Liberty Maven

Ron Paul failed to wipe the floor with Bernanke in the last Congressional Hearing. Here’s why. Shift tactics next time!

by Jake, the Champion of the Constitution
Originally published November 20, 2008 at http://www.nolanchart.com/article5511.html

Although I greatly admire Ron Paul’s ideas, as I watched the latest RP vs. the FED battle, I was quite disappointed. The FED is gasping for air. They caused the mother of all bubbles, and it’ll finally pop next year. Dr. Paul took over 4 minutes of his precious 5 minutes pontificating about the glory of Austrian economics and the horror of the FED instead of pressing home an attack. Art of War 101: “Cut off his head before waxing eloquent.”

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In Ron Paul’s latest video released on his Congressional site he talks about his questioning of Bernanke yesterday. The video is a bit of a scholastic lecture on our fiat money system. During it, he claims, more than once, that our financial system has collapsed.

Yesterday, Secretary of the Treasury Henry Paulson published an Op-Ed piece in the New York Times.  It was filled with doublespeak, platitudes, lies, and incredible ignorance. Chris Martenson parsed Paulson’s words, paragraph by paragraph, to shed some truth of the situation.  Here’s a snippet:

[Paulson writes:]

I have always said that the decline in the housing market is at the root of the economic downturn and our financial market stress. And the economy, as it slows further, threatens to prolong this decline, as well as the stress on our financial institutions and financial markets.

My Comment: Um, no, Hank, sorry, this is not true. Here are some recent quotes from you:

April 20, 2007 — “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.”

July 26, 2007 — “I don’t think it [the subprime mess] poses any threat to the overall economy.”

This article by Chris Martenson is quite revealing, even entertaining (if you’re into black comedy).  Read the whole thing here.

Ron Paul appeared today on CNN in the time slot usually reserved for Glenn Beck, but Beck is off to FOX News now. His replacement Jane Velez-Mitchell is mostly right with her views, but after listening to her you may need a few ibuprofen.

They discuss the auto bailout and bailouts in general. Neither Velez-Mitchell nor Paul think this auto bailout is necessary, of course. Paul seems to hint around that he doesn’t necessarily believe the auto bailout bill is as “dead” as many are making it out to be.

Ron Paul appeared on FOX Business News today following his grilling of Ben Bernanke on Capitol Hill. He accuses Bernanke and Paulson of price fixing among some other choice words. Paul’s contention is that they are fighting against what the market wants and their efforts to subvert the market will fail because the “market is more powerful than the central bankers”.

A favorite Paul comment:

“No I didn’t get answers, and I didn’t expect any.”

Watch the full video:

Ron Paul questioned Ben Bernanke this morning regarding the entire financial system as it relates to the bailouts. Again, Paul says the words that no one wants to hear, but truly needs to hear. A few choice quotes from Paul:

“Something has to give, or we are going to waste more time trying to patch this system together.”

“Does this thought come up… about a new world reserve currency?”

“The dollar system has essentially been declared dead.”

“We spent. We inflate. We run up deficits.”

A step-by-step explanation of how the Federal Reserve, America’s Central Bank, can manipulate monetary policy.

by Jake, the Champion of the Constitution
Originally published November 17, 2008 at http://www.nolanchart.com/article5489.html

Part 5 covered the origins of fractional reserve banking.  In this article I will formally define fractional reserve banking and describe how it works. Next I will share how the Federal Reserve controls monetary policy and supply with its three major tools – “printing” or “de-printing” money (technically referred to as “open market operations” by the FED), bank reserve requirement ratios, and the infamous “Fed-rate.”

Fractional Reserve Banking - a banking system in which banks are supposed to maintain a quantity of reserves from its depositors that is a fixed fraction of the amount of new money the bank is then allowed to create.  This newly created money, or credit, is then loaned to the bank’s borrowers.

Fractional reserve banking has two major flaws in practice.  The first is that it is an arguably criminal act, which is a topic more suited for Part 7.  (See Rothbard’s “The Case Against the Fed” below, pages 40-45.)

