Category Archives: Monetary Policy

Peter Schiff on The Real Crash, Austrian economics and Ron Paul

TAMPA, August 30, 2012 – Like Ron Paul, Peter Schiff was predicting the 2008 economic meltdown long before it occurred. Schiff is the president of Euro Pacific Capital, a firm that pursues investment strategies based upon Schiff’s contrarian economic analysis. Clients who took his advice over the past decade did very well, even after the financial crisis.

Both Paul and Schiff are proponents of the Austrian school of economics, which emphasizes free markets, sound money and Carl Menger’s subjective theory of value. Asked to describe what the “Austrian school” is, Schiff quipped,

“It’s kind of like you’re asking me ‘What’s Science? Or what’s astronomy, because you believe in astrology. Austrian economics is economics. Keynesianism is like a witch doctor. It’s all a bunch of nonsense, but politicians love Keynesianism, because it justifies what they want to do to get elected, which is spend more money, promise something for nothing, play Santa Claus.”

Schiff was Ron Paul’s economic advisor during the 2008 campaign.

Schiff became a national sensation when the predictions documented in his 2007 book, Crash Proof: How to Profit from the Coming Economic Collapse, came true. Not only was Schiff the darling of nationally televised financial and investing programs, but he found a whole new audience among Ron Paul supporters, who drove millions of page views to the You Tube video “Peter Schiff was right.”

Continue at Communities@ Washington Times…

 

Ron Paul’s “We are the Future Rally” unlike any other political event

TAMPA, August 27, 2012 ― Everyone knows what to expect from a political rally. Speakers recite the party line on various subjects. The audience already agrees with them and knows what they are going to say. The crowd cheers. The opposition is trashed. The crowd cheers again. The keynote speaker is introduced. Standing ovation. More talking points.

Ron Paul’s “We Are the Future Rally” couldn’t have resembled that model less. Rather than politics, the entire program focused on ideas.

His first three speakers were libertarian philosophers Lew Rockwell, Walter Block and Butler Shaffer. There were no talking points. Instead, attendees were treated to intellectual arguments for individual liberty from three of the most powerful libertarian thinkers alive.

Not everyone agreed, either. Block’s controversial argument for a new libertarian stance on abortion actually drew boos. Block argued that a woman has a property right in her body and thus can evict a “trespassing” fetus from her womb, but does not have a right to take the fetus’ life. Block claimed that this was possible now during the third trimester of pregnancy and that as the science advanced, it would be possible earlier and earlier.

Some of the more conservative among Paul’s following weren’t ready to hear it.

There were speeches by politicians Barry Goldwater, Jr. and South Carolina State Senator Tom Davis, but even these were atypical. Goldwater read from and commented on passages from his father’s Conscience of a Conservative, while Davis focused exclusively on attacking the Federal Reserve System.

Paul’s official campaign blogger and rising conservative star Jack Hunter continued with a talk on conservative philosophy, citing Ronald Reagan, Russell Kirk and other noteworthy conservatives. Hunter reminded supporters of Reagan’s “three-legged stool” theory of conservatism: equal parts national security conservatives, religious conservatives and economic/libertarian conservatives. Hunter argued that it was the absence of the libertarian leg that led to the profligacy of the Bush years. He quoted Reagan saying, “libertarianism is the very heart and soul of conservatism.”

None of this is to suggest that the affair was a quiet seminar with attendees nodding their heads and taking notes. Right from senior campaign advisor Doug Wead’s opening remarks, the atmosphere was electric and the applause thunderous. As usual, remarks on the Federal Reserve System and Paul’s non-interventionist foreign policy got the most enthusiastic response.

Continue at Communities@ Washington Times…

Repealing Glass-Steagall did not create the banking monster

TAMPA, August 22, 2012 – As we approach the Republican and Democratic National Conventions with two major party candidates that don’t substantively disagree on anything, debate about the causes of the housing bubble and what should be done about it will inevitably recur.

Both candidates advocate massive government intervention. They just disagree about the details.

Neil Barofsky weighs in with the generally accepted argument that the repeal of Glass-Steagall was the creator of what he calls “the monster,” highly leveraged investment banks taking extraordinary risks that led to the 2008 financial meltdown.

