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  • October 3, 2008 03:54 PM EDT by Elizabeth MacDonald

    Ron Paul's Texas Straight Talk on the Bailout

    If there's anyone in Congress who should feel like he has been shouting into a field of cotton, it should be Congressman Ron Paul (R-Texas).

    And sometimes a journalist just needs to yield the platform for once, for God's sakes, to someone who is trying to bring some common sense to the debate.

    Because God knows we TV gasbags have done enough, doing our part to add to global warming, taking out Arctic glaciers on a daily basis.

    T. Boone Pickens, who now advocates a major wind energy plan, should realize that the Central Bank of Wind, the Saudi Arabia of Wind is not Tornado Alley--it stretches from right here in media land in New York City down to outside the halls of Congress.

    Yes, Dr. Paul has been criticized and ridiculed. By those who live in an echo chamber and don't give anyone except those who agree with themselves a fair hearing. It's time to listen to all points of view, because we are living through one of the rare times when the landscape of this economy is being permanently changed.

    I am printing below Dr. Paul's thoughts on the historic bailout of the financial sector.

    Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on a commodity-backed currency, his bio reads.

    He is a strong advocate for sound monetary policy and is an unrelenting critic of the Federal Reserve's inflationary measures.

    Dr. Paul is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives. Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the US Constitution, his bio notes.

    Dr. Paul serves on the House Financial Services Committee, the International Relations committee, and the Joint Economic Committee.

    And he is the author of several books, including Challenge to Liberty; The Case for Gold; and A Republic, If You Can Keep It. He has been a distinguished counselor to the Ludwig von Mises Institute, and is widely quoted by scholars and writers in the fields of monetary policy, banking, and political economy.

    Here now is Rep. Paul:

    Paul Fears Bailout Could Tank the Economy

    The following is taken from a news report quoting Dr. Paul:

    The so-called financial "bailout" package could end up tanking the economy, warns Paul. "We're trying to prop up bad debt," he warns.

    Congressman Paul argued that a bailout does not address the underlying problems that caused the current crisis.

    The bad debt should be "wiped off the books" rather than purchased by taxpayers, Paul argued. The Texas congressman said he would vote against the bill, citing a response of 9-1 against it by his constituents.

    On a more ominous note, Paul warned of lean economic times ahead. "We will have our recession," he said, warning that it could turn into a major "depression" if the bailout bill in its current form was signed into law. "We built this problem by...irresponsible spending," Paul said.

    Spending to Wipe Out Bad Debt Equals Inflation

    He said the bailout bill would make the economy worse. "It's propping up bad debt with more spending," he said. "As long as you can create new money, you create more inflation" he said, referring to the power of the Federal Reserve to introduce new money into the banking system.

    Before the late 1960s, the Fed had to keep a percentage of gold on hand for every Federal Reserve note it issued. These constraints were removed by Congress in the mid to late 1960s during the administration of President Lyndon Johnson, thus giving the Fed a blank check on how much currency it could put into circulation.

    It forced Johnson's successor, President Richard Nixon, to remove the final restraint, pegging the dollar to a fixed gold price. This created an inflationary spiral that was not quashed until the mid-1980s via the restrained monetary policy of then-Fed Chairman Paul Volcker.

    Paul's remarks indicated that he believes the economy could be headed for a similar inflationary spiral.

    But Paul had a few good things to say about the bailout bill. "I think there have been a few improvements," Paul said, citing tax breaks and cuts tacked on to the $700 bn in taxpayer-funded buyouts that could make the bill more appealing to legislators. "Maybe the markets will like that for a little while."

    Words of Warning

    Here is Rep. Paul on the biggest bailout in the government's history, words he wrote before the U.S. House of Representatives voted to approve the bill Friday:

    This time last week, the biggest bailout in the history of the world seemed to be a fait accompli. 

    Last weekend, the Fed Chairman and the Secretary of the Treasury had harsh words of doom and gloom for Congressional leaders, with the rest of the administration parroting along, and by last Monday it seemed both parties were about to fall in line and vote our Republic away by socializing the banking industry through this bailout. 

