Constitutional Conservative Ron Paul has introduced H.R. 2755, the “Federal Reserve Board Abolition Act“, which will repeal the Federal Reserve Act and abolish the US Federal Reserve at the end of 1 year after its passing into law.

The 1-year time frame will be a “winding down” period, overseen by the Chairman of the Board of Governors of the Federal Reserve System, who will continue to pay employees and operate day-to day dealings.

The OMB Director will begin liquidating the Fed’s assets, which will put into the General Fund of the Treasury. The Secretary of the Treasury and the Director of the Office of Management and Budget will report back to Congress at the end of 18 months.

IS THERE A SOLUTION?

America became the greatest, most prosperous nation in history through low taxes, constitutionally limited government, personal freedom, and a belief in sound money.

The way out of this current financial crisis is to return to those timeless Principles:

1.) End the Bailouts - The Federal Reserve’s authority to use taxpayer money to bail out Wall Street must be revoked and
The Fed must be held accountable.

2.) Stop Congress’ Reckless Spending - We must freeze all non-entitlement spending by the federal government at
current levels and eliminate wasteful spending both domestically and in our trillion-dollar overseas budget.

3.) Cut Taxes - If Wall Street can be given your tax dollars, shouldn’t you get some back? It’s time to cut taxes and return your money to you. Combined with spending reform, this will increase the purchasing power of our dollars and help lessen the economic storm.

4.) Reform the Monetary System - If we are to have long-term economic progress, we must end the system of printing money out of thin air. The current laws limiting the circulation of gold and silver-backed currency must be overturned.

WHAT CAN I DO?

Write, call, email, and fax your representatives and ask them to support Ron Paul’s bill immediately!

Join Patriotic Voter Bomb to vote out those who voted for the “bailout” and other unconstitutional bills. The site contains a list of offenders from all states, for reference and is also looking for input from like-minded people.

http://www.voterbomb.com/2008/

Politicians are like diapers; must be changed often for the same reason.

Scott, I thank you as well. You bring up valid points and I respect you and your perspective. I want to respond thoroughly, but to do so will take far more time than I choose to take at the moment.

Here are a few brief points:

1. I have not called anyone to arms. Rather, I have called on people to vote wisely, take personal responsibility, be the change they would like to see in the world, and to prepare for hard economic times.

2. The principles I have outlined ARE the alternative to the short-term expediency that this bill represents.

3. This was NOT a case of an unregulated free market going sour; it was the case of the Federal Reserve injecting artificial credit in the market many years prior to the crisis, effectively distorting the natural market indicators used by entrepreneurs to predict.

This crisis mirrors the blunders of the Great Depression, as well as what caused the artificial Roaring ’20’s. And your sentiment is precisely what people have been saying about the Great Depression since it hit.

It is empirically false, which I will be showing in future articles. The Great Depression was caused by government intervention, as was our current crisis.

4. The full consequences you speak of are going to happen anyway; all this bill does is exacerbate and prolong the problem, just as New Deal policies did for the Great Depression. Negative consequences caused by government intervention aren’t solved by further government intervention.

5. It’s not the “quest for profits” that pushes banks to take foolish risks; it’s artificial demand created by the Federal Reserve injecting cheap money into the marketplace that causes such risks. In a truly free market, entrepreneurs have zero incentive to do what has happened in this case. Again, this will be explained in detail in subsequent articles.

6. Any stabilizing that occurs from the bailout will be temporary at best. The market is going to crash and it’s going to crash hard. All we’ve done is prop up a rotting building. Mind you, the “building” isn’t free market institutions; it’s the quasi-socialist institutions formed by the marriage between government and business and it’s unsustainable.

7. Regulations aren’t the answer; keeping the government in its proper role and eliminating the Federal Reserve are the answers.

8. You say, “The four parts you recommend are appropriate long term approaches for individuals. But few citizens follow these…”

Yeah, that’s the point. Now is a great time to capitalize on the fear and anger and turn them to productive use. Problems that have been building for longer than a century aren’t going to be solved in a few years or with a Band-aid bailout.

I’m in the trenches of liberty for the long haul. Anyone looking for short-term political activism and quick fixes isn’t going to find them on this site.

Scott and Kathy, thanks again for your valuable input. Stay tuned for future articles discussing the causes and consequences of recessions/depressions and what ordinary citizens can do about them.

You asked, “Are we for allowing the full weight of consequences to follow?” The answer is YES we are.

The proper role of government is to protect our life, liberty and property. No where does the constitution grant the government the role of parent or babysitter.

