In 1982, Ron Paul predicts the future

[bobbyw24]

Had the nation listened to him back then we'd all be better off. Better late than never, I suppose

Here is Ron Paul, once again, showing his prescience on economic matters back in October of 1982:

“This conference report is an open-ended guarantee of hyperinflation. . . . Not only is the FDIC given unlimited power to act unilaterally, its actions may include loans, deposits, exchanges, and gifts to any of the 15,000 insured banks that the FDIC chooses. . . . This conference report makes clear exactly what “lender of last resort” means. It means that the Government stands ready to print any amount of paper money or create credit for anyone, at anytime, in order to keep a financial institution open…The FDIC has about $11 billion in reserves and insures deposits totaling over $1 trillion. But that is not really important any longer. Last March, the Congress passed House Concurrent Resolution 290, pledging the full faith and credit of the U.S. Government to deposits in insured institutions. It is not any longer simply a matter of using up $11 or $12 billion. The Government has made a moral obligation to bailout everyone, everywhere, to the tune of $1 trillion.”

Score another one for Austrian economics.

http://libertymaven.com/2010/01/10/in-1982-ron-paul-predicts-the-future/8576/

[brandon]

I don't see how he predicted the future from this quote. He mentions a possibility of hyper inflation and the government needing to bail out the FDIC...neither of which have happened.

[bobbyw24]

I don't see how he predicted the future from this quote. He mentions a possibility of hyper inflation and the government needing to bail out the FDIC...neither of which have happened.

Americans are about to re-learn that bank deposit insurance isn't free, even as Washington is doing its best to delay the coming bailout. The banking system and the federal fisc would both be better off in the long run if the political class owned up to the reality.

We're referring to the federal deposit insurance fund, which has been shrinking faster than reservoirs in the California drought. The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago, when regulators told us all was well and there was no need to take precautions to shore up the fund.



The FDIC has since had to buttress the fund with a $5.6 billion special levy on top of the regular fees that banks already pay for the federal guarantee. This has further drained bank capital, even as regulators say the banking system desperately needs more capital. Everyone now assumes the FDIC will hit banks with yet another special insurance fee in anticipation of even more bank losses. The feds would rather execute this bizarre dodge of weakening the same banks they claim must get stronger rather than admit that they'll have to tap the taxpayers who are the ultimate deposit insurers.

It isn't as if regulators don't understand the problem. Earlier this year they quietly asked Congress to provide up to $500 billion in Treasury loans to repay depositors. The FDIC can draw up to $100 billion merely by asking, while the rest requires Treasury approval. The request was made on the political QT because, amid the uproar over TARP and bonuses, no one in Congress or the Obama Administration wanted to admit they'd need another bailout.

http://online.wsj.com/article/SB10001424052970204731804574385072164619640.html

[FrankRep]

I don't see how he predicted the future from this quote. He mentions a possibility of hyper inflation and the government needing to bail out the FDIC...neither of which have happened.

The Coming FDIC Bailout - WSJ.com

The Coming Deposit Insurance Bailout
Another lesson that federal guarantees aren't free.

Wall Street Journal
SEPTEMBER 1, 2009

http://online.wsj.com/article/SB10001424052970204731804574385072164619640.html

[brandon]

Yep... The FDIC will definitely need some kind of bailout at some point in time. Just hasn't happened yet.