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Ron Paul Unveils $1 Trillion In ACTUAL Cuts
October 19th, 2011 | 
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Republican presidential candidate Ron Paul on Monday laid out an economic plan that would lower corporate and individual taxes and cut federal spending by $1 trillion during his first year in office, achieved partly by eliminating five cabinet-level departments.
Mr. Paul, a longtime Texas congressman, said he would close the departments of Education, Energy, Commerce, Interior and Housing and Urban Development, as part of a broader plan to cut federal spending. The federal work force would be cut by 10%. Mr. Paul also called for stopping foreign aid and “ending foreign wars.”
Now that is cutting spending.
It also likely has the media power and public acceptance of about 3% of the population, because doing so will instantly collapse the entire ponzi game that has been run for the last 30 years.
It needs to happen too.
But it won’t.
Nonetheless, I do give Mr. Paul credit for putting it forward and actually saying what needs to be said in this area.
And while turning Social Security and Medicare into programs that people can “opt out” of sounds good, neither step does anything about the promises made that cannot be kept. So…. what’s the plan there and how do we avoid the boomer blowup problem? (Incidentally, again for those who missed it the last time, if we assume a current cost of medical insurance for a healthy 50 year old of $600 monthly, by the time he turns 85 at current cost escalation rates that policy costs about $12,000 – per month – or nearly $150,000 a year!)
The fail in this plan is that it does not address the 900lb Gorilla in the China Shop, which is the medical system.
That has to be fixed or the rest simply doesn’t matter and Ron Paul, like the rest, fails to address it, moving part of it to the States (sorry, shifting dollars doesn’t address the problem) and doing nothing of materiality with the rest.
The plan is, however, a start.
Posted in #OCW, #TCOT, Budget Deficit, Debt, Economic Crisis, Economy, Financial System, Government, Money, Ron Paul | 
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Ron Paul Drops "Sound Money" And Endorses PRINTING!
Representative Ron Paul has hit upon a remarkably creative way to deal with the impasse over the debt ceiling: have the Federal Reserve Board destroy the $1.6 trillion in government bonds it now holds. While at first blush this idea may seem crazy, on more careful thought it is actually a very reasonable way to deal with the crisis. Furthermore, it provides a way to have lasting savings to the budget.
Remarkably creative? Wait a second…. .Ron Paul has told us time and time again that he’s for “sound money.” That is, money that doesn’t change in value. Monetary policy that abides the actual statements in The Federal Reserve Act of 1913 (which, incidentally, The Fed has wantonly violated ever since with their so-called “inflation target”, whether explicit or otherwise.)
In fact, Ron Paul has consistently railed against that very inflation in essentially every case where he’s had Bernanke in front of him in a committee.
So let’s think through Mr. Paul’s “creative” solution. Destroying the bonds The Fed holds while leaving the “excess reserves” that are on deposit, which The Fed creates with a push of a button to pay for those bonds, is in fact exactly identical to unbacked emission of currency.
That is, raw printing of money.
(Incidentally, that’s illegal under The Federal Reserve Act as well, but heh, who cares about the law, right?)
I have repeatedly and very publicly held that Mr. Paul has no clue what the hell he’s talking about when it comes to these matters. That gold-backed currency does nothing to address the problems we face, and the empirical evidence backs my position (panics and wild bouts of both inflation and deflation under a metallic monetary standard.) I further have charged repeatedly that Mr. Paul, despite multiple opportunities to grill Bernanke on the simple and easily-understood violation of the standard of stable prices in the Federal Reserve Act, has utterly failed to do so.
Now you know why: He doesn’t believe in stable prices and a stable and strong currency as he in fact is now suggesting intentional monetary inflation in an outrageous amount through this so-called “solution.” This is exactly the sort of crap FDR ran in the 1930s – in fact, it’s functionally identical to FDR’s “executive order” gold devaluation!
To those who have supported Mr. Paul all these years, you’ve now seen his true colors. Will you be man (or woman) enough to admit that he never actually understood what the hell he was screaming about, nor did he ever have an actual intent of restoring “sound money” to America?
We’ll see.
Posted in Debt, Economic Crisis, Economy, Financial System, Government, Monetary Policy, Monetary System, Monetization, Money, Ron Paul |
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Ron Paul On Debt Ceiling: Boehner Will Cave
Please consider this interesting interview by Bloomberg columnist Al Hunt with Ron Paul on the debt ceiling, big government, and military spending.
Link if inline video does not play: Ron Paul Interview on Debt Ceiling
Select Interview Highlights
Al Hunt: Do you think Congress will pass an Extension.
Ron Paul: I do. This will go up until the last minute, then they will raise the debt ceiling.
