Healthcare Reform is More Corporate Welfare
Last Wednesday the nation was riveted to the President’s speech on healthcare reform before Congress. While the President’s concern for the uninsured is no doubt sincere, his plan amounts to a magnanimous gift to the health insurance industry, despite any implications to the contrary.
For decades the insurance industry has been lobbying for mandated coverage for everyone. Imagine if the cell phone industry or the cable TV industry received such a gift from government? If government were to fine individuals simply for not buying a corporation’s product, it would be an incredible and completely unfair boon to that industry, at the expense of freedom and the free market. Yet this is what the current healthcare reform plans intend to do for the very powerful health insurance industry.
The stipulation that pre-existing conditions would have to be covered seems a small price to pay for increasing their client pool to 100�f the American people. A big red flag, however, is that they would also have immunity from lawsuits, should they fail to actually cover what they are supposedly required to cover, so these requirements on them are probably meaningless. Mandates on all citizens to be customers of theirs, however, are enforceable with fines and taxes.
Insurance providers seem to have successfully equated health insurance with health care but this is a relatively new concept. There were doctors and medicine long before there was health insurance. Health insurance is not a bad thing, but it is not the only conceivable way to get health care. Instead, we seem to still rely on the creativity and competence of politicians to solve problems, which always somehow seem to be tied in with which lobby is the strongest in Washington.
It is sad to think of the many creative, free market solutions that government prohibits with all its interference. What if instead of joining a health insurance plan, you could buy a membership directly from a hospital or doctor? What if a doctor wanted to have a cash-only practice, or make house calls, or determine his or her own patient load, or otherwise practice medicine outside the constraints of the current bureaucratic system? Alternative healthcare delivery models will be at an even stronger competitive disadvantage if families are forced to buy into the insurance model. And yet, the reforms are sold to us as increasing competition.
What if just once Washington got out of the way and allowed the ingenuity of the American people to come up with a whole spectrum of alternatives to our broken system? Then the free market, not lobbyists and politicians, would decide which models work and which did not.
Unfortunately, the most broken aspect of our system is that Washington sees the need to act on every problem in society, rather than staying out of the way, or getting out of the way. The only tools the government has are force and favors. These are tools that many unscrupulous and lazy corporations would like to wield to their own advantage, rather than simply providing a better product that people will willingly buy. It seems the health insurance industry will get more of those advantages very soon.
Tuesday
WHAT I THINK......JEFF CROUERE
If a presidential election were held last night on the campus of Loyola University New Orleans, the winner would not have been the 48 year old occupant of the White House, but a spry 74 year old physician from Texas.
U..S. Congressman Ron Paul (R-TX) enthralled a huge crowd of supporters and students with a one hour address on topics ranging from the war in Afghanistan to the Federal Reserve. The crowd was so large that the university set up five overflow rooms to accommodate the intense interest in Dr. Paul’s message.
It was amazing to see such an enthusiastic reception for Paul’s message of limited government, freedom and adherence to the U.S. Constitution. The event was mostly promoted on the Internet and, as usual, the mainstream media was nowhere to be seen. Nevertheless, more and more people are learning about Ron Paul and they agree with his message.
Last night, Paul warned that the U.S. foreign policy was creating enemies for this country around the world. He noted that as innocent civilians are killed in war, Muslim families with “long memories” will spend the rest of their lives seeking vengeance against Americans. Paul said that the “easiest place to cut” the federal budget is the defense department and that the U.S. should bring home our troops from not only the wars in Iraq and Afghanistan, but also countries such as South Korea, Japan and Germany.
In keeping with his staunch libertarian principles, Paul advocated an end to selective service and the draft and the war on drugs. He called for an end to all foreign aid and said that if people wanted to help the poor in other countries, they should give handsome donations. Such generosity will be made easier if Paul is successful in eliminating the federal income tax.
The Congressman is delighted with the tea parties and the town hall meetings and the “anger being directed at Washington D.C.” He said that the Congress should “get government off of our backs and out of our lives” and allow individuals to “keep the fruits of their labor.” He said that the government has expanded beyond the “restraints of the Constitution” and there is no constitutional right to medical care, education or free meals.
In Paul’s view, the real problem is the continual devaluing of the U..S. dollar and the resulting inflation which hits the poor and the middle class the worst. Paul noted that it is ironic that our former communist enemies are now our bankers. If the dollar continues to lose its value, the Congressman believes that the result will be higher interest rates and rampant inflation. He said that the only way to improve the value of the dollar is “to restrain the printing press.”
While the Obama administration may be “brainwashing themselves” that their policies are working, Paul believes that a correction is inevitable. There will be “tough days ahead” to correct for the “extravagance of the past.” As more people become upset and disillusioned with their government, Paul sees the possibility for a “de facto nullification” in which people ignore our government and just “walk away.”
Even though he sounded the alarm about our problems, Paul is optimistic because the new generation has “a different attitude about government.” He also noted that the rise of the Internet allows for people to learn about these issues, study the documents of the Founding Fathers and become aware of what is going on in our government.
Overall, Paul believes that the country is headed for perilous times unless more Americans “wake up.” Yet, due to Ron Paul and other critics of the Obama administration, the American public is finally waking up and attempting to take back control of their government. While the stakes are very high and the problems quite immense, it is at least encouraging that a greater number of Americans are aware of what is happening with their government.
