Ron Paul talks sence on Economic Crisis

Discussion in 'Business & Economics' started by madanthonywayne, Mar 6, 2009.

  1. madanthonywayne Morning in America Registered Senior Member

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  3. pjdude1219 The biscuit has risen Valued Senior Member

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    than you should have voted for him.
     
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  5. copernicus66 Banned Banned

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    As an Australian, I know I was mind boggled when McCain won the primaries instead of Ron Paul. Ron Paul is *the* classic Conservative (from memory, he was determined the most Conservative in the Republican Party). He favoured a policy of non-intervention in foreign affairs, capitalism, and the ejection of Federal Government from affairs which were rightfully in the State's jurisdiction.

    But McCain was voted in in the primaries. What the fuck was America fucking thinking?
     
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  7. spidergoat Liddle' Dick Tater Valued Senior Member

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    I agree, we should let the economy just die like an old dog. Maybe take it behind the barn and shoot it.
     
  8. ashura the Old Right Registered Senior Member

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    Ridiculous answer, by this logic the US economy would've been dead and buried with the severe depression of '19-'21 when the government did pretty much nothing, cut spending and allowed liquidation of bad assets to occur. Guess what? That resulted in an extremely speedy recovery. Contrast that with the Great Depression where government did each and every thing it could to intervene with the economy, and Japan's long economic downturn where the Japanese government tried every trick in the Keynesian book. This fantasy that the economy needs government intervention to fix it is just that, a fantasy.
     
  9. spidergoat Liddle' Dick Tater Valued Senior Member

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    The Great Depression was obviously much worse, probably due to Hoover DOING NOTHING ABOUT IT.
     
  10. ashura the Old Right Registered Senior Member

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    More fantasy. Hoover was a massive interventionist at the time who increased government spending, created job programs and tried to prop up failing banks through the manipulation of money supply. FDR campaigned against Hoover by smearing his big government policies.

    EDIT: In his own words-"We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action…. No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times…. For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered…. They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.

    Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for … "the common run of men and women." Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom…. We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.
    "

    To call him a do-nothing president when it came to the economy is to be ignorant with regards to history.
     
    Last edited: Mar 7, 2009
  11. nietzschefan Thread Killer Valued Senior Member

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    Very good example. However I'd rather some real controls be placed on banks in the states, or the boom/bust cycle just comes too quickly(i.e ten years in your example 22-33). Quite frankly I honestly think we should and could do away with banks. That's quite a change though.
     
  12. ashura the Old Right Registered Senior Member

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    There's no need to do away with banks, just keep them honest. Doing that means removing them from the safety of the government and allowing people to understand that they're not risk free investments for their wealth. That will restart competition and force banks to indulge in better business practices. The threat of bank runs will bring back discipline into how the banks handle our money, rather than the current BS of protecting all big banks at the expense of smaller banks and the taxpayer.
     
  13. nietzschefan Thread Killer Valued Senior Member

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    Agreed, i'm just so fed up with banks right now.
     
  14. iceaura Valued Senior Member

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    Completely different situation, of course: people lived on subsistence farms, credit squeezes affected a couple of dozen folks two weeks travel away, and last but not least

    "the economy" did not recover, "speedy" or any other way. Unemployment (in an economy when many fewer people held "jobs") remained double what it had been, and agriculture - the big gorilla - remained in depression through the 20s, until the credit bubble that had produced a false prosperity among the moneyed classes (as the rich picked up all those "bad assets", and the wealth of the economy accumulated in ever fewer hands) popped in '29 and things really went south.
    The only discipline that is enforced by the threat of bank runs is the discipline of people keeping their money out of banks.
     
    Last edited: Mar 7, 2009
  15. ashura the Old Right Registered Senior Member

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    The economy did recover and your unemployment figures are off. The rate went from being 11.71% in '21 to 6.7% in '22 to 2.4% by '23. If that's not a speedy recovery I don't know what is. And basing recovery on one industry is foolhardy as the industry might be one that naturally would be declining. Farming was such an industry and attempts to prop it up would've been similar to propping up the horse buggy industry with the advent of cars. A similar downturn would be occurring now in housing if the effort to prop up home prices weren't so great, and that downturn would be both natural and desirable. Now it's true that the economy soon went to hell in a hand basket by the end of the decade, but that's easily traceable to the Fed's massive expansion of credit. The results of such a foolish policy predicatably led to the downturn of the 30s (which Hoover DID NOT react to in a laissez faire manner contrary to spidergoat's bad history).

