bobbyw24
12-16-2009, 06:23 AM
Full title:
Congressman Ron Paul’s “Free Competition in Currency Act” Won’t Solve the Problem But Still Raises Vital Issues
While Congressman Ron Paul’s Free Competition in Currency Act is not a workable proposal, it points to a deeply serious problem with the Federal Reserve System that must be faced if the U.S. economy is to have a future.
Over the last 40 years the Federal Reserve, with the acquiescence of Congress and the executive branch, has become the primary regulator of the economy. The prevailing philosophy is called monetarism, and it’s based on the raising and lowering of interest rates.
This period has been marked by the successive creation and destruction of several gigantic investment bubbles. After the Federal Reserve brought on the recession of 1979-83 by raising interest rates to over 20 percent, we had a bubble during the Reagan/G.H.W. Bush years based on business mergers and acquisitions. It was then that the fulcrum of the U.S. economy shifted from manufacturing to finance. This bubble collapsed in a recession that brought Bill Clinton to the presidency in 1992.
Then, using the strong dollar to attract foreign investment, the Federal Reserve and the Clinton administration floated the U.S. economy throughout the 1990s on what was called the dot.com or "tech" bubble. This bubble collapsed in 2000-2001 with an enormous loss of asset value to U.S. and foreign investors, including massive loss of pension funds.
In 2000 George W. Bush was elected president. Instead of taking steps to rebuild the U.S. manufacturing economy, the Federal Reserve under Chairman Alan Greenspan slashed interest rates and removed the regulatory controls, resulting in a huge inflation of home prices through the housing bubble. Cash entering the economy through mortgage lending was the economic engine for the Bush presidency. Taxes from the housing bubble paid for much of the Afghanistan and Iraq wars.
Other investment bubbles in equities, hedge funds, derivatives, and commodities also took off. All this collapsed in the financial crash of October 2008. Now, President Barack Obama is trying to restart the U.S. economy by a huge infusion of federal government money through the largest increase in the national debt since World War II.
http://www.marketoracle.co.uk/index.php?name=News&file=article&sid=15829
Congressman Ron Paul’s “Free Competition in Currency Act” Won’t Solve the Problem But Still Raises Vital Issues
While Congressman Ron Paul’s Free Competition in Currency Act is not a workable proposal, it points to a deeply serious problem with the Federal Reserve System that must be faced if the U.S. economy is to have a future.
Over the last 40 years the Federal Reserve, with the acquiescence of Congress and the executive branch, has become the primary regulator of the economy. The prevailing philosophy is called monetarism, and it’s based on the raising and lowering of interest rates.
This period has been marked by the successive creation and destruction of several gigantic investment bubbles. After the Federal Reserve brought on the recession of 1979-83 by raising interest rates to over 20 percent, we had a bubble during the Reagan/G.H.W. Bush years based on business mergers and acquisitions. It was then that the fulcrum of the U.S. economy shifted from manufacturing to finance. This bubble collapsed in a recession that brought Bill Clinton to the presidency in 1992.
Then, using the strong dollar to attract foreign investment, the Federal Reserve and the Clinton administration floated the U.S. economy throughout the 1990s on what was called the dot.com or "tech" bubble. This bubble collapsed in 2000-2001 with an enormous loss of asset value to U.S. and foreign investors, including massive loss of pension funds.
In 2000 George W. Bush was elected president. Instead of taking steps to rebuild the U.S. manufacturing economy, the Federal Reserve under Chairman Alan Greenspan slashed interest rates and removed the regulatory controls, resulting in a huge inflation of home prices through the housing bubble. Cash entering the economy through mortgage lending was the economic engine for the Bush presidency. Taxes from the housing bubble paid for much of the Afghanistan and Iraq wars.
Other investment bubbles in equities, hedge funds, derivatives, and commodities also took off. All this collapsed in the financial crash of October 2008. Now, President Barack Obama is trying to restart the U.S. economy by a huge infusion of federal government money through the largest increase in the national debt since World War II.
http://www.marketoracle.co.uk/index.php?name=News&file=article&sid=15829