Progress is also gradually occurring in Washington D.C. Dr. Paul noted that there is increased support for his bill to audit the Federal Reserve. Paul has over 280 co-sponsors for the legislation, all Republicans and over 100 Democrats in the House.
If the crowd in Loyola University is any indication, the Ron Paul revolution is alive and well. Paul’s message strongly resonated with the audience, both students and adults. It followed months of unprecedented citizen activism at tea parties and town hall meetings throughout the country.
Dr. Ron Paul deserves a good deal of credit for this movement for he raised many of these issues during his 2008 presidential campaign. In fact, he predicted the financial crisis which has engulfed this country over the past year. While he was not able to wrest the GOP nomination from the favorite of party leaders, Paul attracted millions of supporters to his cause.
Now Paul is even more credible and Americans are even more receptive to his pro-liberty message. The time might be right for Ron Paul to achieve mass appeal in this country. Certainly, he has as much appeal on the Loyola campus as any rock star.
Let’s hope America starts learning the words to the song this rock star is singing
U..S. Congressman Ron Paul (R-TX) enthralled a huge crowd of supporters and students with a one hour address on topics ranging from the war in Afghanistan to the Federal Reserve. The crowd was so large that the university set up five overflow rooms to accommodate the intense interest in Dr. Paul’s message.
It was amazing to see such an enthusiastic reception for Paul’s message of limited government, freedom and adherence to the U.S. Constitution. The event was mostly promoted on the Internet and, as usual, the mainstream media was nowhere to be seen. Nevertheless, more and more people are learning about Ron Paul and they agree with his message.
Last night, Paul warned that the U.S. foreign policy was creating enemies for this country around the world. He noted that as innocent civilians are killed in war, Muslim families with “long memories” will spend the rest of their lives seeking vengeance against Americans. Paul said that the “easiest place to cut” the federal budget is the defense department and that the U.S. should bring home our troops from not only the wars in Iraq and Afghanistan, but also countries such as South Korea, Japan and Germany.
In keeping with his staunch libertarian principles, Paul advocated an end to selective service and the draft and the war on drugs. He called for an end to all foreign aid and said that if people wanted to help the poor in other countries, they should give handsome donations. Such generosity will be made easier if Paul is successful in eliminating the federal income tax.
The Congressman is delighted with the tea parties and the town hall meetings and the “anger being directed at Washington D.C.” He said that the Congress should “get government off of our backs and out of our lives” and allow individuals to “keep the fruits of their labor.” He said that the government has expanded beyond the “restraints of the Constitution” and there is no constitutional right to medical care, education or free meals.
In Paul’s view, the real problem is the continual devaluing of the U..S. dollar and the resulting inflation which hits the poor and the middle class the worst. Paul noted that it is ironic that our former communist enemies are now our bankers. If the dollar continues to lose its value, the Congressman believes that the result will be higher interest rates and rampant inflation. He said that the only way to improve the value of the dollar is “to restrain the printing press.”
While the Obama administration may be “brainwashing themselves” that their policies are working, Paul believes that a correction is inevitable. There will be “tough days ahead” to correct for the “extravagance of the past.” As more people become upset and disillusioned with their government, Paul sees the possibility for a “de facto nullification” in which people ignore our government and just “walk away.”
Even though he sounded the alarm about our problems, Paul is optimistic because the new generation has “a different attitude about government.” He also noted that the rise of the Internet allows for people to learn about these issues, study the documents of the Founding Fathers and become aware of what is going on in our government.
Overall, Paul believes that the country is headed for perilous times unless more Americans “wake up.” Yet, due to Ron Paul and other critics of the Obama administration, the American public is finally waking up and attempting to take back control of their government. While the stakes are very high and the problems quite immense, it is at least encouraging that a greater number of Americans are aware of what is happening with their government.
Progress is also gradually occurring in Washington D.C. Dr. Paul noted that there is increased support for his bill to audit the Federal Reserve. Paul has over 280 co-sponsors for the legislation, all Republicans and over 100 Democrats in the House.
If the crowd in Loyola University is any indication, the Ron Paul revolution is alive and well. Paul’s message strongly resonated with the audience, both students and adults. It followed months of unprecedented citizen activism at tea parties and town hall meetings throughout the country.
Dr. Ron Paul deserves a good deal of credit for this movement for he raised many of these issues during his 2008 presidential campaign. In fact, he predicted the financial crisis which has engulfed this country over the past year. While he was not able to wrest the GOP nomination from the favorite of party leaders, Paul attracted millions of supporters to his cause.
Now Paul is even more credible and Americans are even more receptive to his pro-liberty message. The time might be right for Ron Paul to achieve mass appeal in this country. Certainly, he has as much appeal on the Loyola campus as any rock star.
Let’s hope America starts learning the words to the song this rock star is singing
GOVERNMENT SOLUTIONS LACK UNDERSTANDING
Things seem to be unraveling quickly for the new administration. The latest unemployment numbers are worse than the last reports. For all the billions of dollars spent and committed to fixing our economic problems, the situation is only getting worse. This was to be expected by those who understand the root causes of the problems. Throwing money around and creating more government programs is both simplistic and damaging to the economy. Of course, the administration claims that we would have been much worse off without these efforts. You can’t improve this situation by adding to our mountain of public debt for the benefit of big banks and other special interests. The American people know this. When will Washington learn?
In addition, the president’s plans for healthcare reform – or health insurance reform - are becoming more and more unpopular as details are examined. But because of all the alarmist rhetoric, politicians in Washington feel obligated to pass something, even if it doesn’t help. Rarely are liberty and prosperity at greater risk than when politicians feel they must “do something”. It is frightening to watch Washington toy with our healthcare purely for political reasons.
