Tag Archives: Money/Economy/Taxes

Ron Paul predicts Fannie Mae crash (five years ago!)

The words of the prophet, Ron Paul, in 2003:

“I hope this committee spends some time examining the special privileges provided to GSEs by the federal government. According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. Today, I will introduce the Free Housing Market Enhancement Act, which removes government subsidies from the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the National Home Loan Bank Board.

One of the major government privileges granted to GSEs is a line of credit with the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out GSEs in times of economic difficulty helps the GSEs attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a huge unconstitutional and immoral income transfer from working Americans to holders of GSE debt.

. . . .

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.” (Read more at blog.freeny.org)

Stocks plummet after retail, unemployment data

“NEW YORK – Wall Street dove sharply lower Thursday, sending the Dow Jones industrials down over 300 points as retailers and the Labor Department added to the mountain of dismal economic news that has all but dashed investors’ hopes for a late-year recovery.” (Read more from news.yahoo.com)

Cost of war? Iraq alone has long-since surpassed a half-trillion. Total long-term cost (like veterans’ benefits) is usually estimated in the trillions. Trillions with a ‘T’.

Cost of government? One out of seven people in America’s labor force (about 22 million out of 150 million) works directly for the federal government. If tax payers weren’t bilked for 22 million government salaries, we’d have more money to spend on retail stuff.

End the Massachusetts Income Tax will be the first ballot question on the November 2008 ballot

Massachusetts residents will be voting to abolish the state income tax and replace it with nothing. Find out more at smallgovernmentact.org.

When I talk small government, particularly with my liberal friends, they often ask “what about the poor,” thinking the poor will suffer without government largess. In fact, the opposite is true. Free markets are responsible for ending famine in Europe. The worst famines occurred in the most government-manipulated economies – USSR, China. Here and now, I can point to low-tax New Hampshire, which has the lowest poverty rate of all states. (Read more at dailypaul.com)

Taxes are for Little People

“Most corporations, including the vast majority of foreign companies doing business in the United States, pay no income taxes, according to a Government Accountability Office report released Tuesday.

During the eight-year period covered by the report, 72 percent of foreign-owned corporations went at least one year without owing taxes, and the same was true for 55 percent of domestic corporations.”

(Read more from cqpolitics.com)

Lying about the deficit

(just like everything else)

” MANASSAS, Va., July 29, 2008 /PRNewswire-USNewswire via COMTEX/ — The following is a statement by Richard A. Viguerie, Chairman of ConservativeHQ.com, regarding the White House projection of a $482 billion deficit for Fiscal Year 2009:
‘The White House has issued figures indicating that President Bush and his enablers in Congress will leave his successor with a budget deficit of $482 Billion for Fiscal Year 2009, which is a record. How’s that for a legacy?
‘As shocking as this deficit figure is, that’s still not the true scope of our budget woes because it excludes $80 billion in war costs and $227 billion borrowed from the Social Security Trust Fund. The real budget deficit is therefore $789 billion.'”

Oil Prices: falling dollar, not increased demand

“Last month Congressman Ron Paul, ranking member of the Subcommittee on Domestic and International Monetary Policy called for a hearing on the relationship between the falling value of the dollar and the recent rise of oil prices. That hearing request has been granted and scheduled for July 24 at 2:00pm.”

Ron Paul on Bernanke’s Testimony

“Without [Ron Paul], it’d be a lot of bootlicking questions and waving of incense before the sacred Ben.”

See video clip at campaignforliberty.com

The Myth of War’s Economic Benefit

This great article from thepeoplesvoice.org discusses the economic impact of Iraq and includes many book excerpts including the following:

One of the most pernicious economic myths is the idea that war helps the economy. In reality, war is destructive and it always results in economic retrogression and misery. The US economy didn’t really recover until 1946, when the immediate postwar period witnessed the dismantling of the command economy in favor of a much more liberalized market economy. Peace brought military demobilization, deregulation, and perhaps most importantly, a seventy-five percent reduction in government spending. This was a genuine peace dividend and it set the stage for America’s legendary post-war economic boom.
–War and Economic Decline

Nobel Prize-winning economist Joseph Stiglitz has blamed the Iraq war for sending the United States into a recession. On Wednesday, he told a London think tank that the war caused the credit crunch and the housing crisis that are propelling the current economic downturn. Testifying before the Senate’s Joint Economic Committee the following day, he said our involvement in Iraq has long been “weakening the American economy” and “a day of reckoning” has finally arrived.
–Is the Economy a Casualty of War?