Al Hunt: Your speaker John Boehner says he will absolutely insist on a dollar of spending reduction for every dollar the debt ceiling goes up. Do you take that seriously?
Ron Paul: I don’t take that seriously. President Reagan wanted 2 dollars of cuts. The deficit exploded. Do you think the American people will believe that we are going to cut in the future? The only budget that counts is this year. 10-year programs are pie-in-the-sky talking. This year our obligations are 5 trillion dollars.
Al Hunt: The idea of a spending cap that takes place in 10 years does not appeal to you?
Ron Paul: A 10-year spending cap is too little, too late. No one is going to believe it. All governments when they get this far into debt, default. They don’t default by not paying the bills. We will always pay the bills. The default comes from the devaluation of the currency.
Al Hunt: On Libya, Afghanistan, it looks like most are taking the John McCain line.
Ron Paul: Politically they are making a big mistake. I have been arguing to bring the troops home. I did not want them to go in the first place. The people now know we cannot pay for this. A lot of conservatives are coming to that direction. I’ve said over the years that I will win this argument because we will run out of money. That is how all great nations and empires end. They cannot afford it any longer, and that is what is happening right now. I have proposals that are different. As much as I am opposed to all spending, if you want to cut purposely in deliberate fashion, then have priorities. My priorities is cut all all foreign welfare and foreign militarism, and corporate welfare before you go after child healthcare. That sells. You don’t have to just address health-care for poor people, rather than looking at atrocious spending overseas.
Al Hunt: You would bring home troops from Afghanistan, Libya, Pakistan?
Ron Paul: Res, I believe in strong national defense and that hurts our defense. I would bring them all home. We have no reason to be there. The soldiers we have in Korea went there when I was in high school. How long are we going to stay there?
Al Hunt: Do you see any other candidate [for president] who is talking about a full audit of the Federal reserve?
Ron Paul: No way. But they won’t laugh as much as they did last time. They won’t laugh any longer. Just think of the difference no on the attitudes of the people on the Federal reserve.
Al Hunt: Is the Federal Reserve in retreat?
Ron Paul: (laughing) Have you ever anticipated over the years, Bernanke would be holding press conferences defending his position? He can’t defend it because it is a failed policy. You can’t print money to get yourself out of trouble. Grade school kids know this. We will win when the system comes unglued.
Bernanke’s Self-Serving Lies
The Ron Paul interview was recorded June 3. Bernanke poured on the lies yesterday in his US Economic Outlook. Bernanke tried to absolve the Fed of all guilt. Please see Bernanke’s Self-Serving Bold-Faced Lies for details.
In regards to spending in general and military spending in particular, Ron Paul is correct. This is “how all great nations and empires end”.
A similar sounding statement attributed to Margaret Thatcher goes like this: “The problem with socialism is that eventually you run out of other people’s money to spend.” The statement is true whether or not Thatcher ever said so explicitly.
Republicans need to stop US militarism and focus on the US economy.
In regards to the debt ceiling, unfortunately I too think Boehner will cave. Please see my video discussion on Yahoo Finance regarding the debt ceiling and the bond market: Debt Ceiling Discussion on Daily Ticker with Mish, Aaron Task, Henry Blodget: Will the Bond Market Eventually Force Congressional Hands?
Mike “Mish” Shedlock
Global Economic Analysis
Posted in Debt, Debt Ceiling, Deficit Spending, Deficits, Economic Crisis, Economy, Financial System, Government, Money, Ron Paul |
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Ron Paul Asks: When Is Bernanke Going To Admit Fed Policy Is A Total Failure?
And I would ask Congressman Paul, when he is going to issue a subpoena to Mr. Bernanke. You are now the Chairman of the Domestic Monetary Policy Committee. In the words of Elivis Presley, ‘A little less conversation, a little more action,’ please.
Posted in Banks, Ben Bernanke, Economic Crisis, Economy, Federal Reserve, Financial System, Government, Money, Ron Paul |
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Congress Threatens To Sow The Seeds Of Our Next Banking Crisis
I wrote recently about the Bank of England sowing the seeds of their next banking crisis by deciding to reduce bank examinations. Spencer Bachus (R. Ala.), the incoming Chair of the House Financial Services Committee, told the Birmingham News: “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
Ron Paul (R. Tex.), asked to comment on Bachus’ statement, said: “I don’t think we need regulators. We need law and order. We need people to fulfill their contracts. The market is a great regulator, and we’ve lost understanding and confidence that the market is probably a much stricter regulator.”
