Time to listen to Texas Congressman Ron Paul, the lone voice of reason in Congress today who’s got to feel like he’s shouting into a field of cotton with his repeated warnings about the dangers of a collapsing dollar, while the administration goes AWOL on the problem.
The dollar just hit a record intraday low against the euro on reports that consumer confidence levels have dropped to levels not seen since the post-Watergate era. It is down 7% year to date against the Chinese renminbi, it’s weaker than the Japanese yen and the Canadian loonie.
The joke is the greenback is now only stronger than the Mexican pesos and the Zimbabwe dollar, an overstatement for dramatic effect, to be sure.But since hitting a peak in 2002, the dollar has lost about a quarter of its value against a trade weighted basket of currencies.
A weak dollar acts as an anvil around the neck of the US economy and consumers. Rising inflation is essentially a tax on consumers, so are rising energy prices, and that double whammy threatens to undermine the purchasing power of the rebate checks due out in May–backed by printing even more dollars.
A bellwether event of significant import to our nation’s finances happened this past January 1 with little notice. That’s the day the first baby boomer was allowed to retire. A new federal report wearily warns once again for the umpteenth time that the nation faces some $60t in Social Security and Medicare unfunded liabilities alone.
We’ve heard time and again conservatives say deficits don’t matter. To say that deficits don’t matter is like saying ketchup is a vegetable or trees cause pollution.
The $406b we pay annually in interest on the $9t in federal debt alone would rank as the world’s 30th biggest economy.
That annual interest cost surpasses the gross domestic product of Belgium, and is bigger than the GDP of Denmark and Hungary combined. The $406b would cover the annual cost of investigating Medicare fraud.
Stack all those one dollar bills making up our $9t deficit (and that doesn’t include the $60t in unfunded liabilities for Medicare and Social Security) and you would reach the moon and back. “Printing money cannot create wealth, if it could counterfeiting would be legal,” economist Brian Wesbury has said.
Even Milton Friedman, the Nobel Prize-winning economist and a forceful advocate for laissez-faire economics, got so sick of the way central bankers were willy nilly printing money in the ‘70s, he advocated that the government should replace the Federal Reserve with a computer. “Money is too important to be left to central bankers,” he quipped.
Broad zoom: The US economy has spent all of a year and four months in a downturn over the last two and a half decades. During that time we’ve seen a market crash of 22% in 1987, the S&L crisis, four wars, three financial crises (Mexico, Asian flu and Russian debt crises), the blow up of the hedge fund Long Term Capital, two asset bubbles (dot com and telecom). Since the Bush tax cuts of 2003, the US economy added the equivalent of China’s GDP–and government spending has boomed.
Now Federal Reserve chairman Ben Bernanke has both cut rates at a breakneck speed and pumped a massive amount of monetary stimulus into the markets to cure the credit crisis. I still think he is doing his level best to fix a crisis not entirely of his own making. The question now is, will Bernanke yank the liquidity punch bowl when the economy returns to trend growth in 2010 or 2011 as the central bank projects?
Let’s hope so, because the case for a weak dollar is, to me, well, weak. Namely, that a lame greenback softens the housing and credit crises as it fuels profits at US exporters whose goods are now dirt cheap in the eyes of foreign customers. Strong foreign sales at places like Boeing and Caterpillar reportedly added 1.4% to US growth in the second quarter of 2007. But exports make up just 13% of GDP. Consumers make up a larger 70%.
It’s no surprise consumer confidence is as weak as it was in the ’70s. LBJ had promised this country it could have both guns and butter in the ‘60s, so the Federal Reserve gunned the printing presses to pay for spending on entitlement programs and for the Vietnam war. For the first time, too, politicians got their mitts on taxpayers’ Social Security funds, after Democrats passed a so-called “unified budget” in the late ‘60s.
All that spending caused the dollar to nosedive in the 1970s amidst an oil embargo that sent oil costs, priced in dollars, soaring. Paul Volcker, then Fed chairman, enacted rapid rate hikes hitting 21% by 1979, and the Treasury went so far as to sell $6.4b in “Carter bonds,” largely denominated in Deutschemarks, to prop up the dollar. Gold got ripped off its mooring of an average $35 an ounce in the ‘70s, and in 1980 it hit a record $835 an ounce, around $2,250 in today’s prices.
