Ron Paul:Be Prepared for the Worst

www.forbes.com...

Forbes Magazine dated November 16, 2009
The large-scale government intervention in the economy is going to end badly.

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?

What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.

The fact that Ron Paul, one of the few in Congress who seems to understand economics and the economy, predicts that it is more likely that there will be a repeat of the Great Depression, is extremely concerting.
Everything that he is saying, though, makes perfect sense. You cannot keep printing money without dire consequences.
Unfortunately, Congress and the Administration seem to be ignoring the warnings, and continue government intervention, when it seems obvious that they are making it worse.

i truly believe Ron Paul was our last hope, he was one of the few politicians not consumed by greed and power.

but like they say.. the man most fit for president will never be president.

as a finance major, i am able to see the validity behind this article, and i fear that the worst is indeed ahead of us.

interesting post my friend.

Thanks for the post, but how is the article dated November 16, 2009, when it is only November 1, 2009 now?

I noticed the date thing too.
Ron Paul would have been a great president!

Magazines always date the issues one to two weeks ahead of its issue. Next time you're at the magazine rack, pick up any magazine that just came out, and you'll see that the date is probably a future date.

Prof, anyone with a modicum of financial awareness should be shaking like a dog trying to pass a peach pit.

I fear our economy is beyond recovery, and these interim steps are like direct electrical shock applied to a stopped heart.

Normally, when you dig yourself into a hole, after a while, you quit digging. Lest you dig yourself in too deep to get out.

We're past that. On so many levels, in so many major industries, they are ruined, and government intervention prevents any meaningful recovery.

One more little blip, and this thing could blow up in our faces.

I can no longer afford restful sleep. Rather restless naps.

When this thing tilts on over, things will happen fast, and like the Titanic, the nose will dig deep with an irreversible force.

WTG Prof!
It really is common sense!
I will be surprised if this all works out like they say it is supposed to!
I dont see how it can.

There comes a time when there is nothing left to prop up.
We have no more propping up material anyway. We blew it.
Especially when continually doing the same things that got us into this in the first place!

Instead of looking to the future we bought our lives on credit.
We live way beyond our means yet think its always sustainable.
Is that completely insane or what?

We have not saved for a rainy day and are now in a pickle.
We can never return to the old ways again. They are gone.
Yet we somehow think we can. That is why we are toast.
We still have that "because I deserve all of it" attitude.
Well, guess what we do. And the downside isnt purty.
Contrary to these daily end of the world threads,
we may scrape by a few more years.
But eventually the repo guy always comes. Thats what he does.

Our jobs are not coming back.
They were downsized, outsourced and automated away a long time ago.
It is catching up to us bigtime now.
Our spending is what makes the economy roll.

I am afraid they will probably try more war for profit.
Has worked very well before.
Feed the soldier, he'll fire a gun for ya.....
That's what its coming to.

I am just a broken record here and wasting my breath,
but we blew it along time ago with our reckless borrowing.
All the while completely indifferent to the bills needing to be paid one day.
All with little regards to future problems such as peak oil, environmental degradation, overcrowding, collapse of the food system, etc.
Oh well I'm wasting my time even writing this.
But if it helps one good family to weather this s*** storm,
and prepare, it was worth it.

The large boned lady is bellowing now. I can hear her, can you?
Thanks for letting a broken record play!

Originally posted by ProfEmeritus
The fact that Ron Paul, one of the few in Congress who seems to understand economics and the economy, predicts that it is more likely that there will be a repeat of the Great Depression, is extremely concerting.
Everything that he is saying, though, makes perfect sense. You cannot keep printing money without dire consequences.
Unfortunately, Congress and the Administration seem to be ignoring the warnings, and continue government intervention, when it seems obvious that they are making it worse.

You'd be surprised at just how many are in favor of regulating the FED and treasury now. There have been several senators and congressmen / women step up and start voicing concern over the way we've been bought and sold to wall-street and the bankers. Problem is... they're being voted down by the majority of ignorant idiots content with their perpetuation of this endless pyramid scheme. I'm just trying to find some hope in this depression by metaphorical and economic. I'm sure, we'll start seeing a major push towards more representatives like Dr. Paul in the near future.

Originally posted by ProfEmeritus
... I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner...

