Dear friends,

a recent letter from Ron Paul on the current Fed actions and its true implications.

by Ron Paul | March 31, 2008

These past few weeks have provided an unfortunate opportunity to discuss inflation. The dollar index has reached new all-time lows. The total money supply, M3, as calculated by private sources, is growing at a disturbing 17% rate. The Fed is pumping dollars into the economy at an alarming rate. Just recently the Fed announced new loan auctions totaling $100 billion. That is new money created from thin air. If these money auctions, combined with the bailout of Bear Stearns, continue to be the trend, we are in for some economic stormy weather. The explanation lies in understanding the basics of money, and why it is dangerous to give government and big banks control over it.

First, money is not wealth, in and of itself. You cannot create more wealth simply by creating more money. Wall Street bankers cry out for more liquidity, but what is really needed is more value behind the dollar. But the value, unfortunately, isn’t there.

You see, the Fed creates new money and uses it to purchase securities from banks. Flush with funds, these banks seek to put this money to use. During the Fed’s expansionary period, much of this money went to home loans. Through a combination of federal government inducements to lend to risky borrowers, and the Fed’s supply of easy money, the housing bubble took shape. Fannie Mae and Freddie Mac were encouraged to purchase and securitize mortgages, while investors, buoyed by implicit government backing, rushed to provide funding. Money that could have been invested in more productive, less risky sectors of the economy was thereby malinvested in subprime mortgage loans.

The implicit guarantee from the Fed is quickly becoming explicit, as those institutions deemed “too big to fail” are bailed out at taxpayer expense. Wall Street made a killing during the housing bubble, reaping record profits. Now that the bubble has burst, these same firms are trying to dump their losses on the taxpayers. This approach requires more money creation, and therefore debasement of all dollars in circulation.

The Federal Reserve, a quasi-government entity, should not be creating money or determining interest rates, as this causes malinvestment and excessive debt to accumulate. Centrally planned, government manipulated economies always fail eventually. The collapse of communism and the failure of socialism should have made this apparent. Even the most educated, well-intentioned central planners cannot plan the market better than the market itself. Those that understand economics best, understand this reality.

In free markets, both success and failure are options. If government interventions prevent businesses, like Bear Stearns, from failing, then it is not truly a free market. As painful as it might be for Wall Street, banks, even big ones, must be allowed to fail.

The end game for this policy of monetary inflation is that the money in your bank account loses purchasing power. So, by keeping failing banks afloat, the Fed punishes those who have lived frugally and saved. The power to create money is a power that should never be granted to government. As we can plainly see today, the Fed has abused this power, and taxpayers are paying the price.

When I tell people I believe in limiting the size and scope of government and individual freedom and abiding by the US Constitution, I often get “who cares…we NEED government..blah…blah…blah” This is from both conservatives and liberals alike.

Our founders who gave up so much in blood and treasure for our freedoms…that is political, social and economic would be very upset at what we have come to.  We seem to have lost the faith and confidence on how FREEDOM works. Trust in free markets and the goodness of philanthropy. Let people run thier lives and economy, not some elite few on a hill.

Below is a great letter from Bill St. Clair Crypto-Anarcho-Libertarian writer and activist, or perhaps from Larken Rose..there is some debate who wrote this.  Explains exactly what cohersion from government is and asks the question..Who Owns Me?

It never ceases to amaze me how people change what I say in order
to be able to rebut it. Some people “advocate” anarchy, meaning
they suggest doing away with government altogether, abolishing it,
and forming a free society. That is NOT what I am suggesting, any
more than I am suggesting that Santa Claus be abolished. I am
arguing about what IS, not what SHOULD be. The only “should” I’m
suggesting is that people “should” accept open their eyes to
reality, accept the truth, and throw away the insane, self-
contradictory, horribly destructive superstition upon which ALL of
the political beliefs of 99.9% of the population rest. I don’t want
to CHANGE reality; I merely want people to RECOGNIZE it, and then
deal with it as they see fit. When people tell me that they don’t
think my idea will “work,” or aren’t “practical” or “realistic,” it
tells me that those people aren’t reading what I wrote. About 90%
of political discussions I have with people amount to this:

Me: “Santa Claus isn’t real. He doesn’t exist.”

Other guy: “But Christmas would never work without Santa! We can’t
do away with him! You’re being too idealistic. The people would
never get Christmas to work without Santa! They’re just not
charitable enough. Sure, there should be limits on what Santa is
allowed to do, but we can’t have NO Santa. That would never work!
Your idea is too extreme. We need Santa to do SOME things!”

Let me break this down to something which is both amazingly simple,
and yet which hardly anyone ever thinks about (and which you will
NEVER hear discussed in any mainstream politic debate, or in any
“educational” institution):

Fred and Bob are hungry. There is one sandwich on the table in
front of them. They both want it. Who gets it? It depends upon who
“owns” it–who has a rightful claim to it? To whom does it belong?

The concept is pretty darn simple. Now try this: Who owns me? Do I
own myself, or does someone else (an individual or a group) own me?
At this point almost everyone responds by saying that I own me–but
almost NO ONE actually believes it.