Gold acts as a dew line for inflation. We essentially have a good handle on how much gold there is in the world and potentially below ground. When gold rises in price, it signals we are printing too many dollars, which indicates a concurrent drop in the greenback’s value. Over the last seven years, gold and oil prices have risen in lockstep, up 239% and 267% respectively. If the dollar had also risen in value at the same rate, oil would be selling at about $30 a barrel.
But now central bankers say that because of the weak dollar, they’ve seen capital losses carved out of an estimated $12t worth of dollars they hold in foreign currency reserves. The fear is they may unload their $12t in greenbacks en masse to cut their losses and run–which would really tip the US into a protracted recession. Already reports out of China show government officials there willing to rotate future planned investments out of US treasurys into other investments.
Countries pegged to the dollar are rightly saying, too, that we are exporting inflation to their shores. Saudi Arabia is a land that has had nearly zero inflation since 1998, but recently inflation soared to 7% annually, despite the fact the country is flush with petrodollars.
Congressman Paul rightfully warns us when he says the US government has “systematically undermined” the US dollar by expanding “the money supply at will for financing war or manipulating the economy with little resistance from Congress–while benefiting the special interests that influence government.”
It’s not just the US gunning the mints. Goldman Sachs figures that three-fifths of the world’s broad money supply growth came from emerging economies over the past year or so. Three-fifths. That’s gigantic.
Goldman Sachs says the growth in Russia’s M3 measure of broad money grew 51% over the last year or so, India by 24%, and by 20% in China, Saudi Arabia, South Africa and Brazil. That’s three times as fast as the US and the rest of the developed world, and it’s faster than their GDP growth rates. It’s the fastest pace in decades.
All that loose money is pouring into commodities, stock exchanges around the planet as well as bond markets–it’s largely why our long-term bond yields have been historically low, spurring a dramatic increase in mortgage borrowing, as mortgage rates typically track the 10-year Treasury note.
Watch out here–emerging economies are just as susceptible to minting lots of money due to political pressures, including things like paying for wars, or calming local populations clamoring for higher pay and more jobs.
What can be done stateside?
The administration needs to state more emphatically that it supports a strong dollar. A stronger dollar would draw liquidity back into the credit markets, lower inflation risks, cut oil prices and restart economic growth, notes Bear Stearns economist David Malpass.
Presidential candidates vilify NAFTA and free trade, when the weak dollar is partly to blame for problems like jobs lost to overseas operations, Malpass adds.
“Empires fail because they run out of money, or more accurately, run out of the ability to spend or inflate,” Congressman Paul warns. “We need to control spending, immediately, before it is too late.”
158 Responses to “Time to Listen to Ron Paul?” Comment by Baba Padmanabhan
Mar 26th, 2008 at 11:06 am
About time you guys at the Fox News woke up about Ron Paul. Guess what? It may not be too late to get behind the R3volution folks…he is stil in the race.
Comment by Nathan Carter
Mar 26th, 2008 at 11:08 am
Thank god someone’s showing some sense and finally listenting to the man!
Also, saying “Deficits don’t matter” automatically makes you NOT a conservative! That is the kind of thing LIBERALS are supposed to say, and still do! So my question is where are have all the conservatives gone? VOTE RON PAUL!
–Nathan
Comment by Ryan
Mar 26th, 2008 at 11:16 am
Thank you for finally getting a good word in about Ron Paul, a little late but better late than never.
Comment by Valeria
Mar 26th, 2008 at 11:17 am
Ron Paul has been telling you all right along what the problem was. Well you reap what you sow. When pundits don’t listen and don’t report fairly and accuratly to the people of course its going to fall.
Comment by Marc
Mar 26th, 2008 at 11:18 am
It is way past time to listen to Ron Paul. He should have been listened to from the beginning. Doing so now would be a good step. Better late than never.
