Ron Paul: America Is Hurting While the Fed’s Cronies Enjoy Full Employment and Jackpot Bonuses

by Ron Paul

Unemployment continues to plague our economy. In spite of constant claims that we have just turned the corner into recovery, the jobs report remains grim with no real signs of improvement. While Keynesian economists and big government apologists scratch their heads about persistent unemployment in spite of unprecedented government so-called “investment” in the economy, free-market economists understand the problem perfectly well. In short, they understand that we are looking to the Federal Reserve to solve an unemployment crisis that the Fed itself largely created.

For example, the Fed is supposed to maintain full employment as half of its dual mandate. But the Fed simply has the wrong tools to do this. In fact, its credit expansion and manipulation of interest rates cause harm when they are applied to “help the economy.” As we saw with the housing boom and bust, Fed-created inflation cannot be sustained without harmful consequences. The Fed’s artificial boom led to the unemployment we’re suffering today.

The Fed is not a small business or a manufacturer that creates value or increases productivity to sustain real job growth. It literally destroys value by printing more money and distributing it through sweetheart deals to well-connected banks and corporations, including foreign banks. The only success the Fed has had in maintaining full employment has been on Wall Street, where it props up crony banks and investment houses to protect them from going bankrupt as they should. Instead they survive to malinvest another day while their executives enjoy jackpot bonuses.

The Fed also pumped up employment in the housing industry with artificially low interest rates that created an unsustainable demand for housing. Millions jumped into the sector when the money was loose and the bubble inflated. Besides the many who bought houses they could not afford and now face foreclosure, there were also those who became employed in housing-related fields. These people invested time and money in training and spent years establishing careers in real estate, mortgage lending, construction and contracting. Careers that all vanished into thin air with the burst of the bubble. Now they face considerable disruption in their lives as they struggle with unemployment, underemployment, and decisions about retraining for different careers. This amounts to a tremendous amount of unnecessary waste that would not have occurred had the housing industry be allowed to develop naturally according to market demands.

Jobs are properly created by entrepreneurs who are willing to work hard and take calculated risks. Jobs are also created through real increases in productivity, resulting from real investment profits or conservative borrowing at market interest rates. But the Fed has made those risks impossible to calculate and made borrowing money artificially cheap. As a result, economic growth has been chilled while unemployment skyrockets.

Until those in power understand the harm they do with central economic planning, we will continue to slide backwards and lose jobs. The Fed needs to stay out of the job-creating business altogether, and the federal government needs to focus on its constitutional duties. Just when we need government to back off, we hear about more government intervention in the economy in the form of “more spending”, only they call it “investment”. It is more properly called “malinvestment”, and the resources that are funnelled into industries by government policies will only hurt employment more in the long run.


  • ron pauls gold standard is theft if anything!

  • slapcompany

    Success for Managers means: I want to be in healthy relationships. I want a real connection with people I spend so much time with.

  • flagator0012

    Anyone who thinks that a lack of regulation caused the housing crisis is either being ignorant or fooled by our congress. What made all those bankers give out bad loans? Have any of you pro regulation looms thought of that? Banks don’t make that kind of error all at once… Unless their incentives are perversed by a government. You simply cannot tell banks that Fannie and Freddie must buy their bad loans and expect the banks to continue to deny bad loans… It’s just a beautiful cycle for power

  • MadebyUSdotcom

    Ron Paul is right.
    Ron Paul 2012
    Have the courage to support him – speak your mind.

  • mzedong001

    If Ron Paul was really not a government apologist, he´d be pro – revolution.

  • deficithawker

    Ron Paul does not understand Austrian economics. Here is a director quote from Hayek that appeared in a letter to a London newspaper in 1932:

    “No one thinks that deflation is in itself desirable.”

    Ron Paul has said many times that deflation is in itself desirable. He said exactly that in the first hearing he held as Chairman of the House Financial Services Committee.

    Google this phrase: “No one thinks that deflation is in itself desirable.” +hayek

  • zombiefitnezz

    Too bad Ron Paul does not understand how the housing bubble inflated. Low interest rates were obviously a factor but the US also had a trade deficit of 5% of GDP which meant billions flowing in from overseas. Thanks to lax regulation Wall Street pumped that money into the housing sector via liar loans which they could bundle up, get rated AAA and sell to suckers. The countries with housing bubbles (UK, Spain, US, etc) all had large capital account surpluses and lax regulation.

  • When will it be over (Obama said he would end the wars, instead he escalates and some how calls having 60,000 troops in Iraq the end of the war)? Why are we fighting it? What does victory even look like? Why have we been in a state of perpetual war since WWII? Ever read 1984? It’s all BS and control… and the american people/media don’t even care! Nor do they ever make the connection between are economic peril and the multiple “wars” we are always fighting

  • but you have no experience in dealing with the regulations. Sure, they look great on paper! Keep us safe, protect us! But implementation is a pain! I wanted to open my restaurant in Down Town Royal Oak, but it would have taken me over a year to become compliant with every regulation! But who can open it quickly? Those with political connections and deep pockets!

    And being clean is such a small part of health inspection. You should see what I get knit-picked over!

  • Because as with Seatbelt and Speed limit laws, the Feds do not have the power to make them, but they can hold funding ransom to the states unless they do pass the laws. So it’s BS.

    And again, I’m not making shit up. Google it, their are studies that show fatality rates rise. But politicians don’t really care about facts/studies.. another big reason to support them having less power.

  • When I went through Food Safety in college, at absolutely no point did “LAWS” come in to play. It was about whats the best/safest/smartest practice. Laws are too slow. And they are made without examining the consequences.

    Restaurants are only inspected twice a year. That does not make sure everyone always washes their hands.

    And go watch Ramsays Kitchen Nightmares, and see how “Clean” some of your “A” rated restaurants are.

  • but with free market competition, unless the Insurance companies were illegally price fixing, one company would offer a better deal, better pricing, better service and consumers could use them!

    Law doesn’t make my employees wash their hands, I do and would do so whether or not I was health inspected.

  • Price ceilings are caps on what they can charge!

    And here, again I sort of agree. With healthcare, it needs to be all or nothing. Either completely socialize it or complete free market (i prefer free market, but would accept Socialized over this BS).. but instead we are left with more of the same Crony-Capitalism that benefits no one except politicians and insurance companies.

  • Who regulates the value of money? The Federal reserve… and independent cartel of bankers with no regulation from congress. Ever notice how the value of money ALWAYS goes down?

    And when was the last time we declared War? WWII. It’s such BS

    And what if my pursuit of happiness came from drug use and I harmed no one else through it? And who exactly is the enemy in the “war on drugs”? The millions of Non-violent offenders locked behind bars?

  • No, I expect my local school board to make sure students are being educated properly! And if they do a poor job, people leave the area for one with “better schools”. If they do well, more people move to that city and funding rises. And if it becomes known that a certain area produces quality students, companies will move there and create jobs because they know there is a quality workforce available! Then other districts can take notice of what works and adopt it!

  • No, I expect my local school board to make sure students are being educated properly! And if they do a poor job, people leave the area for one with “better schools”. If they do well, more people move to that city and funding rises. And if it becomes known that a certain area produces quality students, companies will move there and create jobs because they know there is a quality workforce available! Then other districts can take notice of what works and adopt it!