Bombs and Bribes

Ron Paul nails it once again:

What if tomorrow morning you woke up to headlines that yet another Chinese drone bombing on U.S. soil killed several dozen ranchers in a rural community while they were sleeping? That a drone aircraft had come across the Canadian border in the middle of the night and carried out the latest of many attacks? What if it was claimed that many of the victims harbored anti-Chinese sentiments, but most of the dead were innocent women and children? And what if the Chinese administration, in an effort to improve its public image in the U.S., had approved an aid package to send funds to help with American roads and schools and promote Chinese values here?

Most Americans would not stand for it. Yet the above hypothetical events are similar to what our government is doing in Pakistan.

The U.S. Government Is Lying About Iran

It's warmongering, pure and simple. We saw it before with Iraq, and we're seeing it now with Iran.

Ron Paul on Secession

It's a legitimate, constitutional, and necessary option. Dr. Paul writes:

America was born from an act of secession. When King George's rule trampled on the rights of the colonies, we successfully seceded from England. It took a war, but we were well within our rights. We applauded when former soviet states seceded from the USSR and declared their sovereignty. And hopefully the United States will eventually secede from the United Nations. We pay most of the bills of the UN, yet do not have the commensurate votes, so someday we will wake up and realize that membership, for these and other reasons, does not serve our interests.

On a personal level, contracts you enter into can be terminated if one side unilaterally changes the terms. If a credit card company jacks up your interest rate, you have every right to fulfill your obligations and close the account. Imagine if you were forced to stay with a credit card company forever no matter what just because you previously signed up! The principle of self-determination applies to political unions as well. In the cases I mentioned above, governing organizations transformed into much more overbearing entities than originally agreed upon. Several state constitutions originally had clauses explicitly allowing them to opt out of the Union down the road if they so chose. I doubt our country would have ever come together if this were not the case. Just because the north successfully kept the union together by force with the Civil War does not mean that enslaving the states is a legitimate alternative.

Secession is the last resort of states whose sovereignty is over-ridden by an overreaching federal government. The federal government has only itself to blame for this talk. Recently, some states have enacted laws allowing for the medicinal use of marijuana, yet these laws are basically voided by the continuing raids by the DEA, sanctioned by the administration. The federal government is also strong-arming states with stimulus money, forcing them to expand programs they know they will not be able to afford in the future, at a time when many states' budgets are already in the red. This is not a new problem. No Child Left Behind burdened the states' education systems and forced them through many hoops designed by federal bureaucrats in distant Washington DC rather than allowing communities to tailor education to their children's unique needs. There are numerous other examples of the erosion of state sovereignty and many governors are frustrated, not just ours in Texas. Without the right to secede, state's rights are meaningless.

Secession Is an American Principle

How to Deal with the Pirate Problem

Forget military force and nation-building. Bring back marque and reprisal.

Ron Paul on Bill Maher's Show

How Do We End Slavery in America?

According to Ron Paul, abolishing the Selective Service would be a good start.

Ron Paul on What to Expect from an Obama Presidency

Education for Liberty

From Campaign for Liberty:

An educated public is an essential ingredient of a free society. Ambitious governments would have far greater difficulty implementing schemes that undermine liberty and prosperity were they faced with an informed and vigilant population.

In that spirit, we have assembled these resources to help you learn more about some of the pressing issues of our time. The resources you'll find here include books (many of which we link to in free online versions) and articles, as well as audio and video available online and for free download. We receive many requests from people wondering what they should read to learn more about free societies. These resources, to which we intend to add periodically, will go a long way toward satisfying this demand.

You can access these invaluable resources at CampaignForLiberty.com.

Ron Paul's Statement on the Bailout

As you can imagine, he wasn't happy:

Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes. That this bailout was initially defeated was a welcome surprise, but the power-brokers in Washington and on Wall Street could not allow that defeat to be permanent. It was most unfortunate that this monstrosity of a bill, loaded up with even more pork, was able to pass.

The Federal Reserve has already injected hundreds of billions of dollars into US and world credit markets. The adjusted monetary base is up sharply, bank reserves have exploded, and the national debt is up almost half a trillion dollars over the past two weeks. Yet, we are still told that after all this intervention, all this inflation, that we still need an additional $700 billion bailout, otherwise the credit markets will seize and the economy will collapse. This is the same excuse that preceded previous bailouts, and undoubtedly we will hear it again in the future after this bailout fails.