Comment by Brian Davis, Delray Beach, FL
Mar 26th, 2008 at 11:20 am
Wow. A positive article on Ron Paul from foxnews. There might be hope for the GOP yet…
Comment by BBurns
Mar 26th, 2008 at 11:20 am
Fantastic article Ms. MacDonald! Finally someone is printing what some of us have been jumping up and down screaming for years. This country is doomed if we continue on the current course.
Comment by Robert
Mar 26th, 2008 at 11:21 am
Well, its nice to see someone is saying something. This man has been talking about the same thing for the past 20 years or so. What makes people want to listen now, the dollar is actually falling and half of what he says is true. Well, I have personally looked at the other half and its true as well. All of it and more and more people will become aware. My suggestion is if you value your job in journalism. START TELLING THE TRUTH. like this article, kudos Fox you got it right. Heres hoping that my career in journalism will lead me to continue the truths that are hidden amongst the pages of the internet in so called public forums.
You want a candidate for change. You want a candidate that will listen to the people when they say the war is wrong. You want a candidate that will not lie about his record its public right to read it. You want a candidate that will not flip flop on the issues, there are videos of him online saying the same things 20 years ago. maybe with a bit more fire tho. You want a candidate that will make sure the economy doesnt crash, hire an economist You want a candidate that will help fix health care and SS, hire a doctor that has even at times treated patients with no money instead of taking government money. You want a candidate that can run a campaign with no loans, no federal matching money, even no donations from companies with special interest.
You want a candidate that truly tells it like it is.
You want Ron Paul.
Thats the truth as I see it, find it for yourself.
Wikipedia.com
Comment by Vlad
Mar 26th, 2008 at 11:21 am
Excelent report. Its true. In economics, Ron Paul is the only political voice of reason.
He has some good ideas also on what your country should be
But that’s a different issue.
Comment by Jim
Mar 26th, 2008 at 11:24 am
The time to listen was before he was run out of the race for POTUS. The America you and I grew up in is gone in four years time. With or without Ron Paul. It’s too late now.
Comment by Walksthisway
Mar 26th, 2008 at 11:25 am
I’m impressed that FOX news has openly admitted to the needs of the economic platform of Ron Paul to bring this country ontrack again. A cautious thumbs up to Fox. Thanks Ms. McDonald
Comment by Hot 27 yo Female
Mar 26th, 2008 at 11:25 am
What else we aren’t hearing publicly is that the US Government is trying to collapse the dollar, to replace it with the Amero. Why replace it with the Amero? Because by then, the US will have lost it’s soverignty and government as we have ever known it - along with Canada and Mexico. The North American Union will be completed, with 1 currency, and eventually merged with the EU, ASEAN, and the Bilderberg superpower will control the world by force. Why aren’t people paying attention to this? Because you are psychologically programmable. Why are you angry that I posted this? Because you are stubborn and you don’t want to find your way out of what you think you know, and you don’t want to admit you are wrong.
Comment by joey
Mar 26th, 2008 at 11:26 am
Watch it! You might be labeled a kook.
Ron Paul also says that real economic growth comes from long term savings and market dictated interest rates. What a crazy guy!
“We’re all Keynesians now” bwaaaahaaaaaahaaaaaaaaa
Comment by Lars
Mar 26th, 2008 at 11:27 am
Hi Elizabeth. that is the best article on the current problems I have read in the main media so far. It is important people begin to realize the problems we are in before it is too late.
Comment by Jacques Poirier
Mar 26th, 2008 at 11:27 am
Well, the good doctor is still around. Why don’t you call him up and show him some interview time, for a change?
Comment by Paula
Mar 26th, 2008 at 11:29 am
Thank you for your article on Ron Paul. Its frustrating watching the economy go down the tubes and none of the candidates know what they are talking about except for Ron Paul. What is going on now, happened to the Roman Empire. America needs to wake up and listen to Ron Paul. He knows what is going on and can lead America out of this mess.
