Congressman warns middle class in danger of being wiped out, says Congress is oblivious and Fed has no clue
September 18, 2008
Congressman Ron Paul has issued a stinging address concerning the financial crisis in which he outlines how the current economic problems, created via malinvestment and shift to a debt based economy, are now being mismanaged by private interests in secret.
What’s more he says he is not sure the Federal Reserve has any idea what to do next and that the Congress is totally oblivious to the whole sorry state of affairs – a cocktail of elements he warns puts the middle class of America in serious jeopardy.
“Today we had a lot of financial fireworks in the markets, a lot of things are going on, and I think we are in the middle of something very big.” the Congressman stated.
Speaking on the recent collapse and government bailout of several big financial institutions he warned:
“We’re talking about big bucks, we’re not talking about hundreds of millions or even hundreds of billions, we’re talking about trillions of dollars, the obligation is immeasurable.”
“The interesting thing is that they (the financial institutions) don’t come to the Congress, I mean the Federal Reserve buys them out, they own it. We as tax payers now own Fannie Mae and Freddie Mac and know one knows how much that will cost. They don’t come to the Congress, we don’t have appropriations, it’s done by secret government, private individuals behind the scenes maneuvering and manipulating and trying to patch things up. While in the meantime, I’m sure there’s a few people making a couple of bucks out of this whole thing.”
The Congressman highlighted how an economy structured on debt and credit and a financial system based on interventionism and self serving moral hazard has led to gross devaluation of the dollar and ultimately lies at the root of the current financial meltdown.
“Our problems come first of all from the Federal Reserve. It is a monopoly and it controls interest rates artificially low, causes people to make mistakes, that’s the basic source. But then on top of that in the Housing market we had the community reinvestment act which told investors that they had to loan to risky borrowers, and that was a risky complication. HUD contributes to this, FDIC contributes, it’s called moral hazard, everything that we have done over here creates moral hazard, that is we assure people or assume that we will take care of everybody, just go out and create the risk, it is the opposite of the market place.” Paul stated.
“You can’t create money like we’re doing in order to support the dollar, because ultimately it hurts the dollar and everything we do in Washington today whether its on the appropriations side, whether it’s what the Fed is doing, buying up America, it’s all putting pressure on the dollar. One of these days we’re just going to have to wake up and say that we need to liquidate debt. This is malinvestment.” he urged.
The Congressman then slammed those who have blamed the crisis on failures of the free market:
“And then they have people come along and say ‘see, this is the failure of capitalism’, this has nothing to do with capitalism, this is something that started off as interventionism and us being too involved in the economy for the benefit of special interests. But now it is being socialized out in the open.”
“The end of this comes when people reject the dollar and I think we’re getting awfully close to this.” Paul stated echoing comments from leading investors such as Jim Rogers, who predicted Monday that the dollar would soon lose its world reserve status.
“When you see the movement in the markets that we have today, you know that there are serious problems out there and Congress basically are oblivious, they have no idea what’s going on.” Paul continued.
“As a matter of fact I’m not even sure the Federal Reserve has any idea what to do about this. They’ve been manipulating and maneuvering for their own benefit over the years but eventually the market wins out.”
The Congressman’s comments were echoed today by reports indicating that the Congress cannot agree on any form of action and is likely to simply adjourn and “get out of the way”.
Senate Majority Leader Harry Reid told reporters that “no one knows what to do”.
In a stark warning, Ron Paul stressed that the longer the value of the dollar is allowed to depreciate, the greater the risk becomes for the majority of Americans:
“The reason this is so important is that if you care about people in a humanitarian sense, what you want to do is protect the value of the money. Just think of the third world nations when they have total run away inflation, the middle class gets wiped out. And what we are seeing today is the middle class being jeopardized by this type of system that we have, unlimited spending, unlimited debt, unlimited creation of new credit.”
“So it’s time that we wake up… The answers are in the free market, sound money and our Constitution.” Paul concluded.
Watch the full address by the Congressman: