Ron Paul: “free stuff is not justice”

[Zenaan Harkness]

Ron Paul often speaks relative common sense, principles and
foundations for liberty, and yesterday was no exception.

Enjoy :)



Extended quote from Ron Paul:
 “Prosperity, built on debt, inflation, and false government
  promises, is illusionary and can disappear quickly. It will be
  necessary that the people learn, or relearn, that
   ∙ debt is not wealth,
   ∙ paper is not money,
   ∙ free stuff is not justice,
   ∙ war is not peace, and
   ∙ government coercion is not liberty.
  Signs of social chaos are readily apparent and are a predictable
  consequence of the economic distortions created by the excesses of
  the QE bubble.”




https://www.zerohedge.com/news/2018-01-12/ron-paul-what-has-qe-wrought
Ron Paul: "What Has QE Wrought?"

by Tyler Durden
Fri, 01/12/2018 - 18:15

⟨With full transcript :⟩

https://www.youtube.com/watch?v=ui6wmmliywU

Full Transcript:

  The Great Recession began in 2007. It didn’t take long for the
  money managers to recognize its severity, and that a little
  tinkering with interest rates would not suffice in dealing with the
  economic downturn. In Dec. 2008, the first of four Quantitative
  Easing programs began which did not end until Dec. 18, 2013. Some
  very serious consequences of this policy of unprecedented credit
  creation have set the stage for a major monetary reform of the fiat
  dollar system. The dollar’s status as the reserve currency of the
  world will continue to be undermined. This is not a minor matter.
  As our financial system unravels, the seriousness of it will become
  evident to all, as the need to pay for our extravagance becomes
  obvious. This will make the country much poorer, though the elite
  class that manages such affairs will suffer the least.

  By the time the QE’s ended, the Central banks of the world had
  increased their balance sheet by $8.3 trillion, with only $2.1
  trillion worth of GDP growth to show for it. This left $6.2
  trillion of excess liquidity in the banking system that did not go
  where the economic planners had hoped. Central banks now own $9.7
  trillion of negative interest yielding bonds. The financial system
  has been left with a bubble mania, financed by artificial credit
  and unsustainable debt. The national debt in 2007 was $8.9
  trillion; today it’s $20.5 trillion. Rising interest rates will
  come and that will be deadly for the economy and the Federal
  budget.

  This inflationary policy is generated by the belief that there is
  no benefit in allowing the needed economic correction to the
  problems generated by the Fed to occur. The correction is what the
  market requires, not the resumption and acceleration of the
  dangerous inflationary policy that caused the bubble economy. It’s
  like giving a case of beer to an alcoholic to calm his nerves as he
  attempts to stop drinking. It should not surprise anyone that
  perpetuating a problem won’t solve the problem.

  The obsession with a QE monetary policy has created a bubble
  economy of enormous size which one day will burst. The warning
  signs are everywhere, yet ignored. Political demands control
  policy; not common sense or sound economics. All major decisions
  are bipartisan and guarantee a continuation of current spending,
  taxing, inflationism, welfarism, and warfarism until the giant
  bubble bursts.

  All recessions since the Great Depression were essentially caused
  by the Fed’s mismanagement of monetary policy and subsequently
  resolved by it with renewed vigor in monetary mischief by rigging
  interest rates and the money supply. This off and on process
  temporarily aided the economy, but structural defects multiplied.
  Debt accumulation, mal-investments, unfunded liabilities, welfare
  benefits, militarism, constant wars, uncontrolled government
  growth, and systematic attacks on our liberties, have continued
  unabated.

  The people sense that a major crisis is fast approaching. Today’s
  Super Bubble economy, promulgated by the QE’s, must resolve itself.
  A continued program of spending and inflation, while financing even
  bigger government, will only exacerbate the social chaos that has
  already started. That is to be expected in a bankrupt nation. And
  the US is bankrupt! Eventually our dollar and credit will weaken,
  prohibiting us from living off others or our future generations.

  Social conflict will add to the financial difficulties caused by
  the QE dangerous experiment. Trillions of new dollars created in
  the last decade is unprecedented and the full consequence of this
  policy is yet to be discounted. My concern is that it will be much
  more serious than most expect and few will be prepared to offer a
  solution -- other than to demand more government even if it’s at
  the expense of liberty, peace, and prosperity.

  Prosperity, built on debt, inflation, and false government
  promises, is illusionary and can disappear quickly. It will be
  necessary that the people learn, or relearn, that debt is not
  wealth, paper is not money, free stuff is not justice, war is not
  peace, and government coercion is not liberty. Signs of social
  chaos are readily apparent and are a predictable consequence of the
  economic distortions created by the excesses of the QE bubble.