Barofsky is right about Wall Street being a monster, but the repeal of Glass Steagall wasn’t its Frankenstein. As Tom Woods explains in his bestseller, Rollback,

“But did the repeal of two provisions of Glass-Steagall allowing affiliation of commercial banks with securities firms through their control by the same holding company contribute to the losses and risk that permeated the system? Certainly not. For one thing, commercial banks bought mortgage-backed securities for their AAA rating, their attractive return, and the minimal capital requirements associated with holding them; they did not acquire these assets because they were connected to investment banks that were trying to unload them.

Moreover, severe regulatory firewalls essentially prevent this kind of affiliation from contributing to losses or increased risk on the part of the commercial bank involved. The reverse problem, that affiliation with a commercial bank might bring down and investment bank, is exceedingly unlikely, given the relative magnitudes of assets held by each institution. The commercial banks’ assets were only a tiny fraction of those held by the investment banks they were affiliated with. These banks were in no position to cause the investment banks any serious problem, much less their complete downfall.”

If that’s true, then why was that “sucker going down,” as President Bush so eloquently put it?

Continue at Washington Times Communities…

Audit the Fed first shot in Ron Paul’s revolution

TAMPA, August 3, 2012 – “When I was your age, I went to the movies for a dime and bought a big bag of popcorn and a soda for a nickel.”

My father said that to me a hundred times when I used to pay $2.75 to go to the movies and another $1.25 for the popcorn and soda. For five generations, Americans have understood steadily rising prices as an immutable law of nature. Yet history shows that this just isn’t true.

The Federal Reserve of Minnesota publishes historical inflation figures on its website going back to 1800. The attached chart from that website shows annual inflation rates from 1800 through 2008. I added the last column to calculate the price movements of a basket of goods that cost $100 in 1800.

You don’t need a Ph.D. in finance for the numbers to jump off the page. The basket of goods that cost $100 in 1800 only cost $58.10 in 1913 (the year the Federal Reserve System was created). For that entire first full century of American history, steadily decreasing prices were something Americans took for granted.

In the ninety-nine years since the creation of the Federal Reserve System, that same basket of goods has risen to $1,265.14.

Continue at Washington Times Communities…

Exclusive Interview: Rand Paul weathers endorsement storm

TAMPA, June 18 2012 – 218 years ago, George Washington signed the Jay Treaty, reestablishing economic relations with the British. Claiming that John Jay and the Federalist Party had sold America out to the British and betrayed France, Jefferson’s Republicans denounced Jay as a monarchist and a traitor.

His effigy was burned and one newspaper went so far as to print, “John Jay, ah! the arch traitor – seize him, drown him, burn him, flay him alive.”

Senator Rand Paul of Kentucky might know how Jay felt. Since endorsing Mitt Romney for president on June 7, Paul has endured a barrage of criticism from his father’s supporters and those who consider themselves part of the larger “liberty movement.”

There have even been a few death threats.

I spoke to Senator Paul last Thursday. He was understandably concerned by the more outlandish reactions, but put them in perspective.

“The people that are over the top and even making death threats on the internet, I hope they are not serious, but they are a small number of people making a disproportionate number of the comments. A lot of those people may not even vote or may not have voted for my father. They don’t represent the majority of the people that support what we’re fighting for.”

Overlooked during the controversy is Paul’s promise to his constituents to endorse the Republican nominee. Paul won a decisive victory in Kentucky with far more than Ron Paul supporters behind him. Without promising to endorse the nominee, Paul may have never even won the Republican nomination, much less become a U.S. Senator.

“I’ve said all along that I would endorse the Republican nominee. I made that promise during my own campaign, because it was a concern for many Republicans that my dad hadn’t endorsed the Republican nominee in the past. People should understand that it doesn’t mean that I’ve changed my philosophy or adopted anyone else’s.”

Continute at The Washington Times Communities…

Will Ron Paul delegates make Romney flip flop again?

TAMPA, June 10, 2012 – With all but one of the Republican primaries concluded, there are two things that are clear. The first is that unless something very improbable occurs, Mitt Romney will be the Republican nominee for president in 2012. The second is that Ron Paul will have an army of delegates at the Republican National Convention (RNC) in August.

