Liberty Forged

the State has no money of its own, so it has no power of its own. ` Nock

National Taxpayer’s Union on Spending

Posted by Jesse on February 6, 2008

When you have financial obligations that need to be taken care of what do you do?
You economize and pay down your debt, right? Which presidential candidate will do that?

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Nicholas von Hoffman has a few words about Ron Paul, the economy, and our current monetary policies.

“He is the only candidate who brings up what is happening to our money, which is another way of saying that he is worried about why the cost of buying groceries is going through the roof. While the other presidential contenders are silent on the topic, Paul reminds us that “government officials consistently claimed that inflation is in check at barely 2 percent, but middle-class Americans know that their purchasing power–especially when it comes to housing, energy, medical care, and school tuition–is shrinking much faster than 2 percent each year.”

Paul is the contender who seems to understand that the Federal Reserve Board is not the Vatican and that its chairman, Ben Bernanke, is not the pope. It’s a fixed practice by our politicians to treat whoever is the chairman of the Fed as though he were endowed with infallible powers.

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On Wall Street, the sharper ones know better. They understand that lowering interest rates every time the stock market swoons will eventually, or even a lot sooner, bring a world of pain down on us. As it is, thanks to the Fed, interest rates are lower than the rate of inflation. This anomalous condition is called “negative interest,” and for savers it means that their money is disappearing even as it rests safely tucked away in certificates of deposit.

For people who understand that their money is evaporating in front of their eyes there is a mighty incentive to rush out to the mall while that money is still worth something. For the moment a stampede to the stores by inflation-spooked people may please the economic pooh-bahs because current theory has it that people will buy lots of stuff, which in turn will create lots of jobs. But after they’ve spent their retirement money, then what?

Then people can spend their economic stimulus money. Left undiscussed is how the government is going to get the money it plans to hand out to anybody who has a pulse. Maybe Uncle Sam can borrow it from the Chinese or the Arabs–although both groups are losing enthusiasm for making loans to be paid back in ever-shrinking dollars.”

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