  Inequitable wealth distribution becomes a problem in an economy
  regulated by Federal Reserve mismanagement. The wealthy do get
  wealthier and the poor do get poorer when a currency is debased,
  with the middle class suffering the most. The ability of the
  special interests to influence legislation to benefit from the
  distribution of newly created money, is legendary. Think: “military
  industrial complex,” “free welfare benefits,” “bank bailouts,” and
  early access to an inflated currency. All these items play a
  significant role in the accelerating disparity of wealth
  distribution between the top 10 percent and rest of the people.
  These problems will worsen and fuel social conflicts and anger.

  The inequity, not being fully understood, causes those who feel
  cheated to become angry and to start thinking about the false
  promises of the Socialists. This, along with the large number of
  economic Marxists who have inundated our government-run colleges,
  presents a problem that feeds into the anger. It doesn’t take a lot
  of searching to witness the anger in action on the campuses, as
  expressed by both students and faculties.

  This conflict encourages envy and greed to flourish and justified
  with a sense of moral indignation. The greater the chaos, the
  easier it is for the Marxists to join in the fray and promote hate
  and destruction of cultural and traditional norms. It’s essential
  that the economic distortions, that arrived with the QE’s, as part
  of Keynesian economic planning, will need corrected to restore
  long- term economic growth. The full cost of decades of deficit
  spending must be paid for one way or another.

  The problem of economic ignorance and misplaced good intentions
  will need to be addressed in order to steer a course that rejects
  the notion that unlimited government spending can be financed by
  the dangerous QE type of monetary inflation. This, sadly, will not
  be considered until the super bubble bursts and it becomes evident
  that the correction that has been avoided so far has become a
  necessity.

  It is my opinion that the QE bubble is bigger than the Housing
  Bubble and the Dot Com Bubble combined. It is no easy task to
  correct for all the mal-investments and excessive debt and provide
  for all the unfunded liabilities. In the process of paying the
  piper, the country is destined to become much poorer, especially
  since a miraculous increase in productivity is unlikely in spite of
  the hoped-for benefits from the recently passed tax law. Economic,
  psychological and political pressure will prevent the changes in
  policy needed to deal with the huge complicated mess that the QE’s
  have generated. What we are experiencing is the climactic end of
  gigantic experiment with a fiat currency inflation, the size of
  which was never tried before.

  The Fed has followed a deliberate policy of monetary debasement
  from the time it was sanctioned in 1913. Though there was a steady
  erosion of the dollar’s value throughout the 20th Century, a link
  to gold was maintained until the closing of the gold window by
  Nixon in 1971. A total fiat currency - the dollar - was unleashed
  on the world with this event, and the US became the biggest
  beneficiary by assuming the role of managing the world reserve
  currency. For decades this well served America’s interests since it
  was equivalent to the world permitting us to create as much “gold”
  as we wanted. The system was totally fraudulent since it was
  imaginary money and we owned the printing press. Why should anyone
  be surprised at the results of what excessive money creation has
  caused? Printing fiat currency and expanding the money supply has
  nothing to do with creating wealth. This process is more likely to
  destroy wealth than create it. The QE programs have undermined
  sound economic policy and will continue to do so as the
  consequences of the massive monetary expansion become more evident
  with the bursting of the bubble economy.

  Instead of allowing the correction to run its course, the economic
  planners continue to pursue the goal of invigorating a failed
  experiment. Keynesianism created the monster crisis that we’re
  facing and yet the platitudes pushed by both political parties fail
  to address the subject of huge deficits and massive spending. This
  process can’t be stopped as long as the politicians and the special
  interests persistently and strongly oppose restricting the current
  role of our government. A compliant citizenry that fails to grasp
  the importance of liberty and instead accepts dependency on
  government as a substitute for self-reliance, guarantees that the
  bursting of the QE Bubble will generate a much more serious crisis
  than it need be.

  What’s involved in the bubble? Plenty! Almost everything to some
  degree. It is difficult for an economy to operate smoothly without
  a sound currency to measure value when goods and services are
  transferred from one entity to another. A definable medium of
  exchange is crucial to facilitate the market. Ever since direct
  bartering was phased-out more than three thousand years ago, the
  choice of the marketplace for money has been something tangible. As
  the understanding of the nature of money developed, the items used
  for money were easily recognizable, devisable, long lasting, and
  definable. Early on, governments challenged the market choices,
  especially when gold and silver were chosen, and replaced them with
  a government monopoly control over the currency. The contest
  between the market’s desire for honest money and the government’s
  desire to solidify power by usurping the authority to debase the
  currency started early on and continues to this day.

