Ron Paul’s latest book, End the Fed, will be released on September 16. If you are at all interested, please pre-order the book to help make it a best seller on Amazon and get it more exposure. Also, don’t forget to contact your congressman and senators and tell them to cosponsor HR1207 and S604 to Audit the Fed.
Tag Archive for 'austrian economics'
Ben Bernanke had no idea what was going to happen to the economy. Watch this collection of his statements from the past. This should be one reason to realize that we need to audit the fed. The fed manipulates the economy and we need to know what they do.
For those unfamiliar with those who say what was coming you can watch the following video compiling historical clips showing that Peter Schiff was right.
(HT: Mises.org)
Mises.org has posted an excellent article on free-market education to their site. I recommend that you go read it for yourself, but will give a short synopsis here. A teacher in a San Diego high school decides to sell advertising on tests and quizzes to local area businesses and parents. This helps the teacher to do his best job in class without incurring more expenses himself. People allowed to operate within the free-market will figure out a profitable way to do the best thing for all parties involved. Taxpayer funded schools (or anything else for that matter) are nothing but a drain on the taxpayer and will always do a poor job. Think of the irony of congress getting a pay raise while they demand pay cuts for the automaker executives. We need to remember the housing bubble which precipitated the current crisis started with the fed and it’s socialist manipulation of credit. Congress could control or abolish the fed if they cared. Shouldn’t they take a pay cut – or be fired?
Ron Paul before the U.S. House of Representatives, 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.
Original at The Austrians Were Right.
The important fact to remember when considering the current economic crisis is to remember that people like Ron Paul, who hold to austrian economics, predicted it. They pointed out years ago that what Greenspan was doing would cause such a crisis eventually.
The current economic crises involving Fannie Mae, Freddie Mac, AIG, and the government has caused a host of activity by the federal reserve and the treasury. Most people are looking to the government to solve the problem. If only the government would step in to “save” us from the evils of capitalism. We are led to believe that the government has nothing but good intentions at heart and is also omniscient to solve the problem. Unfortunately government and those in it are not even able to look back less than 100 years to see that their solutions have been tried before and failed. Murray Rothbard concludes his book America’s Great Depression with this condemnation of the policies of the Hoover administration:
Mr. Hoover met the challenge of the Great Depression by acting quickly and decisively, indeed almost continuously throughout his term of office, putting into effect “the greatest program of offense and defense” against depression ever attempted in America. Bravely he used every modern economic “tool,” every device of progressive and “enlightened” economics, every facet of government planning, to combat the depression. For the first time, laissez-faire was boldly thrown overboard and every governmental weapon thrown into the breach. America had awakened, and was now ready to use the State to the hilt, unhampered by the supposed shibboleths of laissez-faire. President Hoover was a bold and audacious leader in this awakening. By every “progressive” tenet of our day, he should have ended his term a conquering hero; instead he left America in utter and complete ruin—a ruin unprecedented in length and intensity.
What was the trouble? Economic theory demonstrates that only governmental inflation can generate a boom-and-bust cycle, and that the depression will be prolonged and aggravated by inflationist and other interventionary measures. In contrast to the myth of laissez-faire, we have shown in this book how government intervention generated the unsound boom of the 1920s, and how Hoover’s new departure aggravated the Great Depression by massive measures of interference. The guilt for the Great Depression must, at long last, be lifted from the shoulders of the free-market economy, and placed where it properly belongs: at the doors of politicians, bureaucrats, and the mass of “enlightened” economists. And in any other depression, past or future, the story will be the same.
Unfortunately in the 30s Roosevelt continued to follow and expand upon the policies that Hoover had started. If government and the fed had left the economy alone the great depression would probably have never happened. If they decided to not try and “fix” the problem it would have ended quicker. Too bad most of our current crop of politicians and unelected buerocrats have not learned anything from history.
At the Mises Institute you can download or read online America’s Great Depression for free. Many of the other books I mentioned yesterday are available for free at the Mises website.
All kinds of theories and ideas are being thrown around on the news and talk radio about how the government should solve the current crisis. Over the years I have become convinced that the government caused the problem and that the more the government does the longer the problem will go. Read America’s Great Depression to see how the government helped cause and extend the great depression. The Case Against the Fed is an excellent source of arguments and evidence showing the destructiveness of fractional reserve banking. Economics in One Lesson explains economics in an informative way that shows how government intervention and taxes hurt the economy. How Capitalism Saved America gives many historical examples of unfettered capitalism in United States history that helped to produce the prosperity that generations past started and we continue to experience today. It will also help to see that what we have today isn’t really capitalism and that the supposedly deregulated businesses suffer under much government control.
There are some additional books that I plan to read soon that should also be worthy of recommendation. What Has Government Done to Our Money?, A History of Money and Banking in the United States, and Prices and Production to name a few. For a good work of fiction I really enjoyed An Enemy of the State. It is a science fiction novel examing the takeover of a totalitarian intergalactic society through purely economic means. I found it helpful to see these economic concepts worked out in fiction to get a glimpse of how it might work.
Recent Comments