Thursday, July 28, 2011

A Swamp Monster Disses Ron Paul

TIME Magazine columnist Michael Scherer, who writes a column called Swampland, is out with one of the most distorted attacks on Ron Paul since, well, the beginning of Time.

I guess there will be more of this from the establishment as Dr. Paul climbs in the polls, but this one runs Congressman Paul's views through a distortion mirror at least a dozen times and comes out with these conclusions:
[Ron Paul]argues that this [a default] will mean, as the President, Wall Street and the Treasury Secretary argue, an increase in interest rates, not just for the government, but for regular Americans. The cost of car loans would go up. The cost of house loans would go up (and the values would probably come down), as would the monthly payments for people with adjustable rate mortgages. The amount small businesses pay to get loans to expand their business would go up....

So to summarize, here is what Ron Paul, who may yet win the biggest GOP polling test of 2011, is advocating: Less short term employment, slower economic growth, and higher costs for things that Americans buy regularly.
Nowhere does Ron Paul say that defaulting on the U.S. debt will result in higher interest rates in the private sector. In fact, getting the government out of the debt market will increase by trillions the amount that is available from the markets for the private sector.

Interest rates are currently distorted downward by the Federal Reserve for the benefit of the banksters, and getting the Fed out of the way would likely result in the market pushing rates higher, but a U.S. government default would do nothing but result in downward pressure on private sector rates, as the lack of governement borrowing would stop the massive crowding out of the private sector now being done by government borrowing.

All the new funds available for the private sector (not sucked up as they are now by government borrowing) would, contrary to Scherer's contention, result in a booming economy built on real savings that is not subject to the volatility of the business cycle.

Scherer is also way off on his contention that a default would result in higher prices. Where he gets this theory I have no idea. There is no economist on the planet that I am aware of that contends that a U.S default would be price inflationary. Without the U.S. Treasury issuing billions in new securities monthly, the Fed would have one less reason to print new money and cause price inflation.

Scherer's Swampland attack on Ron Paul is a horror. It is the most distorted attack on Ron Paul to date. The establishment is obviously getting desperate with this kind of attack that doesn't even belong in a swamp, but in a garbage dump.


  1. Interest rates going up (as they should) will mean GREATER PURCHASING POWER for seniors and people on fixed income.

    I thought liberals wanted to help old people...

    Higher interest rates will discourage rampant consumerism based on debt.

    I thought liberals hated the "consumer society".

    Higher interest rates will encourage savings leading to greater productivity and the rebuilding of our capital base.

    I thought liberals wanted American industry to recover.

    Higher interest rates would divert money from speculation, now largely driven by lower returns on deposits.

    I thought liberals disliked rampant speculation.

  2. "Higher costs for what Americans buy." !

    Is it me, or has the Fed been advocating this principle since its enactment in 1913? Since you know, we have LOST 97% of our purchasing power with the dollar!

  3. The establishment is VERY afraid (and rightfully so at that). Arguments from ignorance, blatant distortions and full-blown falsehoods and lies will increase. They must. Otherwise, the power structure will shift and this is what they simply cannot afford to have happen.

    Gasp!!! Why think of what would happen if all those little people out there, in AMERICA of all places, did what they wanted. The horror of it all!

    They're sick. Very, very sick indeed.

    Go Ron, go!

  4. In the 1980s I bought a Beta VCR. I was convinced the smaller tape would be the most popular format.

    I was wrong.

    I was out the cost of the player, as well as the cost of what movies I had purchased.

    I had to buy a VHS player and movies, as well as save for a camera later on as the technology improved.

    My point? We all make mistakes and allocate resources to incorrect areas, but it is not permanently life altering as long as bad assets are liquidated, and new assets accrued via saving and investing.

    Higher interest rates coupled with natural price deflation are GOOD economic trends, provided they are achieved in a gradual way.

  5. Btw, who cares what TIME says anyways. Does anyone even read it anymore? I suggest they change the name to OUT OF TIME.

  6. Aw, what the heck, I'll answer my own question. I personally don't know anyone that reads TIME here in rural Ohio but, I am willing to bet I can find plenty of back issues in the outhouses.

  7. Sure glad NOBODY reads 'TIME'.

  8. There you go with your facts. Facts get in the way of the state's agenda.

  9. Liberal/Progresses are too stupid to spend time in critical thinking how economics work.

    Just the typical failure of towing a party line of propaganda and quixotic budgetary statistics.

    Fools on the far left(ZOMBIES/SOCIALISTS/MARXIST) and far right(NEOCONS/FASCISTS) don't have a clue what kills purchasing power and reciprocal Inflation/Taxation.

  10. The fact that government bond issues crowds out productive investment can't be promulgated enough, and I thank you for really driving it home.

    anon 10:21, I've had those same thoughts many times!

  11. The fundamental point is Austrian Economics is neither Republican nor Democrat. The concept itself has no political affiliation and people fail to recognize this fact.

    Articles such as these are what fuel the 'divide and conquer' strategy established by the TPTB. Color everything as red or blue.