  Government’s monopoly over the creation of money is equivalent to
  counterfeiting and resulted from the fact that the people never
  liked to pay taxes for unnecessary wars and to provide benefits to
  the politicians and their friends. Though beneficial to the
  powerful few, the abuse and the inequitable distribution of wealth
  that resulted would inexorably stir anger and rebellion within the
  people, who demanded changes to the system.

  It is true that nothing ever changes under the sun or with human
  nature. We today are approaching a political and economic crisis of
  enormous proportion as a consequence of this age-old phenomenon of
  abuse from a government financed by a modern-day monetary
  destruction of the economy with the QE’s dangerous experiment. It
  is more than a minor correction that is needed to deal with the
  huge excesses that today exists world-wide.

  Many of the central planners in charge reassure us that the concern
  for a dangerous bubble existing is completely unfounded since the
  CPI is barely rising. Two points: 1) The CPI is rising faster than
  they will admit and 2) The CPI is not the tell-tale sign of a
  serious bubble forming. Many other bubbles and dislocations can
  exist as a consequence of creating trillions of dollars out of thin
  air. And there are quite a few:

   ∙ The housing bubble is back along with subprime loans.
   ∙ There’s an auto financing bubble encouraged by subprime loans for many customers.
   ∙ The stock market is in a bubble waiting to be pricked.
   ∙ The bond market is in a huge bubble as a result low or negative interest rates.
   ∙ Wall Street has inflated expectations that America is quickly being “Made great again.”
   ∙ Exaggerated trust exists in the dollar maintaining its reserve status for the foreseeable future.
   ∙ The unwinding of the Fed’s balance sheet and a move toward market rates of interest is a long way off.
   ∙ Deficit financing for the Military Industrial Complex will not be challenged before the QE bubble bursts.
   ∙ Saving for a rainy day or to make a future purchase is not considered sound policy. Unlimited borrowing is.
   ∙ Credit card debt is in a bubble.
   ∙ Student loan debt is in a bubble.
   ∙ Transfer payments to the dependent poor will never be cut.  Instead, when the big bubble bursts these payments will skyrocket since the process will generate more poor.
   ∙ The medical care spending bubble has created a huge mess with misallocation of resources, runaway cost, and poor care. Corporate medicine must end and be replaced by a free market.
   ∙ Cultural Marxism’s influence on American college campuses is a dangerous “bubble.”
   ∙ The dollar is in a bubble.
   ∙ The unpayable pension systems: federal, state, county, city, involves trillions of dollars.


  The unpayable debt bubble can only be held together by accelerating
  inflation and the liquidation of debt by currency debasement.  This
  is a very dangerous economic and political solution that seems
  inevitable.  The problem describes what happens to a bankrupt
  country refusing to live within its means.  Instead of being
  reassured that things are going well because Wall Street is
  booming, it should be a warning sign that danger lies ahead and
  reveals the growing imbalance between rich and poor.
  
  The bubble mentality of neocon war-mongering needs to end.  The
  sooner the better.  Sadly, it will only end after the dollar-driven
  bubble economy collapses.  The foreign policy of militant
  interventionism needs to be extinguished.  It’s a major source of
  debt and lost credibility for us, both of which undermines dollar
  hegemony.  The bursting of the dollar bubble will not be a minor
  event.  The adjustments required to restore economic prosperity and
  preserve liberty will be a major challenge to all freedom loving
  Americans.
  
  The excesses of an economy based on debt, inflation, central
  planning, constant war, the military industrial complex, and crony
  capitalism, all contribute to a growing disparity of wealth between
  rich and poor.  This type of command system is self-limited but
  eventually always fails.  Though it takes a lot to kill a once
  robust economy, our political leaders have managed to set the stage
  for a major crisis, brought on by QE’s attempt to rescue it from
  the coming bankruptcy.
  
  The problems we face today did not appear overnight.  It took many
  decades to create the conditions of bankruptcy and the beginning of
  the end for the dollar as the world’s reserve currency.  There have
  been many warning signs, dating all the way back to the origination
  of the Federal Reserve in 1913, and with the subsequent growth of
  central banking world-wide.  The Bretton Woods Agreement in 1944
  established the dollar as the reserve currency of the world with a
  watered-down version of the gold standard, and was destined to fail
  as it did in 1971.  Noted free market economist, Henry Hazlitt, at
  the time of its inception, predicted that it would fail due to
  inflationary policies that the Fed would not be able to resist.
  
