PDA

View Full Version : The Austrians Were Right- Ron Paul 11/20



Duckenheimer
11-25-2008, 10:42 PM
Statement of Congressman Ron Paul

United States House of Representatives

The Austrians Were Right

November 20, 2008



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

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

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

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

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

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

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

Similar mistakes were made in the 1930s and ushered in the age of the New Deal, the Fair Deal, the Great Society and the supply-siders who convinced conservatives that deficits didn?t really matter after all, since they were anxious to finance a very expensive deficit-financed American empire.

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

Although it is obvious that the Keynesians were all wrong and interventionism and central economic planning don?t work, whom are we listening to for advice on getting us out of this mess? Unfortunately, it?s the Keynesians, the socialists, and big-government proponents.

Who?s being ignored? The Austrian free-market economists?the very ones who predicted not only the Great Depression, but the calamity we?re dealing with today. If the crisis was predictable and is explainable, why did no one listen? It?s because too many politicians believed that a free lunch was possible and a new economic paradigm had arrived. But we?ve heard that one before--like the philosopher?s stone that could turn lead into gold. Prosperity without work is a dream of the ages.

Over and above this are those who understand that political power is controlled by those who control the money supply. Liberals and conservatives, Republicans and Democrats came to believe, as they were taught in our universities, that deficits don?t matter and that Federal Reserve accommodation by monetizing debt is legitimate and never harmful. The truth is otherwise. Central economic planning is always harmful. Inflating the money supply and purposely devaluing the dollar is always painful and dangerous.

The policies of big-government proponents are running out of steam. Their policies have failed and will continue to fail. Merely doing more of what caused the crisis can hardly provide a solution.

The good news is that Austrian economists are gaining more acceptance every day and have a greater chance of influencing our future than they?ve had for a long time.

The basic problem is that proponents of big government require a central bank in order to surreptitiously pay bills without direct taxation. Printing needed money delays the payment. Raising taxes would reveal the true cost of big government, and the people would revolt. But the piper will be paid, and that?s what this crisis is all about.

There are limits. A country cannot forever depend on a central bank to keep the economy afloat and the currency functionable through constant acceleration of money supply growth. Eventually the laws of economics will overrule the politicians, the bureaucrats and the central bankers. The system will fail to respond unless the excess debt and mal-investment is liquidated. If it goes too far and the wild extravagance is not arrested, runaway inflation will result, and an entirely new currency will be required to restore growth and reasonable political stability.

The choice we face is ominous: We either accept world-wide authoritarian government holding together a flawed system, OR we restore the principles of the Constitution, limit government power, restore commodity money without a Federal Reserve system, reject world government, and promote the cause of peace by protecting liberty equally for all persons. Freedom is the answer.

http://www.house.gov/apps/list/speech/tx14_paul/statement_11_20_08.shtml

StartTheMachine
11-25-2008, 11:00 PM
The likely destination of this letter:
































http://www.primeideas.com/DistributorCentralImages/Games/games5062.gif

stealth_swimmer
11-25-2008, 11:26 PM
The likely destination of this letter:
































http://www.primeideas.com/DistributorCentralImages/Games/games5062.gif



Unfortunately so. :(

FullSack
11-26-2008, 12:11 AM
Although it is obvious that the Keynesians were all wrong and interventionism and central economic planning don?t work, whom are we listening to for advice on getting us out of this mess? Unfortunately, it?s the Keynesians, the socialists, and big-government proponents.

Thats what i don't understand, all the high profile big-wigs like paulson, bernanke and geithner are the dudes who ****ed up, so why are they seen as the ones to sort things out - eg. all the nut hugging of geithner and obama making him treasury secretary

Morbid_Mind
11-26-2008, 12:42 AM
Thats what i don't understand, all the high profile big-wigs like paulson, bernanke and geithner are the dudes who ****ed up, so why are they seen as the ones to sort things out - eg. all the nut hugging of geithner and obama making him treasury secretary

Who better to put the fire out than the arsonist?

