Libertarianism today is a rear guard action, fought to protect our weekends from the legions of moralistic, do-gooder assholes America produces in such abundance.
The same kind that put a pot-bellied, apologetic bar owner smack dab next to my outside table rather than tending to his business inside, because he’s forced to be there, forced to smoke outside his own goddamn bar because our city’s self-righteous midget of a mayor quit smoking – so now we all have to. When I think about that bar, all our city’s bars, in fact, Washington Irving’s take on the pub springs to mind. "That temple of true liberty, the inn" he called those of his time, and I lament how we’ve sunk so low.
We left early, as forty-year-olds always do. Everybody else stayed behind – for the younger set now, as always, the night was there to be lived through, a time to wring out every drop of dark until daylight sent you to a diner. I drove home; I always drive, and knew that back there the bar was dew cheeked and full of that bright-eyed hopeful earnestness that only the young can hold.
All these Ron Paul kids have yet to come to terms with the fact that they live in a thoroughly socialist world, and that strikes me as just fine. If there’s any chance we’re going to get out of this mess we’re in, we’d better pray they never do.
Monday
ANYTHING LESS THAN FULL DISCLOSURE IS UNACCEPTABLE
Last week a new bill was introduced in the Senate to audit the Federal Reserve. Some backers of my bill HR1207 and the existing Senate companion bill S.604 were a little miffed at this, but depending on how you think about it, this new legislation poses no great threat to our efforts.
With the economy in shambles, people are looking for answers - not just because of lost savings on Wall Street, but because of lost houses on Main Street. Because of the many problems we face, the Federal Reserve and its powers over the economy have come under scrutiny. This translates into a lot of political pressure on Congress. With all the House Republicans signed on as co-sponsors and over half of the Democrats, HR 1207 has enormous bipartisan support. It would be disingenuous for Washington not to embrace the principles behind this bill after all the promises for transparency. How can one credibly argue for more transparency in government in one breath and defend the secrecy of the Federal Reserve in the next?
However, there is still very powerful resistance to the disclosures that HR 1207 would require and efforts to weaken it will continue to pop up before this issue is settled.
The good news is that Washington is responding and the Federal Reserve has become the issue. Concerned Americans need to keep the pressure on by continuing to define what we want, and what we do not want.
One major concern is that HR 1207 constitutes some kind of power grab for Congress. Congress would not do a better job dictating interest rates or managing money supply growth than the Federal Reserve does for exactly the same reasons: Congress is not the free market. Any select group of people, no matter how wise and educated, simply cannot replace the wisdom of the market. HR 1207 does not seek to replace the wisdom of the Fed with the wisdom of Congress. That would be a giant step backwards. HR 1207 simply asks for full disclosure, and I am agreeable to allowing for a reasonable lag time to calm the fears that Congress intends to dictate monetary policy.
What we do want, what we insist upon, is that no longer will decisions that carry so much economic weight be made in absolute secrecy. We want to know what arrangements the Fed makes with other governments and central banks. We want to know who is benefitting from the actions of the Fed and what deals are being made. The Fed is already reacting to pressure by scaling back its liquidity facilities and returning to more traditional monetary policy through direct asset purchases. With nearly $800 billion in mortgage-backed securities on its books already, $800 billion in Treasury securities, and no real limit to what the Fed can acquire, there is a tremendous opportunity for malfeasance. We need to know who the Fed deals with, what they buy, how much they spend, and who benefits. As good as any step towards Federal Reserve transparency is, anything less than full disclosure at this point is unacceptable.
With the economy in shambles, people are looking for answers - not just because of lost savings on Wall Street, but because of lost houses on Main Street. Because of the many problems we face, the Federal Reserve and its powers over the economy have come under scrutiny. This translates into a lot of political pressure on Congress. With all the House Republicans signed on as co-sponsors and over half of the Democrats, HR 1207 has enormous bipartisan support. It would be disingenuous for Washington not to embrace the principles behind this bill after all the promises for transparency. How can one credibly argue for more transparency in government in one breath and defend the secrecy of the Federal Reserve in the next?
However, there is still very powerful resistance to the disclosures that HR 1207 would require and efforts to weaken it will continue to pop up before this issue is settled.