There are people who worked hard and invested in stock, such as Lehman Brothers, to carry them through retirement. Their choice. Every soul who buys stock understands clearly at the onset that sometimes the value of stock goes up, sometimes it goes down. They knowingly assume that risk. We have a huge number of people in this country who live day to day…. they work and are just able to meet their needs, using not one cent of welfare, medicaid, or any other government assistance. When they hit retirement age, they work as greeters at wal-mart and other such jobs. Their lifetime is spent working to care of themselves and their families. So you think it is right that THOSE people… that GREAT BIG group of working poor who just make it from day to day, going without health care because they have no insurance… these people should carry the burden of those who decided to knowingly take a risk and play the stock market? And these people, many of whom have never and will never own their own home, they should pay for the greedy homeowners and mortgage companies who unwisely engaged in business together without wisely looking at the full picture?

I think it is unwise to place this burden on the backs of those who did not enter into such business themselves…. it will burden us and our children and our grandchildren.

It is unconstitutional. Read the constitution. Nowhere does it grant the government the right to tax the people and give that tax money to bail out private businesses, or even to bail out individuals. Since it is unconsititutional, it is usurpation and oppression for the government to do so.

Seek out the highest law of the land, the US Constitution, and see what is the basis that Americans are to be governed under.

Kathy

Some thoughts:

Are we for free capital markets? Or regulated economies? It was a free market with limited regulations in which this occured.

Are we for more government regulations? A lack of self-policing by the industry is one of the culprits here. Expect more regulations.

Are we for allowing the full weight of consequences to follow? Then tens of thousands of homeowners would be unable to get mortgages, many more banks would fail, retirement account and home values would continue to be destroyed… not to mention all of the employees joining the unemployed.

The challenge with this crisis is that in our time, information and finance are global in nature and transactions move rapidly among institutions. Yes, the root causes will point to investment banks, insurance/finance conglomerates, federal regulatory agencies, etc. and then on to the managers, who continued their ways at the encouragement of investors, who continued there ways at the encouragement of their clients, the people buying houses on credit and folks adding to retirement savings - taxpaying citizens.

Sometimes the damage to an organization is such that simply letting it crumble (ie Lehman Brothers) is acceptable, but sometimes someone must step in to salvage what they can within an industry.

The investment banks that have now disappeared were created as a result of the Great Depression in hopes of avoiding another economic melt down. The model worked for a while… but the quest for profits eventually pushed investment banks to take more risks. Interestingly, we now are moving back towards a banking structure that was in place before the depression… except that now more foreign governments and institutions own more equity in the US financial system than before.

The bailout certainly is not a desirable political approach as it expands government, raises the spectre of more regulation and saddles the taxpayer with more liabilities. And yet, is it not similar to the Savings and Loan bailouts of the Reagan years?

Where we need to focus our energies is in ensuring that the purposes of the bailout are met in stabilizing the financial sector sufficiently until markets can do their own balancing. We must make sure that our politicians act reasonably and responsibly to return the bailed out entities back to market in a healthier condition without undue hardship upon taxpayers. And then ensure that the regulations are appropriate to avert another disaster in the future without hobbling an industry.

The four parts you recommend are appropriate long term approaches for individuals. But few citizens follow these…

Scott

You have an amazing story. I loved reading it and seeing how far you have come and what a dream has done for you.

To have the courage to dream even when others laugh at you takes faith and commitment. Its so simple, the idea of dreams, and yet so difficult. But when you reach your goal, when you sell your first shirt, that feeling cannot be replaced. To feel that high is worth all the years of dreaming and working.

Well, I worked a few jobs and got a cash reserve again. I got back down to Phoenix and moved in with my negative friend. I told him about my plans and he laughed at me. He saw me as a bum, a guy who could barely live the game of life, and here I was talking about starting a business? I remember how hurt I was when he said those things.

Anyways, I can also remember how elated I was when I sold my first shirt. I will never forget the phone call I got from Daily Bread magazine when they wanted to display my shirts in their magazine. I nearly fainted from the exhilaration.

Living my dream has changed my life. It has given me a glimpse into what I am capable of. It has built my confidence in ways that I can not explain.

I encourage all to go and live thier dream. The rewards are definitely worth it.

Regarding the impact on the poor when increasing the money supply: It’s true, increasing the supply of money, increases inflation, which can decrease the purchasing power of all, but it is felt most by the poorest. We witness in our area, however, the decreaed money supply (via less liquidity) driving down demand for areas in the construction trades. I can now contract for labor at rates available ten years ago. These laborers have less purchasing power than two years ago. Perhaps a prolonged recession will bring prices back into a range where their purchasing power increases, but for the foreseeable future, these guys talk about 2003-2006 as a great time for their profession…even in the face of watching things like housing slip further away from their ability to pay. They might have been frustrated by the challenge to buy a home, but now they are scared when they can’t feed their family. In addition, increased middle classes around the world could prevent commodities from falling back to levels that would allow the purchasing power of these laborers to ever climb back to previous levels.

I’m not disagreeing with your positions, rather I tend to share them myself. Recent events, however, have thrown examples into my face that force me to ask myself how deeply committed I am to these views…and I’m still working it out.