Hillary Clinton Still Doesn't Get It (Neither Does Rudy Giuliani), But Ron Paul Does
The Federal Reserve System is being bailed out once again by Chinese, Russian, Singapore, and Arab central bankers. Clinton says this is bad for American sovereignty but won't admit that her own health care proposal will make the problem far worse. by Walt Thiessen
(libertarian)
Friday, December 21, 2007
Over the past few weeks and months, there has been a quiet crisis going on in Western central banking. Led by the plummeting dollar under the direction of the Federal Reserve Board of Governors, and undermined further by the Fed-caused sub-prime mortgage calamity, Western central bankers find themselves increasingly turning their ownership over to China, Russia, the Middle East, and Singapore, all of which is bad for the West.
Even Democratic presidential "spend-until-we-drop" candidate Hillary Clinton is quoted in Time Magazine saying, "I think vigilance is in order when the investor is a foreign government. My principal concern is to increase transparency so that there is a clear understanding of where these funds are coming from ... and what the potential downsides might be of having a foreign government control certain assets in our country." Too bad her proposals will only make the problem worse. Only Ron Paul seems to understand what the real problem is...and what the solution is.
Clinton has no particular proposal to deal with the crisis. She's just exercising her political privilege of blowing smoke. However, her universal health care proposal will actually make it even more likely that China will come to own our banking system in the years ahead, thereby obliterating any sovereignty that might be left by that time. As Comptroller General David Walker of the GAO said on CBS News' "60 Minutes" program, "We're not being realistic. We can't afford the promises we've already made, much less to be able, piling on top of 'em [more promises]."
What was Walker talking about? He was talking about how the president and the Congress made things much worse in Dec. 2003 when they expanded the Medicare program to include prescription drug coverage. Why can't we afford what we had before that program was passed? "Well, because we promise way more than we can afford to keep...eight trillion dollars added to what was already a $15 to $20 trillion under-funding." There isn't a shadow of a doubt that all of the other nationalized medicine programs the Democratic candidates are proposing, including Clinton's proposal, will be far more expensive than the prescription drug program.
Think I'm exaggerating the problem? Guess again. It's already happening. As a direct result of Federal Reserve inflation (which they keep reporting as being under 3% when in truth it's closer to 13% annually, as measured by the old M3 which they quietly abandoned in 2006), we not only have a sub-prime mortgage crisis that is destroying Western central banks (which were the original intended beneficiaries of the Federal Reserve system), but we also have another mammoth crisis that starts by 2017, when the amount of revenues from Social Security and Medicare taxes will begin to fall short of demand for those services. And why is that going to happen (again, according to both Walker and other sources)? Because the baby boomers start retiring for the first time ever next month, January 2008.
Oh, and by the way, the Consumer Price Index (CPI) was fiddled with in the 1990s to show a lower rate of increase in prices. Dr. Michael Boskin, a senior advisor to Rudy Giuliani's campaign, "chaired the highly influential blue-ribbon Commission on Consumer Price Index, whose report has transformed the way government statistical agencies around the world measure inflation, GDP, and productivity," according to his Hoover Institute biography. Thus, the "official" CPI is about 4.6% during the past year. However, the real CPI is much more, likely over 10%. Why is there such a discrepancy? Primarily because the new CPI doesn't factor in things like rising real estate prices!!!
Giuliani supporters should despair that their candidate is taking monetary policy advice from a man who believes that the country is better off if it buries its collective head in the sand and denies that we're headed toward the edge of the cliff. Instead, Giuliani refuses to address the dollar and banking crisis at all, choosing instead to fall back on vague talk about "cutting taxes and shoring up the economy." I'm all for tax cuts (who isn't?) but tax cuts and vague references to "shoring up the economy" aren't going to solve the crisis. Heck, the man thinks that the solution to the Social Security crisis is to form yet another blue ribbon, bi-partisan committee to study it. Get real!
The disastrous tsunami is coming.
China's central bank now owns 10% of Morgan Stanley. It should be noted that Morgan Stanley was founded by J.P. Morgan, who was a major architect of the Federal Reserve System. Three months ago, China didn't own any of Morgan Stanley. Nothing at all! Ol' J.P. is finally getting his comeuppance. Unfortunately, we're the ones who will pay for it. Ol' J.P died before all the spam hit the fan, leaving the rest of us holding the bag.
