Sunday, November 23, 2008
As President-Elect Barrack Obama continues to lower expectations for change by appointing Clinton-era advisor Larry Summers to direct the White House's National Economic Council and long-time New York Fed Chairman Timothy Geithner as Treasury Secretary, Congressman Ron Paul (R-Texas) continues to try to explain how the entire system is flawed and that doing more of the same just isn't going to make things any better over the long run.
In ratcheting up his 2009 economic stimulus plan that will end up costing untold hundreds of billions of dollars, the new president is sure to be comforted by his new top economic advisor who, according to this Bloomberg report, noted less than a week ago that "ballooning debt isn’t a major issue for now because there’s 'excess demand' for Treasuries rather than excess supply, as investors flock to government debt as a haven".
Yes, Mr. President-Elect, as long as the financial world remains in a state of perpetual terror, the U.S. will always have an accommodative funding source for whatever it is that we decide we want to spend money on.
That's a good long-term plan.
Meanwhile, Ron Paul continues to press the case for real change beginning with the type of economists that the new administration might employ, describing in this speech last week the differences between Keynesians and Austrians and once again prompting the whimsical fantasy of what a Ron Paul White House might look like if tens of millions of voters would have had a clue what he was talking about when he sought the Republican Party nomination for President last summer.
Madame Speaker, many Americans are hoping the new administration will solve the economic problems we face. That’s not likely to happen, because the economic advisors to the new President have no more understanding of how to get us out of this mess than previous administrations and Congresses understood how the crisis was brought about in the first place.Dr. Paul goes on to talk about how governments need central banks so that they can tax the public through the sneakiest of all means - inflation - in order that they be able to remain "large and in charge" (my words not his) and that we'd be much better off with sound money and smaller government.
Except for a rare few, Members of Congress are unaware of Austrian Free Market economics. For the last 80 years, the legislative, judiciary and executive branches of our government have been totally influenced by Keynesian economics. If they had had any understanding of the Austrian economic explanation of the business cycle, they would have never permitted the dangerous bubbles that always lead to painful corrections.
At least 90% of the cause for the financial crisis can be laid at the doorstep of the Federal Reserve. It is the manipulation of credit, the money supply, and interest rates that caused the various bubbles to form.
Although it is obvious that the Keynesians were all wrong and interventionism and central economic planning don’t work, whom are we listening to for advice on getting us out of this mess? Unfortunately, it’s the Keynesians, the socialists, and big-government proponents.
Who’s being ignored? The Austrian free-market economists—the very ones who predicted not only the Great Depression, but the calamity we’re dealing with today. If the crisis was predictable and is explainable, why did no one listen? It’s because too many politicians believed that a free lunch was possible and a new economic paradigm had arrived. But we’ve heard that one before--like the philosopher’s stone that could turn lead into gold. Prosperity without work is a dream of the ages.
Of course, Keynesian economists would probably note that we face de-flation at the moment, not in-flation (happens every time a bubble bursts), and that the idea of abolishing the Federal Reserve as proposed by Ron Paul is about the stupidest thing a government could do.
What would a Ron Paul White House look like...