  Throughout the 20th Century, the Fed created many recessions and
  depressions that were papered over with accelerating inflation and
  government deficit spending.  It worked to some degree on the short
  run, but postponed the required payment for another day.
  Unfortunately that day has arrived, and the flawed policy of
  delaying the payment needed to keep the economy churning, is no
  longer working.
  
  The replacement of the Bretton Woods arrangement with the fiat
  dollar standard in 1971 continued to benefit the US by it
  maintaining control over the world reserve currency.  This
  arrangement permitted us to “export” our inflated dollars and buy
  cheap imported goods from overseas.  This led to a structural
  imbalance in foreign trade with a hefty short-term benefit to us at
  the expense of a huge foreign debt.  When the magnitude of this
  problem hit in 2007, the QE program of massive credit creation was
  initiated, which only compounded the problems already generated by
  zero and negative interest rates, along with astronomical budgetary
  deficits.  More drugs for the addicted never solves their problem.
  
  The search is now on for a solution to our financial time bomb, a
  foreign policy presenting great danger to the world, and the
  systematic attack on our liberties here at home.  We’re beyond the
  point where more lies and deception will calm the anger.  The
  wealth available for bribing the masses is quickly dwindling as the
  demands and expectations grow.  The dollar is destined to go down
  in value, as it has been doing since 1971.  We are getting weaker
  and poorer and other world governments are getting stronger and
  richer.  The dollar this past year lost more than 10 percent.
  
  There’s a lot of built-up resentment toward America for the
  privileged financial position that it has enjoyed for decades,
  while it flaunted its “exceptionalism,” backed by a militant
  foreign policy.  This arrangement is ending and the process will
  not go smoothly.  Though the consequences of QE are all around us,
  there’s little else the planners will consider.  A repeat of this
  failed effort will be tried again-with worse results.  Cutting
  spending, reining in the Fed, and strictly limiting the role of
  government, can only be achieved in the distant future after the
  current crony-capitalism and welfare state self-destructs.
  Preparing for that day is the job for all who desire to live in a
  free society.  If current authoritarian policies are left
  unchecked, our economic conditions will deteriorate and true
  freedom will only be a memory.
  
  There’s a growing number of people becoming aware of the
  significance of the Fed’s disastrous monetary policy and the utter
  silliness of QE.  Since few people expect the privileged class to
  promote sound money, many outside of government are seeking a
  system of money that protects wealth rather than destroys it.
  
  Historically, money originated in the marketplace as a tangible
  asset.  The choice for thousands of years has been the precious
  metals, especially gold.  Governments, notoriously, have taken over
  monopoly control of the monetary systems and used them to benefit
  the government over the people.  Because of the abuse of the
  currency over the centuries, a return to gold was frequently needed
  to restore order and confidence in the money.  For this reason, I
  have been a champion of competing currencies to allow the people to
  make the choice about the monetary unit, as long as no fraud was
  involved.  A government-designed currency should also be free of
  fraud.  This means no fiat currency and no legal tender laws.  A
  tangible currency developed in the market, such as gold or silver,
  should not be subject to sales or capital gains taxes.
  
  The race is now on to find an alternative to our current dollar
  system in order to escape from the Federal Reserve run banking
  system.  Crypto-currencies have been offered as an alternative with
  much vigor.  By Jan.  3, 2018 their total capitalization was more
  than $700 billion with 97 percent of that achieved in less than a
  year.  It has been declared a “mania” by many.  This type of price
  appreciation would not have occurred without the funds the QE’s
  generated by the Federal Reserve.  The money managers have been in
  a quandary for the past 10 years because the inflated money supply
  and the very low interest rates did not generate the economic
  growth they wished for.  Now it’s going into numerous bubbles like
  stocks, bonds, housing, student debt, and crypto-currencies.  My
  view is that the entire economy is a huge bubble with sovereign
  debt being the most dangerous.
  
  Though currently, there is a lackadaisical interest in gold
  compared to crypto-currencies, I believe gold is in the early stage
  of the third major bull market since 1971, which started two years
  ago when gold was $1050/oz.  If history is of any benefit, gold
  will be used in the coming monetary reform, whether it’s
  accomplished by the government or the market.  But if the choice of
  a monetary unit turns out not related to something tangible, it
  will prove to be a first in history.  Just because our current
  money is now a total fiat dollar, it can’t be used to justify a
  market developed fiat currency.  We must remember that the dollar
  was originally defined as a weight of silver or gold.  The
  destructive nature of the monetary event of Aug.  15, 1971 was a
  consequence of our government refusing to maintain the dollar’s
  relationship to something tangible, thus making it a fiat currency.
  This explains why we’re in such a mess.  A fiat currency developed
  in the market, won’t solve the current financial crisis the world
  faces.
  
