Finance

One of our British authors, C.J. Stone, just forwarded me the below movie that outlines just how corrupt and illegal the Federal Reserve is and provides an intriguing method to protest it.

Movie: http://www.youtube.com/watch?v=yP2JpY-J8MA
Website: http://www.myspace.com/greatamericanstrike

Synopsis for both: Strike (e.g. call in sick) to abolish the Federal Reserve on the IRS tax filling deadline day, April 15, 2008.

A grade school kid will quickly tell you that by injecting this much credit into the market, the Fed could be broke in four months. To survive, it must start the presses, increase real liquidity, the M1 money supply. Checks will be presented, they must clear, and “real money” must be handed off. Where does it come from? Paper, ink, the word (fiat) of the government. The people's trust in fiat might vanish at any time. The dollar could be dead. They could try to switch to the Amero. People might not trust it either. Gold rules!

I oppose HR 5512 because it is unconstitutional to delegate the determination of the metal content of our coinage to the Secretary of the Treasury. Under Article I Section 8 of the Constitution, the Congress is given the power to coin money and regulate the value thereof. It is a shame that Congress has already unconstitutionally delegated its coinage authority to the Treasury Department, but that is no reason to further delegate our power and essentially abdicate Congressional oversight as the passing of HR 5512 would do.

Oversight by members of Congress, who have an incentive to listen to their constituents, ensures openness and transparency. This bill would eliminate that process and delegate it to unelected bureaucrats. The Secretary of the Treasury would be given sole discretion to alter the metal content of coins, or even to create non-metal coins. Given the history of Congressional delegation and subsequent lax oversight on issues as important as the conflict in Iraq, it would be naïve to believe that Congress would exercise any more oversight over an issue as unimportant to most members as the composition of coins.

many Americans have expressed concern over the growing role played by sovereign wealth funds in the U.S. economy. Such fears are to a large extent misplaced, however, as we should be more concerned with the underlying causes that have allowed sovereign wealth funds to accumulate as much capital as they have.

The two major types of sovereign wealth funds are those which are funded by proceeds from natural resources sales, and those funded by accumulation of foreign exchange. The former category includes sovereign wealth funds in Saudi Arabia, Kuwait, and the UAE. Flush with dollars due to the high price of oil, they are looking for opportunities to make that money work for them. The high price of oil is due in large part to our inflationary monetary policy. We have literally exported inflation across the globe, spurring malinvestment and a subsequent commodities boom.

A topic that is on the lips of many people during the past few months, and one with which I have greatly concerned myself, is that of moral hazard. We hear cries from all corners, from politicians, journalists, economists, businessmen, and citizens, clamoring for the federal government to intervene in the economy in order to forestall a calamitous recession. During the boom, many of these same individuals called for no end to the Fed's easy credit. Now that the consequences of that easy money policy are coming home to roost, no one wants to face those ill effects.

We have already seen a plan from the administration to freeze mortgages, a plan which is alleged to be only a temporary program. As with other programs that have come through this committee, I believe we ought to learn from history and realize that “temporary” programs are almost anything but temporary. When this program expires and mortgage rates reset, we will see new calls for a rate-freeze plan, maybe for two years, maybe for five, or maybe for more.

Price controls are almost universally reviled by economists. The negative economic consequences of price floors or price ceilings are numerous and well-documented. Our current series of hearings have been called to discuss the most important, but least understood, price manipulation in the world today: the manipulation of the interest rate.

By setting the federal funds rate, the rate at which banks in the Federal Reserve System loan funds to each other, the Federal Reserve inhibits the actions of market participants coming together to determine a market interest rate. The Federal Reserve and the federal government do not deign to interfere in setting the price of houses, the interest rate on mortgages, or the prices of wood and steel. The Fed's actions in setting the federal funds rate however, because it reflects the price of money to a borrower and thus affects demand for money, affects prices throughout the economy in a manner less pervasive but just as damaging as direct price controls.

I rise to speak on the concept of competing currencies. Currency, or money, is what allows civilization to flourish. In the absence of money, barter is the name of the game; if the farmer needs shoes, he must trade his eggs and milk to the cobbler and hope that the cobbler needs eggs and milk. Money makes the transaction process far easier. Rather than having to search for someone with reciprocal wants, the farmer can exchange his milk and eggs for an agreed-upon medium of exchange with which he can then purchase shoes.

