URGENT: Ron Paul’s Economic Solutions

A welfare-style tax rebate band-aid? Lowering interest rates and injecting billions of fiat dollars into an already over-inflated economy? This is like sticking bubble-gum into the cracks of a dam that is about to burst. It is only delaying the inevitable and making things worse.

Our economy is now facing imminent collapse, this will not be abated by faulty, temporary “fixes” that are only contribuing to the problem. Here are the real, urgent economic solutions provided by Ron Paul that need to be implemented.

1. Tax Reform: Reduce the tax burden and eliminate taxes that punish investment and savings, including job-killing corporate taxes.

2. Spending Reform: Eliminate wasteful spending. Reduce overseas commitments. Freeze all non-defense, non-entitlement spending at current levels.

3. Monetary Policy Reform: Expand openness with the Federal Reserve and require the Fed to televise its meetings. Return value to our money.

4. Regulatory Reform: Repeal Sarbanes/Oxley regulations that push companies to seek capital outside of US markets. Stop restricting community banks from fostering local economic growth.

Ron Paul’s comprehensive economic revitalization plan is available in it’s entirety online at: http://www.RonPaul2008.com/Prosperity.

The following are excerpts taken from articles written by Ron Paul. I believe that these are the only permanent solutions for our nation to prevent a depression and climb successfully out of the recession we are currently in.

Another ‘Emergency’ Spending Bill

Ron Paul (03.21.2006)

The real emergency is in Washington, where Congress is spending and borrowing America into a perfect storm. As economist James Turk explains, the federal government now relies upon debt to finance 20% of its spending. Low interest rates during the 1990s and early 2000s kept interest payments on government debts – Treasury Bonds and Treasury Bills – somewhat manageable. During the same period, however, the Federal Reserve greatly increased the money supply, which has caught up to us in the form of price inflation. The Fed now must raise rates to combat this inflation, but higher interest rates will chill economic growth and slow tax revenue. To quote Mr. Turk, “The federal government faces a potentially toxic mix of constrained revenues, soaring expenditures, ballooning debt, and rising interest rates.”

This is the real emergency that must be addressed in Washington, and the only solution is to reduce government spending substantially. If we don’t put the brakes on the spending spree soon, we may find ourselves facing another period of economic malaise that rivals the 1930s.

Paul calls for eliminating federal income taxes to avoid recession

USA Daily 1.22.08

While touring Louisiana before today’s caucus, Republican presidential candidate once again proposed eliminating federal income taxes and returning to a gold backed currency to rescue the nation’s economy.

Paul had warned that the current economic crises would develop and has blamed the Federal Reserve for creating it. Paul said, “The Fed has again taken our country into a terrible crisis. Who else is talking about honest money that cannot be printed up at will by DC bureaucrats? My opponents in both parties are all some variety of print-and-spend Keynesians.”

Paul continued, “Only we are telling the truth, about who is to blame for this recession, and how we can build real prosperity with sound money, no IRS, no deficit, and strict obedience to the Constitution. And, of course, no hyper-expensive, hyper-dangerous empire all around the globe.”

Ron Paul has been advocating these economic solutions his entire career. As he pointed out in the recent MSNBC debates:

Dr. Paul has never voted for a tax increase or for an unbalanced budget.

Dr. Paul also pointed out that he is the only candidate who has repeatedly voted against raiding the Social Security funds and has introduced a bill to stop Congress from borrowing money from the Social Security to pay for unbalanced budgets. He also opposes taxation of Social Security benefits.

“Ron Paul has a record of sticking to his conservative principles that spans four decades,” said Ron Paul campaign manager Lew Moore. “Dr. Paul’s record clearly shows that he’s the real Republican and the true conservative.”

Economic Terror:

Ron Paul (02.09.2002)

. . . In the 1970s, wage and price controls were used to suppress price inflation and to help the economy, without realizing the futility of such a policy. Not only did it not work, the economy was greatly harmed. Legislation, per se, is not necessarily harmful, but if it reflects bad policy, it is. The policy of wage and price controls makes things worse and represents a serious violation of people’s rights.

Today, we hear from strong advocates of higher taxation, increased spending, higher budget deficits, tougher regulations, bailouts and all kinds of subsidies and support programs as tools to restore economic growth. The Federal Reserve recognized early on the severity of the problems and, over the past year, lowered short-term interest rates an unprecedented 11 times, dropping the Fed funds rate from 62 % to 1: %. This has not helped, and none of these other suggestions can solve the economic problems we face either. Some may temporarily help a part of the economy, but the solution to restoring growth lies not in more government but less. It is precisely too much government, and especially manipulation of credit by the Federal Reserve, that precipitated the economic downturn in the first place. Increasing that which caused the recession can’t possibly, at the same time, be the solution.

. . .Monetary inflation is the chief cause of recessions. Therefore, we must never expect that this same policy will reverse the economic dislocations it has caused.

