by Ron Paul
French businessman and economist Jean-Baptiste Say is credited with identifying the fundamental economic principle that aggregate demand for goods in an economy will equal the aggregate supply of goods when markets are permitted to operate. Or in Say’s words, “products are paid for with products.”
English classical economist David Ricardo, among others, more fully developed this principle into what has become known as “Say’s Law.” Say’s Law, according to Ricardo, leads us to understand that market equilibrium for goods is constant. This simply means that markets, when left alone by government planners or other fraudulent actors, inexorably tend toward an “equilibrium price” which eventually balances supply and demand for any particular good. Thus markets will clear themselves of any surpluses or shortages in the form of excess supply and demand.
This important corollary of Say’s Law– that markets clear– is critical to understanding the moribund US housing market. In housing, perhaps more than any other good, we see the terrible consequences of government and central bank interference with market forces.
First, the Federal Reserve Bank relentlessly increased the money supply over the last few decades. Much of this newly created money and credit flowed from Fed member banks into the residential and commercial real estate markets, causing prices to rise dramatically prior to the housing bust of 2007.
At the same time, the Fed systematically suppressed interest rates for decades. This led to tremendous malinvestment both by homebuilders and individuals, and encouraged a seedy subprime mortgage industry to make nonviable loans that would not make economic sense under market interest rates.
Congressional meddling in the mortgage market also added tremendously to the problem. Inane legislation like The Community Reinvestment Act literally forced banks to make thousands of loans to bad credit risks. Similarly, Fannie Mae and Freddie Mac put taxpayers on the hook for millions of mortgages that never would meet market underwriting criteria. And of course the real estate and homebuilder lobbies made sure mortgage interest debt (unlike most personal debt) remains tax-deductible.
The ultimate result of these interventions by our caring friends in Congress and the Fed has been the biggest housing bubble and crash in US history, leaving millions of Americans underwater on their mortgages if they have not already lost their houses altogether. Congress and the Fed are directly responsible for millions of shattered lives, and almost unknowable economic damage in the form of trillions of dollars in mortgage backed securities.
The only solution to this mess is to allow the US housing market to clear. All of the bad mortgage debt must be liquidated, whether via foreclosure or bankruptcy. Banks holding substantial mortgages or mortgage backed assets must face the music and adjust their balance sheets to reflect today’s reality. Undoubtedly this will force many banks into immediate insolvency, but such banks must be allowed to fail without receiving another nickel of taxpayer money. Banks took the risks and made money during the bubble years; those who exercised bad judgment must now accept the consequences of their actions.
Never in American history have we needed to adopt a policy of laissez faire more desperately; never has government seemed more determined to artificially prop up an industry. But only by allowing the housing market to clear can we hope to rebuild our shattered economy from a stable foundation. Clearly there will be pain in the short term, but we owe it to younger Americans and future generations to allow the reemergence of a rational housing market.
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America did not bail out Euro banks. I invest in bank stocks, I know…
Even some of the US banks who did not want or need a bailout were forced to take one along with all the baggage that came along with it (i.e. JPMorgan).
Yes, if America goes down a lot of the world will go down with it. West Europe certain will. China will take a hit. Saudi Arabia and other oil exporting countries will be hurting.
The world is in for some rough times. My guess is it’ll take 40 years to fix this
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America did not bail out Euro banks. I invest in bank stocks, I know…
Even some of the US banks who did not want or need a bailout were forced to take one along with all the baggage that came along with it (i.e. JPMorgan).
Yes, if America goes down a lot of the world will go down with it. West Europe certain will. China will take a hit. Saudi Arabia and other oil exporting countries will be hurting.
The world is in for some rough times. My guess is it’ll take 40 years to fix this
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America also bails out Euro banks. America has entrenched itself in the world economy extensively for a reason. The DOLLAR Standard is because of America. “If America goes down, it’s gonna try and take a lot of other countries with it.” Qaddafi knew this that’s why he was backing away from the dollar, and what happened to him? Hussein knew this too. What happened to him? Just because you run out of money, doesn’t mean you stop fighting wars… you just have nothing to lose.
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I have a feeling you will find out soon enough. I left America over a decade ago. I was always proud of my US citizenship. After Nov 6th I feel like getting czech citizenship. I pay 15% income tax here. Life is good, people are friendly, the economy is growing…..
The US is done for. It’s on the path for a 1-2 generation long socialist experiement and it will come crashing down hard. I don’t wanna be there when that happens.
East Europe is the place to be.
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Only one of the things you mentioned rightfully (and constitutionally) belongs in Federal hands: Defense. Interestingly, in view of our ongoing open-border policy, it’s also the only one the Federal gubmint refuses to do. How much more corrupt and treasonous can this gubmint get?
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Actually I agree that taxing income is actually ethically wrong. Because it punishes a vrtue. There should be a consumption tax.
And while I agree that no taxes would be a good system, there are things you want in public hands: defense, health and safety inspection, and to a degree infrastructure and education and yes, welfare for those who absolutely can’t help themselves (like the disabled)
But these things make up only a fraction of the federal budget.
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Actually I agree that taxing income is actually ethically wrong. Because it punishes a vrtue. There should be a consumption tax.
And while I agree that no taxes would be a good system, there are things you want in public hands: defense, health and safety inspection, and to a degree infrastructure and education and yes, welfare for those who absolutely can’t help themselves (like the disabled)
But these things make up only a fraction of the federal budget.
