James Turk Interview

The Truth About the Greek Bailouts

History has shown that a common tactic of governments with totalitarian aspirations is to create a problem and then present themselves as the only solution to that problem. Nowhere is this more evident than when it comes to the European Union's handling of the Greece bailouts.

 

As Daniel Hannan (one of the few remaining law makers with any sense) has pointed out, the EU continues to presents itself as the answer to the Greek economic crisis. In actuality, the EU is one of the principal causes of the disaster.

How Uncle Sam Gets Your Money

In an article I wrote in October 2009, titled, "What the Treasury Department is not telling Americans about the National Debt" I explained how the government actually gets money. I pointed out that there are only three ways that a government can get funds to inject into the economy: tax, print or borrow.

Suppose government does the first: raises funds through taxation. In such a case, government can then only inject into the economy what it has first suctioned out, a point that was made with characteristic lucidity by Daniel Hannan in THIS short video clip.
  

Now although Western governments make liberal use of this option, the amount of revenue that is available through taxation is necessarily limited. For example, in order for America to meet its present commitments through taxes alone, the federal tax rate for each American household would have to increase by 42% by 2040 (a figure does not take into account the liabilities to business, and therefore to tax revenue, that always come as the corollary of burdensome taxation).

 

The other option is that government can print money ex nihilo. The problem is that governments which do that have never been able to resist the temptation to completely debase their currency, resulting in hyperinflation. All Western governments have handed over the authority to create money to private central banks (America’s version of this is called the Federal Reserve). But the banks do not create money through printing presses. Instead, they create new money electronically every time they issue a loan for more money than they actually have on deposit. The reason they can get away with this is because only a small percentage of commerce takes place with actual physical money. The commercial banks in America end up creating $98 for every $1 held on deposit, which means that most of the money in circulation is actually debt money. Since every loan increases the money supply (a supply that is represented in bank ledgers rather than hard cash), it also depreciates the relative value of the money held by everyone else. Thus, central banking is also inflationary. However, the requirement to pay interest curtails the borrowing to a certain degree. On the other hand, when governments print money or mint debased coinage, as in Weimar Germany and the last three centuries of the Roman Empire, they tend to completely debase the currency in a shorter period of time than happens under a central banking system.

 
What this means is that if the American government wants more money to spend then it can raise through taxation, the only option is to go to the banks and ask for a loan.
  


Further Reading

"What the Treasury Department is not telling Americans about the National Debt"


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Quantitative Easing Explained

For more about what is wrong with our economy, click here.

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Visit my other website Alfred the Great Society

The Government just stole from the poor

I just read here that the day after the election, the Federal Reserve made a little-noticed announcement that it’s printing up another $1 trillion. To get an idea just how much money that is, click here.

Not enough people realize it, but every time the government prints money, it is stealing from us. It is stealing the purchasing value of the dollars we already have, and this tends to affects the poor the worst.
The government can choose who receives the new money (friends of government and military contractors) and by the time it trickles down to the rest of us, the new money has already lost much of its value. "To steal from the shoemaker the fruit of his labor," noted Herbert Schlossberg in Idols of Destruction, one can take his product or the money he has received for it. Or else one can so tamper with the monetary system that the money will not serve to purchase economic goods equivalent to the product the shoemaker provides. Outright stealing is widely recognized for what it is, but the economic crime that accomplishes the same thing through debasing the money is not. Yet the motive and the effect are the same."

Review of Robin Hood

With a name such as mine, I have always emulated Robin Hood as a kind of patron saint. It was therefore with great anticipation that I went to see the new Robin Hood movie.

I was not impressed. The film offers neither good character development nor the type of sustained suspense of an action thriller. Completely bereft of all poetry and romance (not to mention the absence of any sword fighting or a good quarter staff brawl), the movie had little continuity with the Robin Hood of myth.

But there was one thing the movie gets right: Robin Hood was no socialist.

We know very little about the historical Robin Hood. But we do know that he was not a proto-Obama figure, redistributing wealth to achieve a utopia of economic quality.

