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The Evil of Bailout
Ron Paul
Tuesday, Oct 14, 2008
One of the burning questions regarding the recently passed bailout, and the one that almost no one has bothered to answer, is how the government intends to pay for it. Governments have three main methods by which they can raise funds: taxation, printing new money, and debt. As our $10 trillion national debt shows, the federal government has always enjoyed raising money by issuing new debt. Money is gained upfront, while the cost of repaying that debt is pushed onto future generations.
This method is especially favored today, since imposing $700 billion worth of taxes would lead to widespread public dissatisfaction. When the cost of all the recent bailouts plus the cost of all the new lending facilities the Federal Reserve has initiated are added together, we quickly reach a figure in the trillions of dollars. Even with the debt ceiling being raised to $11.3 trillion, the issuance of debt alone cannot begin to cover the cost of all the bailouts in which the government is engaged. Every indication is that the government will use both debt and inflation in its attempt to keep the economy running at full speed.
Debt financing has begun in earnest, as the national debt has increased $600 billion over the past three weeks, and most of that increase came even before the $700 billion bailout bill was passed. I fully expect that trend to continue in the near future and would not be surprised if we see another debt-limit increase slipped into another economic stimulus package that might be passed before the new year. Now that our foreign creditors are less willing to purchase our debt, what debt we cannot sell to foreigners will be monetized through the Federal Reserve, resulting in increased inflation.
In fact, money supply data for the narrowest measure, the adjusted monetary base, show an unprecedented increase, far higher than when Chairman Alan Greenspan attempted to reflate us out of trouble after the dot-com stock bubble burst. That intervention on Greenspan’s part, pumping in liquidity and driving interest rates down, led to the real estate bubble, and Chairman Ben Bernanke unfortunately seems to be following the same script as his predecessor in resorting to credit creation and low interest rates. Even were this effort to succeed, it would only delay the inevitable. In order for the economy to return to normal, the Federal Reserve must cease the creation of new credit, overvalued assets must be allowed to fall in price, and malinvested resources must be allowed to liquidate and be put to use in more productive sectors.
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18 Responses to “The Evil of Bailout”
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October 14th, 2008 at 4:11 am
As usual, Dr. Paul’s advice and analysis is sound. Thank you for sharing his articles and warnings. Another problem with our economy is our trade deficits and the massive loss of jobs and factories. Adjusted for real inflation, and factoring out speculative activities, the U.S. economy has been contracting for decades.
October 14th, 2008 at 5:57 am
So, when our government has nothing else to sign over to our creditors except its citizens, when should we expect to be sold into slavery to absolve them of the responsibility of trillions of dollars?
October 14th, 2008 at 6:03 am
We need to share the teaching of Ron Paul with others. He is a new founding father.
October 14th, 2008 at 6:15 am
Apply for all the credit cards you can, rack it up to the hilt, then stick your middle finger up to the JP Morgans and Citigroups of the world. Fuckim
October 14th, 2008 at 6:34 am
Mr. Paul is correct, once again!
as Mr. Paul has said: “GET BACK TO THE CONSTITUTION!”
That is the Answer!
WE THE PEOPLE = STAND TOGETHER AS ONE..or we fall..one at a time!
October 14th, 2008 at 6:57 am
Ron Paul and the Libertarians are the only ones who want to take on the problems that we caused ourselves and take it off of our children. This a real man’s way of dealing with a problem, not some coward’s way.
Be a real man and stand up to these liars. Vote all Republicans and Democrats out of office. Write in every candidate. Stand up and be heard.
October 14th, 2008 at 10:39 am
Ron Paul is my president.
Screw the fake results of the upcoming fake election.
Time for America to bifurcate:
1) Americans for a constitutional republic
2) The rest of the loser creep commie Demopublicans
October 14th, 2008 at 11:21 am
“One of the burning questions regarding the recently passed bailout, and the one that almost no one has bothered to answer, is how the government intends to pay for it.”
We the poor will pay for it we always do throughout history!
October 14th, 2008 at 11:46 am
this is no bail out, it’s a Baal out. lol.
http://ca.youtube.com/watch?v=h_ORoldycM0
October 14th, 2008 at 3:19 pm
IF YOU VOTE, YOU ARE A TERRORIST.
Cosidering you only have terrorists to choose from, voting for either would be an act of terrorism.
October 14th, 2008 at 5:30 pm
#2
Thats what we’ll be doing in the fema camps. slave labor for the elite. worked for hiltler.
October 14th, 2008 at 6:33 pm
speak for yourself et, I’m getting the hell out of here! The whole world may suffer because of this, but better be thousands of miles away from the epicenter of the collapse.
October 14th, 2008 at 8:18 pm
re. Transduction. When I was young I wanted to run, then I got older and realized that this is MY country. No one is going to run me off. I’ll stand my ground with familly and friends and neighbors. This is our country.
October 14th, 2008 at 9:24 pm
#13
like I said in another post. i will share a foxhole with anyone who wants to defend this great country, race or belief doesn’t matter. thats what this republic was founded on. what’s that saying… oh yeah these colors never run. Red is for the blood, Blue is for the bruise and white is for the eyes that fought for me and you. The line is drawn, what are you gonna stand for?
October 14th, 2008 at 9:47 pm
Amen Brothers… I guess if you want to defend then that just makes it harder for them to steal, and then Lie that they are stealing. But hey they have been trying to steal your freedom from the day we started this country why let them have a free pass now? Viva La Freedom!
October 15th, 2008 at 1:01 am
The whole bailout to me is the developed worlds biggest double standard. The G8 was asked to abolish the third world debt, which is remarkably less than the bailout, but refused even when the world made it perfectly clear that this is what we wanted, (protests, marches etc).
One of the reason for not abolishing the 3WD was that it would send the wrong moral message to the worlds economies allowing them to default on their loans.
So let me get this straight world leaders…its not alright to save human life from the degrading slow death of poverty managed by corupt leaders in the third world, but you all stand together when your shares start to loose points and bail out a financial system which benefit only the elite, managed by corrupt leaders.
No wonder there are military exercises going on around the world to prepare for internal unrest. You all must be very nervous spending our money in such a way.
I know I would be.
October 15th, 2008 at 5:59 am
ron paul is my president
October 15th, 2008 at 7:41 am
Run for your lives Congress, judges and fed reserve because I am going to vote you all out regardless of party,,I am sick of your lying,stealing, stinking ways and you made your own hanging rope.