Ron Paul: Economics 101 Is Not Rocket Science!





by Ron Paul

Last week the Congressional Budget Office (CBO) issued its annual long-term budget outlook report, and the 2012 numbers are not promising. In fact, the CBO estimates that federal debt will rise to 70% of GDP by the end of the year– the highest percentage since World War II. The report also paints a stark picture of entitlement spending, as retiring Baby Boomers will cause government spending on health care, Social Security, and Medicare to explode as a percentage of GDP in coming years.

While the mainstream media correctly characterized the CBO report as highly pessimistic, they also ignored longstanding errors of methodology in CBO estimates. And those errors tend to support arguments for higher taxes and government spending, when in fact America needs exactly the opposite.

As Paul Roderick Gregory explained in a recent Forbes column, CBO has always applied wrongheaded assumptions inherent in Keynesian economics when forecasting future deficits – no matter how many times both history and economic theory have proven such assumptions incorrect. In particular, CBO seems wedded to two enduring Keynesian myths: First, that higher taxes necessarily increase federal revenue and have no negative effect on the economy; and second, that lower government spending hurts the economy. Neither is true, of course.

CBO also fails to factor in unexpected wars and expensive foreign entanglements, and we should not assign too much validity to predictive models based on peace. Judging from the actions and rhetoric coming from both parties in Washington, new military entanglements in Syria and Iran may well spike military spending in coming years.

Despite these sobering budget realities, the CBO report suggests that a solution is possible with merely a few minor adjustments in the way Congress handles economic issues. But what we need are not minor adjustments, but rather a fundamental shift in our philosophy of government. If we could come to our senses about the proper role of government in America, and what level of government interference is appropriate in a free economy, we would quickly find that there is no reason for government to spend so much, borrow so much, and tax so much.

If we simply allowed markets to work free of governmental or Federal Reserve interference, bad debt would be liquidated relatively quickly and malinvestment would be curtailed. Scaled-back regulations would encourage businesses to expand. Lower taxes would jump start investment and spur job creation.

This is not rocket science, it is Economics 101. All it would take is for government to get out of the way. There would be some short term pain, of course, but only by allowing the bubble to burst and bad debt to liquidate can we ever hope to begin building a real economy again.

The CBO report was alarming to most simply because they know neither party will take the steps necessary to avoid eventual fiscal calamity. Instead, despite their rhetoric, both parties want to maintain the fantasy that “deficits don’t matter.” But the CBO report, combined with what is happening in Greece and the European Union, should finally make the undeniable case that economic realities apply even to industrialized first world economies. We must take concrete steps today to avoid having America become the next Greece.



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153 Comments:

  1. Ron Paul is a boss!!!!

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  2. You don't really have any understanding Pal. In case you had not noticed. In every state Where Doc Paul campaigned. He WON. But was not given the win. RNC and our TRAITORSTREAM media types like Wolf Blitzer, were told to do whatever they had to do to make sure Ron Paul would not win. They did their jobs well. Who knows. Maybe we will soon see some FELONY charges filed against some of the more blatant ones. Rand Paul makes his own CHOICES..capishe?

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  3. RON YOU REALLY SCREWED US. JUST BECAUSE YOU DIDN'T ENDORSE ROMNEY PERSONALLY DOESN'T MEAN YOU DON'T ENDORSE HIM THROUGH YOUR SONS ACTIONS. YOU COULD HAVE COME OUT PUBLICLY AND BAD MOUTHED YOUR SON'S ACTIONS. INSTEAD YOU STAYED QUITE AND SHOWED YOUR TRUE ALLIANCE. NOW I CAN'T BELIEVE ANYTHING YOU SAY. YOU KILLED YOUR REPUTATION AND SUPPORT IN ONE DAY BY REMAINING QUITE.

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  4. All the way through this answer You are still talking about Rand Paul, so You did not get my point.
    But I understand that You are disappointed about Rand Paul.

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  5. Now you're just pulling stuff out of your ass.

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  6. Ask Rand Paul you stupid dumb bastard... Supporting Ron Paul doesn't mean you support Rand.

    I'm glad we are going through this reboot of movement Ron Paul helped start, just by being Ron Paul...

    See ya, we dont need wanna-be's like you who turn on a dime... Go be miserable somewhere else.

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  7. This isn't "biding your time and not showing your hand". This is bending over and not only endorsing everyone you claim to oppose, but hitting the campaign trail with them and shilling for them.

    Double think is believing two opposing ideas can both be true at the same time, and it's double think to believe that you can oppose the establishment by campaigning for it.

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  8. A heads up to Dr Paul supporters. Beware of those that lack claim patience and are prematurely ready to denounce Dr Paul. Saner, cooler heads know that this is a very long term fight that is bigger than any one man. Dr Paul has been fighting 40 years just to wake most of us up. We are at the beginning, not the end and not even the middle.

    And remember that most importantly are your local & state elections. You must control your state if you are to eventually affect D.C. in a meaningful way.
    -

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  9. A heads up to Dr Paul supporters. Beware of those that lack claim patience and are prematurely ready to denounce Dr Paul. Saner, cooler heads know that this is a very long term fight that is bigger than any one man. Dr Paul has been fighting 40 years just to wake most of us up. We are at the beginning, not the end and not even the middle.

    And remember that most importantly are your local/state elections. You must control your state if you are to eventually affect D.C. in a meaningful way.
    -

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  10. Video unavailable

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  11. Supporting a self defeating campaign that sticks a knife in it's supporters backs IS FEEDING THE ESTABLISHMENT.

    Why did Rand Paul need to endorse Romney? Why did he need to say he's going to hit the campaign trail and shill for the establishments puppet? Why does Rand Paul think he as all this "political capital" that he can steer into the establishments lap?

    Supporting Rand and Ron Paul IS SUPPORTING the establishment.

    Don't trust me, listen to Rand Paul himself.

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  12. You simply fail to understand that we are the underdogs. When you're a underdog, you are wise to bide your time and not show your hand before it is time...
    -

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  13. well, I guess that kinda made you look silly then. but look, we;re all angry about that. I fought in conventions too, and what do I get? this really confusing and frustrating blip. I think it's time for Ron Paul to say something publicly to set us all straight. It seems like we should still try to win the state conventions for him because Paul is the best candidate.

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  14. what is right is not widely accepted, what is right requires popularity.

    dosn't it make you feel odd having such an opinion of someone else's life?

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  15. I'm done listening to Ron Paul.

    I listened to him explain why he skipped out on Iowa. I listened to his staffers tell delegates to not wear any buttons, to hide who you support, to act like an establishment Republican, to blend in with the Romney supporters, to stay silent and if you felt like you had to speak keep it to Ron Paul talking points.

    I listened while he told us to be respectful when GOP played every dirty trick they could and assaulted his supporters.

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  16. Actually Jesus is my LORD and GOD and SAVIOR. I was talking about the people in the republican establishment he's trying to convince to go his way

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  17. When was that? It hasn't been after this incident.

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  18. not sure if you have ever heard of independence. its thing thing where one person dosn't control the actions of another regardless of there relation. i require no explanation from Ron about Rand's decision to support Romney. quit trying to stir up drama. jerk.

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  19. really?, did he post a negative comment on a helpful/informative video?

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  20. Rocket Science is easy, this is just common knowledge, Thanks for keeping us updated!
    Ron Paul Logically Analyzing big issue's so you don't have to.

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