But didn’t Robin Hood steal from the rich to give to the poor? If the legends are to be believed, he merely attempted to give back to the people what the government and the corrupt clergy had taken from them. Ridley Scott gets this exactly right in portraying Robin Hood as the defender of a people being taxed to death by a corrupt government.

Read More

Interview with Peter Schiff

Click HERE to listen to Lew Rockwell's fascinating interview with Peter Schiff who is running for the Senate in Connecticut. Schiff explains how government policy is driving the price of college tuition through the wall, making a debt-free university degree almost unattainable.

Deficits are Bad, but the Real Problem is Spending

For more about inflation and the national debt, see my article 'What the Treasury Department is not telling Americans about the national debt.'

Spend first, pay later

I have just published an article for the Spokane Examiner, being a response to Demoncrats asking for Congress to increase the U.S. federal debt ceiling by $1.8 trillion. Click on the following link to go to the article.

Spend first, pay later

To read other political articles I have written, click HERE.
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What the Treasury Department is not telling Americans about the National Debt

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According to treasury figures released today, government spent $46.6 billion more in September than it took in, a month that normally records a surplus.
 
However, this is only the tip of the iceberg. Few Americans are actually aware what a serious financial situation America is currently in.
 
The Treasury Department doesn't like to advertise the fact, but America’s national debt is larger than the total economies of China, the United Kingdom, and Australia combined and is quickly approaching or exceeding the USA's 14 trillion GDP. (It appears less than that in charts, because the government has been cooking the books since the Clinton Administration. They are not counting Social Security and Medicare obligations as part of the debt.) If the pattern continues over the next decade, the government will borrow approximately $1.72 million every minute.
 
Our debt to China alone is approximately $776.4 billion, having grown more than $240 billion in the last year.
 
How did we get to this point and what are the long-term consequences if America continues down this same course, borrowing itself into oblivion? How did America get itself into this position?
 
A Brief History of Fiscal Foolishness
 
When George Bush took office in 2001, he inherited a national debt equivalent to 57.4% of America’s yearly GDP. But he also inherited a budget surplus of $128 billion - the second successive surplus after roughly 30 years of budget deficits.
 
(For those who don't know, a budget deficit occurs whenever a country spends more money during a year than it has taken in. A budget surplus occurs every time the country takes in more money than it has spent during a year. The national debt is the accumulation of all the unpaid deficits in a nation’s history. Servicing the interest on the debt becomes a central part of successive budgets, making it progressively harder to achieve a budget surplus.)
 
Instead of building on the opportunity afforded by the surplus and reducing the national debt, Bush quickly ran up unprecedented deficits, as the chart below left reveals.

Not only did he engage in foreign wars costing hundreds of billions, but he also initiated an array of new government goodies on a scale unseen since the days of Franklin Roosevelt. His Medicare Prescription Drug Act alone will cost more than $1 trillion by the end of the decade, possibly a lot more as the baby boomers begin accessing it.
 
Far too few people asked where the money for all of Bush’s new programs and his bank bailout was going to come from. The answer, of course, is that it could only come from running up huge budget deficits and digging the nation deeper into debt.
 
When Obama took office in early 2009, the economy was crippling under the weight of so much unpayable debt. Blaming his predecessors for the recession he inherited, Obama allegedly set out to correct their foolish choices. Among the irresponsibilities that Obama pledge not to repeat was the practice of making financial commitments that the country couldn’t afford. As Obama said in a speech to the Joint Session of Congress: “Now, part of the reason I faced a trillion-dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for -- from the Iraq war to tax breaks for the wealthy.”

I.O.U.S.A

A few weeks ago I was sick and confined to bed. This gave me a chance to watch the movie I.O.U.S.A. which Michael Collender recommended I watch a few months ago. It is available on instant play through Netflicks.

The topic of the movie is America's national debt, a subject that has always given me sense of fascinated horror.


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Enough Bailouts!

Telling it to Gordon Brown like it is

The Folly of Obama's Tax Plan

"A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

"Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006."

Keep reading by clicking HERE.

Spend, spend, spend: Obama's Solution to the Economic Crisis

I had hoped that after Obama was sworn in as President the hype would settle down, reality would set in and the public would begin to realize that this man, for all his pretensions, is really only a man.

