Author: Ron Paul

(This guest post previously appeared at the author’s Congressional site)

As we head into the summer driving season and gasoline prices are again creeping up, the administration has announced plans to explore opening up more off-shore areas for exploration and drilling.  On the one hand this can be lauded as a positive step.  On the other hand, it is too little, much too late to have any meaningful or long-term effect on what Americans pay at the pump any time soon, if at all.

Indeed, if increasing domestic energy production was really a priority, the administration would direct the EPA to remove its many roadblocks and barriers to energy production.  In fact, abolishing the EPA altogether would do much to improve our country’s economy.  Instead of protecting the environment as they are supposed to do, most of what they do simply chills the economy.  Polluters should be directly liable in court to any and all parties they harm, rather than bureaucrats at the EPA.

Of course, last week’s announcement was couched in terms of removing barriers and red tape.  However, the fact that we had these barriers in the first place is yet another reminder of how the energy market is hampered and controlled by bureaucrats and central planners in Washington, rather than the demands of the people and the decisions of private investors.

Consider how extremely negative our government’s reaction has been to other governments around the world that have nationalized their oil and energy industries, such as Venezuela and Iran.  We deposed a democratically elected leader in Iran in 1953 for this very reason.  Yet the level of involvement of our government and bureaucrats in energy is nearly absolute.  Of course, the only thing worse than our government dictating energy decisions to its own citizens is our government dictating energy decisions to the citizens of other countries.

Along with the waste of prohibitions that leave our own natural resources untapped is the waste our government perpetrates with subsidies to alternative fuel sources.  There is certainly profit to be made in perfecting cheaper, cleaner fuel sources, but government subsidy programs interfere with finding realistic long-term solutions.  Subsidies divert resources towards certain politically-favored fuel types while ignoring others.  If the market were left alone, private investors would put their own capital into the most promising alternative fuels.  Instead, due to government incentives, resources are concentrated into politically chosen endeavors that could very well end up being dead ends.  Meanwhile, precious time and money is wasted.

The government has the opposite of the Midas touch.  This has been observed over and over by the reduced quality and rising prices in every private industry in which it entangles itself.  Yet somehow people still seem willing, even eager, to relinquish to government control the most important and sensitive portions of our economy and society.  Education, healthcare, and energy are all unfortunate examples of industries that are in my opinion, far too important to be left to government control when it is the market that has the golden touch.

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(This guest post originally appeared at the author’s blog)

Last week we were reminded that ours is not the only country suffering from severe economic turmoil. 

The Greek government is the latest to come close to default on their massive public debt.  Greece has insufficient funds in their treasury to make even the minimum payments that are now coming due.  Their debt level is about 120 percent of their gross domestic product and their public sector absorbs what amounts to 40 percent of GDP.  Any talk of cutting costs and spending is met with violent protests from the many Greeks heavily dependent on government payments.  Mounting fears of default have sent shockwaves through their creditors and all of the eurozone countries.

But there have been statements made by the European Central Bank to calm fears and give assurances that Greece will get the aid it needs.  Details of agreements are not forthcoming.

Is it possible that our Federal Reserve has had some hand in bailing out Greece?  The fact is, we don’t know, and current laws exempt agreements between the Fed and foreign central banks from disclosure or audit.

Greece is only the latest in a series of countries that have faced this type of crisis in recent memory.  Not too long ago the same types of fears were mounting about Dubai, and before that, Iceland.  Several other countries (Spain, Portugal, Ireland, Latvia) are approaching crisis levels with public debt as well.  Many have strong ties to Goldman Sachs and the case could easily be made that default could have serious implications for big US banking cartels.  Considering the ties between the Fed and these big banks, it is not outlandish to wonder if the US taxpayer is secretly bailing out the entire world, country by country, even as our real unemployment tops 20 percent.  Unless laws are changed to allow a complete and meaningful audit of the Federal Reserve, including its agreements with foreign central banks, we might never know if this is occurring or not.

This global financial crisis is a predictable result of secretive central banking and unsound fiat currency.  Governments are entirely committed to this system of fiat money and fractional reserve banking for obvious reasons: it enables them to do what they love most, namely, spend hoards of money with near impunity.  Without the limitations of sound money, governments will spend without limit.  They will spend money to hire their cronies, pay off special interests, give out favors, create dependence and generally distract from the terrible job they do at their chief mandate, which is to protect the liberties of the people.  Fiat money is a blank check to government, which is very dangerous, and we are witnessing the death throes of the system as the bills come due and the underlying capital is squandered away.

Because of our globe-straddling empire and lingering reserve currency status, perhaps no one has a more vested interest in keeping this system cobbled together than our own government and the Federal Reserve.  The agreements that Iceland and Dubai and Greece have negotiated can amount to little more than kicking the can down the road, as their overall spending habits remain largely intact, fiat currencies are still legal tender and more debt is issued on top of unsustainable debt.  The American people have the right to know if they are going to be the ones holding the bag in the end because the Federal Reserve secretly put them on the hook for it.  This knowledge would be a key factor in peacefully dismantling this immoral and unconstitutional system.

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See Also:

• Bomb Explodes At JP Morgan Branch In Athens, Greece
• Greece: It’s Our Debt, But It’s Your Problem
• Germany: Greece Should Lose Its EU Membership Rights While It Is In "Receivership"

(This post originally appeared at the author’s blog)

Last week, the House approved another increase in the national debt ceiling.  This means the government can borrow $1.9 trillion more to stay afloat and avoid default.  It has been little more than a year since the last debt limit increase, and graphs showing the debt limit over time show a steep, almost vertical trend.  It is not likely to be very long before this new ceiling is met and the government is back on the brink between default and borrowing us further into oblivion.  Congressional leaders and the administration acknowledge that the debt limit will need to be increased again next year.  They are crossing their fingers that the forecasts are correct and they will not need another increase sooner, even before the 2010 midterm elections.

