Ron Paul on consumer prices and artificially low interest rates

7 Responses to “Ron Paul on consumer prices and artificially low interest rates”

1. A.B. Dada on November 11th, 2007 12:26 am

   I think Dr. Paul would take exception to the idea that government has to do anything with interest rates — any Austrian-school economist understands that government intervention in interest rates causes economic harm. Move them up, move them down, either way you’re forcing economic problems on lenders and borrowers.

   Interest rates should flow freely based on two variables: the supply of money that a person has, and the demand for that money by others. If a person (or bank or business) is flush with a lot of money, it is generally in their best interest to loan it out at the maximum rate that someone will borrow for, considering the risk of investment. A business or individual with a long history of paying their bills on time may be a low risk, but everyone else with extra money will want to lend to them — meaning they’ll have competitive supply pressure that brings their rate down.

   Someone with a history of late payments and collections will still get a loan, but the risk is high, so there won’t be a lot of lenders available. The increased risk coupled with the decreased supply of available money means the interest rate will be high.

   This is how the market SHOULD work (and generally does outside of regular banking). The downside is that the Federal Reserve also colludes with the banks by allowing for fractional reserve banking — another outright fraud and theft.

2. Kraig on November 11th, 2007 1:08 am

   Another moment when Fukui would watch and say, “Thank Amaterasu that I don’t ever have to answer questions or listen to anyone.”

3. money as debt on November 11th, 2007 1:14 am

   Until I came across this (and another documentary by Aaron Russon) I knew little about the workings of the monetary system, but the following video helped to open my eyes. I know that the Federal Reserve is a privately owned bank but how about the Bank of Japan? Do rich banking families also pull the strings through the BOJ? Perhaps a naive question but I’m curious.

   BTW, from what I’ve seen so far I think Ron Paul is great. I truly hope he gets elected.

   http://video.google.com/videoplay?docid=-9050474362583451279&hl=en

   Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it … all » is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its “Duncan Initiative” received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

4. money as debt on November 11th, 2007 6:27 pm

   well, guess I found part of my answer here;

   The dollar is the so-called “international currency” because the Federal Reserve and its well-heeled patrons are the directors of the US-Euro-Japan banking cabal which is at the center of the global Fiat money scam. There’s nothing more to it than that. Notice the recent “unilateral” clamp-down on Iran by the US-led banking syndicate. The action was initiated without UN approval for the simple reason that the UN, the World Bank, the IMF, the WTO and thousands of NGOs are just more of the Central Banks’ prime properties. Don’t expect the father to ask the child for permission to punish one of his errant children. The banks are the one’s who really call the shots and–behind the curtain of feigned respectability—they are the driving force behind the endless wars.

   The Last Dead Bull on Wall Street

   http://www.counterpunch.org/whitney11102007.html

5. Matt Dioguardi on November 12th, 2007 9:28 pm

   Great blog entry!

   Consumer price levels don’t accurately measure inflation. I sadly can’t engage in a discussion on this, but one counter example might be that technology and better production methods should lower costs. So even if costs remain the same, that might reflect inflation.

   Also determining which package of goods should be used to determine inflation is also really problematic.

   Anyway, I’m still pondering what effect low interest rates in Japan have had on America and what role they (might) have played in America’s sub-prime woes.

   By the way I love it when Ron Paul says the whole economy is sub-prime.

   Go Ron Paul!

6. Ken Worsley on November 12th, 2007 9:57 pm

   Matt,

   Thanks…I agree that the basket of goods used to determine consumer prices is problematic, especially when the BOJ plans to do things such as not count discounted cellular plans because they will ‘distort’ the CPI.

   I have the feeling that that low interest rates in Japan contributed more to woes at Japanese institutions than the subprime problem itself. I can imagine the subprime crisis happening without Japanese players, but those who took the hits (such as Mizuho and Nomura, who pulled out of their US home lending operations) could not have been so exposed to that risk had it not existed in the first place. They may have helped increase the size of losses, but how much bigger the problem became due to access to cheap money in Japan is going to be an interesting one to see.

7. Kevin on November 13th, 2007 6:42 am

   Wow! Now you know how to get some blog traffic. Just post a video of Ron Paul and all his wackjob fans come out of the woodwork.

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