It turns out that my hope was naive. If a routine trip to our local shops is anything to go by, Obama has already achieved the kind of mythic significance that has normally been reserved for assassinated presidents.

For example, at our supermarket you can buy Barack and Michelle trading cards (the political equivalent of American baseball cards). Not to be beat, our local craft store is selling Obama wall posters and calendars. And finally, the toy stores are selling Obama action figures, complete with a hand gun and lightsaber.

Amid all the Obama hysteria, far less attention is being given to his actual policies. I will leave the reader to judge whether the policies pursued during the Presidents’ first months in office have done justice to his reputation as a guru of wisdom and sagacity.

Stimulating Times

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Obama took the oath of office at a critical time in American history. Following years of oppressive taxes and careless spending under Bush, America is now facing the worst economic downturn since the great depression.

From the very beginning of his administration, Obama’s applied himself to the economic crisis with a vengeance. Following a Keynesian approach to economics, his solution can be summarized in three words: spend, spend, spend.

Obama’s spending plans culminated in what Charles Colson has called ‘one of the biggest grab-bag boondoggles in American history’, namely the $800 billion ‘stimulus package.’ Known now as the American Recovery and Reinvestment Act, it aims to revitalize America by pumping unprecedented amounts of tax-payers dollars into the national economy.

Ever since the plan was enacted on February 17, it has been possible to track where all the new money is going through the government’s website

www.recovery.gov/. The results are interesting.

It seems that everyone is getting a piece of the pie. For starters, Government employees will be receiving pay rises in April, while the 12.5 million workers receiving unemployment benefits will also start seeing a boost in their weekly payments. Those whose employment was involuntarily terminated during the period between Sept. 1, 2008, and Dec. 31, 2009 will qualify for the 65 percent health care premium subsidy. The Social Security Administration's website has promised a one-time payment of $250 to the 55 million Social Security and other supplemental income beneficiaries.

That is not all. Obama is sending $200 million for a clean-burning power plant in Mattoon, Ill, $500 million to the National Institutes of Health offices in Maryland, $750 million to the National Computer Center in Maryland, $275 million to flood prevention, $200 million to public computer centres at community colleges and libraries, $650 million to the public in the form of digital TV converter-box coupons, $8 billion to an investment fund for building high-speed rail, $1 billion to administrative costs and construction of National Oceanic and Atmospheric Administration office buildings, over $2.2 million to Virginia for programs providing meals to low-income seniors.

I wish I could say that the spending spree stopped there. $100 million has been set aside for constructing U.S. Marshals office buildings, $1.3 billion for NASA, $300 million for hybrid and electric cars for the federal government (including golf carts for federal workers).

Red Ink As Far As The Eye Can See

Obama’s $800 billion ‘stimulus package’ is just the first stage and doesn’t even include the $3 trillion-plus budget that he will be bringing forward in a few months. Nor does it include the $15 billion a year that he has promised over the next ten years for children's healthcare, computerized health records, educational reforms and developing resources for solar and wind power.

Altogether Obama is proposing to spend a staggering $3.6 trillion in the 2010 fiscal year, making previous irresponsible deficits look like child's play. (In reality, it will probably be a lot higher. Even as I write, headlines have broken that the President’s climate plan alone could cost as much at $2 trillion, nearly three times the White House's initial estimate.)

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Few people are asking where all the new money is actually going to come from. To Obama, the answer is straight-forward: simply increase taxes on the wealthiest 2% of Americans.

There is a slight problem, however. According to IRS figures for 2006 (the most recent year for which sufficient tax data is available), even if the government confiscated 100% of the taxable income of all Americans earning over $500,000, Congress would only get an extra $1.3 trillion in revenue. That’s less than half the 2006 federal budget and only a quarter of what Congress will have to fork out in fiscal 2010 under Obama’s spending proposals. And this doesn’t take into effect the collateral impact that burdensome taxation will have on the businesses government plunders and the jobs those businesses might otherwise have been able to create. It also doesn’t take into account that 2006 was a good year for the economy, whereas this year the economy shrunk by 6.2% in the 4th quarter and continues in a state of meltdown. That means that Congress will have significantly less revenue in their coffers than they had in 2006.