The good news is that Washington is responding and the Federal Reserve has become the issue. Concerned Americans need to keep the pressure on by continuing to define what we want, and what we do not want.
One major concern is that HR 1207 constitutes some kind of power grab for Congress. Congress would not do a better job dictating interest rates or managing money supply growth than the Federal Reserve does for exactly the same reasons: Congress is not the free market. Any select group of people, no matter how wise and educated, simply cannot replace the wisdom of the market. HR 1207 does not seek to replace the wisdom of the Fed with the wisdom of Congress. That would be a giant step backwards. HR 1207 simply asks for full disclosure, and I am agreeable to allowing for a reasonable lag time to calm the fears that Congress intends to dictate monetary policy.
What we do want, what we insist upon, is that no longer will decisions that carry so much economic weight be made in absolute secrecy. We want to know what arrangements the Fed makes with other governments and central banks. We want to know who is benefitting from the actions of the Fed and what deals are being made. The Fed is already reacting to pressure by scaling back its liquidity facilities and returning to more traditional monetary policy through direct asset purchases. With nearly $800 billion in mortgage-backed securities on its books already, $800 billion in Treasury securities, and no real limit to what the Fed can acquire, there is a tremendous opportunity for malfeasance. We need to know who the Fed deals with, what they buy, how much they spend, and who benefits. As good as any step towards Federal Reserve transparency is, anything less than full disclosure at this point is unacceptable.
THE VERY BUSY POLITICIANS IN WASHINGTON, D.C.
With a faltering economy, multiple wars, and the approaching demise of the dollar’s reserve status, there are more than enough problems to keep politicians in Washington working day and night. In between handing out cash for clunkers and nationalizing healthcare, the administration is busy sending more troops overseas, escalating existing wars, and seeking out excuses to start new wars. Congress is working on “urgent” legislation to address crises like healthcare reform and climate change. The reforms are so very urgent that legislation must pass swiftly with no time to read the bills even though the new laws wouldn’t take effect for several years! Meanwhile, the Federal Reserve is busy dealing with our dollar crisis by printing up more dollars.
Yes, there certainly is a lot for Washington to do these days. Most, if not all, of what Washington is doing however, is more of what created the problems in the first place. Capitol Hill is filled with politicians running around putting out fires – but with gasoline. The truth is that all these fires keep so many powerful people employed and wealthy that it is not truly in many decision makers’ interests to be very effective problem-solvers. If Washington ran out of problems, think how many lobbyists would be out of a job, and how many special interest groups would just disband? Sadly, whatever is bad for the greater economy is good for the economy and job market in DC.
Of course, no form of government, not even one that respected its Constitutional restraints, would magically create a problem-free society. The question is: how should a society deal with its problems? The form of government that our founders envisioned, in which the federal government was strictly constrained by the Constitution, allows private citizens and communities to solve their own problems. The role of the government should be to protect contracts, punish fraud and violence through appropriate laws, law enforcement and the courts. Not a whole lot of laws or bureaucrats are really necessary to work on just that. Instead, new laws are constantly needed to fix the problems that previous unconstitutional laws created. We have ended up with an incomprehensible maze of laws and regulations that severely constrains the people and expands the government – the exact opposite of what our founders intended.
This is all because the Constitution is treated like a suggestion manual instead of the supreme law of the land. Under the Constitution, politicians’ hands are supposed to be tied in most of the areas they involve themselves in today. But somewhere along the line, politicians stepped out of Constitutional bounds and started pretending to solve our problems for us. All we have to show for it is more problems.
Today, Washington politicians can busily “solve” one problem, knowing that unintended consequences from that “solution” will keep them and their friends all very busy tomorrow. The people are ultimately left suffocating under the burden of Washington’s helping hands. It is coming to a point where our economy, our dollar, and indeed, the rest of the world have had about all the help from Washington that they can stand. The United States is headed the way of Rome and the Soviet Union, for the same reasons, unless we reverse the trend.
I continue to hope that enough Americans will realize that the true strength of our country doesn’t come from Washington, but rather the limitations placed on government in the Constitution. We must resolve to reverse the destructive course that we are on and then never again let big government problem-solving take over our lives and our country.
