The government can only tax it's people so much. So whatever extra money they want, they get the FED to print or create out of thin air. This devalues the dollars you hold in your hand, thus is the inflation tax. RON PAUL IS THE ONLY person in Washington that would guarantee an end to this. This is THE ISSUE OF OUR DAY and our nation hangs in the balance of a MAJOR financial meltdown. The money changers of our day are running short on tricks and we need a return to sound money. Ron Paul.
http://www.mises.org Murray Rothbard - What Has Government Done to Our Money
Norman Dodd On Tax Exempt Foundations:
Decoding The Past - Secrets Of The Dollar Bill:
http://video.google.com/videoplay?docid=6534861207969567641#
http://www.trueworldhistory.info
From 2001 to 2005, the stock prices of Fannie Mae and Freddie Mac dropped more than 50 percent. To address the crisis, Congress came up with a piece of legislation entitled "The Federal Housing Finance Reform Act of 2005." In a speech on the House floor that seems clairvoyant in retrospect, Rep. Ron Paul explained why he was opposed to the bill:
Ironically, by transferring the risk of widespread mortgage defaults to the taxpayers through government subsidies and convincing investors that all is well because a "world-class" regulator is ensuring the GSEs' soundness, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie and Freddie have distorted the housing market by allowing Fannie and Freddie to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive uses into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.
Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital into housing creates a short-term boom in housing. Like all artificially created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have been had government policy not actively encouraged over-investment in housing.
Perhaps the Federal Reserve can stave off the day of reckoning by purchasing the GSEs' debt and pumping liquidity into the housing market, but this cannot hold off the inevitable drop in the housing market forever. In fact, postponing the necessary and painful market corrections will only deepen the inevitable fall. The more people are invested in the market, the greater the effects across the economy when the bubble bursts.