The Kuyperian Commentary

Politics, Economics, Culture, and Theology with a Biblical Viewpoint

Archive for the month “October, 2011”

Random Thoughts on Paul and Debate

As I was vociferously attempting to shed some pounds at the treadmill, the gym provides some fascinatingly silly TV programs. Among them is Fox News’ The Five. Essentially, five silly people sit around a table touting the virtues of Mitt Perry. Mitt as the presidential-looking one and Perry as the tea-party look-alike. As I keep listening enduring the muscle pain, I also have to endure their analysis of the Republican debate. Jon Hunstsman, the one who was not qualified to be in the debate, was talked about more often than Ron Paul. Yes, Ron Paul who not only dealt with every issue discussed with intense knowledge, but also the one who received great compliments from other candidates. Black this out!

Blame the Fed for the Financial Crisis

I give here the entire piece published by the Wall Street Journal written by the honorable Ron Paul:


To know what is wrong with the Federal Reserve, one must first understand the nature of money. Money is like any other good in our economy that emerges from the market to satisfy the needs and wants of consumers. Its particular usefulness is that it helps facilitate indirect exchange, making it easier for us to buy and sell goods because there is a common way of measuring their value. Money is not a government phenomenon, and it need not and should not be managed by government. When central banks like the Fed manage money they are engaging in price fixing, which leads not to prosperity but to disaster.

The Federal Reserve has caused every single boom and bust that has occurred in this country since the bank’s creation in 1913. It pumps new money into the financial system to lower interest rates and spur the economy. Adding new money increases the supply of money, making the price of money over time—the interest rate—lower than the market would make it. These lower interest rates affect the allocation of resources, causing capital to be malinvested throughout the economy. So certain projects and ventures that appear profitable when funded at artificially low interest rates are not in fact the best use of those resources.

Eventually, the economic boom created by the Fed’s actions is found to be unsustainable, and the bust ensues as this malinvested capital manifests itself in a surplus of capital goods, inventory overhangs, etc. Until these misdirected resources are put to a more productive use—the uses the free market actually desires—the economy stagnates.

BloombergFed Chairman Ben Bernanke

The great contribution of the Austrian school of economics to economic theory was in its description of this business cycle: the process of booms and busts, and their origins in monetary intervention by the government in cooperation with the banking system. Yet policy makers at the Federal Reserve still fail to understand the causes of our most recent financial crisis. So they find themselves unable to come up with an adequate solution.

In many respects the governors of the Federal Reserve System and the members of the Federal Open Market Committee are like all other high-ranking powerful officials. Because they make decisions that profoundly affect the workings of the economy and because they have hundreds of bright economists working for them doing research and collecting data, they buy into the pretense of knowledge—the illusion that because they have all these resources at their fingertips they therefore have the ability to guide the economy as they see fit.

Nothing could be further from the truth. No attitude could be more destructive. What the Austrian economists Ludwig von Mises and Friedrich von Hayek victoriously asserted in the socialist calculation debate of the 1920s and 1930s—the notion that the marketplace, where people freely decide what they need and want to pay for, is the only effective way to allocate resources—may be obvious to many ordinary Americans. But it has not influenced government leaders today, who do not seem to see the importance of prices to the functioning of a market economy.

The manner of thinking of the Federal Reserve now is no different than that of the former Soviet Union, which employed hundreds of thousands of people to perform research and provide calculations in an attempt to mimic the price system of the West’s (relatively) free markets. Despite the obvious lesson to be drawn from the Soviet collapse, the U.S. still has not fully absorbed it.


The Fed fails to grasp that an interest rate is a price—the price of time—and that attempting to manipulate that price is as destructive as any other government price control. It fails to see that the price of housing was artificially inflated through the Fed’s monetary pumping during the early 2000s, and that the only way to restore soundness to the housing sector is to allow prices to return to sustainable market levels. Instead, the Fed’s actions have had one aim—to keep prices elevated at bubble levels—thus ensuring that bad debt remains on the books and failing firms remain in business, albatrosses around the market’s neck.

The Fed’s quantitative easing programs increased the national debt by trillions of dollars. The debt is now so large that if the central bank begins to move away from its zero interest-rate policy, the rise in interest rates will result in the U.S. government having to pay hundreds of billions of dollars in additional interest on the national debt each year. Thus there is significant political pressure being placed on the Fed to keep interest rates low. The Fed has painted itself so far into a corner now that even if it wanted to raise interest rates, as a practical matter it might not be able to do so. But it will do something, we know, because the pressure to “just do something” often outweighs all other considerations.