The real funny thing is, the Keynesians don't believe they caused this mess. They think it was the free market and they're dead wrong.

Resonator
11-26-2008, 12:59 AM
In before Devian claims that the Austian free market economists are all CT hacks.

alain
11-26-2008, 03:24 AM
some care to give a brief overview on what Austrian Free Market economics is?

Jeremy1
11-26-2008, 03:39 AM
some care to give a brief overview on what Austrian Free Market economics is?

www.mises.org

stealth_swimmer
11-26-2008, 09:38 AM
some care to give a brief overview on what Austrian Free Market economics is?

That's what it is, lol. It used to be that it was just known as "economics" but of course since Keynes influenced economics, people have been less inclined toward the Austrian school even though Keynes has sorta been discredited by now. You'd at least think the Chicago schools of Monetarism would have gained more influence by now, especially since Milton Friedman gained notoriety even by the big shots like Alan Greenspan and Ben Bernanke. Greenspan seemed to do a good job of holding this terrible system together for a while but overdid easy money especially later on. As for Bernanke, I'm glad he's a fan of Friedman's but he doesn't seemed to have really learned any of the lessons and seems to think that today's crisis is the same as in the Depression.

Here's a nice article I found recently of Anna Schwartz saying how Bernanke shouldn't be pumping so much money into the system and that the banks should fail. This is of special importance to note since she worked with Milton Friedman on the book "A Monetary History of the United States" that showed that the Depressions was caused by the Fed decreasing the money supply (though the Austrian school believes it was the Fed INCREASING it earlier and then causing a correction later on, but either way you slice it they had to decrease it and they did so at a time when the economy was actually growing and the supply of gold increased so the decrease in the money supply was even more painful).

Anyways, the gist of the article is that today's problem is not like the Depression where banks faced a bank runs by the public. The problem today is banks aren't lending because they don't know if the people they're lending to will be able to pay them back.
http://online.wsj.com/article/SB122428279231046053.html

KennyK
11-26-2008, 09:45 AM
are there any countries that follow Austrian Free Market economics 100%

unaware

Jeremy1
11-26-2008, 09:47 AM
are there any countries that follow Austrian Free Market economics 100%

unaware

Not a one. Keyensianism has virtually taken the world over.

KennyK
11-26-2008, 09:51 AM
Not a one. Keyensianism has virtually taken the world over.

i've perused that mises.org site.

interesting read

Morbid_Mind
11-26-2008, 09:54 AM
are there any countries that follow Austrian Free Market economics 100%

unaware

No, the closest there is would be Hong Kong; the US did, but that was over 100 years ago and that's the system that helped to bring us to be the most dominant nation in the world.

The "problem" with Austrian Economics, or the problem that governments have with it, is that it severely limits the powers and role of the government.

Keynesianism, on the other hand, calls for a larger, more powerful, centralized government. Which is why those in government love it so.

In Keynes' ideal world there would be a single World Central Bank, a single global currency (the Bancor) and wanted to move towards a global government. He also would have wanted a world in which people would have a 0% savings rate.

"The bancor was a global currency proposed by British economist John Maynard Keynes in the early 1940s. Under Keynes's system, all international trade would be in bancors, managed by an institution called the International Clearing Union (ICU). Balance of trade between nations would be maintained by placing the obligation equally on creditor and debtor nations. Nations with a trade surplus ? creditor nations ? would be charged an interest on their surplus accounts. This would force them to spend their surplus in debtor nations or lose it over time."

http://manishjethani.com/blog/2008/11/23/keynes-proposed-the-bancor/

kvk1
11-26-2008, 09:57 AM
The likely destination of this letter:


NBA on TNT?

:confused:

Jeremy1
11-26-2008, 10:01 AM
i've perused that mises.org site.

interesting read

Cool. Yeah, it is a really good site with tons of info. Make sure to take advantage of all the free online books.

Start here:
http://mises.org/books/fed.pdf


Then.....
http://mises.org/books/

StartTheMachine
11-26-2008, 11:39 AM
NBA on TNT?