Comment by tim, minnesota
Mar 26th, 2008 at 11:32 am
Thanks for a great review of our economic situation. Even better thanks for crediting the only currently active presidential candidate Ron Paul for being an economically wise person. http://www.ronpaul2008.com folks and get behind the only candidate who knows what is going on and how to fix this mess.
Comment by Tesh
Mar 26th, 2008 at 11:37 am
Wait, this is on Fox? Where were you months ago? You’re just now starting to understand that fiat money and inflation are bad for the economy? And you’re finally realizing that Ron Paul has something to say about it?
The time to listen to Ron Paul has been the last twenty years as he’s argued pretty much the same points. The time to listen to Ron Paul was when he started his presidential campaign. The time to listen to Ron Paul was when he answered questions intelligently in debates, despite attempts to ignore and mock him.
Listening to him now is still a good idea, but it is almost too little, too late.
Comment by Adam
Mar 26th, 2008 at 11:38 am
Dr. Paul has been warning us of the pending economic disaster for the last year but organizations such as Fox and ABC have only criticized and mocked him when he has done so. Our country will be bankrupt if we continue down the same path of overspending and printing money and it doesn’t seem like anyone cares.
McCain, Clinton, Obama, NONE of the other leading Presidential candidates speak about the economic problems we face and none of them will do anything to correct the issue. The democrats health care plan will only further the problem just as McCain’s 100 year war plan will do.
It’s sad really. It’s sad that we’re watching our Empire collapse and the only thing people are concerned about is a ‘woman’ in office, a ‘black’ man in office, or not offending the current party. When do we vote for integrity and for a different direction?
Ron Paul is the only candidate who speaks of real change in this Country. He is the only candidate who addresses the fact that we are spending our children and grand children into bankruptcy. Ron Paul is the only candidate speaking of the devaluation of the dollar and is the only candidate who addresses the fact that we need to get back to a more stable currency.
Wake up America! Don’t be one of these people: youtube.com/watch?v=7zsr0UpVjoE
Comment by Hugh
Mar 26th, 2008 at 11:40 am
Amen Sister!
Comment by Desiree
Mar 26th, 2008 at 11:41 am
Great article. Dr. Paul has been saying this for years and we Americans need to listen and learn from him before it’s too late. The Federal Reserve System is un-Constitutional and therefore illegal. Our Founding Fathers were very clear, NO Central Banks! Down with the Federal Reserve Fraud! Ron Paul for president!!
Comment by Paul F.
Mar 26th, 2008 at 11:41 am
Thank you for the honest and insightful reporting. Why is Ron Paul being ignored? Perhaps another story worth reporting.
Comment by Stuart Roberts
Mar 26th, 2008 at 11:43 am
Was that the sound of a few folks waking up? Ron Paul is, unfortunately, going to be looked back upon as the “seer” no one paid any attention to very shortly.
Best economic advice I’ve heard in the last few weeks?
“Invest everything you can NOW, in precious metals: gold, silver and copper-jacketed lead.”
The fertilizer is gonna hit the ventilator very soon, now, people.
Comment by a-ron
Mar 26th, 2008 at 11:45 am
For crying out loud we need a president with wisdom and insight into reality. The concept of the American constitution is too important to neglect for the sake of our future as a free society. Do yourself a favor America read more about the dollar and how it is being destroyed, and read more Emac!
Comment by Michael
Mar 26th, 2008 at 11:46 am
Elizabeth MacDonald please do what you can. Talk to your friends, talk to reporters, get the message out about Ron Paul. If you guys realy get motivated you could ask fox report more on Ron Paul and if Fox doesn’t aggree you could even strike which would get large amounts of media coverage I would assume. You guys have alot of power to get the message out to those older people who don’t use the internet. You could play a crucial role in this revolution. Things might be good now for people with high paying jobs but that will not last for the long term for peoples children and their children think about them. Please use your inside positions to talk to people many other people would have a much harder time being able to speak to. Please the people need help, we are struggling and you could make a huge difference.
Comment by Flo
Mar 26th, 2008 at 11:47 am
Paul is a visionary. He seens the results of our actions years before the news hits the stands. He understands the working of our economic system and puts the other candidates to shame. Ron Paul needs to be in the news. People need his insight and knowledge. America is on a fast train headed for a wreck.