The cold reality is that Obama’s spending plan will have to be financed almost entirely by debt. Indeed, under his $3.6 trillion budget proposal, deficit spending for 2009 will increase to 12.7% of the Gross Domestic Product. That is twice as large a share of the economy as any deficit has run since World War II. By 2019 this pattern will have brought the federal deficit to 82% of the overall economy, according to analysts with the nonpartisan Congressional Budget Office.

Now consider that America’s resources are stretched almost to breaking point, that the nation is already crippled with unpayable debt, and that the influx of new money is poising the nation for serious hyperinflation. When we factor in these considerations we have to question the sanity of a spending policy that gives us red ink as far as the eye can see. We also have to ask: even if all that money was available in Uncle Sam’s coffers, why not give it back to Americans in the form of tax cuts in order to re-stimulate business and investment?

The Necessity of Bankruptcy

Frank Borman once noted that, “Capitalism without bankruptcy is like Christianity without hell.” In economics, as in religion, if people have the possibility of reward but not the potential for loss, then there is little incentive for prudence and discretion. As I have noted previously, this explains what happened to America during the period known as the ‘Great Depression.’

The economic crisis of the 1930s did not occur out of the blue, nor was it caused by a series of runs on the bank. Rather, it was caused by government intervening to cushion the consequences of imprudent investments, very similar to the way Obama is now trying to use the stimulus package to dampen the results of the foolish financial policies pursued in government and the private sector.

Leading up to the Great Depression, the American economy had experienced massive growth but much of that growth was illusory, propelled by investment in companies exceeding their actual profits. Because many companies had a value higher than their earnings (in some cases no earnings at all), people began to grasp that their shares weren’t worth as much as they paid. The banks realized this too, and so they began to call loans. Now naturally when banks begin to call bad loans, this creates losses. But this is not a bad thing. In a free market, both loss and growth are necessary components for stability, since bad business practices are then allowed to suffer their natural consequences. However, instead of letting things to take their natural course, the government stepped in to try to doctor up the economy. From 1923-29, the American money supply was increased 61 times by the Federal Reserve, not dissimilar to the unprecedented amounts of debt money Obama is now pumping into the national economy. This amplified inflation which accelerated the boom market, perpetuating the illusory sense of prosperity. Naturally the new money supply encouraged more imprudent investments.

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Things could only be put off for so long and in February of 29 the stock market ceased to expand, causing Wall Street to collapse. President Herbert Hoover responded by doctoring the market again. In ‘31 he launched the greatest peace-time deficit spending program in history to try to prop up the economy. All he achieved was simply to perpetuate the vicious cycle for longer.

During America’s recent economic boom, the Federal Reserve deliberately kept interest rates low in order to encourage investments. As in the 1920’s, this distorted the market because it allowed entrepreneurs to engage in malinvestments - investments which failed to take into account actual resource availability. America is now facing the necessary fall-out of such foolishness, and that is a good thing. However, instead of allowing the consequences of imprudence to play out, Obama is following the example of Hoover (right) in trying to artificially prop up the market. Through his Public-Private Investment Program, government will help purchase as much as $1 trillion in toxic assets on banks' books. By thus removing the consequences of bad business practices, he is setting a terrible precedent.

In Government We Trust

If unchecked in fulfilling his promises, Obama will push government spending to approximately 40% of the Gross Domestic Product, up from about 33% in 2000. This would put the size of the US government within reach of Europe, where government spending currently eats up 46% of the GDP.

Now here’s the crunch: when Government reaches those kinds of colossal proportions, people begin to think of themselves, and God, differently.

Recently political scientists at the University of Washington studied 33 countries around the world and discovered an inverse relationship between state welfare spending and religiosity. Countries with larger welfare states had markedly lower levels of religious attendance with a greater number of citizens not subscribing to any religious affiliation. As the report notes, “Countries with higher levels of per capita welfare have a proclivity for less religious participation and tend to have higher percentages of non-religious individuals.”

The implications of this study are clear: as government grows, people’s reliance on God seems to diminish. This has already proved to be the case in Europe, in particularly in the Scandinavian countries where the Nanny state provides cradle-to-the-grave care for all its citizens.

