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Source link: http://blog.mises.org/10667/ron-explains-the-problem-with-money-creation/
Ron explains the problem with money creation
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Hopefully Ron Paul gains strength within the Republican Party, and he can become a potential threat to Obama’s re-election.
Very good!
Nice tie, Ron.
A remnant exists in exile.
I’ve noticed a growing trend on this site. I think it is both improper and a disservice to this community to refer to Ron Paul as simply “Ron.”
Huffington actually sounded coherent. It’s too bad that those on the ‘left’ just can’t give up their love for more government. She talks about lobbyists, but can’t get her head around the fact that you can’t bribe somebody to manipulate the system if they don’t have the power to manipulate the system. She’s not against manipulation, she’s in favor of different manipulation.
I am under the impression that some of the major contributors here know Dr. Paul personally, making the use of his first name somewhat appropriate. I do agree that if you are not on a first-name basis with the guy, don’t use his first name. But maybe I’m just a traditionalist like that.
I thought it was amazing, really, to hear Arianna Huffington openly state that what we have going in our country is “not capitalism”, and then going on to describe the situation as an oligopoly. You NEVER hear this type of admission from the Left, which is usually desperate to indict capitalism for every ill.
It’s sad when the remnants in exile are the only ones with a clear view of reality.
It’s sad when the remnants in exile are the only ones with a clear view of reality.
Does anyone have a transcript or link to a video of the speech Congressman Paul gave in 2003 when he called the housing bubble?
http://www.ronpaul.com/books/pillars-of-prosperity/
page 379 or so
Dr. Ron Paul is such an inspirational man.
I wish our politicians in the UK spoke with as much candour and passion. It’s interesting that the UK banking system moved from perfectly competitive markets to oligopoly and indeed with Northern Rock and the HBOS-Lloyds merger, state monopoly. The tax-payer is a majority shareholder of RBS as well.
When Eddie George was governor at the Bank of England, neither Berings nor BCCI were bailed out. This sent out a signal to the other banks that if they were under-capitalised or had taken on too much risk, there was to be no socialisation of their losses.
What we see today is a socialistic sham, but there are enough ‘useful idiots’ to decry the failure of capitalism.
Kudos to Morning Joe for providing to the public some sanity. It’s too bad noone’s watching.
>>>I’ve noticed a growing trend on this site. I think it is both improper and a disservice to this community to refer to Ron Paul as simply “Ron.”<<<
Would you prefer that we use titles that place him above the level of the subservient?
I know “Dr. Paul” or “Congressman Paul” wouldn’t place himself above you, why subordinate? He’d prefer “Ron.”
Transcript of Ron Paul in 2003:
House Financial Services Committee
Congressional Record—U.S. House of Representatives
September 10, 2003
Mr. Chairman, thank you for holding this hearing on the Trea-
sury Department’s views regarding Government Sponsored
Enterprises (GSEs). I would also like to thank Secretaries Snow
and Martinez for taking time out of their busy schedules to appear
before the committee.
I hope this committee spends some time examining the special
privileges provided to GSEs by the federal government. According
to the Congressional Budget Office, the housing-related GSEs
received $13.6 billion worth of indirect federal subsidies in fiscal
year 2000 alone. Today, I will introduce the Free Housing Market
Enhancement Act, which removes government subsidies from the
Federal National Mortgage Association (Fannie Mae), the Federal
Home Loan Mortgage Corporation (Freddie Mac), and the
National Home Loan Bank Board.
One of the major government privileges granted to GSEs is a
line of credit with the United States Treasury. According to some
estimates, the line of credit may be worth over $2 billion. This
explicit promise by the Treasury to bail out GSEs in times of eco-
nomic difficulty helps the GSEs attract investors who are willing
to settle for lower yields than they would demand in the absence
of the subsidy. Thus, the line of credit distorts the allocation of
capital. More importantly, the line of credit is a promise on behalf
of the government to engage in a huge unconstitutional and
immoral income transfer from working Americans to holders of
GSE debt.
The Free Housing Market Enhancement Act also repeals the
explicit grant of legal authority given to the Federal Reserve to
purchase GSE debt. GSEs are the only institutions besides the
United States Treasury granted explicit statutory authority to
monetize their debt through the Federal Reserve. This provision
gives the GSEs a source of liquidity unavailable to their competi-
tors.
The connection between the GSEs and the government helps
isolate the GSE management from market discipline. This isola-
tion from market discipline is the root cause of the recent reports
of mismanagement occurring at Fannie and Freddie. After all, if
Fannie and Freddie were not underwritten by the federal govern-
ment, investors would demand Fannie and Freddie provide
assurance that they follow accepted management and accounting
practices.
Ironically, by transferring the risk of a widespread mortgage
default, the government increases the likelihood of a painful crash
in the housing market. This is because the special privileges
granted to Fannie and Freddie have distorted the housing market
by allowing them to attract capital they could not attract under
pure market conditions. As a result, capital is diverted from its
most productive use into housing. This reduces the efficacy of the
entire market and thus reduces the standard of living of all Amer-
icans.
Despite the long-term damage to the economy inflicted by the
government’s interference in the housing market, the govern-
ment’s policy of diverting capital to other uses creates a short-term
boom in housing. Like all artificially-created bubbles, the boom in
housing prices cannot last forever. When housing prices fall,
homeowners will experience difficulty as their equity is wiped out.
Furthermore, the holders of the mortgage debt will also have a
loss. These losses will be greater than they would have otherwise
been had government policy not actively encouraged overinvest-
ment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning
by purchasing GSE debt and pumping liquidity into the housing
market, but this cannot hold off the inevitable drop in the housing
market forever. In fact, postponing the necessary but painful mar-
ket corrections will only deepen the inevitable fall. The more peo-
ple invested in the market, the greater the effects across the econ-
omy when the bubble bursts.
No less an authority than Federal Reserve Chairman Alan
Greenspan has expressed concern that government subsidies pro-
vided to GSEs make investors underestimate the risk of investing
in Fannie Mae and Freddie Mac.
Mr. Chairman, I would like to once again thank the Financial
Services Committee for holding this hearing. I would also like to
thank Secretaries Snow and Martinez for their presence here
today. I hope today’s hearing sheds light on how special privileges
granted to GSEs distort the housing market and endanger Ameri-
can taxpayers. Congress should act to remove taxpayer support
from the housing GSEs before the bubble bursts and taxpayers are
once again forced to bail out investors who were misled by foolish
government interference in the market. I therefore hope this com-
mittee will soon stand up for American taxpayers and investors by
acting on my Free Housing Market Enhancement Act.
I’ve noticed a growing trend on this site. I think it is both improper and a disservice to this community to refer to Ron Paul as simply “Ron.”
Ron Paul has said, “Please, just call me Ron”.
I will continue to refer to him as Dr. Paul (despite his invitation to the contrary), as a small recognition of uncontested role as greatest American Statesman of our time. I completely understand that he wants us to think of him and treat him as just another dedicated American, but this is testament to his greatness and kind humility. I’ll step it up personally, because he deserves it.
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