What exactly the Fed will do is anyone’s guess, and it is no surprise that markets continue to founder as anticipation mounts. If the Fed would stop intervening and distorting the market, and would allow the functioning of a truly free market that deals with profit and loss, our economy could recover. The continued existence of an organization that can create trillions of dollars out of thin air to purchase financial assets and prop up a fundamentally insolvent banking system is a black mark on an economy that professes to be free.

Mr. Paul, a congressman from Texas, is seeking the Republican presidential nomination.

The End of Foreign Aid & Yesterday’s Debate

Paul–the iconic conservative–said in yesterday’s debate that foreign aid should be the easiest item to cut:

“To me, foreign aid is taking money from poor people in this country and giving it to rich people in poor countries, and it becomes weapons of war, essentially, no well — no matter how well motivated it is.”

Paul’s political purity is truly a challenge to the Republican establishment. Establishment candidates have no interest in making real substantive cuts. Paul dared the other candidates to talk about real cuts. None, of course, took up the challenge.  Paul’s purity makes his message appealing to us, but foreign to others. Yet, last night, much of Paul’s message was resonating with the audience and even with many of the candidates who hurried to shake the congressman’s hands after the debate.

Ron Paul’s Role in the Coming Days

Ron Paul’s economic plan has been laid out and now Paul really becomes the only Republican to offer a comprehensive and detailed plan to deal with the economy by cutting one trillion dollars (Rush Limbaugh agrees) There is a healthy trend ahead for Paul in the polls. In the end, however he does in this process it will mark the continuation of a wider program to restore this nation to its constitutional rights.

9-9-9 is dangerous, says Paul

Paul’s irenic spirit is incredibly unique in the American scene, but once in a while he will attack someone else’s philosophy.

Ron Paul Proposes to Cut 1Trillion in Spending

Ron Paul’s opinions about cutting the budget are well-known, but on Monday, he’ll get specific: the Texas congressman will lay out a budget blueprint for deep and far-reaching cuts to federal spending, including the elimination of five cabinet-level departments and the drawdown of American troops fighting overseas.

Read more:

Ron Paul, the Isolationist

I have offered a brief response to a friend who referred to Ron Paul as an isolationist:

…one quick point of correction. You keep using the term “isolationism.” A true isolationist would be Pat Buchanan who is a protectionist. Ron Paul would be a non-interventionist along the lines of the founding fathers. Non-interventionists like Ron Paul are free-traders, not protectionists. Paul believes firmly in national defense and he even authorized the U.S. military to go after Osama bin Laden after 9-11. Unfortunately, the majority of the country bought into the well-proven lies of the Bush administration in those days and wasted billions of dollars in an unconstitutional war in Iraq instead of pursuing the real culprit. Again, Paul is a strong advocate of the Just War Theory, which places him far away from isolationism. I hope this helps.

Cain vs. Paul

Glenn Greenwald on Due Process for U.S. Citizens

Republican Candidate Gary Johnson and Ron Paul have both argued that President Obama’s actions against U.S. citizen, Anwar al-Awlaki was both unconstitutional and a sad image for America around the world. Glenn Greenwald from argues that al-Awlaki was not tried by any court and that the U.S. was not able to prove his guilt in any of the terrorist threats. He writes:

 It was first reported in January of last year that the Obama administration had compiled a hit list of American citizens whom the President had ordered assassinated without any due process, and one of those Americans was Anwar al-Awlaki.  No effort was made to indict him for any crimes (despite a report last October that the Obama administration was “considering” indicting him).  Despite substantial doubt among Yemen experts about whether he even had any operational role in Al Qaeda, no evidence (as opposed to unverified government accusations) was presented of his guilt.

MSNBC reports the words of a senior American military official who says that the death of al-Awlaki will cause al-Qaida’s surviving leaders a sense of doom. This type of response misses the real nature of enemy retaliation. As many have shown, most notably, Robert Pape, militants retaliate mainly because of U.S. foreign occupation. Pape goes through extensive research to prove this point. The very 9-11 commission report makes reference to this point. If the U.S. military believes al-Qaida and others will simply cease their retaliation course because of a vastly unknown figure-head, then once again the U.S. has not learned its lessons, but rather continues to repeat the faults of the Bush policy. Jeremy Scahill observed yesterday that most in Yemen have absolutely no idea that al-Awlaki was dead or who he was to begin with. “He was barely mid-level management,” Scahill said. In many ways, America’s consistent display of arrogance and unconstitutionality is another incentive for foreign attack. I hope this trajectory changes.

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