For over a year, the Fed has been massively inflating the money supply, and there is no evidence that it has done much good. This continuous influx of new credit instead delays the correction that must eventually come- the liquidation of bad debt, and the reduction of overcapacity. This is something Japan has not accomplished in 12 years of interest rates around 1%. The market must be left to eliminate the misdirected investments and allow the sound investments to survive.

There are other policies that will assist in a recovery that the Congress could implement. All taxes ought to be lowered, government spending should be reduced, controls on labor costs should be removed, and onerous regulations should be reduced or eliminated.

. . .Sadly lacking in the Congress is a conviction that free markets- that is truly free markets- and sound money can provide the highest standard of living for the greatest number of people. Instead, we operate with a system that compromises free markets and causes economic injury to a growing number of people, while rewarding special interests and steadily undermining the principles of liberty. Unfortunately, the policy of monetary inflation is most harmful to the poor and the middle class, especially in the early stages.

Since rejecting the current system and endorsing economic freedom diminishes the power and influence of politicians, it’s difficult to get political support for such a program. The necessary changes will only come when the American people wake up to the reality and insist that the Congress pursues only those goals permitted under the Constitution.

Instead of moving in that direction of freer markets, the more problems the western countries face, the more government programs are demanded. If one looks at Europe, the United States, or even Japan as their economies weaken, government involvement in the economy increases. But in China and Russia, the horrible conditions that communism causes, ironically, made these two countries move toward freer markets when they encountered serious troubles. Even the central banks of these two countries today are accumulating gold, while western central banks are selling.

. . .Very few in Washington, however, recognize the dire consequences to economic prosperity that welfarism, warfarism, and inflationism cause. Most believe that the occasional recession can be easily handled by government programs and a Federal Reserve policy designed to stimulate growth. It’s happened many times already, and almost everyone believes that in a few months our economy and stock market will be roaring once again.

This is where I disagree.

Every recession in the last 30 years, since the dollar became a purely fiat currency, has ended after a significant correction and resumption of all the bad policies that caused the recession in the first place. Each rebound required more spending, debt and easy credit than the previous recovery did. And with each cycle, the government got bigger and more intrusive.

Bigger government with more monetary debasement and deficit spending means a steady erosion of the free market and personal freedoms. This is not tolerated, because the people enjoy or even endorse higher taxes, more regulations and fewer freedoms. It’s tolerated because most people believe that their financial and economic security is the responsibility of the government. They believe they are better off with government assistance in facilitating the free market, having been taught for decades that it is necessary for government to put a human face on capitalism. Extreme capitalism, i.e. freedom, we have been told is just as dangerous as extreme socialism. As long as this belief prevails, our system will continue in its inexorable march toward fascist-type socialism.

. . .The economic loss is bad enough, but whether it’s fighting the war on terrorism, acting as the world’s policeman, or solving the problems of vanishing wealth, the real insult will come from the freedoms we lose. These freedoms, vital to production and wealth formation, are necessary and represent what the American dream is all about. They are what made us the richest nation in all of history, but this we will lose if Congress is not careful with what it does in the coming months.

. . .Many realists who see the world as it really is and who recognize the dilemma we face in the United States to preserve our freedoms in this time of crisis are despondent and pessimistic, believing little can be done to reverse the tide against liberty. Others who share the same concern are confident that efforts to preserve the true spirit of the Constitution can be successful. Maybe next month or next year or at some later date, I’m convinced that, in time, the love for liberty can be rejuvenated. Once it’s recognized that government has no guarantee of future success, promoting dependency and security can quickly lose it allure.

The Roman poet, Horace, two thousand years ago spoke of adversity: “Adversity has the effect of eliciting talents which in times of prosperity would have lain dormant.” Since I believe we will be a lot less prosperous in the not-too-distant future, we will have plenty of opportunity to elicit the talents of many Americans.

Leonard Read, one of the greatest champions of liberty in the 20th Century, advised optimism:

In every society there are persons who have the intelligence to figure out the requirements of liberty and the character to walk in its ways. This is a scattered fellowship of individuals- mostly unknown to you or me- bound together by a love of ideas and a hunger to know the plain truth of things.

He was convinced that this remnant would rise to the occasion and do the necessary things to restore virtue and excellence to a people who had lost their way. Liberty would prevail.

Let us be convinced that there is not enough hate or anger to silence the cries for liberty or to extinguish the flame of justice and truth.

We must have faith that those who now are apathetic, anxious for security at all costs, forgetful of the true spirit of American liberty, and neglectful of the Constitution, will rise to the task and respond accordingly.

Here in 1983, Ron Paul foresees the recession of 1987 (which did occur). The video is of a debate on the Gold Standard, featuring Congressman Ron Paul and Charles Partee, member of the Federal Reserve Board of Governors. This debate took place at the 1983 Capital Hill Gold Standard Conference in Washington, DC, which was hosted by the Ludwig von Mises Institute.