  A sound currency must have a fixed definition of a tangible item.
  Its value must be determined by free market pricing in exchange for
  goods and services.  Bi-metallism, by fixing an ounce of gold to a
  certain number of ounces of silver was unworkable.  Fixing the
  definition of the monetary unit is similar to fixing the exact
  length of a “yard or meter.” The “yard” can be used to measure any
  item you want and it’s crucial in all construction.  Likewise, a
  currency with a fixed definition of a tangible item will facilitate
  all market transactions.  A fiat currency without a precise
  definition by its very nature will fluctuate wildly and interfere
  with all economic calculations.  This is why all fiat currencies
  are destructive and end badly.  The dollar since 1971 has been a
  fiat currency and the mischief it has caused has been especially
  harmful and broad since it has served as the world reserve
  currency.  The importance of this is evident when the US government
  is willing to exert military force against those who threaten to
  abandon the dollar in world trade.
  
  All paper or fiat money self-destructs and has limited lifespans.
  Gold currencies last until governments debase them into a fiat
  currency.  The fiat dollar today, for many nefarious reasons, is
  constantly being destroyed by counterfeiters posing as politicians
  and central bankers.  The day is fast approaching when the fiat
  dollar standard will need a major overhaul.  The age of
  “Quantitative Easing” is ending.  Conclusions
  
  The trillions of dollars created by the QE program have not
  restored soundness to the economy.  QE did not address the problems
  caused by a central bank manipulating interest rates, determining
  the money supply, continuing to monetize government debt, pursuing
  central planning, and depending on a very unstable fiat currency.
  Only true monetary reform can address these problems.
  
  The economic and political clout that a central bank has in
  managing a fiat currency system is enormous.  Without the
  government’s ability to create money out of thin air, the cost of
  financing needless wars and the welfare state would be prohibitive.
  This arrangement guarantees excessive government and a systematic
  abuse of liberty.  The people lose; the special interests always
  win.
  
  We’re at the point where another QE inflationary binge will not
  tide us over in the next economic downturn.  We’re fast approaching
  the time when true monetary reform will be required to deal with
  the “sin” of living beyond our means.  If that is not done, expect
  a long period of economic chaos, inner city violence, and political
  warfare.
  
  Sometimes I’m asked why do I have to be so pessimistic.  Actually,
  many more see me as being optimistic.  Optimism comes with a
  willingness to acknowledge the truth and deal with it in a positive
  manner with policies that make sense.  Accepting bad ideas that
  purport to provide unlimited free benefits to everyone, is a
  deception that ends in disappointment.  Instead of helping the
  poor, welfare serves the interest of the wealthy and the
  bureaucrats.  Refusing to change policy will only extend the bad
  consequences that come from the Federal Reserve’s atrocious
  mismanagement of monetary policy.
  
  In medicine a correct diagnosis of a serious illness can be very
  depressing, but knowing that treatment is available is uplifting.
  Remaining in denial of a problem’s severity is a dangerous option.
  Knowledge and truth lead to optimism.  In politics and economics,
  the only decision to be made is to decide whether or not the goal
  of peace and prosperity can be best achieved by more intrusive
  government or by promoting personal liberty.
  
  If peace and prosperity are the goal, and flawed policies are
  identified, an understanding of what needs to be done should be
  greeted with applause.  Fortunately the answers are not complex,
  and when discovered most agree that they are based on common sense.
  
  The philosophy of liberty is based on the moral principle of
  non-aggression being applied to all individuals and governments.
  If individuals can’t steal or cheat, neither should the government.
  If individuals can’t harm or kill, neither should the government.
  
  Unfortunately, throughout history it’s been government that has
  committed the greatest crimes of aggression against humanity.  A
  modest beginning for us would be to rein in government initiated
  violence by rejecting the Federal Reserve’s authority to finance
  wars of aggression overseas and the welfare state at home.
  
  The political chaos, as reflected by the mess in Washington, is an
  expected consequence of the last 100 years of our drift away from a
  limited government philosophy.  There is now a growing interest in
  the cause of liberty as it becomes evident that the current system
  is financially and morally bankrupt.  The intellectual groundwork
  has been laid for a free society, and with the disintegration of
  the current system there is room for hope that truth “will out” and
  a better world for peace and prosperity will be available to us.