Paul has a bipatiasan plan to save Social Security. No one is talking about it. What is wrong that we wait till after the train wreck to look at our tracks?
Comment by Anonymous
Mar 26th, 2008 at 11:49 am
Time to listen to him? Should have nominated him! Might be to late now. This last year WAS the time to support him and his ideas in the MSM instead of laugh. It was a sham and a shame.
Comment by TimG
Mar 26th, 2008 at 11:52 am
I want to extend my Kudos to Fox for this article. It is unfortunate that the many warning and messages of Ron Paul get attention only after the damage has been done. Ron Paul was the only one screaming that we are in economic trouble induced by the Fed, the unconstitutional war in Iraq, and our federal budget deficit spending and we are in for some trouble if it continues. In fact, many pundits felt it wise to call Paul a crazy, kooky old man. Now the we can see that his message of the Fed devaluing the dollar was true, heads are turning to realize that his honesty is what was so crazy about his message.
At a time when most in our Congress offer blank checks for the President do to as he pleases and a time when the American public expect to be lied from by the politicians, only one sane voice would indeed come off a crazy. His revolutionary message is one that we all should be paying much closer attention to.
Thank you for posting your thoughts on Ron Paul’s message and the fact that it was right on from the economical sense.
Comment by SunTzu360
Mar 26th, 2008 at 11:53 am
How about this, end the war, save some money by returning our troops to america, end the federal reserve so the dollar cannot be debased, set up a Oil-Gold-Silver-Platinum backed currency (or just back the dollar with it when it gets back on track), and then stop taxing people and maintain a smaller government (at least for 8 years) to regain our footing on the debt. We promised the American people social security, but what happens when the government spent all the money for social security? Most Americans live in financial fantasy land, where they believe the government has and ENDLESS supply of wealth, however its not true, we are running on loans from china we should all be ashamed to elect presidents who spend spend and spend, then when their term is up, they say “Oh well, not my problem anymore” Then when the next person goes in, they are depressed by the sheer amount of debt that they inherit, so they give up and spend more and more like the last one.
Comment by Dave
Mar 26th, 2008 at 11:53 am
I can’t believe you work for fox how can it be that something sensible came from fox???
Comment by Aaron
Mar 26th, 2008 at 11:54 am
Until we address the roots of our problems we will never solve them. Our fiat currency, the idea that government should take care of us financially or protect us from ourselves, and building and maintaining a global empire are the roots of our economic and security woes. The weak dollar, housing bust, loss of manufacturing base, and other maladies are the fruits of those fundamental decisions our government–both Republican and Democrat has made.
Perhaps more important than those, the social problems we face (breakdown of the family, rampant homosexuality, abortion, drug use, etc.) are not results of a lack of government action, they are the results of rejecting spiritual (Biblical) and moral absolutes.
Main-stream media and entertainment have dumbed-down Americans to the point they act primarily on feelings not facts. Therefore, we are on a collective ride towards increasing tyranny, socialism, globalism, and fascism.
Comment by Robert Moore
Mar 26th, 2008 at 11:54 am
Finally, someone that gets it! Ron Paul is my hero. He is dead on and I will support him and anyone running for public office that earns his stamp of approval. I love this country too much to see it destroyed by an unconstitutional central bank.
Comment by Anonymous
Mar 26th, 2008 at 11:55 am
Wow! Elizabeth, dust off your resume.
A balanced and fair piece from Fox? Unfortunately you won’t be allowed to write credible pieces for long.
If Ron Paul was right on this, wait until you see his stands on all the other issues. Forget McClinbama.
p.s. buy silver.
Comment by Gasil
Mar 26th, 2008 at 11:59 am
You Guys at fox and the media have done everything in your power to eliminate Ron Paul and in the process have lost me has a veiwer because of your Corpgov propaganda . Now you want people to listen to Ron Paul ? You wouldn’t even give him a seat at the debate in the Early contest . He is the only candidate telling the truth and Ya’ll have ignored him while promoting the very problems that got us here the wars and Wall Street
Comment by Scott from Texas
Mar 26th, 2008 at 12:01 pm
Will we listen? The main stream media ignored Ron Paul for the past year and laughed at him for telling us the truth and now you expect the nation to wake up and listen? I hope that we will before it is too late.
