[ExI] Fwd: My Answer to the President (from Ron Paul)

Stathis Papaioannou stathisp at gmail.com
Fri Sep 26 12:28:43 UTC 2008

2008/9/26 Samantha  Atkins <sjatkins at mac.com>:
> Begin forwarded message:
> From: Congresman Ron Paul <updates08 at ronpaulforcongress.com>
> Date: September 25, 2008 12:52:18 PM PDT
> To: sjatkins at mac.com
> Subject: My Answer to the President
> Reply-To: Congresman_Ron_Paul_bcpag_lnaqfb at cp20.com
> Dear Friends:
> The financial meltdown the economists of the Austrian School predicted has
> arrived.
> We are in this crisis because of an excess of artificially created credit at
> the hands of the Federal Reserve System. The solution being proposed? More
> artificial credit by the Federal Reserve. No liquidation of bad debt and
> malinvestment is to be allowed. By doing more of the same, we will only
> continue and intensify the distortions in our economy - all the capital
> misallocation, all the malinvestment - and prevent the market's attempt to
> re-establish rational pricing of houses and other assets.

The U.S. Federal Reserve screwed up. It should have *raised* interest
rates when it saw the flurry of activity in the housing market, or
otherwise tried to rein in the activity of the commercial banks it is
supposed to be supervising. That's what central banks did in most
other countries under similar circumstances, and the main problems
those non-U.S. banks now have is exposure to U.S. bad loans.

Stathis Papaioannou

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