:confused:
Both likely have their hands in Pelosi's pockets. Goddamn liberal elitists.

kvk1
11-26-2008, 12:08 PM
Both likely have their hands in Pelosi's pockets. Goddamn liberal elitists.

hahah true story

stealth_swimmer
11-26-2008, 02:59 PM
No, the closest there is would be Hong Kong; the US did, but that was over 100 years ago and that's the system that helped to bring us to be the most dominant nation in the world.

The "problem" with Austrian Economics, or the problem that governments have with it, is that it severely limits the powers and role of the government.

Keynesianism, on the other hand, calls for a larger, more powerful, centralized government. Which is why those in government love it so.

In Keynes' ideal world there would be a single World Central Bank, a single global currency (the Bancor) and wanted to move towards a global government. He also would have wanted a world in which people would have a 0% savings rate.

"The bancor was a global currency proposed by British economist John Maynard Keynes in the early 1940s. Under Keynes's system, all international trade would be in bancors, managed by an institution called the International Clearing Union (ICU). Balance of trade between nations would be maintained by placing the obligation equally on creditor and debtor nations. Nations with a trade surplus ? creditor nations ? would be charged an interest on their surplus accounts. This would force them to spend their surplus in debtor nations or lose it over time."

http://manishjethani.com/blog/2008/11/23/keynes-proposed-the-bancor/

x2, and Hong Kong ain't as free as it used to be because it's now under Chinese control again and so they, from what I understand, are under a plan where after a certain number of years they gotta fully adopt the way the Chinese market works.


And man, on the Keynes stuff there. I knew he was for government intervention but I didn't know he was for it on THAT massive of a scale, lol.

Mtguy8787
11-26-2008, 03:46 PM
some care to give a brief overview on what Austrian Free Market economics is?

http://www.campaignforliberty.com/edu/economics.php

Morbid_Mind
11-26-2008, 03:48 PM
x2, and Hong Kong ain't as free as it used to be because it's now under Chinese control again and so they, from what I understand, are under a plan where after a certain number of years they gotta fully adopt the way the Chinese market works.

Part of the deal back in 1998 was that the Chinese coouldn't touch it for 50 years.

I don't think they're going to fiddle with it after that time period anyways.


And man, on the Keynes stuff there. I knew he was for government intervention but I didn't know he was for it on THAT massive of a scale, lol.

Keynes was pretty much a conspiracy theorists wet dream and worst nightmare all rolled up into one. A guy like that being so open about wanting a one world goernment.

stealth_swimmer
11-27-2008, 06:36 PM
Part of the deal back in 1998 was that the Chinese coouldn't touch it for 50 years.

I don't think they're going to fiddle with it after that time period anyways.


ah, ok




Keynes was pretty much a conspiracy theorists wet dream and worst nightmare all rolled up into one. A guy like that being so open about wanting a one world goernment.

lulz, well there ya go

gotDOMS
11-27-2008, 06:39 PM
just because ron paul well informed and is aware of what is going on regarding country and world does not make him suited for president

NJlifter88
11-27-2008, 06:46 PM
me, my father, and my grandfather have been huge proponents of austrian economics. there is a two week program in the summer at the von mises institute in alabama, where you get to take classes, engage in discussions, and study the austrian school of economics. i may go if i don't spend the entire summer taking classes for credit (im on the 5 year plan at this point due to transfers). but anyway, it would be awesome if any other miscer was interested and went down there.

Duckenheimer
11-27-2008, 06:47 PM
http://www.campaignforliberty.com/edu/economics.php

Where does this quote in your sig come from? "Freedom..." Couldn't find a google result.

Chris Lee
11-27-2008, 07:03 PM
just because ron paul well informed and is aware of what is going on regarding country and world does not make him suited for president

You're right... he's too good. We couldn't have someone as intelligent and as knowledgeable as him fill one of the greatest roles in the country.

Morbid_Mind
11-27-2008, 07:51 PM
Where does this quote in your sig come from? "Freedom..." Couldn't find a google result.

cp069Y_P-9M