The media continue to wonder what Paul hopes to accomplish with those delegates, although he has been clear from the beginning. His primary goal was to win the nomination. His secondary goal was to influence the direction of the Republican Party.

Paul has remained consistent in his strategy. In a June 6 e-mail to supporters, Paul said

“We stand to send nearly 200 bound delegates to the Republican National Convention in Tampa…What’s more, we will send several hundred additional supporters to Tampa who, while bound to Romney, believe in our ideas of liberty, constitutional government, and a common-sense foreign policy. When it is all said and done, we will likely have as many as 500 supporters as delegates on the Convention floor.

And while this total is not enough to win the nomination, it puts us in a tremendous position to grow our movement and shape the future of the GOP!”

Some of Paul’s supporters dispute that any of the RNC delegates are bound to vote for any candidate, citing Republican Party Rule No. 38. Obviously, Ron Paul doesn’t see it that way.

However, one thing everyone acknowledges is that no delegate to the RNC is bound to any candidate’s position on the issues. That means Paul’s 500 delegates can vote any way they want regarding the Republican Party platform.

Continue at Washington Times Communities…

Why Ron Paul also matters more than Romney, Santorum and Obama

TAMPA, April 10, 2012 – Ron Paul matters much more than Newt Gingrich in this year’s Republican nomination race, according to The Washington Post. Both men trail frontrunners Mitt Romney and Rick Santorum by a wide margin in terms of primary victories.

As usual, The Washington Post was silent on the possibility that Paul may have far more delegates than most media outlets are reporting.

The thrust of The Washignton Post story is that Paul has much more leverage due to his growing following and potential for a third party run. Thus, he has already influenced Republican Party, including scrutiny of the Federal Reserve, more attention to the debt crisis and even some grudging concessions on foreign policy.

Just a few years back, none of this was part of the Republican platform.

However, the Post article misses the most important point. Ron Paul doesn’t just matter more than Newt Gingrich. He also matters more than Romney, Santorum or even President Obama. Ron Paul has already had a greater impact on America than any U.S. President in generations.

The Republicans have made unseating Obama a sacred quest in this year’s election. To listen to their rhetoric, you would think that Fidel Castro had been inaugurated in January 2009. Obama’s supporters operate under a similar delusion, although they feel differently about it.

It is apparent that both conservatives and progressives have completely lost touch with reality. Nothing has changed since Obama replaced George W. Bush. Nothing would change if Mitt Romney or Rick Santorum replaced Obama, either.

Americans elected Obama in 2008 to not be George W. Bush. Bush was reviled by voters for what they believed was an unnecessary war in Iraq, for spying on American citizens, for being too cozy with Wall Street, and for assuming executive powers not delegated to him by the Congress. Obama promised to change all of that.

Four years later, Obama has started at least three new wars while expanding the boondoggle in Afghanistan. He has continued spying on Americans and sought to expand this authority in the courts. He has filled his cabinet with Wall Street insiders and has bested George W. Bush on expanding executive powers.

Obama actually claims the right to arrest, to indefinitely detain and even to assassinate American citizens that he deems dangerous – all without due process.

Romney and Santorum both support all of this. Gingrich thinks it’s not enough. Progressives in the media who howled with righteous indignation at Bush’s depredations seem to have fallen asleep now that Obama is in.

Doesn’t anyone remember Keith Olbermann’s tirades about Bush’s dictatorial power grabs? Is there some reason that it is ok when a progressive does the same thing?

However, Obama did lead America down the path to socialism by expanding the government’s role in healthcare and imposing draconian regulations on the financial sector, right? Surely he departs from the “laissez faire” Bush here. Can you say “Medicare Part D” or “Sarbanes-Oxley?”

Nothing changes. Obama is no different than Bush. Neither Romney, Santorum, nor Gingrich would be any different than Obama. They don’t even propose to cut Obama’s spending. The spending “cuts” they propose are actually just reductions in spending increases in future years. In other words, they have no objection to Obama’s spending now. They all admit this, yet their supporters continue in their missionary zeal as if their candidates represent some sort of radical change.