Under Obama America seems to be headed towards Scandinavian-style socialism. As it becomes increasingly difficult to say no to government funds, everything from health care to energy to all the nation’s primary industries could become semi-nationalized. Indeed, this has already occurred with education and is in the process of happening with the financial and auto industries, thanks to government bailouts.

The state-dependency invoked by this kind of semi-socialism naturally orients citizens to think paternally of the state, as I argued in my post "Why I did Not Vote For Obama." However, unlike a responsible human parent, the paternal state thrives on dependency and is inescapably parasitic on the very persons whom it turns into parasites. This should not be a hard point to grasp, seeing that the government can only give away what it first takes from someone else (even deficit spending and arbitrary money-printing are essentially processes of confiscation, since the inflation these processes spawn removes value from the currency already held by the populace). The net result is that both the state and its dependents march symbiotically to destruction.

How does this destruction play out in practice? Again, you only have to look at the Scandinavian countries to see. W. Bradford Wilcox observes that “many Scandinavians, especially young adults who have grown up taking the welfare state for granted, are markedly less likely to attend to the social, material, and emotional needs of family and friends than earlier generations. As a consequence, social solidarity is down and social pathology—from drinking to crime—is up. In Wolfe’s words, ‘High tax rates in Scandinavia encourage governmental responsibility for others; they do not, however, necessarily inspire a personal sense of altruism and a feeling of moral unity toward others with whom one’s fate is always linked.’”

Wilcox goes on to note that even if Obama’s audacious spending agenda provides short-term relief to the economic and social challenges that now beset the American people, in the long run the ‘Obama revolution’ is likely to erode both the religious and the civic fibre of America.

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"The Gold Standard

"The gold standard has historically been a bulwark against inflation. It is politically manipulated money such as we have had since the 1930s that causes our inflation. That hsould not be unexpected, or difficult to understand. The supply of gold is relatively fixed and grows only modestly. But in a free economy, capital investment leads to ever-greater productivity, and the ability to produce more and more goods over time. So with gold relatively stable on the on hand and the supply of goods growing by leaps and bounds on the other, the gold will tend to be worth more and more, and the prices of these goods will be lower and lower." Ron Paul, The Revolution, pp. 149.

The Hidden Tax

"When the value of Americans' savings is deliberately eroded through inflation, that is a tax, albeit a hidden one. I call it the inflation tax, a tax that is all the more insidious for being so underhanded: most Americans have no idea what causes it or why their standard of living is going down. Meanwhile, government and its favored constituencies receive their ill-gotten loot. The racket is safe as long as no one figures out what is going on." Ron Paul, from The Revolution, pp. 143-144.
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“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. – As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Keynes, The Economic Consequences of the Peace.
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"To steal from the shoemaker the fruit of his labor, one can take his product or the money he has received for it. Or else one can so tamper with the monetary system that the money will not serve to purchase economic goods equivalent to the product the shoemaker provides. Outright stealing is widely recognized for what it is, but the economic crime that accomplishes the same thing through debasing the money is not. Yet the motive and the effect are the same." (Herbert Schlossberg, Idols of Destruction, p. 90.)
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Income Tax

"Abolishing the income tax could cut government revenue by about 40 percent. I have heard the breathless claims about how radical that is - and compared to the trivial changes we are accustomed to seeing in government, I suppose it is. But in absolute terms, is it really so radical? In order to imagine what it would be like to live in a country with a federal budget 40 percent lower than the federal budget of 2007, it would be necessary to go all the way back to ...1997." Ron Paul, The Revolution, pp. 79-80.

The Bush Bailout and What's Wrong With It

In the 1930s America experienced an economic crisis, which has come to be known as the ‘Great Depression.’ This crisis did not occur out of the blue, nor was it caused by a series of runs on the bank.

It was caused by government intervening to cushion the consequences of imprudent investments.

Leading up to the Great Depression, the American economy had experienced massive growth. Much of this growth was illusory, propelled by investment in companies exceeding their actual profits. Because many companies had a value higher than their earnings (in some cases no earnings at all), people began to grasp that their shares weren’t worth as much as they paid. The banks realized this too, and so they began to call loans.

