Crazy Libertarians, What Do They Know About Economics?

[hblask 1]

Congressman Ron Paul U.S. House of Representatives July 16, 2002 Mr. Speaker, I rise to introduce the Free Housing Market Enhancement Act. This legislation restores a free market in housing by repealing special privileges for housing-related government sponsored enterprises (GSEs). These entities are the Federal National Mortgage Association (Fannie), the Federal Home Loan Mortgage Corporation (Freddie), and the National Home Loan Bank Board (HLBB). According to the Congressional Budget Office, the housing-related GSEs received $13.6 billion worth of indirect federal subsidies in fiscal year 2000 alone. One of the major government privileges granted these GSEs is a line of credit to the United States Treasury. According to some estimates, the line of credit may be worth over $2 billion. This explicit promise by the Treasury to bail out these GSEs in times of economic difficulty helps them attract investors who are willing to settle for lower yields than they would demand in the absence of the subsidy. Thus, the line of credit distorts the allocation of capital. More importantly, the line of credit is a promise on behalf of the government to engage in a massive unconstitutional and immoral income transfer from working Americans to holders of GSE debt. The Free Housing Market Enhancement Act also repeals the explicit grant of legal authority given to the Federal Reserve to purchase the debt of housing-related GSEs. GSEs are the only institutions besides the United States Treasury granted explicit statutory authority to monetize their debt through the Federal Reserve. This provision gives the GSEs a source of liquidity unavailable to their competitors. Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans. However, despite the long-term damage to the economy inflicted by the government’s interference in the housing market, the government’s policies of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing. Perhaps the Federal Reserve can stave off the day of reckoning by purchasing GSE debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary but painful market corrections will only deepen the inevitable fall. The more people invested in the market, the greater the effects across the economy when the bubble bursts. No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Mr. Speaker, it is time for Congress to act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors misled by foolish government interference in the market. I therefore hope my colleagues will stand up for American taxpayers and investors by cosponsoring the Free Housing Market Enhancement Act.

[LongLiveYorke 38]

So how'd that all turn out?

[KONGOS 0]

The only man to speak any truth this election. The 2 we have left are embarrassing.

[Balloon guy 158]

I liked what someone else said:Why is it that the only person who shows any real sense....is insane?

[Mercury69 3]

In a Free Market economy, does the power not rest with those who already HAVE the $$$?

[Balloon guy 158]

In a Free Market economy, does the power not rest with those who already HAVE the $$$?

Yes...Yes it does

[hblask 1]

In a Free Market economy, does the power not rest with those who already HAVE the $$$?

I'm not sure what you are referring to. The article discussed the problems that would be created by the lack of a free market economy, and those predictions, from 2002, have come true.

[CaneBrain 95]

In a Free Market economy, does the power not rest with those who already HAVE the $$$?

um, duh. hence, the liberals problem with a free market economy. they argue it helps the rich get richer and the poor stay poorer.of course, the rich will tell you that everything trickles down. since wealth keeps getting more and more concentrated at the tippie top it is safe to say that the trickle is from the rich urinating on the poor (and laughing about it on the way to their yacht).Ron Paul has some good ideas but he is also a crazy person who wants to start over from scratch. A complicated guy.

[Balloon guy 158]

um, duh. hence, the liberals problem with a free market economy. they argue it helps the rich get richer and the poor stay poorer.of course, the rich will tell you that everything trickles down. since wealth keeps getting more and more concentrated at the tippie top it is safe to say that the trickle is from the rich urinating on the poor (and laughing about it on the way to their yacht).Ron Paul has some good ideas but he is also a crazy person who wants to start over from scratch. A complicated guy.

Than we should tax their stuff.You know what, let's make a new tax but just on really expensive things like yachts!We can even call it a yacht tax!That should even things out.

[hblask 1]

Than we should tax their stuff. You know what, let's make a new tax but just on really expensive things like yachts! We can even call it a yacht tax!That should even things out.

I suspect that many of the people who read this are too young to get the reference.

[Balloon guy 158]

I suspect that many of the people who read this are too young to get the reference.

[hblask 1]

Why is that guy's crotch glowing?

[copernicus 0]

Why is that guy's crotch glowing?

He just had radiation therapy for testicular cancer.

[Balloon guy 158]

Why is that guy's crotch glowing?

That's how it looks when I'm fishingI love fishing

[nutzbuster 7]

laughing about it on the way to their yacht.

Pretty much describes everyone on Capitol Hill, yes?

[CaneBrain 95]

Pretty much describes everyone on Capitol Hill, yes?

especially then ones who were smart enough to marry beer or ketchup heiresses.

[Sal Paradise 57]

I liked what someone else said:Why is it that the only person who shows any real sense....is insane?

or is he so sane that he just BLEW YOUR MIND??

[Kenny Banya 0]

Yes Ron Paul is insane...yet John McCain ins't..."The fundamentals of the economy are still strong"HAHAHAHA!What is one policy of RPs that is insane?