Yes, there certainly is a lot for Washington to do these days. Most, if not all, of what Washington is doing however, is more of what created the problems in the first place. Capitol Hill is filled with politicians running around putting out fires – but with gasoline. The truth is that all these fires keep so many powerful people employed and wealthy that it is not truly in many decision makers’ interests to be very effective problem-solvers. If Washington ran out of problems, think how many lobbyists would be out of a job, and how many special interest groups would just disband? Sadly, whatever is bad for the greater economy is good for the economy and job market in DC.
Of course, no form of government, not even one that respected its Constitutional restraints, would magically create a problem-free society. The question is: how should a society deal with its problems? The form of government that our founders envisioned, in which the federal government was strictly constrained by the Constitution, allows private citizens and communities to solve their own problems. The role of the government should be to protect contracts, punish fraud and violence through appropriate laws, law enforcement and the courts. Not a whole lot of laws or bureaucrats are really necessary to work on just that. Instead, new laws are constantly needed to fix the problems that previous unconstitutional laws created. We have ended up with an incomprehensible maze of laws and regulations that severely constrains the people and expands the government – the exact opposite of what our founders intended.
This is all because the Constitution is treated like a suggestion manual instead of the supreme law of the land. Under the Constitution, politicians’ hands are supposed to be tied in most of the areas they involve themselves in today. But somewhere along the line, politicians stepped out of Constitutional bounds and started pretending to solve our problems for us. All we have to show for it is more problems.
Today, Washington politicians can busily “solve” one problem, knowing that unintended consequences from that “solution” will keep them and their friends all very busy tomorrow. The people are ultimately left suffocating under the burden of Washington’s helping hands. It is coming to a point where our economy, our dollar, and indeed, the rest of the world have had about all the help from Washington that they can stand. The United States is headed the way of Rome and the Soviet Union, for the same reasons, unless we reverse the trend.
I continue to hope that enough Americans will realize that the true strength of our country doesn’t come from Washington, but rather the limitations placed on government in the Constitution. We must resolve to reverse the destructive course that we are on and then never again let big government problem-solving take over our lives and our country.
Saturday
WHAT I THINK......MICHAEL O'BRIAN
The U.S. has moved past none of the core issues that brought the economy to its knees last fall, Rep. Ron Paul (R-Texas) suggested.
Paul asserted that while some big financial institutions may be starting to reap large profits again, the bailouts put in place to help those firms last year have only worsened the long-term economic standing in the country.
"None of this is behind us," the libertarian Republican said during an appearance on CNN. "All we have done is prolong the agony and very soon people are going to realize, in spite of all these huge profits, Wall Street is still a shaky place to be."
The congressman pinned blame for the stagnant economy on the Federal Reserve, long his bête noire, for having extended too much credit to large banks and similar companies, and called for stricter regulation of the Fed.
Paul said that the system would be unable to recover until the U.S. sets a new basis for the dollar.
"We're not going to revive the dollar reserve standard around financial markets that has existed for 35 years," he said. "We have to devise a new system and right now we're only playing games with what we have."
The new standard is necessary because, the 2008 presidential candidate said, Wall Street firms are "pulling the strings" at the Fed.
"You know, it is said that the Congress didn't have enough strings attached to the money that they were giving away, but I think the strings go in the other direction," he said. "I think Wall Street has the strings on Washington. And they pull and do what they want and that's where the corruption is. They control the monetary system."
Paul asserted that while some big financial institutions may be starting to reap large profits again, the bailouts put in place to help those firms last year have only worsened the long-term economic standing in the country.
"None of this is behind us," the libertarian Republican said during an appearance on CNN. "All we have done is prolong the agony and very soon people are going to realize, in spite of all these huge profits, Wall Street is still a shaky place to be."
The congressman pinned blame for the stagnant economy on the Federal Reserve, long his bête noire, for having extended too much credit to large banks and similar companies, and called for stricter regulation of the Fed.
Paul said that the system would be unable to recover until the U.S. sets a new basis for the dollar.
"We're not going to revive the dollar reserve standard around financial markets that has existed for 35 years," he said. "We have to devise a new system and right now we're only playing games with what we have."
The new standard is necessary because, the 2008 presidential candidate said, Wall Street firms are "pulling the strings" at the Fed.
"You know, it is said that the Congress didn't have enough strings attached to the money that they were giving away, but I think the strings go in the other direction," he said. "I think Wall Street has the strings on Washington. And they pull and do what they want and that's where the corruption is. They control the monetary system."
