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Ron Paul and the Credit Bubble

From a number of long years of study and observation, I have come to the personal conclusion that we have recently bore witness to the largest credit bubble in the history of America. This bubble, which started in Tech/Telecom in the late 90s, then found its way to housing, mortgage and structured finance in the past five years, has destabilized the economy and allowed for a number of major maladjustments that have let many reap undue rewards at the long term expense of our economy.

One of the central drivers of this bubble has been an implied guarantee by the federal government and, especially, the federal reserve that if things went downhill, if risk that was taken started to cause trouble, that the "authorities" would step in and ensure that everything "worked out". This is what we are witnessing currently with many of the actions taken by the Fed and calls from a number of government leaders (i.e. mortgage "relief").

In my opinion, the truly free market would have business swings, but WOULD NOT have massive bubbles such as the one we have borne witness to. This bubble was fomented by the activities of central bankers and government officials continuously trying to stop any downturn. The "Greenspan Put" is one common term for this activity.

Essentially, every time there has been a potential problem, the central bank has stepped in and basically worked to debase the currency to prevent a collapse. If you can't save, you must get on the treadmill every day just to keep up, essentially.

But now tremendous risk exists. The housing market is a huge bubble, our country is in massive debt, the savings rate has been NEGATIVE for a number of years, mortgage, banking, financial and insurance firms (the heart of the madness) have been getting slaughtered recently in the markets (see tickers CFC, MER,MBI, WM, PHM for a nice cross section of the destruction).

What we need to realize, and what Ron Paul knows, is that it is not the Free Market that caused these problems. What really took place is that the government, via trying to do too much to prevent any adjustment, acctually encouraged extreme recklessness. The "safety net" encouraged people to climb up a thousand story building to take advantage of potential windfall profits. "Heck, if things go wrong the Fed will bail us out," is what these folks' actions represented.

So, my point is, the economy is in trouble due to too much action by the government. But many will try to blame the Free Market. We need to explain to everyone that it was not the Free Market that caused the problems, it was too much government intervention encouraging nutty risk taking. If Ron Paul is to get elected, more people must understand this. When the Good Doctor talks about the Fed and transferring wealth, this is much of what he means. We need to get the government out of the business of underwriting risk. We need to do it ASAP or the bill will come due very fast and it will be a very large bill for every taxpayer, wage earner and saver out there. Act now. Support Ron Paul.

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Good points

Many good points here, the key one being that the financial crisis facing the country will be blamed on the free-market instead of the central-planning ala the Federal Reserve.

The strangest thing is that guys like Larry Kudlow says that he believes the free-markets and capitalism is the path to prosperity, yet he staunchly believes that there is a role for the central banks in either free-markets or capitalism... and when we watch TV, we think we're getting educated, when in fact, it is just brainwashing on why the status-quo works.

The thing about curing a sick economy (as I'm sure the good doctor knows about curing a sick patient) is that many times, it gets worse before it gets better. The medicine will taste very, very bitter. In fact, the election of Dr. Ron Paul may put us on the path to a Constitutional Republic, in the short-term (within 2 - 4 years of his start in abolishing the Federal Reserve), you will see the financial markets readjust and do so in a very, very turbulent way. We're in the middle of a government-sanctioned Ponzi scheme and unwinding them is a good idea... just never easy or painless.

The Fed Caused the Bubble

The Federal Reserve led by Alan Greenspan kept interest rates too low for too long under the banner of "fighting inflation". This encouraged a speculative frenzy in the real estate market. Speculative bubbles always pop. Now of course you see the same Federal Reserve pumping billions into the credit markets to avoid a credit meltdown (basically a bailout for the big bank lenders).

Ron Paul is correct in his view that the Federal Reserve should be dismantled. It only serves the Global elite.

the FEDis doing this on purpose

devalue the dollar, crash the economy, kill the sovereignty, create the NAU and progress to a NWO.

its part of the Elites plan working through the CFR and FED to rule the world.

We will all be slaves to tyranny.

the only thing stopping them is the middle class and the constitution.

“The main purpose of the Council on Foreign Relations is promoting the disarmament of U.S. sovereignty and national independence and submergence into an all powerful, one world government.”
- Admiral Chester Ward, former CFR member and Judge Advocate General of the U.S. Navy

“The Council on Foreign Relations (CFR) is the American Branch of a society which originated in England… (and) …believes national boundaries should be obliterated and one-world rule established.”
- Carroll Quigley, member of Council on Foreign Relations (CFR), mentor to Bill Clinton

“Once the ruling members of the CFR shadow government have decided that the U.S. Government should adopt a particular policy, the very substantial research facilities of (the) CFR are put to work to develop arguments, intellectual and emotional, to support the new policy, and to confound and discredit, intellectually and politically, any opposition.”
- Admiral Chester Ward, former CFR member and Judge Advocate General of the U.S. Navy

“For a long time I felt that FDR had developed many thoughts and ideas that were his own to benefit this country, the USA. But he didn’t. Most of his thoughts, his political ‘ammunition,’ as it were, was carefully manufactured for him in advance by the Council on Foreign Relations-One World Money Group.”
- Curtis Dall, ex-President Franklin Roosevelt’s son-in-law

“Let us face reality. The framers (of the Constitution) have simply been too shrewd for us. They have outwitted us. They designed separate institutions that cannot be unified by mechanical linkages, frail bridges, (or) tinkering. If we are to turn the founders upside down… we must directly confront the Constitutional structure they erected.”
- James MacGregor Burns, Council on Foreign Relations member, 1984

“The Council on Foreign Relations (CFR) has just let the cat out of the bag about what’s really behind our trade agreements and security partnerships with the other North American countries. A 59-page CFR document spells out a five-year plan for the ’security community’ with a common ‘outer security perimeter…. [ie] wide-open U.S. borders between the U.S., Mexico and Canada… at this … meeting [3-23-05]… President Bush pinned the epithet ‘vigilantes’ on the volunteers guarding our border in Arizona… the CFR document calls for ‘a seamless North American market’ and for ‘the extension of full labor mobility to Mexico.’… adopting a ‘tested once’ principle for pharmaceuticals, by which a product tested in Mexico will automatically be considered to have met U.S. standards…. putting illegal aliens into the U.S. Social Security system, which is bound to bankrupt the system. … a major fund to finance 60,000 Mexican students to study in U.S. colleges…. supervision by a North American Advisory Council of ‘eminent persons’.”
- The Council on Foreign Relations (CFR)

“We are grateful to the Washington Post, the New York Times, Time magazine and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries”
- David Rockefeller, Member CFR, in an address to a Trilateral Commission meeting in June of 1991

woo hoo!

Either way

Conspiracy or not, it's a screwed up system with no philosophical or practical defense, so let's change it up.


Freedom - Peace - Prosperity