These comments share several characteristics. First, they demonstrate that many people in positions of power have not only learned the necessary lessons from the ongoing crisis – they have learned the worst possible lessons. Second, the comments reprise disastrous approaches that allowed the crisis to occur. Third, the comments represent the continuing triumph of ideology over facts. Fourth, the comments rely on false dichotomies that are the enemy of reasoning and good policy.
1. The U.S. and much of Europe have suffered a crisis of great proportions after they adopted deregulation, desupervison, and the de facto decriminalization of financial firms. For the U.S., this is our third major financial crisis in 20 years brought on by those triple “de’s.” The incoming chairs’ response to these crises is increased deregulation and desupervision (and no mention of prosecuting the control frauds driving the crises). What would it take to discredit policies that produce recurrent, intensifying crises?
2. The bipartisan “Reinventing Government” movement of the 1990s (championed by then Texas Governor Bush and Vice President Gore) led the senior leaders of the banking regulatory agencies to order their staff to refer to the industry as their “clients” or “customers.” It became a major agency priority to make those clients happy with the regulators. That policy became even more destructive during the Bush administration, which chose regulatory leaders based on the intensity of their opposition to vigorous supervision. SEC Chairman Pitt’s first major speech was before a group of accountants. He expressed his regret that the SEC had not always been a “kinder and gentler” place for accountants and blamed his agency for not showing accountants more love. The Office of Thrift Supervision’s (OTS) head, “Chainsaw” Gilleran, posed with the three major banking lobbyists and the number two guy at the FDIC (who was Gilleran’s successor) over a pile of federal regulations. Everyone held pruning shears, except Gilleran, who demonstrated the indiscriminate nature of his hate for regulation by holding a chainsaw. It is no surprise that among insured depositories the largest accounting control frauds were regulated by the OTS (where “regulated by” translated into “not regulated by”). The OTS went so far in its efforts to “serve the banks” that it encouraged or knowingly permitted several insolvent banks to file false financial statements relying on backdated entries.
The federal banking regulatory agencies “serve[d] the banks” by preempting state efforts to regulate abusive, predatory, and fraudulent lending. The federal banking regulatory agencies even tried to preempt State Attorney General lawsuits against the leading mortgage frauds.
Similarly, the SEC “serve[d] the [investment] banks” by creating the Consolidated Supervised Entities (CSE) program for the purpose of protecting them from serious regulation by the European Union. The CSE program was a sham. The SEC staff assigned to examine the largest investment banks in the U.S. were not examiners and did not examine the investment banks. No one believed they could because the staffing level was farcical.
Banks do not need regulators to “serve” them? There is no appropriate function in which we serve banks. There are many destructive ways in which anti-regulators would serve the interest of fraudulent banks.
3. Representative Paul’s claims epitomize the triumph of ideology over fact: “The market is a great regulator, and we’ve lost understanding and confidence that the market is probably a much stricter regulator.” No, the “market” is not a “great regulator” and the ongoing crisis is only the latest example of that point. Efficient, non-fraudulent markets would be a very good thing. Inefficient, markets with fraudulent participants can be a catastrophically bad thing. The “market” also does not deal effectively with externalities (and they can be lethal) and with market power. The neoclassical claim that cartels cannot persist and that potential entry solves prevents all serious ills proved false in the real world. Here, however, I will discuss only why control fraud turns “markets” perverse. Accounting control frauds are guaranteed to report high profits in the early years. This is why Akerlof & Romer (1993) agreed with white-collar criminologists that such frauds were a “sure thing.” I’ve explained why the four-part recipe for optimizing fictional accounting income maximizes executive bonuses – and real losses. In the interest of brevity I will merely mention four ways in which accounting control frauds make markets, and “private market discipline” perverse.
a. The fictional profits fool creditors and shareholders – they are eager to lend to and invest in firms reporting record profits. Rather than discipline accounting control frauds, creditors and shareholders fund their massive growth.
b. The fictional profits and the large bonuses they drive create a “Gresham’s” dynamic in which bad ethics tends to drive good ethics out of the marketplace. The CFO that fails to emulate the fraud recipe will report far lower profits in the near term and will fear losing his job. More junior executives whose compensation is based on the firm’s reported income have perverse incentives to engage in accounting fraud to ensure that the firm “hits the number” and have reduced incentives to blow the whistle on frauds.
c. Lenders engaged in accounting control fraud create “echo” epidemics of fraud. They use their powers to hire and fire and create compensation systems to create perverse incentives in other fields: among their employees, “independent” professionals, and agents (e.g., loan brokers).
d. When several large lenders follow similar fraud strategies they can hyper-inflate financial bubbles.