However, the saddest shortcoming of this administration is its utter failure to pursue a more peaceful foreign policy. Just last week up to 90 people, apparently mostly civilians, were killed in Afghanistan in an airstrike, and the violence is only getting worse. The administration is mulling over how many more troops they will send as part of their “Afghan Surge” with advisors getting it exactly backwards. They qualify sending fewer troops as “high-risk” and sending more troops as “low-risk”. This is not the perception at all if you were to ask the families of those being sent over. The best answer would be to stop risking any of our troops for the sake of what is, for all intents and purposes, a violent occupation, helping no one.
But all of these problems and their wrong-headed solutions come from one greater problem - which is not understanding the reasons that we are here. The economy is in bad shape because of too much government intervention producing a myriad of unintended consequences and perverse incentives. Healthcare is broken because the doctor-patient relationship has been broken down by hyper regulation and too much government interference. Afghanistan is a mess because they ignored the mission approved by Congress - to seek out those who attacked us on 9/11. They have instead gotten sidetracked with nebulous interventionist tasks such as promoting democracy and nation building. Eight years later, there is no real progress. The Soviets bankrupted themselves fighting in the mountains and caves of Afghanistan and we’re about to do the same. If we would just look to history it would be self-evident that there is nothing left to win in Afghanistan, and everything to lose.
Most of all, we need to understand that we don’t understand Afghan culture and politics, and for that reason alone, intervening in their affairs is unlikely to produce positive results. The best thing we could possibly do now is to bring our troops home, from Afghanistan, from Iraq, from Japan, from Germany, from all occupied countries, and concentrate on mending badly damaged relationships around the world. Free and honest trade has always been the best way to do that, without fail. Not understanding the benefits of peace, freedom, and nonintervention will always bring about catastrophe.
In addition, the president’s plans for healthcare reform – or health insurance reform - are becoming more and more unpopular as details are examined. But because of all the alarmist rhetoric, politicians in Washington feel obligated to pass something, even if it doesn’t help. Rarely are liberty and prosperity at greater risk than when politicians feel they must “do something”. It is frightening to watch Washington toy with our healthcare purely for political reasons.
However, the saddest shortcoming of this administration is its utter failure to pursue a more peaceful foreign policy. Just last week up to 90 people, apparently mostly civilians, were killed in Afghanistan in an airstrike, and the violence is only getting worse. The administration is mulling over how many more troops they will send as part of their “Afghan Surge” with advisors getting it exactly backwards. They qualify sending fewer troops as “high-risk” and sending more troops as “low-risk”. This is not the perception at all if you were to ask the families of those being sent over. The best answer would be to stop risking any of our troops for the sake of what is, for all intents and purposes, a violent occupation, helping no one.
But all of these problems and their wrong-headed solutions come from one greater problem - which is not understanding the reasons that we are here. The economy is in bad shape because of too much government intervention producing a myriad of unintended consequences and perverse incentives. Healthcare is broken because the doctor-patient relationship has been broken down by hyper regulation and too much government interference. Afghanistan is a mess because they ignored the mission approved by Congress - to seek out those who attacked us on 9/11. They have instead gotten sidetracked with nebulous interventionist tasks such as promoting democracy and nation building. Eight years later, there is no real progress. The Soviets bankrupted themselves fighting in the mountains and caves of Afghanistan and we’re about to do the same. If we would just look to history it would be self-evident that there is nothing left to win in Afghanistan, and everything to lose.
Most of all, we need to understand that we don’t understand Afghan culture and politics, and for that reason alone, intervening in their affairs is unlikely to produce positive results. The best thing we could possibly do now is to bring our troops home, from Afghanistan, from Iraq, from Japan, from Germany, from all occupied countries, and concentrate on mending badly damaged relationships around the world. Free and honest trade has always been the best way to do that, without fail. Not understanding the benefits of peace, freedom, and nonintervention will always bring about catastrophe.
Saturday
WHAT I THINK......JAMES QUINN
In addition to his day job as a strategic planner with an Ivy League university, James Quinn has, in the past year, become one of the Web’s handful of must-read bloggers. Nearly everything he publishes ends up in the DollarCollapse “Best of the Web” column, and his Burning Platform website now hosts high-level discussions on topics ranging from Peak Water to Washington’s fraudulent employment numbers to Swiss bank dumping of U.S. bonds. We spoke earlier in the week:
DollarCollapse: The first article on your Burning Platform website is less than a year old. Since then you’ve been churning out big, thought-provoking, well-researched articles at the rate of about one a week. What happened to suddenly make you such a prolific blogger?
James Quinn: I’d never written an article in my entire life until April 2008. The reason I started was, I was watching the Republican presidential primaries and I saw how the mainstream press and the other candidates were treating Ron Paul. I’d never heard of Ron Paul until Richard Russell brought him up in his newsletter. I started investigating, and everything the guy wrote was dead-on, completely consistent with my point of view. And during the campaign they were treating him like a nut, when he was the most honest straightforward guy in the campaign. So I wrote an article titled “Why We Need Ron Paul.” I tried to get it published in some newspapers but nobody wanted any part of it. Then I came across Lew Rockwell’s site and he loved it and posted it. His site gives out its writers’ email addresses so I started getting 50 emails a day, most of them agreeing with me. So I kept going. The first five or six articles were all Ron Paul based, and Lew put them on his site. Then Seeking Alpha and Minyanville and your site picked them up.