Continually increasing the debt is one of the logical outcomes of Keynesianism, since more government spending is always their answer.  It is claimed that government must not stop spending when the economy is so fragile. Government must act.  Yet, when times are good, government also increases in size and scope, because we can afford it, it is claimed.  There is never a good time to rein in government spending according to Keynesian economists and the proponents of big government.

Free market Austrian economists on the other hand know that times are bad because of the size and scope of government.  The economy is fragile because of the overwhelming stranglehold of bureaucracy and taxation of Washington.  Any jobs Washington might create through these endless spending programs are paid for through more taxation and debt put on the productive sectors of the economy.  Just as insidious is the hidden tax of inflation caused by the Fed and its ever-expanding credit bubble.  When the Fed steps in with its solutions, it only devalues the dollars in everyone’s pocket while encouraging more reckless waste on Wall Street.  All of this leads to a worsening economy, not an improved one.

And so the downward spiral continues.  The worse things get, the more politicians want to spend.  The more they spend, the heavier the debt load becomes and the more we have to spend just to maintain our interest payments.  As our debt load becomes unsustainable, the alarm of our creditors increases.  It is becoming so serious that our credit rating, as a nation, could be downgraded.  If this happens, interest on the national debt will increase even more, leading to even higher taxes on Americans and inevitably, price inflation.

Still, Washington is full of talk of more regulation, more taxation and more spending.  The Senate is still struggling to pass a massive regulatory increase on the financial sector, even as the stock market suffers more shockwaves.  Pay-as-you-go rules give the appearance of fiscal responsibility, but in truth these rules are only used as a justification to raise taxes.  Spending programs like healthcare reform, increased military spending, and a recent doubling of destructive foreign aid are viewed by Washington as necessary and reasonable, instead of foolishness we absolutely cannot afford.

The people understand this, which is why there is so much anger directed at politicians.  Washington needs to change its thinking and adopt some common sense priorities.  The Constitution gives some excellent limitations that would get us back on the right path if we would simply abide by them.  The framers of the Constitution understood that only the ingenuity of the American people, free from government interference, could get us through hard times, yet Washington seems bent only on prolonging the agony.

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See Also:

• Dems Ask: Is Ron Paul Running The GOP Now?
• Ron Paul: I’d Rather Congress Run Monetary Policy Than The Fed
• Ron Paul Tells Jon Stewart Why We Need To "End The Fed"

(This post originally appeared at the author’s blog)

Last week politicians in Washington made a few things clear about how they really feel about the state of the union.  First, they are beginning to hear the growing discontent with the size and scope of government and the broken promises that keep piling up.  Certain events in Massachusetts recently made that statement loud, clear and unavoidable.  In the face of those events, the powers that be made the determination that some populist rhetoric was in order, and the idea of a spending freeze in Washington was proposed, albeit with several caveats.  These caveats to the proposed spending freeze ensure that we are not at any real risk of actually doing anything about spending.

First of all is timing.  It wouldn’t go into effect until 2011, which allows plenty of time to increase spending levels quite a bit before they are frozen.  If the administration really understood and cared about our spending problems they would not freeze spending a year from now, but cut spending immediately and significantly.  But, spending cuts almost never happen in Washington, and they are not likely now or a year from now – if the politicians have anything to say about it.

The second caveat is the huge areas of the budget that are shielded from this freeze.  The entire State Department budget is exempt, as are all entitlements, all military industrial spending and almost all foreign aid.  Fully 7/8 of federal spending is excluded from this freeze, and some areas to be frozen were actually set to decrease, which means a freeze actually guarantees a higher level of spending.

Especially insulting is the idea that in spite of our own fiscal problems at home, taxpayer dollars will continue to be sent overseas in the form of foreign aid where it often does more harm than good.  When need is demonstrated to Americans and they can afford it, they can be counted on for a tremendous outpouring of private, voluntary charity to worthy aid organizations, as we recently saw in Haiti. By contrast, government-to-government aid is taken from the poor by force and too often enriches the corrupt.  It is counterproductive and wasteful.  But the idea of eliminating, freezing, or reducing foreign aid is not up for serious debate any time soon.

The third caveat is what is included in the freeze that would make it politically impossible to pass Congress, for example air traffic controllers salaries, education, farm subsidies and national parks.

I do not necessarily want a cut in spending in this country – I just want to change who does the spending.  The spending should be done by the people who earn the money, if they choose, and on what they choose, without any government interference.  That is what makes the economy work.  Politicians should stick to the very limited roles given them by the constitution instead of allocating such a sizeable portion of our capital and intervening through regulations and tax policy.  But because politicians have disregarded the constitution, and the people have no idea what rule they will break next, there is already a very real spending freeze underway in this economy, by the people.  If government would stick only to what it was authorized to do, and leave the rest to the people, most of these problems would resolve themselves.

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See Also:

• Obama To Unveil Record $3.8 Trillion Budget And $1.6 Trillion Deficit
• It’s Official: Barack Obama Is Just Another Reaganite
• Obama’s Spending Freeze Will Torpedo The Push For A Jobs Bill, Infrastructure, And Expanded Healthcare