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2008 Ron Paul Chapter 18
Congressman Ron Paul
Statement
before the Joint Economic Committee
Hearing on “The Economic Outlook”
April 2, 2008
2008 Ron Paul 18:1
Mr. Chairman,
2008 Ron Paul 18:2
I have never been opposed to regulation, although my idea of regulation differs from that
of many
people in Washington.
The free
market and its forces of supply and demand are the most effective
regulator of
the private sector, and have never been known to fail absent government
intervention.
But piling more public
sector regulation on the private sector will have a detrimental effect
on the
health of our financial system and sow the seeds for the next financial
meltdown.
2008 Ron Paul 18:3
What we in Washington should be discussing is increased regulation and scrutiny of public
sector
regulatory and oversight agencies such as the Federal Reserve Board,
the SEC,
and others.
The Federal Reserve’s
actions got us into at least one depression in the last century, and
have led to
continued cyclical difficulties, including the current economic
slowdown.
2008 Ron Paul 18:4
Back in the 1970s, government-caused inflation reached levels high enough that the Nixon
administration decided to implement wage and price controls.
Placing blame on greedy speculators, unscrupulous mortgage
originators,
or panicky investors, is a common reaction on the part of government.
2008 Ron Paul 18:5
The solution called for, despite the numerous documented failures of government regulation, is
always
more regulation, more government involvement in and control over the
economy,
and less free enterprise.
Never is
the blame placed squarely where it belongs, which is on the shoulders
of
legislators and regulators whose actions distort the market,
prohibiting
legitimate market activities and encouraging the development of
labyrinthine and
opaque financial schemes.
2008 Ron Paul 18:6
The latest regulatory plan from the Treasury Department, with the potential to turn the
Federal
Reserve into a super-regulator overseeing state-chartered banks, bank
holding
companies, and acting as a guarantor of market stability, is another in
a long
line of half-baked government responses to financial difficulty.
Recession after recession has not impressed upon government
leaders the
reality that the Federal Reserve’s monetary policy activities are what
lead to
market instability.
2008 Ron Paul 18:7
The business cycle, contrary to what Secretary Paulson and others seem to believe, is not
endemic to
the free market.
It is always and
everywhere the result of monetary inflation and subsequent
malinvestment, which
when it is discovered must of necessity be liquidated in order for a
true
recovery to occur.
Delaying the
liquidation will only prolong the crisis and ensure that the next
crisis will be
more severe.
2008 Ron Paul 18:8
Every government intervention will result in a distortion of the market and a subsequent
shock
somewhere down the line in the future.
It
is about time that we recognize the failure of government intervention,
get our
hands out of the private sector, and for once allow the market to
function.
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