Then I came across this guy named Jason Rines, who had created a site called Raging Debate, which had used a couple of my articles. I mentioned that I’d like to do a site that would include discussion threads and he said, “I’ll create it for you.” He put together the Burning Platform. I came up with the name and supply the content, and he built the discussion capabilities. Jason’s idea is to roll out these sites for anybody who has something to say. He’ll provide the technology and they’ll provide the content.
DC: Your articles cover a lot of ground, but the central theme is always the mess we’ve made of things. How in your opinion did we screw up so royally?
JQ: It comes back to 1971 when Nixon closed the gold window. Before that we were a manufacturing-based economy. We produced things, and we ran a trade surplus, not a deficit. But [disconnecting the dollar from gold] unleashed the Federal Reserve to print at will, and they have. Since then we’ve had nothing but inflation. The dollar has lost 93% of its value against gold.
We did fine from 1789 to 1913. We had strong growth without inflation. But when we created the Federal Reserve it was for the benefit of the bankers and politicians. It has allowed them to spend freely and create a welfare system that has skyrocketed. But you can’t let the rest of us off the hook. We’ve continued to vote for politicians who promised all the goodies without the pain. That’s how you get reelected today.
DC: You’re especially hard on us baby boomers. What did we do to make you so mad?
JQ: In 1980 the oldest boomer turned 35, and since then they’ve led us into a debt bubble. Every conceivable category of debt has skyrocketed. Now there’s a tipping point coming. As John Mauldin says, “an unsustainable trend will not be sustained.” At some point it’s going to come crashing down.
I have three teenage boys and for the first time in a long time I don’t think our kids are going to have a better future than we had. We’re saddling our children and grandchildren with $66 trillion of unfunded liabilities and still piling it on.
Everything this government is doing is the opposite of what it should be doing. With cash for clunkers and tax credits for houses we’re encouraging people to borrow more. They’re coming out with another for appliances later in the year. The debt is going to go up by $2 trillion this year. Ultimately it leads to a dollar collapse. I can’t see any other out at this point.
DC: If a crisis is unavoidable, what’s your most likely scenario?
JQ: Our standard of living drops dramatically. I keep reading about the government hitting the reset button and devaluing the dollar. Could they do what Roosevelt did in 1932 and confiscate gold and reset the dollar 50% lower to wipe out all the debt that we owe? That would be a choice on the part of the government, which is possible, but I don’t think they’re that smart. So I think it’s more likely to be a collapse where someone heads for the exits and everyone else follows. The Chinese and the Russians are already headed for the exits, but they’re doing it slowly and cautiously so they don’t cause a panic.
DC: What are you doing with your own money?
JQ: We’re putting three kids through school and have almost no debt. I’m mostly in inflation protected bonds. Our biggest stock positions are GLD and SLD, the ETFs for gold and silver. I think commodities are going to skyrocket, so I’ve got the commodity ETF DBA and a few gold mining stocks. But at this point I’m a lot in cash. I think the overall market heads back to its March lows and beyond.
DC: One last question: Your perspective is Austrian, or libertarian, or Constitutional or whatever other right-wing nutcase label you prefer. That’s generally not the dominant culture of an Ivy League school. Do your bosses read your stuff, and if so, what’s their reaction?
JQ: I keep a very low profile.
DollarCollapse: The first article on your Burning Platform website is less than a year old. Since then you’ve been churning out big, thought-provoking, well-researched articles at the rate of about one a week. What happened to suddenly make you such a prolific blogger?
James Quinn: I’d never written an article in my entire life until April 2008. The reason I started was, I was watching the Republican presidential primaries and I saw how the mainstream press and the other candidates were treating Ron Paul. I’d never heard of Ron Paul until Richard Russell brought him up in his newsletter. I started investigating, and everything the guy wrote was dead-on, completely consistent with my point of view. And during the campaign they were treating him like a nut, when he was the most honest straightforward guy in the campaign. So I wrote an article titled “Why We Need Ron Paul.” I tried to get it published in some newspapers but nobody wanted any part of it. Then I came across Lew Rockwell’s site and he loved it and posted it. His site gives out its writers’ email addresses so I started getting 50 emails a day, most of them agreeing with me. So I kept going. The first five or six articles were all Ron Paul based, and Lew put them on his site. Then Seeking Alpha and Minyanville and your site picked them up.
Then I came across this guy named Jason Rines, who had created a site called Raging Debate, which had used a couple of my articles. I mentioned that I’d like to do a site that would include discussion threads and he said, “I’ll create it for you.” He put together the Burning Platform. I came up with the name and supply the content, and he built the discussion capabilities. Jason’s idea is to roll out these sites for anybody who has something to say. He’ll provide the technology and they’ll provide the content.
DC: Your articles cover a lot of ground, but the central theme is always the mess we’ve made of things. How in your opinion did we screw up so royally?
JQ: It comes back to 1971 when Nixon closed the gold window. Before that we were a manufacturing-based economy. We produced things, and we ran a trade surplus, not a deficit. But [disconnecting the dollar from gold] unleashed the Federal Reserve to print at will, and they have. Since then we’ve had nothing but inflation. The dollar has lost 93% of its value against gold.