For big government we now have “The Perfect War,” everywhere and nowhere, secret and interminable. The war will justify ever expanding police powers, higher taxes, and more controls over the citizenry. You can see easily how Washington thrives on war. Since Sept 11th, there have been no nasty challenges to government spending and waste, no tedious debates over things like social security “lockboxes,” nor “political” attacks upon the Presidency. Congressmen and Think Tank experts get lots of TV time and most everyone jumps to obey government orders and support more regulations. Any groups opposed to American military interventions overseas appear unpatriotic and are marginalized, while press coverage of the war is restricted, using the last Gulf War as a model. Big Government, as Orwell wrote, thrives from unwinnable wars; it doesn’t get any better than this.
–John Basil Utley, Alternative to Unending War, Ludwig von Mises Institute

The Great Depression: What They Said Before, During, After

This great webpage shows the heartbreaking lies and deceptions that occurred around the Great Depression. News is written by wolves for consumption by sheep.

“We will not have any more crashes in our time.”
– John Maynard Keynes in 1927

“There may be a recession in stock prices, but not anything in the nature of a crash.”
– Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929

“This crash is not going to have much effect on business.”
– Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

“The Wall Street crash doesn’t mean that there will be any general or serious business depression… ”
– Business Week, November 2, 1929

“Stabilization at [present] levels is clearly possible.”
– Harvard Economic Society Oct 31, 1931

“All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
– President F.D. Roosevelt, 1933

McCain’s Economic Adviser:

–Recession is “mental” and America is a “nation of whiners.” Everything is fine, and patriots do not question what Television tells them!

–Raise retirement age to 70. For the good of the state, those who can work must work!

Helicopter Ben Bernanke

This is old news, but we’ll be feeling the effects for a long time to come. Read more about Helicopter Ben at the Ludwig von Mises Institute.

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” – John Maynard Keynes

Heroes Act of 2008, Citizenship and Taxes

“Congress just passed a new law that will stop your capital — or at least a good portion of it — at the border, should you decide not to be a U.S. citizen anymore. Is it, perhaps, in preparation for the possibility that Americans might rebel at the debt and taxes incurred by their government by leaving for lower-tax locales?

You probably didn’t notice this little provision inserted into the Heroes Act of 2008, passed by Congress on June 17. The headlines in the press release about the law were about the increased benefits for veterans and families of deceased military.

But Richard Kohan of Price WaterhouseCoopers drew my attention to one section of the act, which states that anyone voluntarily giving up his or her citizenship will be taxed on all of his assets as if he or she had sold them — paying capital gains on assets that have increased in value, even though they have not been sold.

That’s right. While everyone in the media is focused on keeping aliens out of America, Congress has voted to lock its citizens – or at least a good portion of their assets — into America! Maybe they’re thinking that patriotism won’t be enough to keep the smart money from recognizing the coming increases in the tax burden.”

Ron Paul on Congress’s latest Iran resolution
(and a list of congressmen who co-sponsored it)

Ron Paul’s statement on the house floor:

Today the Dow Jones Average was down 350-some points, gold was up $32, and oil was up another $5. There is a lot of chaos out there and everyone is worried about $4 gasoline. But I don’t think there is a clear understanding exactly about why that has occurred.

We do know that there is a supply and demand issue, but there are other reasons for the high cost of energy. One is inflation. In order to pay for the war that has been going on, and the domestic spending, we’ve been spending a lot more money than we have. So what do we do? We send the bills over to the Federal Reserve and they create new money, and in the last three years, our government, through the Federal Reserve and the banking system has created $4 trillion of new money. That is one of the main reasons why we have this high cost of energy and $4 per gallon gasoline.