What does it mean to own something? It mean to have the exclusive
right to use it as you see fit, to dispose of it if you wish, to
give it away, to sell it, whatever. For any given thing–including
me–SOMEONE has to have the “final say” on what is done with it. So
the question is, who has the ultimate say over what is done with
ME?

I do. And from that one simple statement, ALL of my political
beliefs can be inferred. Trouble is, most people never bother to
consider what all logically follows from that one simple statement.

There are four guys, including me, in a room. I want to play the
piano. They want to play doubles dominoes, which they can’t without
four people. Now, they have the right to try to talk me into
playing, or pay me, but when it comes right down to it, who has the
RIGHT to decide whether I play the piano or play dominoes? Me.

There are 22 guys, including me. I want to draw dinosaurs, and they
all want to play official-rules football (which requires 22
people). NOW who has the ultimate right to decide which I do? They
can beg, persuade, try a guilt-trip, bribe, bargain, etc., but in
the end, I AND I ALONE have the right to decide what is done with
me. Why? Because I own me, and they don’t.

If this seems so self-evident and so obvious that you’re wondering
why I would bother explaining it, that’s a good thing. Hold onto
your brains as we compare that painfully simple concept to the
authoritarian indoctrination we’ve all been exposed to.

If I own me, then I own what I produce. (The owner of the cow is
also the owner of the milk.) If I build a chair, with my own time
and effort, it belongs to me. And if I decide to trade my chair for
someone else’s basket of apples, then the apples become mine. They
belong to me, every bit as much as I belong to me. If I instead
trade my chair for a few silver coins, the silver belongs to me. No
one else. Me. I own me, so I own it.

Okay, I think I’ve about beaten that point to death, and at this
point hardly anyone would disagree–at least, they don’t THINK they
disagree. Do you think I own myself? If you say “yes,” try this
little test: If I want to spend all the silver I got from selling a
bunch of chairs, to buy a boat from someone else, do I have that
right? If I own me, I certainly do.

Oh, but wait. Some guys decided they get a cut of what I earn,
which they call a “tax,” in order to do stuff and buy stuff THEY
think is important. Is that okay? How about if it’s only a 1%
“tax”? Then is it okay?

If you answer “Yes,” you do NOT believe I own me; you believe that
“government,” or the collective, or my neighbors, or something else
owns me, but that I don’t own myself.

As with the sandwich, SOMEONE has the ultimate right to say what is
done with it. If anyone, or any group of people–whether wearing
the label of “authority” or not–has the RIGHT to take what I
earned–essentially, the right to take a piece of me–and I do not
have the right to overrule them, then THEY OWN ME. It’s no more
complicated than that.

Ownership is digital: either I own me, or someone else does. It
can’t be both. When there is a conflict of ideas about what should
be done with me, ONE side–the side which OWNS me–has the final
say. If we disagree, whoever has the moral RIGHT to enforce his
decision is the rightful OWNER of me. If you believe in “taxation”
at all, in any form and to any degree, you believe that someone
ELSE has the final say, which means THEY own me, and I don’t.

As you ponder that thought, don’t be tempted to rant about what we
“need,” or what “works,” or what is “practical” or “realistic.”
There are two options here, and ONLY two options: 1) I own me, or
2) someone else owns me. So which is it? Don’t tell me what you
think is “necessary” for civilization, or how society has to be
arranged, or whether my philosophy would “work.” Don’t bother
fishing for excuses for your answer, and don’t try muddling the
waters with rhetoric about “consent of the governed,” or “giving up
some of our rights,” or what will happen to society if people don’t
accept your answer, or any other evasions. (In other words, don’t
parrot the obfuscations and bunk that has been force-fed to all of
us in order to obscure and mangle what should be a painfully simple
concept.) Just tell me, WHO OWNS ME? (At the same time, you will be
answering another question: “Who owns YOU?”)

Pretty scary huh??? same goes for ones home..pay for it over 30 years, pay 10’s of thousands in interest to a bank, stand proud you pais off the mortgage…now do you OWN your home?  sorry, but NO. The government still owns the home as it owns you. Try not paying property taxes, the government will foreclose on you and take your paid off home. I can go on, but I dont want to you to faint, or better yet start a revolution…lol

 below are some excerpts concerning the hedge fund bonanza and the true method of wealth distribution. democrats and republicans funnel money from YOU to the wealthy and still tax you death. they of course throw some nice occasional entitlement that keeps us all subdued. why are the wealthiest people donating to both sides, its called hedging a bet. sort of like roulette. why???

 because both top party candidates have been bought and sold and when they are elected, YOU come last. sorry….that is reality.

Mr. Paul said it represented a “transfer of wealth from the poor and the middle class to the wealthy,” adding that, in the current monetary system, “the money gravitates to the banks and to Wall Street. That’s why you have more billionaires than ever before.”

Hedge-fund managers have been keeping an eye on Washington lately, in part because of a measure in Congress that would raise taxes on some of their profits. They have also been making big donations to presidential candidates from both of the major parties.

Paul Tudor Jones II, the billionaire hedge fund executive, used his home in Greenwich, Conn., to hold a fund-raiser for Barack Obama, while also giving the maximum amount to two Republicans, Rudolph W. Giuliani and Mitt Romney.