Thread: Ron Paul's 19th century economic ideas

Ron Paul's 19th century economic ideas

Ron Paul's appeal is a puzzle to many establishment types who wonder why so many voters, young people in particular, are drawn to the 76-year-old Republican congressman from Texas.

RON PAUL: Stop the Fed from distorting the market
Let us suggest a handful of reasons. In a party that sounds all too eager to attack foreign countries — Iraq a decade ago and Iran currently — Paul urges caution. At a time when the soaring national debt threatens to burden future generations, he is sincere in his call for smaller government. In an era of flip-flopping politicians, he is remarkably consistent. And his libertarian views resonate with people who are tired of the nanny state telling them what to do.

Inasmuch as Paul's third place finish in Iowa, and possible second place finish today in New Hampshire, promotes him from uninvited guest at the GOP garden party to man-to-be-reckoned-with, his positions deserve closer scrutiny, and under the magnifying glass the picture is a lot less appealing.

Even where Paul starts with common sense, his ideological rigidity leads him to applications that range from idiosyncratic to bizarre to downright dangerous.

Domestically, he has proposed the legalization of heroin use and prostitution. On foreign policy, his appropriate caution about military entanglements veers into isolationism and blame-America-first talk. Just recently, he classified economic sanctions against Iran, aimed at stopping Tehran's nuclear program, as "an act of war." He has called for getting rid of the CIA and leaving the NATO alliance. He has described the killing of Osama bin Laden as unnecessary.

But perhaps Paul's strangest obsession — particularly in a presidential election expected to revolve around management of the U.S. economy — has to do with the Federal Reserve, the central bank created in 1913.

Paul blames the Fed for the housing collapse and for debasing the value of the dollar. In each Congress since 1999, he has introduced legislation (without finding a single co-sponsor) to abolish the Fed. Instead, he'd leave economic decision-making to Congress. Never mind that without the Fed's rapid actions in the 2008 fiancial crisis, the nation would now be in a depression.

Paul apparently thinks that the best approach to a 21st century globalized economy is a return to banking practices of the 19th century.

By way of a little history, the Fed was created a century ago after the fifth banking crisis in just 34 years made clear that a rapidly industrializing nation couldn't get by with the kind of loosely knit banking system that it had when the economy was mostly agrarian.

The value of a politically independent central bank has been proven repeatedly since then. When Lehman Bros. failed in September 2008, it was Fed Chairman Ben Bernanke who played a key role in preventing the other investment banks from collapsing like a row of dominoes. By late 2008 and early 2009, banks had become so averse to lending that even blue-chip industrial companies such as General Electric, Caterpillar, Verizon and Harley Davidson relied on the Fed to finance their day-to-day operations.

This willingness to lend was what kept a financial crisis from turning into a second Great Depression. The notion spread by Paul and others that the Fed caused the crisis is a bit like seeing a bunch of firefighters next to a burning building and concluding that they must have set it ablaze.

Paul has made some important contributions to the nation's political conversation. But as much as he is a voice of reason on some issues, such as the need for an independent judiciary, his views are off-the-wall on others. Ending the Fed tops the list.

http://www.usatoday.com/news/opinion...omy/52473466/1

I think USA Today is a little biased in their thinking towards Paul. We have had some bad times and I am talking even starting in the early 70's (with the FED) with jobs and banks and other mortgage facilities. And cutting back on spending is what we need. Washington probably doesn't .like it because they love to spend our money and the defense contractors love the business. And as far as legalizing a drug or prostitution. Do you really think people will run out and start doing it just because someone says it is legal? And prostitution has been around for a very very long time.

RELATED

Fed Reports Profit, Sends Nearly $77 Billion to Treasury

http://www.alipac.us/f19/fed-reports...easury-247810/

The Savings and Loans Crisis created the greatest banking collapse since the Great Depression of 1929. By 1989, over half the Savings and Loans had failed, along with the FSLIC fund that was created to insure their deposits. Empire Savings in Texas revealed land flips and other criminal activities. Half of the failed S&L's were from Texas, pushing that state into recession. As bad land investments were auctioned off, real estate prices collapsed, office vacancy rose to 30%, and crude oil prices fell 50%.

and also here
Savings and loan crisis - Wikipedia, the free encyclopedia

I believe with the newer more complex communications banks can fair better today without the use of the FED