Friday
THE FEDS SHOULD BE MORE TRANSPARENT
The continuing financial crisis has made clear to many people the deep problems that exist within our financial system. One of the key decisions to be made in any of the reform proposals floating around deals with the Federal Reserve System and its powers.
For nearly 100 years the Federal Reserve has operated largely in the shadows. The Fed’s monetary policy operations, including open-market operations and agreements with foreign governments and central banks, are exempt from audit by the Government Accountability Office.
Congress itself never delves into these areas in the limited time it has during the Fed chairman’s semiannual appearances before the House Financial Services Committee, and any pointed questions are evaded. Former Fed Chairman Alan Greenspan was adept at this — his “Greenspan-speak” was legendary — but Chairman Ben Bernanke is no slouch, either, at giving vague and nonresponsive answers to direct questions.
While I oppose giving the Fed any additional power, even members who support an expansion should support dealing with the crucial issue of Fed oversight — before proposals for giving the Fed additional power as a regulator of the financial system are discussed. Using Section 13(3) of the Federal Reserve Act, the Fed has gone on the warpath over the past two years. It has involved itself in direct financial support to individual firms such as Bear Stearns and American International Group, has developed new credit facilities to funnel money to numerous other financial companies and has boosted its balance sheet to more than $2 trillion — secure in the knowledge that the legal blocks put in place in 31 U.S.C. 714 to prevent GAO audits of the most significant of the Fed’s actions will hide it from any serious oversight. For an organization with arguably as much clout as the rest of the federal government put together to be able to escape significant oversight is a situation that needs to be rectified immediately.
This is why I introduced H.R. 1207, the Federal Reserve Transparency Act, earlier this year. I introduced similar bills in the early 1980s, but they never received nearly the attention that H.R. 1207 has. For this, we have the Federal Reserve’s actions to be thankful for. More Americans than ever are now aware of the powers that the Fed has and the extent to which it is using them. In some recent polls, 75 percent of Americans supported an audit of the Federal Reserve, which is what H.R. 1207 would do. All restrictions on GAO audits of the Fed would be lifted, and all of its books would be fair game.
Not surprisingly, the Federal Reserve is opposed to H.R. 1207. One of the most often heard arguments is that opening monetary policy operations to a GAO audit would erode Fed independence. Nothing could be further from the truth. An audit of the Fed has one main goal, and that is to find out how much money is being spent and who is receiving it. Congress already dictates monetary policy to the Fed in the guise of the Humphrey-Hawkins mandates of full employment and price stability, so the Fed’s vaunted independence is already compromised in that regard. Nothing in the audit called for by H.R. 1207 should be construed as leading to increased congressional interference in or dictation of monetary policy.
Another argument the Fed has trotted out is that an audit would erode trust in the central bank and raise borrowing costs for the Treasury. An audit could only erode trust if the Fed had in fact been up to no good. If the Fed acts in good faith and with the interest of the American people in mind, it should have nothing to fear from enhanced transparency.
However, trust in the Fed from our foreign creditors has been waning for a while, and ongoing secrecy on the Fed’s part continues to erode that trust. For far too long our government has spent far too much and issued debt to fund its profligacy. Our creditors understand this and are reluctant to invest any further until they can be assured that the Fed will stop pursuing policies that devalue the dollar.
A final argument that the Fed uses is that publicizing the names of firms that receive financial assistance could lead to investors selling those firms’ stock and potentially cause the firms to collapse. In fact, it has been shown that the stock prices of firms receiving bailout funds actually improve. As misguided and wasteful as bailouts are, the firms that receive them are viewed by many investors as “winners,” at least temporarily. Even if bailed-out firms eventually collapse, the bailouts signal that the government will not let them collapse in the near term, which allows investors to remain invested in the companies and continue to profit from movements in the stock price.
There really is no viable reason to continue to withhold from the American people the names of firms receiving Federal Reserve assistance and the amount of money they receive. The Treasury Department has been relatively transparent in publicizing the disposition of bailout funds and the terms of agreement it signs, so why should the Federal Reserve be any different?
The march toward financial services reform seems to be inevitable at this point. Whatever legislation is passed in the next year will create a new financial system framework that will very likely remain in place largely unchanged for decades to come. It is absolutely imperative that we get a detailed look at all of the Federal Reserve’s past actions and ensure that any future government intervention into markets is fully and completely transparent.
