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I don't mean this to be political, but when Ron Paul was firing every revolver in Ben Bernanke's direction, there were a lot of people cheering down here, with regard to the only tools the Fed ever seems to use, are the easing tools. And on the inflation front, many traders were reading the subtitles and they went back and checked, with respect to the weaker dollar, it affects import prices but not domestic prices, that's kind of an inconsistency [...] I just think you don't understand the way traders think. Traders don't care about your analysis. They care about making money. And they obviously realize that the only thing the Fed has ever done to solve these problems is to ease, and they're making money. But if you ask these people, do you think you really gonna see a rate cut in December, half the people I talk to say by time we get into December, headline inflation would probably make it so the Fed can't ease.
--
Rick Santelli, November 8, 2007

 

Ron Paul

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Question: If you could pick one cause that has gotten us here, what'd you say it is?
Ron Paul: Easy money. The Federal Reserve artificially lowering interest rates, deceiving the people, the investors, the savers, into believing that there's a lot of savings out there, and that we should invest more, build more houses, more cars. It's the malinvestment, which is every bit as dangerous, from the inflation of the money supply, as is the high prices that usually come.

 

Ron Paul

 

Question: You wanna gut that safety net...
Ron Paul: But the safety net doesn't work.
Question: Tell me why it doesn't work.
Ron Paul: It does work for some people, but overall it ultimately fails, because you spend more money than you have, and then you borrow to the hilt. Now we have to borrow $800 billion a year just to keep the safety net going. It's going to collapse when the dollar collapses, you can't even fight the war without this borrowing. And when the dollar collapses, you can't take care of the elderly of today. They're losing ground. Their cost of living is going up about 10%, even though the government denies it, we give them a 2% cost of living increase.
Question: So do you think the gold standard would fix that?
Ron Paul: The gold standard would keep you from printing money and destroying the middle class. Every country where you have runaway inflation, there's no middle class. Mexico, there's no middle class, you have a huge poor class, and a lot of wealthy people. Today we have a growing poor class, and we have more billionaires than ever before. So we're moving into third world status...
Question: Who is the safety net that you're speaking of, who does benefit from all those programs and all those agencies?
Ron Paul: Everybody on a short term benefits for a time. If you build a tenement house by the government, for about 15 or 20 years somebody might live there, but you don't measure who paid for it: somebody lost their job down the road, somebody had inflation, somebody else suffered. But then the tenement house falls down after about 20 years because it's not privately owned, so everybody eventually suffers. But the immediate victims aren't identifiable, because you don't know who lost the job, and who had the inflation, the victims are invisible. The few people who benefit, who get some help from government, everyone sees, "oh! look what we did!", but they never say instead of what, what did we lose. And unless you ask that question, we'll go into bankruptcy, we're in the early stages of it, the dollar is going down, our standard of living is going down, and we're hurting the very people that so many people wanna help, especially the liberals...

 

Ron Paul

 

The big, looming, monetary issue is "quantitative easing": that is, printing money. What happens is that the government borrows from the Bank of England, not from the markets. It expands the money supply to keep the economy going and also to counter deflation without simultaneously increasing government debt. The attractions are obvious, as are the dangers. The Robert Mugabe school of economics provides a salutary warning about uncontrolled monetary expansion in generating hyper-inflation. The road to Harare is not as long as we might hope. Monetary easing may prove to be necessary but will have to be managed with great skill and care: Too little easing and the crisis drags on – as in Japan. If there is too much, the authorities face the messy task of mopping-up liquidity by issuing bonds which add to the burden of borrowing or else we lurch back from deflation to inflation. So interest rates may soon become yesterday's story.

 

Vince Cable

 

There is a saying that bad traders divorce their spouse sooner than abandon their positions. Loyalty to ideas is not a good thing for traders, scientists - or anyone.

 

Nassim Nicholas Taleb

 

Question: As a doctor, is it meaningful to you when somebody say that healthcare is a right, or that people have a right to good medical care?
Ron Paul: That's incorrect, because you don't have a right to the fruits of somebody else's labor. You don't have a right to a house, you don't have a right to a job, you don't have a right to medical care. You have a right to your life, you have your right to your liberty, you have a right to keep what your earn. And that's what produces prosperity. So you want equal justice. And this is not hard for me to argue, because if you really are compassionate and you care about people, the freer the society the more prosperous it is, and more likely that you are going to have medical care... When you turn it over to central economic planning, they're bound to make mistake. The bureaucrats and the special interests and the Halliburtons are gonna make the money. Whether it's war, or Katrina, these noncompetitive contracts, the bureaucrats make a lot of money and you end up with inefficiency.

 

Ron Paul