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.
Virginia Governor Tim Kaine Urged to Stop Persecution
Contact: Chaplain Gordon James Klingenschmitt, 719-360-5132 cell, firstname.lastname@example.org or Virginia Governor Timothy M. Kaine (D-VA), 804-786-2211 (press secretary Gordon Hickey).
RICHMOND, Virginia, Sept. 25 / Christian Newswire / — Virginia Governor Tim Kaine is defending why his administration forced the sudden resignation of five Virginia State Police Chaplains because they prayed publicly “in Jesus’ name.” Police Superintendent Col. W. Steven Flaherty single-handedly created then enforced a strict “non-sectarian” prayer policy at all public gatherings, censoring and excluding Christian prayers, then accepted the resignation of five chaplains who refused to deny Jesus or violate their conscience by watering down their prayers.
House Republican Leader Morgan Griffith and Delegate Charles W. Carrico, (R-Grayson) both issued public statements defending the chaplains, questioning Governor Kaine’s role in terminating the chaplains, and vowing to introduce legislation protecting police chaplains’ right to pray according to their own conscience.
Defending Flaherty’s persecution of Christian Chaplains, Governor Kaine pretended he himself was being persecuted, saying through his spokesman: “It is disappointing that Del. Griffith would make such a political attack on Gov. Kaine about his faith.”
Former Navy Chaplain Gordon James Klingenschmitt, who was also fired in 2007 for praying “in Jesus name” in uniform (but won the victory in the U.S. Congress for other military chaplains), weighed in:
“Governor Kaine campaigned like a Christian to get our votes. But now, instead of governing like a Christian, or respecting his own chaplains’ First Amendment rights, his administration forced the resignation of five police chaplains, simply because they prayed publicly ‘in Jesus’ name.’ These five chaplains lost their jobs for honoring Christ. They’re heroes of the faith, because they refused to deny Jesus when ordered to by the Kaine administration. If they contact me, they will be honored through my web-site: www.PrayInJesusName.org . And now Governor Kaine pretends he’s the martyr, because we question why his administration forced them to resign for praying to Jesus? He’s still got a job, they don’t. Governor Kaine isn’t the martyr, he’s the persecutor.”
Citizens are urged to call Governor Kaine’s office at 804-786-2211, to insist the chaplains be reinstated and the policy reversed, and also email him through his web-site:
September 23, 2008
Yesterday, September 22, Congressman Ron Paul publicly gave me his endorsement for the office of President of the United States. In his blog at the Campaign for Liberty web site, he said, “I’m supporting Chuck Baldwin, the Constitution Party candidate.” (See the complete statement at: http://www.campaignforliberty.com/blog/?p=582 )
Obviously, I could not be more delighted and honored to have Dr. Paul’s endorsement. I called him last evening and thanked him personally. And now I want to thank him publicly.
I am fully aware that Dr. Paul was under considerable pressure from various groups that were actively soliciting his support. I can honestly say that I never lobbied Dr. Paul for his endorsement. He knew I would be thrilled to have it, but I have too much respect for Ron Paul to be so presumptuous as to expect him to endorse me. I completely understood his neutrality. He has strong ties to both the Libertarian and Constitution parties–not to mention the obvious fact that he is a ten-term Republican Congressman with much support from the Republican Party in his home district.
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.
Ron Paul’s message is my message; Ron Paul’s fight is my fight.
I want to return America to constitutional government. “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” (Amendment X) I believe that, and will govern the Executive branch of the federal government accordingly.
My sworn oath to the Tenth Amendment means I would dismantle the Patriot Act and restore law enforcement to the states and local governments, where it rightly belongs. Yes, this includes the so-called “war on drugs” and the so-called “war on terror.” No more warrantless searches and seizures. No more eavesdropping on Americans’ phone calls, or collecting Americans’ emails, or spying on American citizens without court order and oversight. No more stripping Americans of their constitutional rights in the name of “national security.” In addition, I would use every power and authority vested to my office to preserve and protect the right of the people to keep and bear arms. And, yes, I will immediately restore Posse Comitatus. As President, I want to protect America from Washington, D.C., as much I want to protect it from foreign powers.
I will also take the words of the Declaration of Independence seriously, where it states, “That these United Colonies are, and of Right ought to be Free and Independent States.” This means the day I am sworn in as President of the United States, the New World Order comes crashing down! The NAFTA superhighway is dead. The North American Union is dead. I will work to eliminate NAFTA, CAFTA, GATT, and the WTO. The FTAA is DOA. I will not expend tax dollars for the support of the United Nations.