Now naturally when banks begin to call bad loans, this creates losses. But this is not a bad thing. In a free market, loss as well as growth are necessary components for stability, since bad business practices are then allowed to suffer their natural consequences. However, instead of letting things to take their natural course, the government stepped in to try to fix things. From 1923-29, the American money supply was increased 61 times by the Federal Reserve. This amplified inflation which accelerated the boom market, perpetuating the illusory sense of prosperity. Naturally the new money supply encouraged more imprudent investments.

Things could only be put off for so long and in February of 29 the stock market ceased to expand, causing Wall Street to collapse.

President Herbert Hoover (picture on left) responded by doctoring the market again. In ‘31 he launched the greatest peace-time deficit spending program in history to try to prop up the economy. Because money has to come from somewhere, it was the tax payer who had to foot the bill. Thus, in ‘32 Hoover launched the largest peace-time tax hike in America’s history. To pay their taxes, people had to remove massive amounts of money from the banks, which increased the burden the financial institutions were already under, creating a vicious cycle.

Alexander Solzhenitsyn once remarked that “If we don’t know our own history then we simply have to endure all of the same mistakes and all of the same sacrifices and all of the same absurdities over again times ten.” Nowhere is the truth of Solzhenitsyn’s words more evident than in America today, which is like a replay of the events of the Hoover administration.

During America’s recent economic boom, the Federal Reserve deliberately kept interest rates low in order to encourage investments. As in the 1920’s, this distorted the market because it allowed entrepreneurs to engage in malinvestments - investments which failed to take into account actual resource availability.

The artificial sense of prosperity led to many Americans to invest in homes they could not afford. Gambling on the idea that house prices would keep rising indefinitely, they counted on selling or re-financing their homes before the bill came due. Banks allowed this to occur by giving out sub-prime mortgages. (A ‘sub-prime’ mortgage is a type of loan granted to individuals with poor credit histories.) As can be expected, when the house market levelled out, many simply had no way of paying. As a consequence, currently 9% of all Americans with mortgages are either behind on their payments or in foreclosure.

The nature of politics in America has also contributed to the financial crisis. It is candidates who promise the most ‘goodies’ who get elected and voters rarely ask, “Where is the money for that going to come from?” When unforeseen expenses, like the war in Iraq or hurricane Katrina, are added to the cost of all the entitlements, pensions and programs government has already committed to pay, there is only one place for the money to come from: debt.

Given the irresponsible pattern of spending and investment from both the public and private sector, it should come as no surprise to find the American economy going belly up. The question is: will the United States learn from the stock market crash of ‘29 and allow bad investments to suffer their natural consequences, or will government try to artificially prop up the economy? It is the later course that the Bush administration is pursuing. According to current proposals, the American taxpayer will have to pick up the bill for a $700 billion bailout, in which government will buy toxic loans and mortgages from hurting financial institutions. This will increase the national debt ceiling to at least $11.315 trillion, bringing the federal deficit to 79% of the American economy. That equals nearly $2,300 for every man, woman and child in the USA.

By removing the consequences of bad business practices, the government is setting a terrible precedent. The Bush administration as well as presidential candidates, Barack Obama and John McCain, are trying to cure the problem by the very means which brought it about. If the market had been allowed to be truly free rather than being doctored with by the Federal Reserve, then interest rates would have reflected reality and discouraged malinvestment. It is perhaps asking too much to expect the government to have learned its lesson and be willing to finally take a “hands-off” approach to the economy, whatever the short-term consequences might be.

Not all members of government have been so blind. Congressmen Ron Paul (pictured left) has argued that what is needed is the liquidation rather than the purchasing of toxic debt. Commenting on the proposed bailout, the Texas representative said: “It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year…. By doing more of the same, we will only continue and intensify the distortions in our economy – all the capital misallocation, all the malinvestment – and prevent the market's attempt to re-establish rational pricing of houses and other assets.” (Visit Ron Paul's blog HERE)

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Solzhenitsyn (picture on right) was correct: if we don’t know our own history then we simply have to endure all of the same mistakes and all of the same sacrifices and all of the same absurdities over again times ten.

In this case, times billions.

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