Anti-consumer control frauds can also turn markets perverse by creating Gresham’s dynamics. Chinese infant formula provides a good example. Dishonest firms drove honest firms from the market – maiming hundreds of thousands of infants’ health.
In the case of nonprime loans, for example, both principals (the borrower and the lender) typically lost utility as a result of the loan – reverse Pareto optimality. The unfaithful and fraudulent agents, however, won big.
Even when private market discipline did finally kick in it did not perform as advertised. Instead of differentiating between good and poor credit risks and honest v. fraudulent actors it simply shut down hundreds of markets.
Rep. Paul’s comparative statement – implying that the markets were tougher regulators than the regulators – fails on two bases. One, as pathetic as the anti-regulators were, they were commonly better than the market, e.g., warning about concentrations in commercial real estate well before the crash. Two, claiming that regulation is a failure because the ideological foes of regulation controlled the agencies and so completely desupervised the financial sector so completely that they created a self-fulfilling prophecy of regulatory failure is an act of chutzpah.
4. Rep. Paul’s other remark, however, illustrates the false dichotomies that underlie the ideological assault on regulation. He notes that we “need law and order.” He thinks that proves we don’t need regulation, but it proves the opposite. The banking regulators are the “cops on the beat.” We have nearly a million police and guards that deal almost exclusively with blue collar criminals. Control fraud creates a Gresham’s dynamic because it means that cheaters prosper. As regulators, we do “serve the [honest] banks” by taking away the ability of the cheaters to prosper – when we regulate effectively. The OCC and the OTS did zero criminal referrals during the current crisis. We did thousands as regulators during the S&L debacle. We prioritized the most severe frauds (the large control frauds) and made the support of criminal prosecutions a top agency priority. The result was over 1000 priority felony convictions of S&L elites. Without the regulators’ expertise the FBI cannot possibly stop an “epidemic” of mortgage (FBI House testimony, September 2004).
In the ongoing crisis, the Department of Justice, denied regulatory support and relying instead on the Mortgage Bankers Association – the trade association of the “perps” – has secured zero convictions of any senior officers of the large lenders specializing in nonprime lending/securitization. Effective regulations and regulators are not the enemy of private markets or private market discipline, but rather one of the essential requirements for efficient, honest markets in a modern economy.
Bill writes a column for Benzinga every Monday. His other academic articles, congressional testimony, and musings about the financial crisis can be found at his Social Science Research Network author page and at the blog New Economic Perspectives.
Bill Black is the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. He spent years working on regulatory policy and fraud prevention as Executive Director of the Institute for Fraud Prevention, Litigation Director of the Federal Home Loan Bank Board and Deputy Director of the National Commission on Financial Institution Reform, Recovery and Enforcement, among other positions.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Financial System, Fraud, Government, Money, reform, Regulation, regulatory capture, Ron Paul, Spencer Bachus, William Black |
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Will Ron Paul Be Able To End The Fed?
Is Ron Paul finally in position to really do something about the Federal Reserve? U.S. Representative Spencer Bachus, the chairman-elect of the House Financial Services Committee, has announced that Ron Paul will chair the domestic monetary policy subcommittee starting next month. This puts Ron Paul in tremendous position to be able to put significant pressure on the Federal Reserve. In previous years Ron Paul has introduced legislation to end the Federal Reserve but it never got any traction. During this most recent session of Congress an effort by Ron Paul to have a full audit of the Federal Reserve conducted gathered quite a bit of momentum for a while, but in the end it did not get passed. However, a very limited examination of Fed activities during the recent financial crisis was passed, and that examination has revealed some really shocking things. With so many Tea Party members entering Congress this upcoming session there may be more momentum than ever to hold the Federal Reserve more accountable. Ron Paul is already talking about how he is planning for a full slate of hearings on U.S. monetary policy and he has indicated that he plans to restart a push to have the Fed audited.
And why shouldn’t the Federal Reserve be fully audited? The Federal Reserve has more power over the U.S. economy than any other institution and yet it has not been subjected to a comprehensive audit since it was created back in 1913.
So what would an audit accomplish?
Well, it would hopefully expose what is going on inside the Federal Reserve.
A very, very limited examination of Fed transactions that occurred during the recent financial crisis forced the Federal Reserve to reveal the details of 21,000 transactions stretching from December 2007 to July 2010 that totaled more than 3 trillion dollars. It turns out that the Federal Reserve was just handing out gigantic piles of nearly interest-free cash to their friends at the largest banks, financial institutions and corporations all over the globe.
These revelations have many members of Congress wondering what else has been going on inside the Federal Reserve.
For example, U.S. Senator Bernie Sanders was absolutely outraged by these “backdoor bailouts” by the Federal Reserve….