From 1929:

[atsimg]http://files.abovetopsecret.com/images/member/ef661eedf2a3.png[/atsimg]

And five years later, from 1934:

[atsimg]http://files.abovetopsecret.com/images/member/97cac1e799a0.jpg[/atsimg]

reply to post by dooper

Prof, anyone with a modicum of financial awareness should be shaking like a dog trying to pass a peach pit. I fear our economy is beyond recovery, and these interim steps are like direct electrical shock applied to a stopped heart

Dooper, you're right on. I have been doing everything that I can for my family and I, to lessen the effect, when it really turns ugly, and I am also convinced that it will.
For those that are also concerned, there is great advice on the Survival forum of ATS. I haven't visited it lately, but I certainly have contributed in the past.

reply to post by dodadoom

There comes a time when there is nothing left to prop up. We have no more propping up material anyway. We blew it. Especially when continually doing the same things that got us into this in the first place!

My friend, you're right.
Isn't it amazing that the government finally RECOGNIZED the Bernie Madoff Ponzi scandal, but continues to run the biggest Ponzi Scheme in the world-namely the US Economy?
This Ponzi Scheme, called the US Government can end up only one way, the same way all Ponzi Schemes end up, with no net worth, and with all of its investors (the American People) bankrupt.
As soon as people realize that their investments (our taxes) are being destroyed, they must start doing what any victim does, find other ways of preserving themselves. Unfortunately, we cannot stop paying taxes, but we can take what money we have and trade it for things that we will need to survive. before that money is recognized as the worthless paper that it is.

reply to post by silent thunder

Silent, if you come up with any other cheerful news, please don't hesitate to share with the rest of us.

As if we needed more evidence.

Good post, star for you.

reply to post by silent thunder


Great find. Thanks for posting those papers.
Isn't it amazing that rather than LEARN from past mistakes, Congress and the last two administrations seem hell-bent on REPEATING the mistakes of history?
Obama even said that he wants to emulate FDR- well he's certainly doing that, unfortunately.

I've starred all of your posts, because it is obvious that all of you understand what is happening. Isn't it amazing that our "elected" officials can't see it?

reply to post by ProfEmeritus

I truly cannot understand these people.

Anyone, and I mean ANYONE who didn't sleep through Economics 101 would KNOW better!

We have gone in the exact opposite direction from where we should to correct matters.

Taxes are killing us, moving all our jobs overseas, the interest is a great burden, and we're just piling it on.

We must have the greatest group of self-delusional dumbasses in Congress than has ever been gathered in one spot.

And I hope when this thing finally goes tits up, they are the first casualties.

Hmmm
Failing Economy- Check
Government Intervention in Economy- check
Failing Government Intervention in Economy- check
Economy worse off than before- check
...
...
World war- not checked yet...

It seems so very familliar to me, where have I seen this before...
Maybe somebody in government has learned a lesson from the past and is prepared to declare a world war to fix the economy? Why not, it makes as much sense as what they have been doing so far...

reply to post by iamoverrated


It makes me sick to see all those aholes wanting to audit the Fed and regulate it NOW. You know what these same schmoes were doing a few years ago when people like Ron Paul were speaking out? They were laughing and calling him a kook and a nut saying we have the soundest financial companies and banks in the world. Most of Congress and the Senate and Washington in general votes for whatever way the wind blows and they have absolutely no foresight.

Just wanted to give you guys something to chew on. Like most on this site, I thought that our economy would have collapsed by October, yet here we are. I am constantly amazed by the amount of manipulation that can be wielded by the Fed and would not be surprised if they can keep juggling everything for several more years or at least long enough for us to forget the connection to the current crisis.

As we all know, they are just kicking the can a little further down the road. The only question is how far and how much longer?

I wanted to vote Paul for prez but they ran that frikin Palin BS oh well.. talk about a massive lost opportunity. Anyway, Paul talks a lot of doom, but doesn't seem to have any answers. "don't do this, don't do that".. ok so what DO we do then? What he always proposes is not realistic and essentially would result in total collapse + opportunity to rebuild from the ashes. However Americans are in denial, they will not voluntarily crash as Paul suggests, instead they want to make believe everything is ok. Big wake up call is coming.