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2008 Ron Paul Chapter 65

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“The Bailout”


Statement of Congressman Ron Paul
United States House of Representatives September 29, 2008

(Mr. PAUL asked and was given permission to revise and extend his remarks.)

2008 Ron Paul 65:1
Mr. PAUL. Madam Speaker, I rise in strong opposition to this bill. This is only going to make the problem that much worse. The problem came about because we spent too much; we borrowed too much, and we printed too much money; we inflated too much, and we overregulated. This is all that this bill is about is more of the same. So you can’t solve the problem. We are looking at a symptom. We are looking at the collapsing of a market that was unstable. It was unstable because of the way it came about. It came about because of a monopoly control of money and credit by the Federal Reserve System, and that is a natural consequence of what happens when a Federal Reserve System creates too much credit.

2008 Ron Paul 65:2
Now, there have been a fair number of free market economists around who have predicted this would happen. Yet do we look to them for advice? No. We totally exclude them. We don’t listen to them. We don’t look at them. We look to the people who created the problem, and then we perpetuate the problem.

2008 Ron Paul 65:3
The most serious mistake that could be made here today is to blame free market capitalism for this problem. This has nothing to do with free market capitalism. This has to do with a managed economy, with an inflationary system, with corporatism, and with a special interest system. It has nothing to do with the failure of free markets and capitalism. Yet we’re resorting now, once again, to promoting more and more government.

2008 Ron Paul 65:4
Long term, this is disastrous because of everything we’re doing here and because of everything we’ve done for 6 months. We’ve already pumped in $700 billion. Here is another $700 billion. This is going to destroy the dollar. That’s what you should be concerned about. Yes, Wall Street is in trouble. There are a lot of problems, and if we don’t vote for this, there are going to be problems. Believe me: If you destroy the dollar, you’re going to destroy a worldwide economy, and that’s what we’re on the verge of doing, and it is inevitable, if we continue this, that that’s what’s going to happen. It’s going to be a lot more serious than what we’re dealing with today.

2008 Ron Paul 65:5
We need to get our house in order. We need more oversight—that is a certainty —but we need oversight of the Federal Reserve System, of the Exchange Stabilization Fund and of the President’s Working Group on Financial Markets. Find out what they’re doing. How much have they been meddling in the market?

2008 Ron Paul 65:6
What we’re doing today is going to make things much worse.

2008 Ron Paul 65:7
The process of this bailout reminds me of a panic-stricken swimmer thrashing in the water only making his situation worse. Even a “bipartisan deal”—whatever that is supposed to mean—will not stop the Congress from thrashing about.

2008 Ron Paul 65:8
The beneficiaries of the corrupt monetary system of the last 3 decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege.

2008 Ron Paul 65:9
The difficulties in our economy will continue because the legislative and the executive branches have not yet begun to address the real problems. The housing bubble’s collapse, as was the dot corn bubble’s collapse, was predictable and is merely a symptom of the monetary system that brought us to this point.

2008 Ron Paul 65:10
Indeed, we do face a major crisis, but it is much bigger than the freezing up of Wall Street and dealing with worthless assets on the books of major banks. The true crisis is the pending collapse of the fiat dollar system that emerged after the breakdown of the Bretton Woods agreement in 1971.

2008 Ron Paul 65:11
For 37 years the world built a financial system based on the dollar as the reserve currency of the world in an attempt to make the dollar serve as the new standard of value. However since 1971, the dollar has had no intrinsic value, as it is not tied to gold. The dollar is simply a fiat currency, which has fluctuated in value on a daily, if not hourly, bias. This worked to some degree until the market realized that too much debt and malinvestment existed and a correction was required.

2008 Ron Paul 65:12
Because of our economic and military strength, compared to other countries, trust in America’s currency lasted longer than deserved. This resulted in the biggest worldwide economic distortion in all of history. The problem is much bigger than the fears of a temporary decline on Wall Street if the bailout is not agreed to.

2008 Ron Paul 65:13
Money’s most important function is to serve as a means of exchange—a measurement of value. If this crucial yardstick is not stable, it becomes impossible for investors, entrepreneurs, savers, and consumers to make correct decisions; these mistakes create the bubble that must eventually be corrected.

2008 Ron Paul 65:14
Just imagine the results if a construction company was forced to use a yardstick whose measures changed daily to construct a skyscraper. The result would be a very unstable and dangerous building. No doubt the construction company would try to cover up their fundamental problem with patchwork repairs, but no amount of patchwork can fix a building with an unstable inner structure. Eventually, the skyscraper will collapse, forcing the construction company to rebuild—hopefully this time with a stable yardstick. This $700 billion package is more patchwork repair and will prove to be money down a rat hole and will only make the dollar crisis that much worse.

2008 Ron Paul 65:15
But what politicians are willing to say that the financial “skyscraper”—the global financial and monetary system-is a house of cards. It is not going to happen at this juncture. They’re not even talking about this. They talk only of bailouts, more monetary inflation, more special interest spending, more debt, and more regulations. There is almost no talk of the relationship of the Community Reinvestment Act, HUD, and government assisted loans to the housing bubble. And there is no talk of the oversight that is desperately needed for the Federal Reserve, the Exchange Stabilization Fund, and all the activities of the President’s Working Group on financial markets. When these actions are taken we will at last know that Congress is serious about the reforms that are really needed.

2008 Ron Paul 65:16
In conclusion, there are three good reasons why Congress should reject this legislation:

2008 Ron Paul 65:17
It is immoral—Dumping bad debt on the innocent taxpayers is an act of theft and is wrong.

2008 Ron Paul 65:18
It is unconstitutional—There is no constitutional authority to use government power to serve special interests.

2008 Ron Paul 65:19
It is bad economic policy—By refusing to address the monetary system while continuing to place the burdens of the bailout on the dollar, we can be certain that in time, we will be faced with another, more severe crisis when the market figures out that there is no magic government bailout or regulation that can make a fraudulent monetary system work.

2008 Ron Paul 65:20
Monetary reform will eventually come, but, unfortunately, Congress’ actions this week make it more likely the reform will come under dire circumstances, such as the midst of a worldwide collapse of the dollar. The question then will be how much of our liberties will be sacrificed in the process. Just remember what we lost in the aftermath of 9–11.

2008 Ron Paul 65:21
The best result we can hope for is that the economic necessity of getting our fiscal house in order will, at last, force us to give up our world empire. Without the empire we can then concentrate on rebuilding the Republic.



















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