We did fine from 1789 to 1913. We had strong growth without inflation. But when we created the Federal Reserve it was for the benefit of the bankers and politicians. It has allowed them to spend freely and create a welfare system that has skyrocketed. But you can’t let the rest of us off the hook. We’ve continued to vote for politicians who promised all the goodies without the pain. That’s how you get reelected today.
DC: You’re especially hard on us baby boomers. What did we do to make you so mad?
JQ: In 1980 the oldest boomer turned 35, and since then they’ve led us into a debt bubble. Every conceivable category of debt has skyrocketed. Now there’s a tipping point coming. As John Mauldin says, “an unsustainable trend will not be sustained.” At some point it’s going to come crashing down.
I have three teenage boys and for the first time in a long time I don’t think our kids are going to have a better future than we had. We’re saddling our children and grandchildren with $66 trillion of unfunded liabilities and still piling it on.
Everything this government is doing is the opposite of what it should be doing. With cash for clunkers and tax credits for houses we’re encouraging people to borrow more. They’re coming out with another for appliances later in the year. The debt is going to go up by $2 trillion this year. Ultimately it leads to a dollar collapse. I can’t see any other out at this point.
DC: If a crisis is unavoidable, what’s your most likely scenario?
JQ: Our standard of living drops dramatically. I keep reading about the government hitting the reset button and devaluing the dollar. Could they do what Roosevelt did in 1932 and confiscate gold and reset the dollar 50% lower to wipe out all the debt that we owe? That would be a choice on the part of the government, which is possible, but I don’t think they’re that smart. So I think it’s more likely to be a collapse where someone heads for the exits and everyone else follows. The Chinese and the Russians are already headed for the exits, but they’re doing it slowly and cautiously so they don’t cause a panic.
DC: What are you doing with your own money?
JQ: We’re putting three kids through school and have almost no debt. I’m mostly in inflation protected bonds. Our biggest stock positions are GLD and SLD, the ETFs for gold and silver. I think commodities are going to skyrocket, so I’ve got the commodity ETF DBA and a few gold mining stocks. But at this point I’m a lot in cash. I think the overall market heads back to its March lows and beyond.
DC: One last question: Your perspective is Austrian, or libertarian, or Constitutional or whatever other right-wing nutcase label you prefer. That’s generally not the dominant culture of an Ivy League school. Do your bosses read your stuff, and if so, what’s their reaction?
JQ: I keep a very low profile.
WHAT I THINK......GEORGE SMITH
In 1919 a book was written that contained a brief passage about how to bring any modern society to its knees without firing a shot.
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
At no time in college did I come close to even hearing about that passage, let alone actually reading it. The book in which it appeared was not assigned, nor was the idea of "currency debauchery" discussed in any political science or economics class. From what I’ve read of the author it is by far the most profound thought he ever penned, and one of the most important ever written. If every high school student were required to imbibe this passage as a condition of graduation, the world would likely be facing a sunnier future.
Unfortunately for the world, the author became famous for raising currency debauchery to a political and economic ideal. The teachers of today’s students, in high school and elsewhere, were trained to accept that ideal, in some cases as a condition of graduation. Debauchery – inflation – is and has been standard operating procedure of every country that boasts a currency, with the inflating done slowly, at least in the West, so people won’t notice. The only exceptions occur when those mysterious recessions arrive that require heavier doses of inflation to prevent the price level from falling. God help us if our cost of living ever declined.
Ninety years after publication of that passage, another book has arrived calling for the abolition of the world’s most respected currency debaucher, the U.S. Federal Reserve. It’s author, Ron Paul, has spent the better part of his career trying to wipe the Fed and its toxic effects off the face of the earth. His new book, End the Fed, is, as the title indicates, a death threat to the central bank. Given Paul’s popularity among libertarian activists and his congressional support for blowing the lid off Fed secrecy, the book cannot be dismissed as fanciful.
Paul’s libertarian view of the Fed brought to mind the 1950 Damon Knight short story, "To Serve Man." In that tale, aliens pay a visit to earth and claim to be man’s benefactors, telling a special session of the U.N. that they want "to bring [them] the peace and plenty which we ourselves enjoy." Two U.N. translators steal one of the aliens’ books and manage to translate the first chapter, only to discover to their horror that it’s a cookbook.
As he has done countless times, Ron Paul has translated the Fed-speak of the central bankers and its many defenders and subjected it to the rigors of free market and moral analysis. And the results are no less frightening than the aliens’ culinary recipes for mankind.
Can the Fed be reformed?
The first chapter of Paul’s 210-page book brings the curious on board by explaining why we should care about killing "the beast," as he refers to the Fed on at least one occasion. Wouldn’t it be more reasonable to push for reform? Abolishing any government creature is virtually impossible, especially one nearly a century old that serves as a pillar of the leviathan state. Isn’t a leader who calls for its abolition setting himself up for defeat?
The answer is no, for at least two reasons. One, any reform of the Fed would be pointless. Reform would imply it could exist in some condition that would be beneficial to all Americans. As a banking cartel with the license to counterfeit, there is no version of the Fed consistent with the ideas on which our welfare depends: voluntary exchange and private property. Second, abolishing the Fed is absolutely necessary if we care about freedom and civilization, because the central bank and its printing press are destroying both.
