Ron Paul Under Attack

“First they ignore you, then they laugh at you, then they fight you, then you win.” — Mahatma Gandhi

Mahatma Gandhi successfully sought the overthrow of tyrannical British rule in India via non-violent civil protests. In doing so, the above quote became synonymous with his name.

Basically, Gandhi’s quote outlines how new ideas are received by the special interests that the ideas threaten. For decades, Ron Paul has strived to expose the flawed Keynesian thought that dominates economic thinking in the United States–and most of the rest of the world.Not only does Krugman forget the WFC of 2008, he conveniently forgets the S&L crisis of the 1980s when a third of the nation’s S&Ls failed, and the FSLIC and the Resolution Trust Corporation closed or forced mergers of another 1,000 S&Ls.

And, there was the Latin American debt crisis that blew up in the 1980s after loose money policies caused Latin American debt to balloon to amounts that could not be sustained. In that mess, the US engineered a $50 billion bailout of Mexico.

The effects spread to Asia, which required still more loose monetary policies that were used to bailout countries there. Also in the late 1990s, Russia defaulted on domestic debt and declared a moratorium on payment to foreign creditors.Long-Term Capital Management was another disaster brought on by loose money. LTCM was a hedge fund that collapsed in the late 1990s, leading to a Fed-forced $3.6 billion bailout. This bailout is memorable in that the Fed had to meet over a weekend to force our nation’s largest banks to pony up money to rescue a mere hedge fund.

Ron Paul is right. Loose money does lead to monetary crises. But, as Ron is quick to point out, he cannot say just when those crises will surface.

Paul Krugman, on the other hand, seems to think that they never occur. After all, if he doesn’t recognize the 2008 WFC, I doubt he will ever recognize a crisis.

Reprinted with permission from CMI Gold & Silver.