More of the Same Policy Is Creating More of the Same Problems (Video)

In his most recent Liberty Report, Ron Paul declared that the economic calamity anticipated by many free market advocates is now at hand.

Paul focused in on the obsession people like Paul Krugman have with deflation, pointing out that it isn’t the problem; it is merely the symptom of an economy trying to correct itself. Unfortunately, the Federal Reserve and government central planners seem intent on continuing the very policies that created the underlying problems in the first place:

Concentrating only on deflation and ignoring the unlawful, dangerous powers of the Fed to inflate and regulate will always result in a steady weakening of the economy – the economy which today is facing total collapse. Deflationary pressures do exist. Some debt and malinvestements are being liquidated. But the correction is constantly impeded by the Federal Reserve’s monetary policy and congressional spending.”

Highlights from the video:

“The economic calamity anticipated by free market advocates is now at hand…Paul Krugman champions a solution of increasing government and consumer spending, ignoring debt as a problem, and continuing the Federal Reserve’s unrelenting inflation of the money supply with zero interest rates. Concern for any consequence that might arise from continuing this policy is nowhere to be found.”

“Continuing and accelerating the policies that gave us this worldwide crisis can’t possibly be the solution.”

“Deflationary forces are indeed a major problem. They are, however, more a symptom than the cause. Deflation is a market reaction to an inflationary monetary policy out of control. Seeing deflation as the entire problem will not help in finding a solution to the shrinking economy and the loss of real wealth over the last 15 years.”

“Markets demand a correction when excesses result from massive monetary inflation and zero interest rates. An economy overburdened by debt, overcapacity, malinvestment, and a government overly involved in all economic activities cannot thrive.”

“A problem of this sort would not exist without a Federal Reserve that accommodates the political demands of operating a welfare-warfare state.”

“It makes no sense to obsess over deflation. Deflation is a consequence of earlier inflation and as such is actually a market solution to problems caused by the excesses of Federal Reserve policy.”

“Concentrating only on deflation and ignoring the unlawful, dangerous powers of the Fed to inflate and regulate will always result in a steady weakening of the economy – the economy which today is facing total collapse. Deflationary pressures do exist. Some debt and malinvestements are being liquidated. But the correction is constantly impeded by the Federal Reserve’s monetary policy and congressional spending.”

“Still, the inexorable growth of the monetary base and the artificially low interest rates continue. As this is not going to change, expect our problems to be with us for a long time to come. The monetary excesses so far have mostly found their way into the financial markets – stocks, bonds, government debt, government education, and medical care. In all of these areas, we have excessive price increases. Central banks can create credit out of thin air, but they have no control over where it ultimately ends up. The high cost of living is devastating to retirees and the middle class. We should expect this to get worse.”

“When we hear that the only economic problem we have to deal with is deflation, and that if the Fed could only get prices to rise at a 2% rate all would be well, we should dismiss such foolishness. When the argument is always for more inflation, question it!”

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