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I respectfully disagree. NO taxes is “the best system around.” The most prosperous periods in American history are marked by two things: The absence of a central bank, and the absence of income taxes.
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Flat taxes work well in East Europe. It’s the best system around.
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Woot, woot! Jill Stein fan here!
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He’s a troll on any Ron Paul video. Check his channel and and get used to seeing him for a while unless we start flagging his posts for spam. I wouldn’t respond to him and that word ‘wRONg’ you will see every time you see him.
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He’s a troll on any Ron Paul video. Check his channel and and get used to seeing him for a while unless we start flagging his posts for spam. I wouldn’t respond to him and that word ‘wRONg’ you will see every time you see him.
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go ron pual last chance at saving usa and the for fathers the older families who built usa
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Those supporting Gary Johnson need to realize the insanity of his oppressive Flat Tax, oxymoronically called a “fair” tax. Nothing “fair” about it. Wake up, Gary!
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id vote for johnson 2012 ron paul is not running
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I am very shock that you drop for the president Race.
I put your sign on my car for long time….and your name fade
away…I just shocked that you are endorcing to Gary Johnson?
NOT OBAMA I understand. Not Romney…
I am just shock ….I don’t know what to say or what kind of feeling
I am having….just disappointed.
I was looking forward to you….Sorry that you step out from this Presidential
Race. Your son will be the next??? or who? can be….
I miss you….tak care….Mike
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Unless you VOTE for Gary Johnson — we won’t have an Election, but puppet Selection!
You want a prediction — here is an APODICTIC one:
The American People LOOSE, regardless which one of these two puppets (Barack Hussein or Mormon Mitt) gets “elected”!
(PLEASE, SPREAD THIS — THERE IS TIME LEFT TO INFLUENCE THE UNDECIDED!)
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Mitt Romney and Bain Capital —Greed and Debt: The True Story.
Read more: http://www.rollingstone.com/politics/news/greed-and-debt-the-true-story-of-mitt-romney-and-bain-capital-20120829#ixzz2BJeMMV2I
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Just Say NO to Rmoney — VOTE for ANYONE but Mormon Mitt!
The Mormons stripped the richest man in the world, Howard Hughes, not only of his life, but his entire fortune (that is how the Mormons got financial power to jump start their cult)!
Now another Mormon wants to do the same to our entire Nation!
And his 5 Mormon Sons are waiting in line to finish US off!
*Vote FOR Gary Johnson* — Do NOT vote for Mormon Mitt (or Barack Hussein) the lesser of two evils!
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Amazing that the people have been bamboozled into thinking that either Barack or Mitt are a solution — when both are AGAINST these principles upon which our Nation was built!
PRINCIPLES we must stand by!
“A government big enough to give you everything you need, is a government big enough to take away everything that you have….” Thomas Jefferson
“They who would give up an essential liberty for temporary security, deserve neither liberty or security” BENJAMIN FRANKLIN
“When liberty is taken away by force it can be restored by force. When it is relinquished voluntarily by default it can never be recovered.” DOROTHY THOMPSON
“Before a standing army can rule, the people must be disarmed; as they are in almost every kingdom in Europe. The supreme power in America cannot enforce unjust laws by the sword; because the whole body of the people are armed, and constitute a force superior to any band of regular troops that can be, on any pretence, raised in the United States. A military force, at the command of Congress, can execute no laws, but such as the people perceive to be just and constitutional; for they will possess the power, and jealousy will instantly inspire the inclination, to resist the execution of a law which appears to them unjust and oppressive.” —Noah Webster, An Examination of the Leading Principles of the Federal Constitution (Philadelphia 1787).
“All that is necessary for the triumph of evil is that good men do nothing” EDMUND BURKE
“America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.” ABRAHAM LINCOLN
—————————————————————————–
Voting for either anti-American — Barack the Kenyan or Mitt the Mexican Mormon — would only be legitimizing the further government corruption that seems to have no end!
VOTE for Garry Johnson — who stands for these principles, and is on nearly all 50 States ballots (unlike my 1st choice, Ron Paul, who is NOT on ANY States ballots) or face the dire consequences of failing to do so — TIME TO WAKE UP AMERICA!
VOTE GARY JOHNSON — the only REAL AMERICAN LEFT on the BALLOT!
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If they wanted to do that, they’d need to do it before all the votes are counted, and they haven’t yet. Regardless, it’s the best way to start weakening the 2 party system, unless you have a better idea. I’d love to write in Ron Paul, but what would be the point besides sending a message? If we vote Gary Johnson, aside from also sending a message, there’s a chance it’ll actually make some meaningful change.
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say they get 5.3%
What is to stop them changing it to making them need 7%?
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We aren’t voting Johnson to get him to president, but so that we can get 5% of the vote. This will cause the libertarian party to become a “Major Political Party,” which will cause them to start receiving federal funding as well as many other benefits that Republicans/Democrats enjoy.
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That’s not what your wife said!
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For someone who hates whining, you sure whine a lot….
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Guys, you have GOT to stop feeding the trolls.
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Yo Paultard, go find a head-shrinker, take a Valium and find another hopeless cause!
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Dear Sir,
I said nothing about any “cause” or Dr. Ron Paul in my commits below. I was then and am now, only addressing your commits.
If you could read and think at the same time, you would’ve already know that. You would also know, you and anyone like you, are my cause. With tough love, Peace.
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