Ron Paul Smackdown of Bernanke

Relish it.

Mark Thornton on the Fed and how our dollar loses value

HT: Liberty Pen

Thomas Woods on the Federal Reserve

HT: Liberty Pen

Some of the best posts I’ve read on the “Wall Street Bailout.”

From The Bobo Files:

There is an overwhelmingly clear majority in both the House and the Senate in Congress. If the Dems really wanted to pass a bill, they could do it on their own. I don’t buy their bullshit that they want to pass a partisan bill. They could care less about anything else, so why this? Could it be the fact that they are trying to siphon off 20% from the $700 Billion + to go to ACORN (the organization that Obama worked with) and other housing organizations? That 20% which is supposed to be going to pay down debt - they want to put it back in to the same kind of freakin’ organizations that caused this problem in the first place. They want to bail out stupid and/or unqualified homeowners on our dollar. They want to give money to an organization that is currently under investigation for voter fraud. Is it any wonder the Republicans won’t sign off on it?

From Shaving Leviathan:

Thanks to the creation and favored treatment of Fannie and Freddie, the CRA, the Tax Act Reform of 1986, and a host of other legislation, the mortgage lending market was severely distorted. Self-limiting free-market mechanisms that constrain bad investment decisions was thus removed. The Fed greased the wheels, and put the whole train on a roller coaster, through a years-long policy of artificial manipulation of interest rates.

(This is not to mention the ample funds Obama himself received from Fannie and Freddie. However, even at #2 on the list of recipients, $135,000 over three years isn't enough to make the case that he was bought, as is common currency on conservative blogs. It's chump change and a tiny percentage of the $150 million those two paid to politicians over the years.)

Gold vs. Dollar

Here's a video most Ron Paul supporters will love and understand.

The ugly face of inflation.

From The Wall Street Journal (subscription may be required):

“The Federal Reserve is sharply cutting U.S interest rates -- the opposite of the usual response to rising inflation -- to prevent the housing bust and credit crisis from causing a deep, prolonged recession. That's making the global response to inflation more complicated.”

“On Wednesday, the World Bank estimated global food prices have risen 83% over the past three years, threatening recent strides in poverty reduction. The IMF forecast consumer prices in emerging and developing countries will rise 7.4% this year, the most inflation since 2001 though still well below the double-digit levels of the recent past.”

“As crops are sold for alternative-energy production, food prices have soared: The price of rice, the staple for billions of Asians, is up 147% over the past year.”

Comment: In another example of how the global economy is intrinsically tied together, we now have the threat of record high global inflation. Every time the Fed makes a move downward on interest rates, countries that have their currency tied to the dollar get a kick up in inflation. Of course, the two primary forces in all of this are food and energy prices. And I do believe that we are moving into an era where these two drivers are going to have a deleterious effect on the world economy for some time to come. As long as the U.S. continues to subsidize corn for use as ethanol and as long as the global energy infrastructure stays in its current modality, we are going to see slightly higher global inflation for some time. In this sense, I disagree with the articles rosy conclusion that an economic slowdown in the U.S. and Europe will quickly stabilize inflation as has previously occurred in history. The IMF also noted that world economic growth has slowed due to the financial crises in the U.S. The theory of a “decoupled” world economy (from the U.S. particularly) seems to hold little value.

The Coming Depression?

From the The Los Angeles Times :

"Dysfunctional capital markets, frantic central banks, stressed-out consumers, fear and uncertainty -- all are alarming echoes of the global economic cataclysm of the 1930s."

"Which raises the inevitable question: Could another Great Depression be lurking over the horizon?"

"TV news programs show grainy footage of Depression-era bankers as reporters tick off grim economic statistics. The Federal Reserve invokes powers it hasn't used since the 1930s. Critics of President Bush's economic policies are emboldened to use the H-word: "Hoover." '

Comment: This article points out that the reason a depression is unlikely is due to a Fed that takes an active role when a crisis hits like the Bear Stearns incident. The article doesn’t really outline that when the Fed does bail out failing firms, the taxpayer is the one who is usually on the hook. And some of those taxpayers (some of them struggling to make ends meet) may never benefit from government bailing out a large investment bank. The fed holds a 30 billion dollar liability from Bear Stearns. That's me and YOU.