Ending the Fed, Paul writes,
[W]ould bring an end to dollar depreciation. It would take away from the government the means to fund its endless wars. It would curb the government’s attacks on the civil liberties of Americans, stop its vast debt accumulation that will be paid by future generations, and arrest its massive expansions of the welfare state that has turned us into a nation of dependents. [pp. 6–7]
One of his core beliefs is that,
Bad economic policy can destroy a civilization – no policy is more dangerous than bad monetary policy. [p. 9]
He moves on to the Fed’s fictitious history of how it was conceived as a means of curbing those injurious panics and recessions of the 19th century, and particularly the Panic of 1907. The solution to the problem of panics, said the bankers, was a more elastic currency, which is banker talk for money they could create when they wanted it. The banks also needed some institution to bail them out when they got in financial trouble. To accomplish their aims, the banking elite, together with key politicians, devised a plan for a central bank with a façade of decentralization. They called it the Federal Reserve, and it was passed into law by a depleted Congress two days before Christmas in 1913.
One Fed champion, the Comptroller of the Currency, issued a statement in 1914 that the Fed "supplies a circulating medium absolutely safe," and that all the previous panics would "seem to be mathematically impossible." He went on to say that "national-bank failures can hereafter be virtually eliminated." [p. 24] Drawing on data from the National Bureau of Economic Research, Paul shows that at least 18 "mathematically impossible" recessions have occurred since the Fed’s creation.
Later, he discusses the connection between central banking and government’s appetite for war, and how the Fed provided the bulk of the funding needed to send Americans overseas to fight in the European bloodbath of 1914–1918.
For the United States, [the "Great War"] meant the entrenchment of the imperial presidency and a globalized foreign policy mission. For Germany, it created the conditions of the great inflation, which led to Hitler . . . For Russia, it meant the beginning of Communism. [p. 66]
In a very real sense, we’re still fighting the "war to end all wars" that central banking made possible.
In a chapter called "The Current Mess," Paul discusses why the housing bubble burst and why the government’s response to it will only intensify the crisis. The suffering of housing and other sectors were "symptoms of a deeper problem: the Fed and its role in sustaining an unsustainable paper money system." [p. 124] Even Treasury secretary Timothy Geithner admitted to Charlie Rose that "easy credit" was one of "three types of broad errors of policy" that created the crisis, though as Paul’s partial transcript of their conversation reveals, Geithner didn’t name the Fed as the culprit.
The Fed created moral hazard by inducing "investors, savers, borrowers, and consumers to misjudge what was going on." Fed low interest rates created opportunities for quick profits, and competitive pressures made them virtually impossible to resist. But as Paul makes clear,
The problem isn’t with the choices made by central bankers, [such as low interest rates]. The problem is that they possess the power to make any choice at all. [p. 127]
The bursting of the housing bubble, he asserts, marks the end of a monetary era – the end of the fiat dollar reserve currency system. [p. 125]
Education is key
In his final chapters he makes the case for ending the Fed from four perspectives: philosophical, constitutional, economic, and libertarian. Simply stated, the Fed "is immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty. Its destructive nature makes it a tool of tyrannical government."
Nothing good can come from the Federal Reserve. It is the biggest taxer of them all. Diluting the value of the dollar by increasing its supply is a vicious, sinister tax on the poor and middle class. [p. 141]
In the last chapter he shows us the way out: "unplug the machinery of the Fed." [p. 202]
In an ideal world, the Fed would be abolished forthwith and the money stock frozen in place. . . credit would be rooted in money saved, not money created. Congress would remove the Fed’s charter, and the president would stop appointing Fed governors." [p. 203]
Along with this, the government’s gold stock would be used to guarantee the convertibility of the dollar "at home and abroad," resurrecting the dollar’s role as the world’s preeminent hard-money currency.
But Paul doesn’t stop here. We should reconsider and ultimately reject "the entire idea of a government monopoly on money." We should repeal legal tender laws and let everyone who wants to get into the business of money production. "This would create a competitive market in which the best monies would emerge over time to compete directly with the federal government’s dollar." [p. 205]
This is the ideal world, but unfortunately not the real one. Paul does not expect a "graceful transition to sound money" for various reasons, including the powerful corporate welfare-warfare constituency that demands "financing well beyond what could be paid for through taxes or even borrowing." [p. 207]
Thus, as we work for reform, we should prepare for hyperinflation, poverty, depression, and quite possibly war, "as protectionist sentiments around the world grow." [p. 208] If there’s good news, it’s that most big government supporters are people of good faith who are misinformed. We must learn how liberty works ourselves then help educate those who do not understand. We should draw encouragement in knowing truth is on the side of liberty.
Even if you’re well-read in Ron Paul, End the Fed will provide an invigorating presentation of the problems of the central bank. Personally, I couldn’t put it down. It is an invaluable resource for any advocate of sound money and liberty.
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
At no time in college did I come close to even hearing about that passage, let alone actually reading it. The book in which it appeared was not assigned, nor was the idea of "currency debauchery" discussed in any political science or economics class. From what I’ve read of the author it is by far the most profound thought he ever penned, and one of the most important ever written. If every high school student were required to imbibe this passage as a condition of graduation, the world would likely be facing a sunnier future.
Unfortunately for the world, the author became famous for raising currency debauchery to a political and economic ideal. The teachers of today’s students, in high school and elsewhere, were trained to accept that ideal, in some cases as a condition of graduation. Debauchery – inflation – is and has been standard operating procedure of every country that boasts a currency, with the inflating done slowly, at least in the West, so people won’t notice. The only exceptions occur when those mysterious recessions arrive that require heavier doses of inflation to prevent the price level from falling. God help us if our cost of living ever declined.