    Foolish business behavior was about to be rewarded, and propped up a little longer, the bubble blown a little bigger, and our coming Depression made that much greater, but then something happened on the way to the House floor.

    Citizens made their voices heard. 

    The real story behind the story in Congress this week was the thousands of calls and emails sent to Representatives, clogging up inboxes and even slowing down the House internet system. 

    Slowly, like the Titanic turning around, sentiments on the Hill shifted, and we heard Congressmen capitulating and changing their tune a little, desperately trying to find ways to salvage the bailout without completely enraging their constituencies.

    Now we hear about taxpayer protections, about golden parachutes, and about other nuances that hardly cover up the fact that we would be creating more money out of thin air and further devaluing the dollar! 

    The problem is not HOW the government is spending this money; it's the fact that the government is spending this money. We don't have it. We are already nearly $10 tn in debt, not including unfunded liabilities. 

    We already spend about $1 tn a year we don't have on our overseas empire. Now nearly $1 tn more is somehow supposed to magically appear and solve all our problems!  No -- creating more money might delay the inevitable for some well-connected banks on Wall Street, but in a few weeks we will find ourselves right back in this same position, but much poorer.

    The unfortunate thing is that we've already spent at least $700 bn on other bailouts that did not solve the problem. And while all this negotiation was taking place, the auto industry was quietly bailed out, with no controversy, no discussion, to the tune of $25 bn.

    Inevitably, it appears Congress will call their constituents' bluff and the bailout will pass, because that is the habit Wall Street and Washington have fallen into. People are right to be concerned about our financial future. 

    I've been talking for 30-some years about reasons we need to be concerned and change our ways. We find ourselves now in a position of no good options, and no silver bullets. 

    But the worst thing we can do is to compound our problems by intensifying the mistakes of the past. 

    We do have tough economic times ahead, no doubt, no matter what we do, even if we do nothing. 

    The question is, will we have the courage to take our medicine now and get it over with, or will we prolong the misery for many years to come? I'm less and less optimistic about the answer to that question.

Kim Kelley

Thank you Dr. Paul for being and advocate for our liberty. I salute your courage and applaud your outspokenness. It is people like you that keep the free market "free" for us all. It is a terrible shame that more of your colleagues are not as honorable. Thank you again. You are keeping my hope alive!

October 3, 2008 at 7:01 pm

Tyler, TX

I am disgusted by the Congress passing this bail out. Americans do not have to wait until November 4th to vote "NO" to everyone who voted "YES". I voted "NO CONFIDENCE" by selling to CA$H on my 401k website this afternoon, so that I can still get $0.70 on the dollar, before the glorious U.S. Government rides in on a white horse and "FIXES" all of our problems. Economists and the American Public tried to reason with Washington, but Washington KNOWS IT ALL. New Mantra: Abandon the free market at the first sign of trouble. Government and socialism is our savior. GOOD LUCK ON MONDAY!!!

October 3, 2008 at 6:56 pm

Darryl Schmitz

Our elected representatives have spoken: Throw good money after bad.

October 3, 2008 at 6:49 pm

Aaron

Amen! from an atheist

October 3, 2008 at 6:46 pm

The Dream

This is indeed a sad day for the dream that is America. Some thought that the rank and file American population were too dumb to realize that not passing this bill would have effected the average citizen in profound ways. What they fail to realize is that not only did most of us understand the risks, we were and are still ready for anything to preserve and uphold the Constitution. We are willing to defend our Constitution at all costs. Unfortunately, it seems those who vowed to do so are not. Citizens of the United States, we must act and not just talk if we want to affect change. Too many of us feel we have done our civic duty to bring about change when we vote, call our Representative or leave a note like this on a website. While these are noble and necessary efforts, they are obviously not enough to let our voice be heard in a way that creates the true, lasting and fundamental change in our country we all seek - forcing our leaders to return to the Constitution which they vowed to uphold, and which millions have lost their lives defending. Coordinated protests of an unprecedented scale are the first steps we must take to get the ear of those in power. Do we have the courage to insist our voice be heard, or are we too busy with our daily lives to realize that our country is being taken from us before our very eyes? Would we act if our leaders went on television and burned the Constitution openly for all to see? How are their current actions any different?

