Thread: Ron Paul: Be Prepared for the Worst ~ its going to end badly

Be Prepared for the Worst

Ron Paul, 10.29.09, 09:20 AM EDT
Forbes Magazine dated November 16, 2009
Comments 160



The large-scale government intervention in the economy is going to end badly.


I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan’s excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?

What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.

Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.

The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.

Ron Paul is a Republican congressman from Texas.

http://www.forbes.com/forbes/2009/1116/ ... -mind.html

We are in economic collapse. There are 5 crucial actions we need to take to reverse the policies that caused it:

1. stop illegal immigration - stops unsustainable population growth that generates more people than jobs, unemployment for Americans, tax burdens for US citizens, more government spending and more debt

2. pass the FairTax - redistributes earned income back to those who earned it and then when people want to buy new products and services used for non-business purposes when they can afford it, they pay a national retail sales tax at the register or when they pay a bill or invoice for a service they voluntarily chose to purchase

3. protect our trade - brings our manufacturers back home where they belong so we can recreate the 30 million good jobs forfeited under Free Trade Treason Treaties and recovers the $840 billion currency loss in foreign trade deficits for manufactured goos

4. legalize/regulate/tax the illegal drug trade - reduces government spending, ends the incarceration and costs of non-violent drug users, recovers this $300 billion a year currency drain sucked out of our nation by foreign drug cartels, ends the unregulated uncontrolled illegal drug trafficking that sells to minors, that sells bad dope, that threaten parks, streets, schools and has destroyed otherwise safe neighborhoods and turned them into gang turf for drug lords

5. drill baby drill - reduces our dependency on foreign oil, recovers $400 billion a year of our currency lost to foreign oil purchases, creates jobs, reduces the cost of energy to fuel homes, cars, businesses and manufacturing facilities while we develop other viable and affordable alternatives

It's not complicated. It's very simple.

I'm a Republican Citizen from North Carolina.

I cannot believe the Repub Party gave us McCain/Palin as a ticket, when there was Ron Paul that sees the bigger picture.
Nope, none of this will end well, no matter how many green shoots are being talked about. With continual printing of money, those green shoots ain't worth what they were before the recession. The Chinese, the largest owners of Treasury obligations, are getting cranky, as the interest we pay them in dollars is not worth much. The Russians don't want to sell their oil in dollar denominations.
And this ain'ta gonna end real soon.

Originally Posted by vortex

I cannot believe the Repub Party gave us McCain/Palin as a ticket, when there was Ron Paul that sees the bigger picture.
Nope, none of this will end well, no matter how many green shoots are being talked about. With continual printing of money, those green shoots ain't worth what they were before the recession. The Chinese, the largest owners of Treasury obligations, are getting cranky, as the interest we pay them in dollars is not worth much. The Russians don't want to sell their oil in dollar denominations.
And this ain'ta gonna end real soon.

Russian doesn't want to sell their oil in dollars any more. So, lets drill our own and then it doesn't matter what the Russians want to do with their oil. Drill Baby Drill.

China is the largest owner of treasury obligations because we have a $265 billion a year trade deficit with China, they take all our money then have to loan it back to us with interest to keep US afloat. So, lets produce our own products, pay our own workers, keep our own currency in our pwn country and then if we need to sell some treasury obligations to pay for some defense weapons or some MediCaid for the poor but don't have the cash on hand at the moment, Americans have the money to buy their own treasury obligations with their own money and earn the interest for themselves. Protect our trade.

Any day now I expect the Mexican drug cartels will want to be paid in Euros for their drug sales because Mexico doesn't want any more dollars either. So if we legalize our drug trade, regulate it to prevent sales to minors, ensure safe production of these drugs, provide legal distribution through regulated monitored stores under a civil code instead of a criminal code, tax the transactions under the FairTax, use some of the FairTaxes collected on drug transactions to better educate people about the risk and consequences of using drugs and pay for free rehabilitation on demand without stigma for anyone who wants or needs it, every dime of expense paid for lock stock and barrel with the drug taxes the drug users paid at no one else's expense, then there can be a good ending to this disaster. Pass the FairTax and legalize/regulate tax the illegal drug trade.

Of course we also have to stop illegal immigration so we can reduce government spending on the poverty and public services these excess aliens burden us down with such as MediCaid, welfare, unemployment, food stamps, free school lunch, SCHIP, HUD and etc., etc., etc. See when we bring our 30 million good jobs back, pass the FairTax, drill baby drill and stop illegal immigration, there will be very few people who even need entitlements of any kind. Even drug users are paying their own way at that point without crime, without incarceration cost, without dealing in public on street corners, neighborhood, school, parks, etc.

5 simple steps to reverse the policies that caused this disaster.

1. stop illegal immigration
2. pass the FairTax
3. protect our trade
4. legalize/regulate/tax under 2 the illegal drug trade
5. drill baby drill.

It's so simple.

And yes, I agree 100% that the McCain Palin ticket was a bad ticket, the weakest in my life-time, but that's the way the ball bounced. I voted for Ron Paul in the primary. All we can do is what we can do given the options that are available. I thought Mitt Romney would be the best at this particular time because of his governance experience as Governor of Massachusetts, the great job he did with the Salt Lake Olympics, and his experience with successfully turning companies around, but he had already dropped out of the race, by the time North Carolina had their primary.

So in the fall General Election, the people decided on Obama, Fable Man as I refer to him, a Tall Tale from A to Z and now we have a bunch of nutty fruit-ball socialist-globalists in charge of the United States who can't seem to bankrupt us fast enough so they can open the borders, dissolve the United States and march forward to One World Government.

The very basis for our country becoming powerful and rich was our industrial might. When our industry was exported, the source of our wealth went with it. Until it returns, you will see no recovery. its just that simple. Besides the myriads of other reasons for america's rapid plunge into second nation status, losing our industry is the single most devastating reason.

Originally Posted by Reciprocity

The very basis for our country becoming powerful and rich was our industrial might. When our industry was exported, the source of our wealth went with it. Until it returns, you will see no recovery. its just that simple. Besides the myriads of other reasons for america's rapid plunge into second nation status, losing our industry is the single most devastating reason.

No question about it, and our industry can't and won't return until we reverse the policies that caused the exodus.