One of the most dangerous effects of this bailout is the incredibly elevated risk of moral hazard in the future. The worst performing financial services firms, even those who have been taken over by the government or have filed for bankruptcy, will find all of their poor decision-making rewarded. What incentive do Wall Street firms or any other large concerns have to make sound financial decisions, now that they see the federal government bailing out private companies to the tune of trillions of dollars? As Congress did with the legislation authorizing the Fannie and Freddie bailout, it proposes a solution that exacerbates and encourages the problematic behavior that led to this crisis in the first place.

With deposit insurance increasing to $250,000 and banks able to set their reserves to zero, we will undoubtedly see future increases in unsound lending. No one in our society seems to understand that wealth is not created by government fiat, is not created by banks, and is not created through the manipulation of interest rates and provision of easy credit. A debt-based society cannot prosper and is doomed to fail, as debts must either be defaulted on or repaid, neither resolution of which presents this country with a pleasant view of the future. True wealth can only come about through savings, the deferral of present consumption in order to provide for a higher level of future consumption. Instead, our government through its own behavior and through its policies encourages us to live beyond our means, reducing existing capital and mortgaging our future to pay for present consumption.

The money for this bailout does not just materialize out of thin air. The entire burden will be borne by the taxpayers, not now, because that is politically unacceptable, but in the future. This bailout will be paid for through the issuance of debt which we can only hope will be purchased by foreign creditors. The interest payments on that debt, which already take up a sizeable portion of federal expenditures, will rise, and our children and grandchildren will be burdened with increased taxes in order to pay that increased debt.

As usual, Congress has shown itself to be reactive rather than proactive. For years, many people have been warning about the housing bubble and the inevitable bust. Congress ignored the impending storm, and responded to this crisis with a poorly thought-out piece of legislation that will only further harm the economy. We ought to be ashamed.

Ron Paul: My Answer to the President

Via e-mail:

Dear Friends:

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,

Ron Paul

Ron Paul Predicted the Housing/Banking/Mortgage Crisis

It isn't surprising that Ron Paul would address the House Financial Services Committee concerning the housing crisis. But he delivered this speech back on September 10...in 2003:

Mr. Chairman, thank you for holding this hearing on the Treasury 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 dollars. This explicit promise by the Treasury to bail out GSEs in times of economic 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 competitors.

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation 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 government, 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 Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government'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 over-investment 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 market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts.

No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided 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 American 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 committee will soon stand up for American taxpayers and investors by acting on my Free Housing Market Enhancement Act.

If only they had listened.

Chuck Baldwin Thanks Ron Paul

Constitution Party presidential candidate Chuck Baldwin thanks Ron Paul for his endorsement:

I was happy to support Ron Paul during the Republican primaries, because I believe in the same principles. I personally campaigned for him in several states and in this column. And I asked (or expected) nothing in return. In fact, I have stated this publicly, time and again: if Ron Paul had won the Republican nomination for President, I would not be running. I would still be supporting Ron Paul.

I am running for President because the Republican Party rejected Ron's Paul's message of constitutional government, fiscal responsibility, and non-interventionism. Therefore, someone had to pick up the mantle and carry this message into the general election. The Constitution Party asked me to be their standard-bearer in order to bring this message to the American people in November. So, here I am. And now, Ron Paul's endorsement is further substantiation that the message of constitutional government will not die in 2008. The American people still have a real choice instead of the big-government, globalist, interventionist, "big box" party candidates, John McCain and Barack Obama. ...

... Needless to say, I am both humbled and honored that Ron Paul would place enough faith in me that he would endorse me for President. I can think of no higher compliment to my candidacy. I here and now publicly thank him for this vote of confidence. I know my Vice Presidential running mate, Darrell Castle (a former Marine Corps officer and Vietnam veteran), joins me in inviting all of Dr. Paul's supporters to help us take the message of constitutional government into the general election on November 4. Thank you.

Ron Paul Endorses Chuck Baldwin for President

Ron Paul has officially endorsed Constitution Party presidential candidate Chuck Baldwin. (He also gets in a nice dig against Libertarian Party candidate Bob Barr, who snubbed Paul at a recent press conference.)

From the Campaign for Liberty web site:

The Libertarian Party Candidate admonished me for "remaining neutral" in the presidential race and not stating whom I will vote for in November. It's true; I have done exactly that due to my respect and friendship and support from both the Constitution and Libertarian Party members. I remain a lifetime member of the Libertarian Party and I'm a ten-term Republican Congressman. It is not against the law to participate in more then one political party. Chuck Baldwin has been a friend and was an active supporter in the presidential campaign.

I continue to wish the Libertarian and Constitution Parties well. The more votes they get, the better. I have attended Libertarian Party conventions frequently over the years.