October 3, 2008 at 6:30 pm

Austyn

Thanks for being legit. Not often does the MSN listen and write about someone who actually knows whats going on.

October 3, 2008 at 6:25 pm

Brian

Now that's a real Maverick! Too bad Conress didn't listen, because we have a long way to go before this all all over. Trillions more and more socialism is what we can expect from this.

October 3, 2008 at 6:21 pm

Ted Pert

I believe that he is one man that is telling the truth but what can i do to help the situation i am spending as little as i can and save as much as can put away. Ron Paul would have made a great president!!!!

October 3, 2008 at 6:17 pm

EcoMom

Thank you SO much for posting this! I would like to hear more of this reported from the media! I vote for taking the bitter pill and getting healthy again.

October 3, 2008 at 6:15 pm

althusius

This bailout is the product of a corrupt, vile Congress. One day in the future the bailout will be a scandal as famous as Teapot Dome.

October 3, 2008 at 6:12 pm

CT Johnson

Why oh why is this guy NOT President!!!! He seems to have been the only one in Washington who knows what the heck is going on and has been saying it for years. It appears that some people in Washington are picking up on what this humble congressman is saying and that is encouraging. These are scary times and Ron Paul seems to be the one small light shining bright in an enveloping darkness.

October 3, 2008 at 6:07 pm

Scott Harmon

Paul is just voicing a concern that many already know, because you don't need a Ph.D. or rooms full of incompetent Wall Street analysts to know that this GAME is OVER. That is, the shell game, the Keynesian ruse of moving money around so fast that no one will ever find out where it is. Unfortunately, that carnival trick has one downfall: you can find out where it ISN'T if you look under enough rocks. That's what the world banksters are finding, now that the wheel of illusion has stopped. Everyone, from Main Street to Wall Street to the International Cabal are finding that out. In the past 10-15 years, the major US policy, financial and foreign, is MORE. MORE of everything, from wars to domestic spending (Homeland Security) to pork. Today was just one more day, like the thousands of others before it. Today, I felt like I was at the carnival watching a few hundred geniuses throw darts at one of those balloons on the wall. They popped a lot of them; no prize inside.

October 3, 2008 at 6:07 pm

CD

Ron Paul is a prophet. Glad you are noticing.

October 3, 2008 at 6:04 pm

ConcernedCitizen

I am very pessimistic about where our country is headed after seeing the bailout pass. I am tired of seeing Bush along with all his rich associates get their way like usual, while the hardworking citizen is either tricked into supporting the bailout or is ignored completely. At least there are still people out there who are willing to listen to reason, and forget about their own selfish interests. The way I see it is that increasing the $100,000 FDIC to $250,000 will not be helping the average citizen. How many people do you know that are struggling while having more than $100,000 in the bank?. This is a bailout for the wealthy, not for the struggling. Also the bailout only helps keep this country on its addiction to debt, which I've always known to be a form of slavery. I'm tired of living in a society that believes that debt brings prosperity and that freedom must be sacrificed for security. Those are flawed beliefs. Its also enraging to know that the majority of the American people have been ignored by their representatives! This should serve to show the true face of our leadership in Washington as bought and paid for politicians.

October 3, 2008 at 5:47 pm

patrickhenry

I wish more people hadn't allowed the media to choose their candiadte, but allowed this honest, honorable cahmpion of liberty to have the opportunity to lead We the People. The fact that he didn't want to do it in the first place, yet conceded to the plea of freedom loving Americans says alot. Freedom and our country weap beacuase of it. Sad times indeed, yet we have nothing but huburis and ignorance to blame.

October 3, 2008 at 5:46 pm

Scott

Ron Paul is so right on. It is a shame Dr. Paul is not our Republican nominee. He would make such a better president than either of the two running.