For nearly 100 years the Federal Reserve has operated largely in the shadows. The Fed’s monetary policy operations, including open-market operations and agreements with foreign governments and central banks, are exempt from audit by the Government Accountability Office.
Congress itself never delves into these areas in the limited time it has during the Fed chairman’s semiannual appearances before the House Financial Services Committee, and any pointed questions are evaded. Former Fed Chairman Alan Greenspan was adept at this — his “Greenspan-speak” was legendary — but Chairman Ben Bernanke is no slouch, either, at giving vague and nonresponsive answers to direct questions.
While I oppose giving the Fed any additional power, even members who support an expansion should support dealing with the crucial issue of Fed oversight — before proposals for giving the Fed additional power as a regulator of the financial system are discussed. Using Section 13(3) of the Federal Reserve Act, the Fed has gone on the warpath over the past two years. It has involved itself in direct financial support to individual firms such as Bear Stearns and American International Group, has developed new credit facilities to funnel money to numerous other financial companies and has boosted its balance sheet to more than $2 trillion — secure in the knowledge that the legal blocks put in place in 31 U.S.C. 714 to prevent GAO audits of the most significant of the Fed’s actions will hide it from any serious oversight. For an organization with arguably as much clout as the rest of the federal government put together to be able to escape significant oversight is a situation that needs to be rectified immediately.
This is why I introduced H.R. 1207, the Federal Reserve Transparency Act, earlier this year. I introduced similar bills in the early 1980s, but they never received nearly the attention that H.R. 1207 has. For this, we have the Federal Reserve’s actions to be thankful for. More Americans than ever are now aware of the powers that the Fed has and the extent to which it is using them. In some recent polls, 75 percent of Americans supported an audit of the Federal Reserve, which is what H.R. 1207 would do. All restrictions on GAO audits of the Fed would be lifted, and all of its books would be fair game.
Not surprisingly, the Federal Reserve is opposed to H.R. 1207. One of the most often heard arguments is that opening monetary policy operations to a GAO audit would erode Fed independence. Nothing could be further from the truth. An audit of the Fed has one main goal, and that is to find out how much money is being spent and who is receiving it. Congress already dictates monetary policy to the Fed in the guise of the Humphrey-Hawkins mandates of full employment and price stability, so the Fed’s vaunted independence is already compromised in that regard. Nothing in the audit called for by H.R. 1207 should be construed as leading to increased congressional interference in or dictation of monetary policy.
Another argument the Fed has trotted out is that an audit would erode trust in the central bank and raise borrowing costs for the Treasury. An audit could only erode trust if the Fed had in fact been up to no good. If the Fed acts in good faith and with the interest of the American people in mind, it should have nothing to fear from enhanced transparency.
However, trust in the Fed from our foreign creditors has been waning for a while, and ongoing secrecy on the Fed’s part continues to erode that trust. For far too long our government has spent far too much and issued debt to fund its profligacy. Our creditors understand this and are reluctant to invest any further until they can be assured that the Fed will stop pursuing policies that devalue the dollar.
A final argument that the Fed uses is that publicizing the names of firms that receive financial assistance could lead to investors selling those firms’ stock and potentially cause the firms to collapse. In fact, it has been shown that the stock prices of firms receiving bailout funds actually improve. As misguided and wasteful as bailouts are, the firms that receive them are viewed by many investors as “winners,” at least temporarily. Even if bailed-out firms eventually collapse, the bailouts signal that the government will not let them collapse in the near term, which allows investors to remain invested in the companies and continue to profit from movements in the stock price.
There really is no viable reason to continue to withhold from the American people the names of firms receiving Federal Reserve assistance and the amount of money they receive. The Treasury Department has been relatively transparent in publicizing the disposition of bailout funds and the terms of agreement it signs, so why should the Federal Reserve be any different?
The march toward financial services reform seems to be inevitable at this point. Whatever legislation is passed in the next year will create a new financial system framework that will very likely remain in place largely unchanged for decades to come. It is absolutely imperative that we get a detailed look at all of the Federal Reserve’s past actions and ensure that any future government intervention into markets is fully and completely transparent.
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