Furthermore, I will take my oath to the Constitution seriously, when it states that one of the express purposes of the federal government is to “repel Invasions.” This means we will secure America’s borders, because the illegal immigration crisis is more than mere immigration: it is an invasion, and I will stop it! Even if I have to send the U.S. Army to the borders, we will put a stop to this invasion of illegal aliens. I will also aggressively prosecute those employers who knowingly hire illegals. And did I mention that my first day in office is Border Patrol Agents Ramos and Compean’s last day in prison? I will personally open the prison doors and restore to these men their freedom. I will also give them their jobs back (with pay), if they want them. And one more item on this point: my first day of office is also U.S. Attorney Johnny Sutton’s last day on the job.
I also share Ron Paul’s concerns for the way the two major parties have allowed the United States to become a meddlesome, interventionist, nation-building empire for the sake of satisfying the greedy machinations of international bankers and power-hungry politicians. I will not only bring our troops home from Iraq and Afghanistan, but also from most of the other 130 nations that currently house U.S. forces. I will end foreign aid. I will get the U.S. out of NATO. It is past time for the European states to defend themselves. It is time for us to stop sticking our nose in every other nation’s business and start taking care of the United States. The Warfare State will kill us. Global empires are not sustainable. I repeat: global empires are not sustainable. If history teaches anything, it teaches that.
Furthermore, the Bush doctrine of pre-emptive war is over, when I become President. Because I will take my oath to the Constitution seriously, I would never send troops to invade and occupy a foreign country without a Declaration of War by Congress. In dealing with rogue terrorist organizations such as al Qaeda, I will seek letters of Marque and Reprisal from Congress, which would give me the authority to use whatever special and/or private forces are necessary to seek out and destroy those who desire our hurt.
And even though I am a born again Christian (as is Ron Paul), I would take my responsibility to protect the religious liberty of every American seriously. People have the right to worship God (or not worship God) according to the dictates of their own conscience. Whether one is Baptist, Catholic, Mormon, or agnostic, people have the right to practice their faith as they see fit. I am absolutely dedicated to preserving religious liberty. Religious tyranny is as evil as political or social tyranny. And, as I will be no man’s slave, neither will I be any man’s master.
I also share Ron Paul’s commitment to the sanctity of life. When I become President, I will use the bully pulpit of the White House to press Congress to pass Dr. Paul’s Sanctity of Life Act, which would overturn Roe v. Wade and end abortion-on-demand. On this topic, the GOP is especially hypocritical. The Republican Party controlled the entire federal government for six years and did nothing to save the life of a single unborn child. Saving unborn babies from the abortionists’ scalpel is more than rhetoric with me, however.
Another area of agreement with Ron Paul is my philosophy of economics. Dr. Paul has been predicting the current financial meltdown in this country for years. And when all is done, the current bailout being proposed will do more harm than good. The problem is, America’s leaders have rejected sound money policies for years, and the chickens are coming home to roost.
As President, I would seek to overturn the 16th Amendment, eliminate the Internal Revenue Service, and disband the Federal Reserve. I would lead the charge to return America to sound money principles. I would seek to reduce federal spending to constitutional levels by eliminating those same federal departments that Newt Gingrich promised to eliminate in his Contract with America back in 1994 (and then failed to do). I would seek to eliminate the Departments of Education, Commerce, Energy, etc. I would demand that Congress pass a balanced budget and that we stop deficit spending.
Neither John McCain nor Barack Obama will do any of the above. If he were President, Dr. Paul would do it, however, and so would I.
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.
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Chuck Baldwin is Founder-Pastor of Crossroads Baptist Church in Pensacola, Florida. Dr. Baldwin is also the host of a lively, hard-hitting syndicated radio talk show “Chuck Baldwin Live” and is the Constitution Party nominee for President in 2008. learn more at www.baldwin2008.com
To learn more about his radio talk show please visit his web site at: www.chuckbaldwinlive.com. When responding, please include your name, city and state.
Congressman Ron Paul
On September 10, 2002 I asked 35 questions regarding war with Iraq. The war resolution passed on October 16, 2002. Now today, as some of my colleagues try to reestablish credentials regarding spending restraint, I want to call attention to my 18th question from six years ago:
“Are we willing to bear the economic burden of a 100 billion dollar war against Iraq, with oil prices expected to skyrocket and further rattle an already shaky American economy? How about an estimated 30 year occupation of Iraq that some have deemed necessary to “build democracy” there?”
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?
Passing HR 2605 to sunset authorization for the use of force in Iraq is the first step to stopping this bloody war, and the consequent bleeding of our treasuries. Serious fiscal conservatives will support it, as will those who have been paying attention to foreign policy predictions and reality.