“The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution.”
More members of Congress than at any other time in recent memory are openly wondering if it is now time “to pull back the curtain” at the Federal Reserve. For those who would like to see the power of the Federal Reserve greatly diminished, there should be one primary goal right now.
Expose the Federal Reserve.
The truth is that the more the American people learn about the Federal Reserve and about what it has been doing the more they disapprove.
During his farewell speech on the floor of the U.S. Senate this week, Senator Jim Bunning noted that as the American people become increasingly aware of what the Federal Reserve is doing the less they like it….
“Public awareness of what the Fed is doing is increasing while public opinion of the Fed is falling.”
Unfortunately, the views of Ron Paul and other anti-Federal Reserve members of the Tea Party movement are strongly opposed by many other members of the Republican Party.
In a recent Bloomberg Television interview, Barney Frank noted this division within the ranks of the Republicans….
“I do not believe that Ron Paul’s views on the Fed represent the views of most Republicans.”
However, there is evidence that the tide is turning with the American public.
According to a recent Bloomberg National Poll, the number of Americans that would like to see the Federal Reserve held more accountable or even completely abolished is increasing….
Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.
Those are very exciting numbers. A majority of Americans now want the power of the Federal Reserve to be reduced or they want it shut down entirely.
If Ron Paul is able to get a comprehensive audit of the Federal Reserve passed, the revelations that would come out of that would certainly turn public opinion against the Fed even more.
So what is so bad about the Federal Reserve?
Well, think of it as a perpetual debt machine.
Did you know that the U.S. national debt is 5,000 times larger than it was a hundred years ago?
That’s right – back in 1910, prior to the passage of the Federal Reserve Act, the national debt was only about $2.6 billion.
Since that time, our debt has been endlessly skyrocketing.
Under the Federal Reserve system, the U.S. government cannot just go out and print money. It is actually the Federal Reserve that issues our currency.
The way our system works, whenever the U.S. government arranges for the Federal Reserve to issue more currency, more government debt is created at the same time. In fact, as I have written about previously, all of our money is now based on debt.
No debt, no money.
What we desperately need is for the current monetary system to be scrapped. The federal government should take back the power to issue currency and should implement a new system based on money that is debt-free.
The truth is that it is insane that any sovereign government should have to go into debt just to produce more of its own currency.
Instead, what we have under the Federal Reserve system is a money supply that will forever be expanding, a currency that will forever be deteriorating in value and a national debt that will continue to skyrocket until the entire system collapses.
Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power. This continual debasement of our currency is called “inflation” and it is a hidden tax on every man, woman and child in the United States.
It is absolutely guaranteed that every single dollar that you own will go down in value over the long-term.
But the American people have come to accept that a constantly expanding national debt and a currency that is constantly losing value is the most “rational” economic system that humanity has ever come up with.
So who benefits from all this?
Well, for fiscal year 2010 the U.S. government paid out over 413 billion dollars in interest on the national debt. In future years that number is projected to rapidly skyrocket even more.
Wouldn’t you like to be getting a nice chunk of that 413 billion dollars?
It turns out that loaning money to the U.S. government is very, very profitable.
That 413 billion dollars is money that was transferred from the American people to the U.S. government, and then transferred from the U.S. government to big financial institutions, foreign countries, and very wealthy bankers.
So what did we get in return for our 413 billion dollars?
Nothing.
Sadly, this is not just going on in the United States. This is going on literally in almost every nation on earth.
All over the world sovereign governments are drowning in debt and so they have to drain their citizens dry so that they can meet their obligations.
In the book of Proverbs, it tells us that “the rich ruleth over the poor, and the borrower is servant to the lender.” Americans like to think that they live in “the land of the free”, but the truth is that we have become enslaved to debt.
But even worse, we have consigned our children and our grandchildren to a lifetime of debt. They will have to work all of their lives to pay trillions of dollars in interest on all of the debt that we have accumulated in this generation.
How would you like to be born into a world where the previous generation had racked up a $13 trillion debt that now you were expected to pay off?
There is a reason why people like Ron Paul are so obsessed with the Federal Reserve. It is not because they don’t have anything better to do. It is because the future of our country literally hangs in the balance.
Throughout American history, presidents, top members of Congress and leading business people have warned us about the dangers of having a central bank. In fact, even though our young people are no longer taught this, the debate over central banking was one of the most important themes in early American history.
But we didn’t listen to the warnings.
We were convinced that we knew better.
Well, now we have an economic system that is dying and a $13 trillion debt that we are passing along to our children and to our grandchildren.
Perhaps we were not as smart as we thought we were.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Money, Ron Paul |
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proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
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