The second flaw is insolvency.  This is generally known as a “bank run” and is easy enough to understand.  If the system’s depositors demand in excess of the reserve amount within a short enough time span, the entire system theoretically just runs out of printed cash and goes broke. Realistically in today’s world this would cause the government to begina a massive physical printing of dollars, resulting in massive currency devaluation and eventual worthlessless and death of the currency via hyperinflation.

For example, let’s suppose the entire banking system consisted of $100 at a 10% reserve ratio.  This means the banks would loan out $90 and keep $10 as its reserves to satisfy depositors.  However, if the depositors of $10.01 ask for their money back, the bank will NOT be able to satisfy the request and will need to close down all redemptions of deposits until it receives cash flow from its loan investments.  This is similar to the dilemna faced by those devious medieval goldsmiths from Part 5, except we are dealing with paper money instead of commodity money.

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Given the direction the political winds are blowing, with world leaders meeting to determine how best to further intervene into the world’s monetary and economic system, the odds of returning to the stable days of the Gold Standard seems infinitesimal at best.  At the Christian Science Monitor, an op-ed titled Forget Bretton Woods II – we need a gold standard, editorialist Walker Todd says that absent the “integrity and restraint a gold standard provides” our country may be headed straight for hyperinflation. Using Weimar, Germany as an extreme example, he illustrated how desperate conditions could get:

Weimar Germany experienced one of the greatest inflations in modern history in 1922 and 1923. Eventually, the official exchange rate reached 4.2 trillion marks per dollar. Some Germans heated their homes by burning cash, since it was cheaper than buying wood. The inflation finally was tamed by government bonds promising repayment in gold, backed by land taxes also payable in gold.

And photographs from the situation in Zimbabwe illustrate clearly what could happen.  Here’s a man going out to lunch:
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“Scenes are now to take place as will open the eyes of credulity and of insanity itself, to the dangers of a paper medium abandoned to the discretion of avarice and of swindlers.” -Thomas Jefferson to Thomas Cooper, 1814

by Jake, the Champion of the Constitution

Originally published November 16, 2008 at http://www.nolanchart.com/article5477.html

Upset about the financial crisis and how it could negatively affect your life? Think it won’t effect your life?  Try reading my last article “Bank and Credit Union 2008 Body Count at 32“.  Well, speaking for myself, I’ve already harassed my Congress representatives to no avail, so I suppose it is time to show up at the FED itself.

END THE FED! protests will take place at the following 39 US cities on Saturday:

Atlanta, Baltimore, Birmingham, Boston, Buffalo, Charlotte, Chicago, Cleveland, Cincinnati, Dallas (Alex Jones of prisonplanet.com to attend, hope he does not break the below principles!), Detroit, Denver, El Paso, Helena, Houston (Ron Paul to attend), Jacksonville, Kansas City, Little Rock, Los Angeles, Louisville, Memphis, Miami, Minneapolis, New York City, Nashville, New Orleans, Oklahoma City, Omaha, Philadelphia,  Phoenix, Pittsburgh, Portland, Richmond, Salt Lake City, San Antonio, San Francisco, Seattle, St. Louis, Washington, DC.

Visit here to sign up, join, and find out when and where to meet up.

The site specifies that END THE FED! participants must agree to the following principles:

• Peaceful, Non-Violent Rally to Support Sound Money
• Cooperation and respect for local laws and authorities
• No harassment of Fed employees
• No blocking of pedestrian or vehicular traffic

“The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.” - Thomas Jefferson to John W. Eppes, 1813

For any who are unaware, although the Federal Reserve was  created by Congress and President Wilson via the Federal Reserve Act of 1913, the Federal Reserve’s use of paper currencies unbacked by gold and silver is unconstitutional, although this decision has been made many times by the contemporary executive and legislative branches, especially in times of war.

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Ron Paul was interviewed by Neil Cavuto on FOX News this morning regarding the G20 financial summit hosted by George W. Bush at the White House. I wish they discussed Bush’s sudden and recent championing of “free market capitalism”, but it was a bit more toward the standard Ron Paul rhetoric we have become used to.

He again says that these leaders don’t have a clue how to “fix” the economic calamity, and in fact, they can’t. He attacks the central bankers as the real movers and shakers in the cause of the mess saying they are meeting overseas, secretly, and we have no idea what they are doing since there is no transparency.