Comment by Web Smith
Mar 26th, 2008 at 12:02 pm
The time to listen to Ron is well past. Thirty years ago, before nine trillion dollars had been stripped out of American pockets, the economy could have been resurrected without too much suffering. At least now, we know where to get the blocks when its time to rebuild. We can start by reminding Congress, as Congressman Crockett once did, that money is not their’s to give. The one thing to keep in mind is that Federal Reserve notes are not legal tender.
Comment by Shane Savoie
Mar 26th, 2008 at 12:03 pm
It’s a shame that the only candidate for the GOP nomination that has a truly conservative stance on government spending had to be someone with so little chance of election. For all of his faults, Ron Paul is the only one who “gets it” on the economy issue. I don’t care who many advisors he may rally around him; John McCain knows less about money than he does about ethics. With a teacher like Charles Keating, that should be a surprise.
Comment by Mythic Mystic
Mar 26th, 2008 at 12:05 pm
Dr. Paul has been warning about this for as long as he has been in Congress. We had a chance to change our direction in this nation, but between the media and others calling Dr. Paul a kook or saying he “has no chance” and the public ignorant on how our economy and nation should be run, it’s no wonder we are in big trouble now. Dr. Paul is not a savior but his supporters know that his ideas (which are that of our founders) are sound and proven when put into historical context. McCain, Obama, or Clinton will not take the steps needed to correct our mistakes. Those “Media Anointed” candidates are too enthralled by the “Central Bankers” and have no idea what their oaths of office even mean. I doubt those three have ever read the Constitution, Bill of rights, or any founding documents. If they knew history they would have known what happened when we had the Articles of Confederation before the Constitution was enacted. What happened then? WE PRINTED TOO MUCH MONEY!!!! Those who do not see the wisdom and logic of Dr. Paul’s argument do not know history and are susceptible to government/corporate/media propaganda.
Don’t worry the economy is doing fine.
Too bad this article is too late for Dr. Paul to become POTUS. We may have saved this nation if more people realized it sooner. See ya in the bread line! Oh wait, I’ve got my storable food so I WON’T see you in the bread line because I have my own food. The REVOLUTION is aware if the REAL problems. Isn’t that “Crazy” or “Cult-Like”, it’s sad if it is thought so.
Comment by JD
Mar 26th, 2008 at 12:07 pm
Amen! Finally, the message is spreading. We need address the root cause of our current economic problems before its too late.
Comment by Tim
Mar 26th, 2008 at 12:14 pm
I think this is a great article. Unfortunalty, most polititians do not want to correct the issue because it will be painful and the majority of americans lack the understanding of exactly how important this is.
This was my main reason for supporting Mr. Paul for President, due to his understanding of how the ecomomy works. One thing to keep in mind when you are looking at Obama or Hillary, the federal government cannot give you anything without taking something away from you. So all those promises of universal healthcare means higher taxes plain and simple.
Comment by mike
Mar 26th, 2008 at 12:22 pm
very well said. this article puts a lot of issues in perspective for me.
Comment by Frank
Mar 26th, 2008 at 12:23 pm
We love how the slip in the “positive” effects of NAFTA within a story that otherwise almost doesn’t mention Ron Paul as much as the economic mess we’re in.
FOX is simultaneously refusing to condemn NAFTA as part of the North American Union, which will forever eliminate the dollar anyway, and leave us with the Amero, and giving almost no attention to Ron Paul other than at token moments.
FOX sickens us.
With NAFTA, there won’t be any closing of the border to allow only legal citizens in and out.
Ron Paul voted AGAINST NAFTA and CAFTA because, despite their names, they are NOT about “free trade” any more than the “PATRIOT” Act is patriotic.
Corrupt government officials give their laws nice-sounding names precisely to distract the masses who, they know, will likely not verify their claims.
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