October 3, 2008 at 5:45 pm

Sean Brooks

Those of us who have supported Dr Paul throughout the last year and a half have, of course, known this economic crisis was comming. The only question was, would we wake up and return to fiscal responsibility and the Constitution, or would we look to more government to bail us out. Unfortunately, America took a sad turn today toward socialism. But the silver lining in all this is that average citizens are waking up to the real problems in this country. And when people see where at least half of this 700 billion is really going, that would be to foreign central banks, the people will finally be ready to take action.

October 3, 2008 at 5:45 pm

Ron Edwards

Dr. Ron Paul, You are right on mark! Maybe some day America will wake up and begin to take interest in their country and their own future . . . hopefully. Please stay on track with your message. R.E.

October 3, 2008 at 5:41 pm

Conrad Jarrell

The bailout should never have been passed in its present form. Without it, it would have been Hell to Pay for a while. Now, it's going to be Hell to Pay FOR A LONG, LONG TIME. The fact you have so little response to this article is a commentary on the successful academic lobotomy performed on the brain of the Body Politic for the last 75 years by the government subsidized public schools. Dumb down three generations for the final coup de grace. Next, Socialism by Evolution while the Constitution is laid aside (the heart of the bailout is unconstitutional). Wave your tiny little flags and chant after me, "USA...USA...USA..."

October 3, 2008 at 5:39 pm

Joy LeBlanc

Ron Paul you are the only person I trust in our government!!!!!!!!!!!!!!!!!!!!!!!

October 3, 2008 at 5:31 pm

Levi

The Dr. knows the cure but Americans aren't willing to think long term. No one wants the short term pain that is necessary to get a solid economy back. I fear we will only get what we deserve, which is the socialism that too many uneducated people are passively allowing.

October 3, 2008 at 5:29 pm

Jersey Grrrl

Ron Paul is one of the rare voices of reasoned thought in public service today. If he had been able to rally a larger number of people to his cause earlier in the presidential campaign, he'd be well positioned today to win in November by a landslide, the current financial crisis being the final straw for most of us. But even in this dark hour, I think we all know that not enough Americans will see the light and be fearless enough to move toward it come November 4, choosing instead to vote for who they perceive will be "the winner," and thus be on the "winning team" - bragging rights on November 5, I guess. Too bad it's not really a game; if it were, I do believe most of us would simply shout "do-over" right now and start over. Consider that Sen McCain - the guy who said that, as President, he'd veto every bill that comes before him with earmarks - just voted for one of the worst earmarked bills ever to come before Congress. I have no hope that a McCain presidency would be any different than any other. (And we need not guess what an Obama presidency would mean to this country - socialism.) Our only true "hope for change" is to do a clean sweep of the House this November - vote out anyone who voted for the bailout and make it clear to the incumbent why you're doing so. When your Senators are up for reelection, do the same thing. Remember this day. It's the day we stepped out onto the ledge and looked down and saw ... the truth.

October 3, 2008 at 5:23 pm

Connie Clark

Well I have listened to Ron Paul tell what is around the corner for some time now and he has nailed it. I can't believe the nations leaders can't see it too. Thus it makes me believe they want to break the dollar and bring in the new money system the Amero. From there where too will the Real ID get as much calls and emails as this when it comes to vote, hopefully with a different result. No, I feel our senate and house are nothing but Lemmons heading for the coast, all of a sudden we will hear them scream, "My God, I can't believe we are falling!!!!"

October 3, 2008 at 5:18 pm

Mike

Ron Paul is an idiot

October 3, 2008 at 5:13 pm

Christie

Ron Paul makes more sense than anybody I've heard. I'm just sorry people didn't listen. I have the names and when voting time comes, they will not get my vote.

October 3, 2008 at 5:11 pm

about this blog

  • Elizabeth MacDonald is the stocks editor for Fox Business Network. She is recognized as one of the top prize-winning business journalists in the country, and has received 14 awards, including the top prize in business journalism, the Gerald Loeb Award for Distinguished Business Journalism, and the Newswomen's Club of New York Front Page Award for Excellence in Investigative Journalism.

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