But there is another factor that I want to talk about tonight, and that is not only the fear of inflation and future inflation, but the fear factor dealing with our foreign policy. In the last several weeks, if not for months, we have heard a lot of talk about the potential of Israel and/or the United States bombing Iran. And it is in the marketplace. Energy prices are being bid up because of this fear. It has been predicted that if bombs start dropping, that we will see energy prices double or triple. It is just the thought of it right now that is helping to push these energy prices up. And that is a very real thing going on right now.

But to me it is almost like deja vu all over again. We listened to the rhetoric for years and years before we went into Iraq. We did not go in the correct manner, we did not declare war, we are there and it is an endless struggle. And I cannot believe it, that we may well be on the verge of initiating the bombing of Iran!

Leaders on both sides of the isle, and in the administration, have all said so often, ‘No options should be taken off the table — including a nuclear first strike on Iran.’ The fear is, they say, maybe some day [Iran is] going to get a nuclear weapon, even though our own CIA’s National Intelligence Estimate has said that the Iranians have not been working on a nuclear weapon since 2003. They say they’re enriching uranium, but they have no evidence whatsoever that they’re enriching uranium for weapons purposes. They may well be enriching uranium for peaceful purposes, and that is perfectly legal. They have been a member of the non-proliferation treaties, and they are under the investigation of the IAEA, and El Baradei has verified that in the last year there have been nine unannounced investigations and examinations of the Iranian nuclear structure and they have never been found to be in violation. And yet, this country and Israel are talking about a preventive war — starting bombing for this reason, without negotiations, without talks.

Now the one issue that I do want to mention tonight is a resolution that is about to come to this floor if our suspicions are correct, after the July 4th holiday. And this bill will probably be brought up under suspension. It will be expected to be passed easily. It probably will be. And it is just more war propaganda, just more preparation to go to war against Iran.

This resolution, H.J. Res 362 [listed as H. Con. Res 362 online] is a virtual war resolution. It is the declaration of tremendous sanctions, and boycotts and embargoes on the Iranians. It is very, very severe. Let me just read what is involved if this bill passes and what we’re telling the President what he must do:

This demands that the President impose stringent inspection requirements on all persons, vehicles, ships, planes, trains and cargo entering or departing Iran, and prohibiting the international movement of all Iranian officials.

This is unbelievable! This is closing down Iran. Where do we have this authority? Where do we get the moral authority? Where do we get the international legality for this? Where do we get the Constitutional authority for this? This is what we did for ten years before we went into Iraq. We starved children – 50,000 individuals it was admitted probably died because of the sanctions on the Iraqis. They were incapable at the time of attacking us. And all the propaganda that was given for our need to go into Iraq was not true.

And it is not true today about the severity [of the need to attack Iran]. But they say, “Yeah, but Ahmadinejad — he’s a bad guy. He’s threatened violence.” But you know what? Us threatening violence is very, very similar. We must – we must look at this carefully. We just can’t go to war again under these careless, frivolous conditions.

The rEVOLution in Idaho votes to abolish Fed

“It appears the Ron Paul wing of the Idaho Republican Party has scored its first victory at the party’s state convention in this North Idaho resort town.

The state party’s platform committee voted overwhelmingly Friday to add to state platform language supporting abolishing the Federal Reserve System and pegging the dollar to gold and silver.”

Grameen Bank Micro-lending in NYC

The Grameen bank is a private bank, pursuing their own interest as they should, but it’s telling that a bank which specializes in anti-poverty micro-lending has chosen to do business in NYC.

The irony is sickening. We’re using tax-payer money to build $200,000 schools, $10,000 retaining walls, multi-million dollar roads in Afghanistan and Iraq like it’s going out of style. We should open a Provincial Reconstruction Team in Queens, or better yet, let American workers keep their salaries and get government out of the business of redistributing wealth, let alone empire-building.