[Sam Donaldson 0]

Ron Paul

[TrulyRaNd0m 0]

The fundamentals of the economy ARE still strong. We still have a growing GDP, we still have a relatively low inflation rate (for the time being)... Now our trade deficit has even been reduced!Even Barney Frank said the fundamentals are still strong. And he's a Dem.- TR

[Kenny Banya 0]

The fundamentals of the economy ARE still strong. We still have a growing GDP, we still have a relatively low inflation rate (for the time being)... Now our trade deficit has even been reduced!Even Barney Frank said the fundamentals are still strong. And he's a Dem.- TR

Silly parrot. If the fundamentals were strong none of this would be happening. Look what is happening because the fundamentals are weak! Tell me oh wise one, what fundamental is strong right now.I told everyone back in February that this was a failed economy. Balloon guy and Loismustdie just laughed at me. They were wrong.And what are you talking about? Inflation is at 5.37%. Not low. Very high! And growing GDP? LOL. If you want to still think you aren't in a recession, fine, I'll make out big time on your ignorance!The worse isn't even over folks.

[Loismustdie 0]

Silly parrot. If the fundamentals were strong none of this would be happening. Look what is happening because the fundamentals are weak! Tell me oh wise one, what fundamental is strong right now.I told everyone back in February that this was a failed economy. Balloon guy and Loismustdie just laughed at me. They were wrong.And what are you talking about? Inflation is at 5.37%. Not low. Very high! And growing GDP? LOL. If you want to still think you aren't in a recession, fine, I'll make out big time on your ignorance!The worse isn't even over folks.

Don't make the mistake of equating volatile bearish markets with failing economy. Interestingly enough, since february, still growing. Slowly, but growing. BG and LMD? Still not wrong. Time will tell. Last I checked unemploymt was still at a manageable 6%, with the holiday season coming up. Don't worry, Kenny, I am confident there will be some ups and downs and you will poke your head around during the most obvious times but for the most part you till hide while things are good because like most you're clueless. No disrespect.

[FCP Bob 1,312]

Don't make the mistake of equating volatile bearish markets with failing economy. Interestingly enough, since february, still growing. Slowly, but growing. BG and LMD? Still not wrong. Time will tell. Last I checked unemploymt was still at a manageable 6%, with the holiday season coming up. Don't worry, Kenny, I am confident there will be some ups and downs and you will poke your head around during the most obvious times but for the most part you till hide while things are good because like most you're clueless. No disrespect.

http://www.thestar.com/article/499746I posted this in another thread but what's your answer to the issues in this article Frank. What's the solution to the Fiscal timebomb that the US is facing ?

[Loismustdie 0]

http://www.thestar.com/article/499746I posted this in another thread but what's your answer to the issues in this article Frank. What's the solution to the Fiscal timebomb that the US is facing ?

Alot of issues in there, but something I hope to see in the not so distant future is a move towards the reduction of spending via. streamlining businesses, and when I say business I mean whatever the government has its hands in. For example, education is one area where for whatever reason public venues just can't seem to balance budgets whilst privates/charters do a better job with less. Find out what works/doesn't work, duplicate/eradicate as needed. Same with Medicaid issues. The fraud that talkes place with that program is astounding. In my mind, it can't be government. It has to be independent of government in terms of who you hire to identify potential fixes. There are people whos very job is coming into companies, finding what the B.S. is and helping to eliminate that. They are contracted in, they work a spell, and they are done. They have no skin in the game except for the fact that they are payed to make whatever entity it is more efficient. Personally I don't think either candidate will do enough/is planning to do enough to pull this off, and raising taxes isnt the answer because it stunts growth. I don't think any one think anyone thing is really the answer but if I had to come up with a formula I would say this: #1 Reduce spending via. efficiency #2 Corporate tax cuts and ladder it- the more jobs you create, the more money you won't have to pay the Government. #3 Tax cuts to increase citizens purchasing power, which stimulates the economy for obvious reasons. #4 Amnesty. I will take fire here but it will increase tax revenue just by virtue of a certain portion will actually pay taxes to a certain extent. Also, it gives a certain level of people some real skin in the game. # A complete retooling of the healthcare system by virtue of opening up avenues currently closed. It's ridiculous that I can get the same or better level of care just by walking across a border to Mexico for way less than I pay here. I believe that Helathcare is like any other commodity,give a company a chance and they will find a way to get it done. Done correctly you would have clinics in Wal-Mart within a year, good care for a good price. That's just a few things off the top of my head. The pipe dream for me is a flat tax on goods and services that encourages saving,I.E., start at a certain percentage and work our way down to a more realistc one. One, it would encourage savings and it would also encourage corporations to more seriously consider price structures. There would have to be a balance, though. I got all kinds of ideas, man.

[hblask 1]

The pipe dream for me is a flat tax on goods and services that encourages saving,I.E., start at a certain percentage and work our way down to a more realistc one.

Excellent post, this part I left in is especially important. Lobbyists will leave when they have nothing to lobby for. The current tax code practically *begs* lobbyists to come to Washington and exchange cash for favors.A while ago I posted a thread about another tax idea -- a land tax. Not a property tax -- it shouldn't be the govt's business what you do with your land. Benefits: you're taxed based on what land you own, and since a primary role of the govt is enforcing ownership, taxes paid will tend to match services you got. The rich pay more, the poor pay less. No intrusive tax forms -- you just get a bill twice or 4 times a year, with an amount based on values that are already known. Visible -- there's no hiding the number on the bill. You see and feel your taxes, unlike the "bleed slowly" plan we have now where people just forget how much they pay, and think getting $100 back at the end of the year is a good thing.Drawbacks: we can't get there from here until federal taxes are a much, much smaller fraction of our incomes, because of the economic turmoil.I have yet to see anyone come up with any real objections to this except for the drawback above. Most people seem to think it's fair and reasonable.