Monday, December 26, 2011

The Coming Fed Bailout of Europe Must Be Stopped!

By Ron Paul

The economic establishment in this country has come to the conclusion that it is not a matter of "if" the United States must intervene in the bailout of the euro, but simply a question of "when" and "how". Newspaper articles and editorials are full of assertions that the breakup of the euro would result in a worldwide depression, and that economic assistance to Europe is the only way to stave off this calamity. These assertions are yet again more scare-mongering, just as we witnessed during the depths of the 2008 financial crisis. After just a decade of the euro, people have forgotten that Europe functioned for centuries without a common currency.

The real cause of economic depression is loose monetary policy: the creation of money and credit out of thin air and the monetization of government debt by a central bank. This inflationary monetary policy is the cause of every boom and bust, yet it is precisely what political and economic elites both in Europe and the United States are prescribing as a resolution for the present crisis. The drastic next step being discussed is a multi-trillion dollar bailout of Europe by the European Central Bank, aided by the IMF and the Federal Reserve
The euro was built on an unstable foundation. Its creators attempted to establish a dollar-like currency for Europe, while forgetting that it took nearly two centuries for the dollar to devolve from a defined unit of silver to a completely unbacked fiat currency note. The euro had no such history and from the outset was a purely fiat system, thus it is not surprising to followers of Austrian economics that it barely survived a decade and is now completely collapsing. Europe's economic depression is the result of the euro's very structure, a fiat money system that allowed member governments to spend themselves into oblivion and expect that someone else would pick up the tab.

A bailout of European banks by the European Central Bank and the Federal Reserve will exacerbate the crisis rather than alleviate it. What is needed is for bad debts to be liquidated. Banks that invested in sovereign debt need to take their losses rather than socializing those losses and prolonging the process of adjusting their balance sheets to reflect reality. If this was done, the correction would be painful, but quick, like tearing off a large band-aid, but this is necessary to get back on solid economic footing. Until the correction takes place there can be no recovery. Bailing out profligate European governments will only ensure that no correction will take place.

A multi-trillion dollar European aid package cannot be undertaken by Europe alone, and will require IMF and Federal Reserve involvement. The Federal Reserve already has pumped trillions of dollars into the US economy with nothing to show for it. Just considering Fed involvement in Europe is ludicrous. The US economy is in horrible shape precisely because of too much government debt and too much money creation and the European economy is destined to flounder for the same reasons. We have an unsustainable amount of debt here at home; it is hardly fair to US taxpayers to take on Europe's debt as well. That will only ensure an accelerated erosion of the dollar and a lower standard of living for all Americans.



  1. Make China pay for it. They want to be a superpower I say start giving them some tests.

  2. It's good of Dr. Pual to point out that a bailout of European banks by the European Central Bank and the Federal Reserve will exacerbate the crisis rather than alleviate it.

    But, the Sovereign Lord God, has plans to let the European sovereign debt crisis fester and to utterly destroy the fiat money system. There will be no free market money system as desired by Murray Rothbard and other Libertarians.

    Murry Rothbard reported that the fiat monetary system began on August 15, 1971, when the US government suspended the convertibility of the US dollar to gold.

    The death of fiat money, that is, the death of fiat currencies, began in August 2011, as the US Dollar, $USD, began to rise from 73.50. This was immediately after investors sold out of stocks in July 2011, when they became aware that a debt union had formed in the Euro zone. Then in August, they sold heavily again, when Angela Merkel and Nicolas Sarkozy called for a true European economic government, and when Herman van Rompuy called for a sovereignty union.

    Bible prophecy found in Daniel and Revelation provides insight into current world events. As fiat money suffers debt deflation, nations loose their sovereign authority, and debt sovereignty, and have to look to a credible sovereign to provide seigniorage, that is moneyness. In the Euro zone fate is passing the baton of sovereignty from sovereign states to the EU ECB and IMF Troika, as technocratic government is being installed in profligate Italy and Greece, and as seigniorage aid is provided to Greece. The Beast Regime of Neoauthoritarianism is rising up out of the Mediterranean Sea. This monster of statism has seven heads, symbolic of its occupation in mankind’s seven institutions and ten horns symbolic of its rule in the world’s ten regions, Revelation 13:1-4.

    Soon out of sovereign armageddon, that is a credit bust and financial system breakdown, Revelation 13:3-4, leaders will meet in summits to announce regional framework agreements, cede sovereignty to a Federal Europe, establish a fiscal union, provide a committee for fiscal sovereignty, announce austerity measures, institute structural reforms, and impose debt servitude, in order to provide for regional security and stability. The Sovereign Lord God, Psalms 2:4-5, is operating through the first horseman of the apocalypse, Revelation, 6:1-2, to effect a EU wide political, economic and military coup d etat which will result in the death of all forms of economic life. The economic capital of credit and carry trade investing is being replaced with the political capital of diktat.

    As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word will and way of these two; they will give their full allegiance to their diktat, Revelation 13:3-4.

    The statue of the progression of human governments, Daniel 2:31-44, reveals that God has purposed for the destruction of fiat currencies to establish an eternal kingdom which will be ruled by His Son, Revelation 2:26-27.