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  • January 2008
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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.

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5 Responses

  1. fix the Housing market.no 1 priority. this was a big Job market. because of housing burst , eliminated a huge number of jobs( agents, appraiser etc) and we lost the confidence overall.

    encourage small business.

    Tax heavily on the services offered from overseas( call centers).this will reduce job vanishing to overseas. we need more service industry in United States.this will create jobs.

    Tax heavily on overseas workers ( h1 b workers).this will encourage hiring from home.even if we tax heavily H1 b workers there is still going to be inflow of qualified workers but advantage is we really get the qualified workers.we should tax heavily on h1 b workers who are getting paid 80000 or less.because after tax thats a huge amout and it is not spend here and will flown out to other countries or send to foreign countries.

    Reduce tax collecting work force. Govt is spending big amount of money to pay to the work force in Tax department.

  2. They seemed like good economic and tax solutions to me. I hope it isn’t too late.

  3. More grease to our great economist Ron Paul’s elbow. Your economic solutions to US recession are factual and F. reserve must impliment them for US economic growth and development.

  4. A one page stimulus plan?

    A fedarally guaranteed household finance program that secures creditor’s paper while requiring negotiation in interest.

    Any household that has over 40% of gross income going to debt can participate as long as they agree to automatic deductions for repayment and have a credit rating of 0 to prevent incuring future debt.

    Our crisis is the result households incuring credit/debt for two reasons. One, this has increased demand for luxuries which increased the price and supply of luxuries while at the same time increasing the price of neccessities. Two, this additional supply of household money is now household debt reducing or eliminating household demand for luxuries as monthly supply of money is now allocated to paying credit balances. What happens next is obvious.

    Businesses reduce supply and their expenses, labor and materials. Layoffs and further reduction of household supply of money occur. We are just at the begining of what can be an apocolyptic cycle. A cycle that should be stopped before our ability to manufacture and distribute goods has deteriorated to the point of no return.

  5. I got my hours cut at work today, but I found the one answer to our economic crisis. The ONLY solution to our economic crisis is reforming our education system. No bailout money for failing companies, no bailout money for anybody. That’s right, no money for you. Every single extra dollar should be put towards our education, EVERY DOLLAR. We need to hire more teachers and we need to pay them more. A happy teacher makes for happy students and happy students are better suited to learn. The more teachers, the smaller the classes, the more the students will learn. We need every student to have all the tools he or she needs to learn anything and everything. Every student should have their own computer with access to the internet. We are in this economic crisis due to lack of education, think about it. A student graduates highschool and does not go to college, college is not for everyone. We will call this student Jim. Jim is all of a sudden in the real world in need of an income. He was never taught in school how to balance a checkbook, write a check, fill out a resume or read a contract. So he goes to a job interview and gets a lower paying job due to his lack of knowledge in the real world, and his poor resume. Well he now needs a vehicle to get to work. Jim goes to the car dealership and takes a loan out for a new car he gets suckered into. He signs a bad contract due to his lack of knowledge in reading contracts. Instantly Jim is stuck in high payments for 5 years. He is now having a hard time affording other things, so he applies for a credit card. Once again Jim signs a bad contract and in a few months is in a debt he can never get out of. Now picture millions of “Jims” across the country doing the same thing, all of a sudden millions of people are in debt. Eventually the whole country is affected and now the economic crisis begins, people lose jobs and I get my hours cut all due to lack of education. Jim can do an algebra problem(a skill in which he will NEVER use again) but he can’t handle his own finances, the education system is a joke. It is an old system that needs to be changed, it is time for a revolution folks.

    Every middleschool and highschool in America should have a “Real World” class, and it should be mandatory for every student, every semester. This class should teach students to read contracts, balance checkbooks, write checks, pay bills, job interview skills, resume and application skills, basic business and finance skills etc. and should be tested in real world environments. Secondly we need to figure out what students are good at early and gear classes to help them excel in their natural field. I mean if a student knows he/she doesnt want to go to college, then begin to teach them a skilled trade such as carpentry, welding, construction etc. Also have internships with real companies to get hands on experience before jumping into the real world. This all should begin at a highschool level or sooner and should be mandatory across the country.

    It’s a disgrace to me that our coutries’ solution to this crisis is to basicly print more money and send checks to failing companies, this will not work. It’s really sad that states are saving money by cutting school budgets, ARE YOU SERIOUS!?!? This is the complete opposite direction we need to go to succeed. That will simply make our future generation of children dumber and cause more economic hardship. In doing this we are only digging the hole deeper, our education is already far behind other countries, and worsening quickly. An undereducated society is a failing society. There could be many geniuses who lived long lives and died without living up to their potential, due to an education system that teaches every kid the same thing, in the same manner. People are different, and need to learn different things, and need to be taught in different ways, not all the same.

    It may be hard at first, but once the education system is reformed the snowball effect will begin. Brighter more educated students will become future leaders. More brilliant ideas will come about due to a generally more intelligent society. The smarter we are as a whole, the better off we will be. Economic crisises will solve themselves, or be solved by the intelligent population working together, instead of our unintelligent society fighting amongst itself. Everybody’s thinking about solutions to our problems, there is only ONE solution and this is it. REFORM OUR EDUCATION SYSTEM BY PUTTING EVERY EXTRA DOLLAR WE HAVE INTO IT. It’s not difficult to figure out, think about it…..it is the only answer.

    Please send this message to everyone you know, this is how things begin to change. We have the internet now, so take advantage and let us make a difference and change the world for the better. Send it to friends, Senators, lawyers, politicians, Barack Obama, your mom, anybody in a position of power. Who knows maybe together we can make this happen.

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