Continue at Communities@Washington Times…

Then there is Ron Paul. He doesn’t just talk about cutting spending. He published his first year budget, cutting $1 trillion dollars. He doesn’t just talk about individual liberty. He wants to end the failed drug war and repeal the Patriot Act. He promises to bring troops home from all over the world and allow young people to opt out of unsustainable entitlement programs. Ron Paul proposes real solutions to real problems, regardless of the political consequences.

Ron Paul is the first presidential candidate in my lifetime to actually use the words “role of government” as if the subject should be debated. He challenges the status quo – the whole, multi-trillion dollar monster in Washington, D.C. that purports to care for 300 million people from cradle to grave and police the entire world. Ron Paul has dared to speak the unspeakable and millions of people all over the world are listening.

That’s why Ron Paul is more important than whoever wins the Republican nomination or the presidency this year. Presidents have come and gone for decades while the federal government has continued to trample our liberties, loot our wealth, and propagate new enemies around the world, regardless of which party has been in power.

Then along came Ron Paul, an overnight sensation thirty-six years in the making. To those who understand what is happening, the presidential election seems almost irrelevant as Paul’s audiences explode into the thousands. Long after history has deemed Bush, Obama and this year’s winner indistinguishable postage stamps on the road to disaster, it will remember the man who planted new seeds during the election of 2012.

As George Washington once said, “Liberty, when it begins to take root, is a plant of rapid growth.

What would it take for Ron Paul to endorse Romney?

TAMPA, April 7, 2012 – GOP frontrunner Mitt Romney continues to win primaries and Ron Paul still won’t go away.

Part of the reason is that the Paul campaign understands the primary process and knows a little history. Romney’s support is lukewarm, while Paul’s actual delegate total is dramatically understated.

As Robert Wenzel points out, Paul is a lot like Warren Harding. Harding went into the brokered 1920 convention with only 6% of the delegates, but emerged as the party’s nominee. Harding won the general election in a landslide and took a very non-interventionist approach to the Depression of 1921.

Free market economists cite Harding’s refusal to intervene in that crisis for the quick recovery that followed.

So, there is no reason not to take Ron Paul at his word when he says that he is still in the contest to win the nomination. Still, speculation persists that he has made a deal with Romney for an eventual endorsement.

In return, Paul would get a speaking slot at the convention, consideration for his son Rand, or concessions in the party platform.

Both Paul and Romney have repeatedly denied this. Paul acknowledges that he is open to talk to the other candidates and that Romney, a personal friend, is easier to talk to. However, anyone who believes Ron Paul will simply endorse the nominee in exchange for political favors doesn’t understand Ron Paul or his Revolution.

Continue at Communities@Washington Times…

Do Republicans really want to defeat Obama?

TAMPA, Fl., April 2, 2012 —The Republican Party has energized its base around the idea that Barack Obama must be defeated to save America from “socialism.” They won a majority in the House in 2010 by focusing on Obamacare. They claim that this election is a turning point. Obama must be defeated or America will be “fundamentally changed.”

There is only one problem. All of the candidates they are running will lose to Obama, with the exception of Ron Paul.

In order to win the general election, the Republicans need independents and Democrats. They also need a media narrative that shows a clear contrast between their candidate and Obama. They get all of this with Paul and none of it with Romney, Santorum, or Gingrich.

During the 2010 elections, Republicans pulled off a rhetorical coup. They successfully labeled Obamacare as “socialism” while at the same time mobilizing millions of senior citizens against the program because it would hurt Medicare. Hats off to their spin doctors. It won’t be that easy this year. If they want to attack Obama on Obamacare, they can’t run a candidate who signed the same program into law in Massachusetts (Romney), who supported its individual mandate for twenty years (Gingrich), or who voted for the Medicare prescription drug benefit (Santorum).

Santorum hasn’t endorsed the individual mandate, but Obama can argue that he’s all for government healthcare and “spreading the wealth around” because of Medicare Part D. The Republican base might swallow Santorum’s rebuttals, but for the rest Obamacare gets neutralized.

Continue at The Washington Times Communities…