In some states, one can be on the ballots of two parties, as they can in New York. This is good and attacks the monopoly control of politics by Republicans and Democrats. We need more states to permit this option. This will be a good project for the Campaign for Liberty, along with the alliance we are building to change the process.

I've thought about the unsolicited advice from the Libertarian Party candidate, and he has convinced me to reject my neutral stance in the November election. I'm supporting Chuck Baldwin, the Constitution Party candidate.

I hope others will join Dr. Paul in sending a message to the Washington elite this November that freedom-loving Americans are sick and tired of the status quo. The two-party stranglehold on the political process must end.

Ron Paul Admits He Was Wrong on Iraq

It takes a real man to admit when he's wrong, and Ron Paul has done just that:

Many scoffed at my "radical" predictions at the time, regarding them as hyperbole. Six years later, I am forced to admit that I was wrong. My "radical" predictions were in fact, not "radical" enough.

I warned of a draining 30-year occupation. Now, politicians glibly talk about a 100-year occupation as if it is no big deal. On cost, according to estimates from the Congressional Research Service, we have already burned through around $550 billion in Iraq, at a rate of about $2 billion per week. Economist Joseph Stiglitz's estimates are even higher, at $12 billion a month. It is a total price tag quickly heading into the trillions, if we don't stop bombing and rebuilding bridges in Iraq that lead us nowhere but bankruptcy! Bridges in this country are crumbling along with our economy, while some howl about earmarks. Earmarks are a drop in the bucket compared to war and occupation.

Yes, I was wrong about Iraq. I knew it would be bad. I didn't know it would be this bad.

The American people deserve better. Being asked to endorse such a farce is beyond insulting. Clearly, the rosy predictions of the neo-Conservatives from before the war are not coming true. Far from it! With a straight face, one official estimated the TOTAL cost of reconstruction in Iraq would be just $1.7 billion. Turns out that we spend more than that in ONE WEEK. Our friends are not pitching in to cover the cost. Expenses are not being covered by oil from a grateful and liberated Iraqi people. Rather, big corporate interests are benefitting, the price of oil has more than quadrupled, and the American economy is on its knees and sinking fast.

No one predicted the exact course of this war before it started. But to continue to listen to the foreign policy advice of those that were the MOST offbase will only lead to more foreign policy disasters. We need to keep this in mind as we think about Russia, Iran, Cuba and other countries. Keep in mind -- the doomsday predictions on the Iraq War from six years ago, sound like a cakewalk today. While what leaders in the administration had predicted, reads like a fairytale. Ask yourself, when listening to the same foreign policy "experts" explaining situations around the world and suggesting policy positions: In light of the facts of today, and the predictions of yesterday, how expert have they shown themselves to be?

John McCain supported the initial invasion and Barack Obama has supported the ongoing occupation. They're the ones who really owe the American and Iraqi people an apology.

Ron Paul on the Global Financial Crisis

Principle Over Party

In a statement to the National Press Club earlier today, Ron Paul refused to endorse fellow Republican John McCain. In fact, he refused to take part in the two-party charade:

The two parties and their candidates have no real disagreements on foreign policy, monetary policy, privacy issues, or the welfare state. They both are willing to abuse the Rule of Law and ignore constitutional restraint on Executive Powers. Neither major party champions free markets and private-property ownership.

Those candidates who represent actual change or disagreement with the status quo are held in check by the two major parties in power, making it very difficult to compete in the pretend democratic process. This is done by making it difficult for third-party candidates to get on the ballots, enter into the debates, raise money, avoid being marginalized, or get fair or actual coverage. A rare celebrity or a wealthy individual can, to a degree, overcome these difficulties. ...

... For me, though, my advice -- for what it's worth -- is to vote! Reject the two candidates who demand perpetuation of the status quo and pick one of the alternatives that you have the greatest affinity to, based on the other issues.

A huge vote for those running on principle will be a lot more valuable by sending a message that we've had enough and want real change than wasting one's vote on a supposed lesser of two evils.

Read the entire transcript here.

All this talk about change? Neither Obama nor McCain even know the meaning of the word. It's time to send a real message.

Ron Paul on Foreign Aid to Georgia

Ron Paul is hated because he is the only representative in Washington willing to stand up to the corrupt establishment:

How dare he question the bureaucratic elitists!

Videos from Rally for the Republic

I was out of town when Ron Paul was in Minneapolis, so I missed his Rally for the Republic. Fortunately, quite a few videos of the events that weekend can be found here.

Enjoy!

Ron Paul Welcomes You to St. Paul

Attendees of the RNC circus next week may end up getting a dose of the truth after all:

More here.