    Wrong, it's keeping money out of banks that aren't solvent. Why would anyone remove their wealth from a healthy functioning bank? So long as they maintain a high enough reserve requirement and don't engage in rampant investments with other people's money, and maintain transparency in their books, banks would be perfectly safe. And even if a bank run was attempted, a healthy bank would be able to weather it. Protecting bad banks with stuff like FDIC insurance and the bailing out of financial institutions only serves to discourage healthy banking practices and encourages risk while hiding the risk from the public.
     
  16. madanthonywayne Morning in America Registered Senior Member

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    I live in Indiana. The Republican primary was settled before I ever even had the chance to vote. Although, I'll admit that before the primary was decided, my primary concern was the war in Iraq and Terrorism (which is the one issue Ron Paul and I don't agree on) so I probably wouldn't have voted for him anyway. If the choice had been him or McCain? I've hated McCain for a long time and would have probably gone for Paul

    Regardless, knowing what I know now, Ron Paul was definitely the man for the job and Obama is just about the absolute worst guy we could have as president right now. Everything he's doing is the opposite of what should be done and that's reflected in the ever lower numbers on Wall Street. Every time some Obama administration official speaks, the market loses another 300 points! It's lost 50% of it's value since Obama clinched the nomination. Yet Obama continues to pursue his radical agenda as if we had infinite resources and no financial problems whatsoever. The guy is completely economically clueless.
     
  17. iceaura Valued Senior Member

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    The unemployment rate before the crash was 1.2 - 1.5 (something in there, my memory isn't working).

    Ag prices and economics remained near crash bottom for the next few years, and then dove from there in the '30s.

    The wealth made available by the crash and rural impoverishment flowed into in the hands of those with money, and then those with credit (installment purchases became common), the 20s roared and the barons robbed until the bubble burst.

    A recovery of a kind, maybe. Certainly many of the rich recovered their relative status, and could afford servants etc.
    Agriculture is not one industry even now - back then it was the most important sector of the economy as far as the wellbeing of the lower classes, and the largest employer etc.
    OK, everyone who can tell whether their bank is sound and being soundly managed for the future, not even vulnerable to domino runs etc, can rationally put their money in the bank.

    That would not include me, btw. I have no reasonable way of evaluating a bank's vulnerability, and the only reason I put any money at all in a bank is for safety. If I have to keep track of the bank's financial dealings myself to ensure that safety I'll just rent a safety deposit box and save myself a lot of work for little gain in security.

    Or buy gold and hide it around the house - which is what lots of people did, and do, in places without government oversight of the banks. That's not so good for a modern industrial economy, of course, but what's prosperity compared with free market principles?
     
    Last edited: Mar 7, 2009
  18. nirakar ( i ^ i ) Registered Senior Member

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    Wrong, go check the numbers in the other thread I created.

    Hoover started spending more in 1932 but nothing like what FDR did.
     
  19. ashura the Old Right Registered Senior Member

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    That's a wartime unemployment rate that benefited with the draft and increased government contracts for war materials. Not exactly something to aspire to.

    Relevance? A declining industry's former significance is unimportant when trying to judge recovery.

    Heh, even with government oversight of the banks people are putting their money into gold because they realize the currency is being destroyed. Back in the 70s Nixon was forced to eliminate Bretton Woods and the gold window because other countries were realizing the extent of US inflation and didn't want to hang onto devalued dollars. You talk as if this is something bad. It's a check against government inflation, and by discouraging it you inadverdently give the government a pass to inflate away Americans' wealth.

    Besides, you worry about the effect of your ignorance in a banking system where risk isn't "removed" by the government. But look at what your ignorance has brought you today, the dollar has been steadily losing value and US stocks when priced in other currencies and commodities, have been in a bear market since 2000 as a result of the banking cartel's policies. Where is the supposed safety you're getting by having your money in the bank? Your wealth, and the wealth of all Americans, is silently being stripped from you. Except because the government maintains the illusion that banks are risk free investments and your wealth is safe with them, most Americans have no idea that this is happening. By removing the government safety and forcing the banks to compete with regards to their solvency, you at least give the people a better chance of understanding what's happening to their money and a better chance of reacting accordingly.

    Not wrong, and explained why in the other thread. And no one claimed that Hoover spent more in nominal dollars than FDR.
     

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