  12. "He argues that by failing to raise the debt limit, the U.S. would default with painful consequences."

    This was the worst part of it to me. This is simply a lie. Dr. Paul has said many times that failing to raise the debt limit has nothing to do with default, and that those in Washington would have to choose to default for it to happen.

  13. To be fair, he does not say that "prices" will go up, but "costs". By which, I take him to mean, car payments and mortgage payments will go up if interest rates rise.

    But note that decreasing house prices are not called decreasing "prices" (good) but decreasing "values".

    He is essentially arguing that we will have lower prices and higher costs.

  14. Even though I am VERY anti Fed, higher interest rates would have prevented this mess in the first place.

  15. Anon@1224PM-

    Divide and conquer is the game. To be more specific, TPTB use the dialectic very skillfully, setting the poles of acceptable discourse- you are either "right" and believe in law & order, big business, are anti-abortion, and "support the troops" OR you are "left" and believe in taxing the rich, gun control, publicly funded welfare and strict separation of church and state. Dr Paul, since he fails to fit into those categories neatly, is a genuine threat to their carefully constructed and cultivated dialectic, and threatens to upset the whole scheme.

    As he wins more polls, gets bigger crowds, and leaves his Rethuglican opponents stammering for viable answers to his queries, the bigger the threat he is to their sick game.

    There is no doubt that the economy (despite the apparent rebound that the trillions of "stimulus" dollars are going to induce for the next 6-9 months) is going to be in HORRIBLE shape 15 months from now for the elections, and the good doctor's 30 year track record of consistent votes and libertarian beliefs will give him a VERY good shot at winning the presidency.

    If he wins the primaries, there is no chance in hell that Obama can beat him. He outflanks him on the right AND the left!

  16. There are SO many words for twaddle. Don't make me choose another. You promote NOTHING as your solution to this problem. Don't stand in the way of A Man With A Spine.

    Vote Vertebrate - Ron Paul 2012!

  17. Ron Paul recently stated, and I agree with him, that we have ALREADY DEFAULTED on our debt (by devaluing our US Dollars)! And I agree with him. The only question is, how will we continue with this default? Will we continue to ignore it by continuing to print up more increasingly worthless dollars & increasing our debt until the "bubble pops" and the collapse is even greater later on? Or will we "bit the bullet" now, stop the madness, stop devaluing the US Dollar & stop piling up more debt? Either option will be painful, but you can have less pain & of shorter duration now, or postpone it & get more pain of longer duration later. I know the average politician wants to postpone it until later. Can they "con" the voters into going along with them?

  18. Scherer is a JournOlister: (turn adblock off)

    Along with his Time colleague the awful Joe Klein:

    Here's a list of those outed as JournOlisters so far. Check them when you see an attack on Ron/Rand Paul. It's probably a coordinated attack:

  19. Stop the presses! Is the outrage over the fact that a guy with a BA in Journalism is challenging the intellect of a medical doctor, or the fear that Americans would choose to actually think he is worth listening to?

    As I see it both things spell doom for this country. God help us if Paul doesn't win...

  20. I think Ron Paul would agree that a DEFAULT would in fact lead to much higher interests rates. I'm sure he thinks that interest rates are artificially LOW, being held close to 0 by the federal reserve for close to a decade.

    The problem is that Michael Scherer assumes something that I find hard to believe... He assumes the default/the hike in interest rates can be avoided by further borrowing.

    We could raise the debt ceiling, go on another year, and find ourselves in a worse position. Our debt problem cannot be solved with more debt.

    Further, Mr. Scherer totally buys into the idea that if the debt ceiling is not raised that MEANS the government must default. Scherer believes that wars are more important that our promises to investors (Including Social Security), that the interest payments to the federal reserve (US pays a private institution interest on each dollar it spends) must be honored before our foreign debts or social services.

  21. The US should start behaving more like the banana republic that it is.


    Then we really would "owe it to ourselves" and we could make about 5 trillion in Treasury debt vanish in an instant.

  22. In a system without fractional reserve banking there would be no emotional reaction about higher interest rates.
    There would be an equilibrium between lender and borrower and interest would be an incentive to safe. Higher interest rates wouldn't be judged as negative.

    With a fractional reserve banking system the focus is just on the "stimulus" argument of low interest rates. Disturbing the equilibrium favors banks for some time and may work as a stimulus temporarily but will cause a currency collapse for sure.

    Oh- we will all have to die anyway- the Keynesian replic to that- an admittance of irresponsibility and anti-social/short-term attitude.

    From Germany regards (you folks in the States can be proud of having Ron Paul)

  23. "All the new funds available for the private sector (not sucked up as they are now by government borrowing) would, contrary to Scherer's contention, result in a booming economy built on real savings that is not subject to the volatility of the business cycle."

    It's the 'not subject to the volatility of the business cycle' I object to. Although you're correct in your statement, I had to think a few minutes about what you meant. Most people not well read with ABCT will assume you mean an end to the business cycle. This will only happen with the end of central banks and a few other institutions. Like I said, your statement is correct. But, fools will misinterpret it and throw it back at you to their advantage in the future.