October 16, 2008

Paul's economic advisor speaks

Ron Paul's economic advisor, Peter Schiff, has a great piece up at the WaPo. Well, at least part of it is wonderful. This part...

Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism.

Sounds good, right? Just like what we've been saying for a while, no? Well, it is. However, he goes on to blame the government for PROMOTING HOMEOWNERSHIP AND NOT REGULATING WALL ST. which is bizarre. Why? Because it was the libertarian philosophies of Schiff and those like him that said the market would self regulate and that we needed to get the nanny state off our backs. Meanwhile people like me were screaming about what had become SOP at all the investment banks... lever 'til it hurts, baby! You guys won the battle of who could eliminate regs. But, as it turns out, my side wins the war because we're the only ones who still have money.

Never mind the fact that the entire economy almost fell off a cliff.

The part of the piece that really struck me was this...

Real credit can be supplied only by savings, so artificial steps to stimulate lending will only produce inflation.

Would someone, you know, take a moment to discuss monetary aggregates with Peter and that deflation is now a far larger concern than inflation considering that more than $ 4 trillion has evaporated from the economy?

Posted by mcblogger at October 16, 2008 10:04 AM

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