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Beware the Coming Bailouts of Europe

Tuesday, December 20, 2011 – by Ron Paul

The economic establishment in this country has come to the conclusion that it is not a matter of “if” the United States must intervene in the bailout of the euro, but simply a question of “when” and “how.” Newspaper articles and editorials are full of assertions that the breakup of the euro would result in a worldwide depression, and that economic assistance to Europe is the only way to stave off this calamity. These assertions are yet again more scare-mongering, just as we witnessed during the depths of the 2008 financial crisis. After just a decade of the euro, people have forgotten that Europe functioned for centuries without a common currency.

The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve.

The euro was built on an unstable foundation. Its creators attempted to establish a dollar-like currency for Europe, while forgetting that it took nearly two centuries for the dollar to devolve from a defined unit of silver to a completely unbacked fiat currency note. The euro had no such history and from the outset was a purely fiat system, thus it is not surprising to followers of Austrian economics that it barely survived a decade and is now completely collapsing. Europe’s economic depression is the result of the euro’s very structure, a fiat money system that allowed member governments to spend themselves into oblivion and expect that someone else would pick up the tab.

A bailout of European banks by the European Central Bank and the Federal Reserve will exacerbate the crisis rather than alleviate it. What is needed is for bad debts to be liquidated. Banks that invested in sovereign debt need to take their losses rather than socializing those losses and prolonging the process of adjusting their balance sheets to reflect reality. If this was done, the correction would be painful, but quick, like tearing off a large band-aid, but this is necessary to get back on solid economic footing. Until the correction takes place there can be no recovery. Bailing out profligate European governments will only ensure that no correction will take place.

A multi-trillion dollar European aid package cannot be undertaken by Europe alone, and will require IMF and Federal Reserve involvement. The Federal Reserve already has pumped trillions of dollars into the US economy with nothing to show for it. Just considering Fed involvement in Europe is ludicrous. The US economy is in horrible shape precisely because of too much government debt and too much money creation and the European economy is destined to flounder for the same reasons. We have an unsustainable amount of debt here at home; it is hardly fair to US taxpayers to take on Europe’s debt as well. That will only ensure an accelerated erosion of the dollar and a lower standard of living for all Americans.

Source: www.thedailybell.com/3379/Ron-Paul-Beware-the-Coming-Bailouts-of-Europe

Filed under politics economy economics eurozone crisis euro fiat currencies Europe Ron Paul 2012 European bailouts central banks central banking ECB European Central Bank Federal Reserve sovereign debt stealth taxation global serfdom

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Monetary Madness – Is the US Monetary System on the Verge of Collapse?

By David Galland 10/18/11

The US monetary system — and by extension, that of much of the developed world — may very well be on the verge of collapse. Falling back on metaphor, while the world’s many financial experts and economists sit around arguing about the direction of the ship of state, most are missing the point that the ship has already hit an iceberg and is taking on water fast.

Yet if you were to raise your hand to ask 99% of the financial intelligentsia whether we might be on the verge of a failure of the dollar-based world monetary system, the response would be thinly veiled derision. Because, as we all know, such a thing is unimaginable!

Think again.

Honestly describing the current monetary system of the United States in just a few words, you could do far worse than stating that it is “money from nothing, cash ex nihilo.”

That’s because for the last 40 years — since Nixon canceled the dollar’s gold convertibility in 1971 — the global monetary system has been based on nothing more tangible than politicians’ promises not to print too much.

Unconstrained, the politicians used the gift of being able to create money out of nothing to launch a parade of politically popular programs, each employing fresh brigades of bureaucrats, with no regard to affordability.

Read more »

Filed under economy economics US dollar US monetary system default US debt overt default covert default inflation stealth taxation David Galland

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Easy-to-understand explanation of the sins of the Fed and our Federal government. Watch to learn why we must end the Fed as Ron Paul has been saying for decades now. Find out how we’ve been fleeced and bled dry by those who were supposed to protect us. Did you know the Federal Reserve is not part of the government but a privately owned monopoly which has been given the legal right by Congress to manipulate our money supply? And does it ever!!! It does whatever it takes to make sure that the banks that own it get the cream of the economy and the rest of us get the dregs.

(Source: outsiderhc)

Filed under economy economics politics Federal Reserve the Fed End the Fed Ron Paul Ron Paul for President inflation stealth taxation sheeple