This medium of exchange should satisfy certain properties: it should be durable, that is to say, it does not wear out easily; it should be portable, that is, easily carried; it should be divisible into units usable for every-day transactions; it should be recognizable and uniform, so that one unit of money has the same properties as every other unit; it should be scarce, in the economic sense, so that the extant supply does not satisfy the wants of everyone demanding it; it should be stable, so that the value of its purchasing power does not fluctuate wildly; and it should be reproducible, so that enough units of money can be created to satisfy the needs of exchange.

Madame Speaker, I find it odd that HR 5140, a bill allegedly designed to provide a stimulus for the anemic American economy, contains provisions that could damage the economy and hurt American taxpayers. Specifically, the provisions increasing the loan limitations of the Federal Housing Administration and the Government Sponsored Enterprises (e.g. Fannie Mae and Freddie Mac), will exacerbate the long-term problems in the housing market, and may even lead to a future taxpayer bailout of the housing industry. The recent bursting of the housing bubble should have taught my colleagues the dangers of government polices that distort the market by diverting resources to housing, when those resources would be more efficiently used in other sectors of the economy.

Ironically, many of the same members who insisted that upper income taxpayers be denied the tax rebates are enthusiastic champions of the provisions in HR 5140 increasing the FHA loan limit to $633,500 and the GSE loan limit to $729,750. This increase in the loan limits represents a generous taxpayer subsidy to high-income homeowners.

The “victims” of the real-estate bubble and sub prime mortgage crash, and the enemies of the free market would have us believe that “predatory lending” is the real problem. Guess again. Government and its regulations are behind it all.

This week Congress finished work on its final spending package for the year. This "Omnibus" bill contains many of the spending bills that did not get passed throughout the year. Last minute changes made by the Senate mean President Bush is likely to sign the legislation into law.

What this bill means is lots more of Washington spending your money. And, with a year of talking and fighting about earmarks, we did not see a significant change in that area either.

Especially disconcerting is the overseas spending. Let me point to just one example. In that portion of the bill for military construction, there were nearly one billion dollars in earmarks for spending overseas. Again, this is just in the portion for military construction projects.

As the year draws to a close, the battle over spending in Washington is heating up. The Democrats want to expand government healthcare, while the President has vetoed the second attempt to expand SCHIP.

The latest version of the State Children's Health Insurance Program would have expanded the entitlement program and raised taxes, just as the earlier version did and the President showed fiscal restraint with his veto.

Reducing our entitlement programs here at home is not against saving the children, as the rhetoric goes, it is about saving the country's economy. The fact is we have huge trade imbalances, massive deficits, and a $9 trillion national debt, which balloons to $60 trillion if unfunded future liabilities in social security and other promises we have made to Americans are included.

Madame Speaker, I rise to introduce the Free Competition in Currency Act. This act would eliminate two sections of US Code that, although ostensibly intended to punish counterfeiters, have instead been used by the government to shut down private mints. As anti-counterfeiting measures, these sections are superfluous, as 18 USC 485, 490, and 491 already grant sufficient authority to punish counterfeiters.

The two sections this bill repeals, 18 USC 486 and 489, are so broadly written as to effectively restrict any form of private coinage from competing with the products of the United States Mint. Allowing such statutes to remain in force as a catch-all provision merely encourages prosecutorial abuse. One particular egregious recent example is that of the Liberty Dollar, in which federal agents seized millions of dollars worth of private currency held by a private mint on behalf of thousands of people across the country.

They have been making war on us for our entire lives. They have used our institutions to enslave us and our children; they are ruthless in their quest for profit. The time has come to fight back by walking away from their world into a future that is the true America.

Mr. Chairman, our economy finds itself in a precarious state. Oil prices are rising, gold is nearing all-time highs, and the dollar is nearing all-time lows. The root of this crisis, as with past financial and economic crises, results from federal government intervention into the economy, not to anything endemic to the market, nor to the the actions of market participants.

The collapse of the housing market has served as a catalyst for the economy's latest bust. For years the federal government has made it one of its prime aims to encourage homeownership among people who otherwise would not be able to afford homes. Various federal mortgage programs through the FHA, Fannie Mae, and Freddie Mac have distorted the normal workings of the housing market.

Washington, DC - Congressman Ron Paul, has signed on to co-sponsor legislation that will give immediate estate tax relief so Americans will not lose the family farm, home, or small business when they experience a death in the family.

Currently, the estate tax is in year 6 of a slow 9 year phase out culminating in 2010 when the estate tax will be completely repealed. If no action is taken, in 2011 the estate tax will reset to pre-tax cut levels, which will mean estates worth more than $1 million (or close to that amount) will again be taxed at a rate of 55%.