Ninety years after publication of that passage, another book has arrived calling for the abolition of the world’s most respected currency debaucher, the U.S. Federal Reserve. It’s author, Ron Paul, has spent the better part of his career trying to wipe the Fed and its toxic effects off the face of the earth. His new book, End the Fed, is, as the title indicates, a death threat to the central bank. Given Paul’s popularity among libertarian activists and his congressional support for blowing the lid off Fed secrecy, the book cannot be dismissed as fanciful.
Paul’s libertarian view of the Fed brought to mind the 1950 Damon Knight short story, "To Serve Man." In that tale, aliens pay a visit to earth and claim to be man’s benefactors, telling a special session of the U.N. that they want "to bring [them] the peace and plenty which we ourselves enjoy." Two U.N. translators steal one of the aliens’ books and manage to translate the first chapter, only to discover to their horror that it’s a cookbook.
As he has done countless times, Ron Paul has translated the Fed-speak of the central bankers and its many defenders and subjected it to the rigors of free market and moral analysis. And the results are no less frightening than the aliens’ culinary recipes for mankind.
Can the Fed be reformed?
The first chapter of Paul’s 210-page book brings the curious on board by explaining why we should care about killing "the beast," as he refers to the Fed on at least one occasion. Wouldn’t it be more reasonable to push for reform? Abolishing any government creature is virtually impossible, especially one nearly a century old that serves as a pillar of the leviathan state. Isn’t a leader who calls for its abolition setting himself up for defeat?
The answer is no, for at least two reasons. One, any reform of the Fed would be pointless. Reform would imply it could exist in some condition that would be beneficial to all Americans. As a banking cartel with the license to counterfeit, there is no version of the Fed consistent with the ideas on which our welfare depends: voluntary exchange and private property. Second, abolishing the Fed is absolutely necessary if we care about freedom and civilization, because the central bank and its printing press are destroying both.
Ending the Fed, Paul writes,
[W]ould bring an end to dollar depreciation. It would take away from the government the means to fund its endless wars. It would curb the government’s attacks on the civil liberties of Americans, stop its vast debt accumulation that will be paid by future generations, and arrest its massive expansions of the welfare state that has turned us into a nation of dependents. [pp. 6–7]
One of his core beliefs is that,
Bad economic policy can destroy a civilization – no policy is more dangerous than bad monetary policy. [p. 9]
He moves on to the Fed’s fictitious history of how it was conceived as a means of curbing those injurious panics and recessions of the 19th century, and particularly the Panic of 1907. The solution to the problem of panics, said the bankers, was a more elastic currency, which is banker talk for money they could create when they wanted it. The banks also needed some institution to bail them out when they got in financial trouble. To accomplish their aims, the banking elite, together with key politicians, devised a plan for a central bank with a façade of decentralization. They called it the Federal Reserve, and it was passed into law by a depleted Congress two days before Christmas in 1913.
One Fed champion, the Comptroller of the Currency, issued a statement in 1914 that the Fed "supplies a circulating medium absolutely safe," and that all the previous panics would "seem to be mathematically impossible." He went on to say that "national-bank failures can hereafter be virtually eliminated." [p. 24] Drawing on data from the National Bureau of Economic Research, Paul shows that at least 18 "mathematically impossible" recessions have occurred since the Fed’s creation.
Later, he discusses the connection between central banking and government’s appetite for war, and how the Fed provided the bulk of the funding needed to send Americans overseas to fight in the European bloodbath of 1914–1918.
For the United States, [the "Great War"] meant the entrenchment of the imperial presidency and a globalized foreign policy mission. For Germany, it created the conditions of the great inflation, which led to Hitler . . . For Russia, it meant the beginning of Communism. [p. 66]
In a very real sense, we’re still fighting the "war to end all wars" that central banking made possible.
In a chapter called "The Current Mess," Paul discusses why the housing bubble burst and why the government’s response to it will only intensify the crisis. The suffering of housing and other sectors were "symptoms of a deeper problem: the Fed and its role in sustaining an unsustainable paper money system." [p. 124] Even Treasury secretary Timothy Geithner admitted to Charlie Rose that "easy credit" was one of "three types of broad errors of policy" that created the crisis, though as Paul’s partial transcript of their conversation reveals, Geithner didn’t name the Fed as the culprit.
The Fed created moral hazard by inducing "investors, savers, borrowers, and consumers to misjudge what was going on." Fed low interest rates created opportunities for quick profits, and competitive pressures made them virtually impossible to resist. But as Paul makes clear,
The problem isn’t with the choices made by central bankers, [such as low interest rates]. The problem is that they possess the power to make any choice at all. [p. 127]
The bursting of the housing bubble, he asserts, marks the end of a monetary era – the end of the fiat dollar reserve currency system. [p. 125]
Education is key
In his final chapters he makes the case for ending the Fed from four perspectives: philosophical, constitutional, economic, and libertarian. Simply stated, the Fed "is immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty. Its destructive nature makes it a tool of tyrannical government."
Nothing good can come from the Federal Reserve. It is the biggest taxer of them all. Diluting the value of the dollar by increasing its supply is a vicious, sinister tax on the poor and middle class. [p. 141]
In the last chapter he shows us the way out: "unplug the machinery of the Fed." [p. 202]
In an ideal world, the Fed would be abolished forthwith and the money stock frozen in place. . . credit would be rooted in money saved, not money created. Congress would remove the Fed’s charter, and the president would stop appointing Fed governors." [p. 203]
Along with this, the government’s gold stock would be used to guarantee the convertibility of the dollar "at home and abroad," resurrecting the dollar’s role as the world’s preeminent hard-money currency.