Two months ago Singapore's bank acquired 9% of Swiss Bankcorp's entire assets. Another 2% is now owned by an unnamed Middle Eastern sugar daddy. The Time article cited above also noted that by 2011, assets of Western central banks held by the Banks of China, Singapore, Russia, and the Middle East worldwide "are projected to grow almost fourfold, to nearly $8 trillion, according to Merrill Lynch. By comparison, hedge funds--unregulated private investment pools--control a paltry $1.5 trillion to $2.6 trillion, according to estimates."
Notice that we're not talking about millions of dollars here, or even billions of dollars. We're talking about trillions of dollars. A trillion dollars is a million, million dollars, or $1,000,000,000,000. Bear in mind that the entire U.S. Gross Domestic Product (GDP) is $13.13 trillion according to the CIA's website. In other words, in just three years from now, China, Russia, Singapore, and the Middle East will own the equivalent of 60% of the entire American economy in terms of ownership of Western central banks.
Nor is there any reason to think that the Eastern financial takeover of the West will stop or even pause in 2011. Instead, it will just be starting. It's hard to imagine which is worse: the prospect of Eastern banks owning the entire Western financial system, or the collapse of that system that comes when Eastern banks try to dump their dollars, which they must eventually do. When that happens the entire house of cards will collapse, not just here in America but also across the world.
Ron Paul is the only candidate for president who is actually talking about the root cause of this whole problem. It's the Federal Reserve system, which he correctly calls the "inflation tax." As Paul wrote in an article dated July 17, 2006 that appears on his Congressional website:
"All government spending represents a tax. The inflation tax, while largely ignored, hurts middle-class and low-income Americans the most. Simply put, printing money to pay for federal spending dilutes the value of the dollar, which causes higher prices for goods and services. Inflation may be an indirect tax, but it is very real- the individuals who suffer most from cost of living increases certainly pay a 'tax.'
"Unfortunately no one in Washington, especially those who defend the poor and the middle class, cares about this subject. Instead, all we hear is that tax cuts for the rich are the source of every economic ill in the country. Anyone truly concerned about the middle class suffering from falling real wages, under-employment, a rising cost of living, and a decreasing standard of living should pay a lot more attention to monetary policy. Federal spending, deficits, and Federal Reserve mischief hurt the poor while transferring wealth to the already rich. This is the real problem, and raising taxes on those who produce wealth will only make conditions worse."
In a recent campaign release commenting on the interest rate cut by the Fed he wrote:
"Make no mistake, the problems faced by the American people are not caused by unscrupulous mortgage brokers or the rising price of oil. These are symptoms of an economic disease caused by a spendthrift Congress enabled by loose monetary policy. Too many pundits praise the weak dollar as benefiting exporters, but they fail to see the harm done to thrifty, hard-working Americans.
"Rather than continuing to pursue a policy of easy credit and increasing debt, we need to return to a sound monetary system."
"Gold, or any acceptable market commodity money, is required to preserve liberty."
Critics will claim that a return to the old gold standard will make problems worse, but that's not what Dr. Paul is proposing. The reason the gold standard didn't work isn't because gold is a bad foundation for currency. To the contrary, it's a great foundation. The reason the gold standard failed is because the Federal Government insisted on fixing the price of gold at $20 an ounce...and then later at $38 an ounce under Richard Nixon, regardless of how much paper money they were printing. That's what caused the problems with the gold standard. It was government incompetence which caused the problems, not gold itself.
When Nixon took away all ties between the dollar and gold as a currency in 1971, the result was a monetary system that made permanent the inflation tax. Dr. Paul proposes that we need to move to a gold-based competing currency system, and he's absolutely right. The sooner we do that, the sooner we'll be able to begin to reverse the tide, hopefully before the coming tsunami drowns us. As Paul recently told Doug Casey of Casey Research, "The United States does not have the authority to tell China, or any other country, what to do with their currencies. The values of currencies should be set by the market. Instead of worrying about the speck in China's eye, I would focus on the beam in our eye by reducing the national debt, restoring a market in currency by repealing the legal tender laws and ending the continued debasement of the American currency."
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That's an excellent read, Mr. Thiessen. The message is getting out, but I hope it isn't too little, too late. I doubt the average American would bother to read the entire article, being more concerned with football scores, or some other insignificant drivel.