But Paul doesn’t stop here. We should reconsider and ultimately reject "the entire idea of a government monopoly on money." We should repeal legal tender laws and let everyone who wants to get into the business of money production. "This would create a competitive market in which the best monies would emerge over time to compete directly with the federal government’s dollar." [p. 205]
This is the ideal world, but unfortunately not the real one. Paul does not expect a "graceful transition to sound money" for various reasons, including the powerful corporate welfare-warfare constituency that demands "financing well beyond what could be paid for through taxes or even borrowing." [p. 207]
Thus, as we work for reform, we should prepare for hyperinflation, poverty, depression, and quite possibly war, "as protectionist sentiments around the world grow." [p. 208] If there’s good news, it’s that most big government supporters are people of good faith who are misinformed. We must learn how liberty works ourselves then help educate those who do not understand. We should draw encouragement in knowing truth is on the side of liberty.
Even if you’re well-read in Ron Paul, End the Fed will provide an invigorating presentation of the problems of the central bank. Personally, I couldn’t put it down. It is an invaluable resource for any advocate of sound money and liberty.
Tuesday
THE FED'S INTERESTING WEEK
It has been an interesting week indeed for the Federal Reserve. Early this week, it was announced that President Obama intends to reappoint Fed Chairman Ben Bernanke to a second term in January, signaling a vote of confidence in him. Bernanke seems to be popular with the administration and with Wall Street, and with good reason. His lending policies have left big banks flush with newly created cash that covers up old mistakes and allows for new ones. By buying up mountains of Treasury debt he has also enabled spending to soar to ridiculous levels that should startle any responsible economist, and scare any American concerned about the value of the dollar. However, these highly sensitive decisions about our money are not made by economists, they are made by politicians. Bernanke, like most of his predecessors, is the politician’s best friend. However, there is no reason to believe any other central planner would behave any differently, considering the immense political pressure on the Fed.
Fed policies have been as bad for the economy as they are good for politicians and bankers, as the recently released numbers on the debt and deficit demonstrate. For the first time since World War II the annual budget deficit is projected to be over 11 percent of the nation’s gross domestic product. It is also projected that by 2019 the national debt will be 68�f GDP. Our path, if unchanged, is completely untenable.
The administration claims that it inherited a dire situation from the last administration, which is absolutely true. However, that hasn’t stopped them from accepting all the policies and premises that got us here, and accelerating those policies to rapidly make a bad situation much worse. The bailouts started with the last administration. They have gotten bigger with this one. The last administration gave us expanded government involvement in healthcare with a new prescription drug benefit. This administration gave us a renewal and expansion of SCHIP, and now the current healthcare takeover attempts. In reality, we can afford none of this, but shady monetary policy allows Washington to continue along its merry way, aggravating all our economic problems.
Not everyone in government finds it acceptable that the Fed wields so much power and privilege in secrecy. Last week, a federal judge ruled against Fed secrecy, compelling them to release under the Freedom of Information Act information regarding which banks received emergency loans, and under what terms. The Fed will, of course do everything in its power to fight this ruling and it is certainly not the last word on the issue. Still, it is encouraging to see that the interests of the taxpayers were defended victoriously in court, while the Fed only sees the plight of its big banker friends.
Meanwhile HR 1207 and S604, legislation to open up the Fed’s books to a complete audit, continue to gain momentum in Congress as the people continue to insist on real transparency of the Federal Reserve. One way or another, the days of Fed autonomy are coming to an end, as well they should. No one should have the power to debauch the currency and gut the economy as they do. It is time they answered for their actions, so the people can understand that we truly are better off with freedom instead of Fed tyranny.
Fed policies have been as bad for the economy as they are good for politicians and bankers, as the recently released numbers on the debt and deficit demonstrate. For the first time since World War II the annual budget deficit is projected to be over 11 percent of the nation’s gross domestic product. It is also projected that by 2019 the national debt will be 68�f GDP. Our path, if unchanged, is completely untenable.
The administration claims that it inherited a dire situation from the last administration, which is absolutely true. However, that hasn’t stopped them from accepting all the policies and premises that got us here, and accelerating those policies to rapidly make a bad situation much worse. The bailouts started with the last administration. They have gotten bigger with this one. The last administration gave us expanded government involvement in healthcare with a new prescription drug benefit. This administration gave us a renewal and expansion of SCHIP, and now the current healthcare takeover attempts. In reality, we can afford none of this, but shady monetary policy allows Washington to continue along its merry way, aggravating all our economic problems.
Not everyone in government finds it acceptable that the Fed wields so much power and privilege in secrecy. Last week, a federal judge ruled against Fed secrecy, compelling them to release under the Freedom of Information Act information regarding which banks received emergency loans, and under what terms. The Fed will, of course do everything in its power to fight this ruling and it is certainly not the last word on the issue. Still, it is encouraging to see that the interests of the taxpayers were defended victoriously in court, while the Fed only sees the plight of its big banker friends.
Meanwhile HR 1207 and S604, legislation to open up the Fed’s books to a complete audit, continue to gain momentum in Congress as the people continue to insist on real transparency of the Federal Reserve. One way or another, the days of Fed autonomy are coming to an end, as well they should. No one should have the power to debauch the currency and gut the economy as they do. It is time they answered for their actions, so the people can understand that we truly are better off with freedom instead of Fed tyranny.
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