Is the Perfect Storm Forming for Ron Paul?

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What a week!
The stock market took a dive to just over 13,000 on the Dow Jones
Industrial Average from an all-time high of 14,000 less than a month
ago. The world’s major central banks flooded the financial
system with tens of billions of dollars to prop up the banks and
the mortgage market.

the unending wars in Afghanistan and Iraq continue to drain the
U.S. military; the bills for the Bush-Cheney invasion of two nations
that did not attack us or threaten to attack us are rocketing to
the one trillion dollar mark.

In other words,
we are witnessing the unfolding of the collapse of the welfare–warfare–fiat-money
complex that has ruled America since 1913, the year the Federal
Reserve was created and the Sixteenth Amendment was added to the
U.S. Constitution allowing the federal government to impose an income
tax on the American people.

Of all the
GOP and Democrat presidential candidates, only Representative Ron
Paul of Texas has been diagnosing correctly the shortcomings of
the welfare–warfare–fiat-money state. In fact, last Friday
on Larry
Kudlow’s CNBC show
Dr. Paul demonstrated once again why
he is the only presidential candidate who understands how the Federal
Reserve creates financial bubbles that always end in pain and suffering,
especially for low and middle income Americans.

Economist Murray
Rothbard identified
the losers in the inflation race:

the wealth in favor of the first-comers and at the expense of
the laggards in the race. And inflation is, in effect, a race
– to see who can get the new money earliest. The latecomers
– the ones stuck with the loss – are often called the
"fixed income groups." Ministers, teachers, people on
salaries, lag notoriously behind other groups in acquiring the
new money. Particular sufferers will be those depending on fixed
money contracts – contracts made in the days before the inflationary
rise in prices. Life insurance beneficiaries and annuitants, retired
persons living off pensions, landlords with long term leases,
bondholders and other creditors, those holding cash, all will
bear the brunt of the inflation. They will be the ones who are

And who are
the winners? Wall Street banks, real estate speculators and others
who are the initial recipients of easy money.

So, if we want
to end the boom and bust cycle we need to restore sound money –
gold and silver as the foundation of our monetary system, as prescribed
the U.S. Constitution. At the very least, the FED should stop creating
money out of thin air. But stopping the inflating of the nation’s
currency would not sit well with the Wall Street crowd, because
they are the prime beneficiaries of easy money. In other words,
halting inflation would drop real estate prices in the Hamptons,
Aspen and other locations where the beneficiaries of inflation have
bid up the price of houses and condos. And forget about those end-of-year
bonuses. Under a sound monetary system, speculating in currency
and other markets would be greatly diminished.

As a student
of the Austrian School of Economics, Dr. Paul is familiar with the
contributions of Ludwig von Mises,
Murray Rothbard, Henry Hazlitt and dozens of others who advocated
free markets and sound money. Professor Mises spent his long academic
career warning about the dangers of inflation, the printing of money
by central bankers.

Professor Mises
long ago showed the relationship between war and inflation, a point
Rep. Paul has reiterated throughout his campaign for the GOP presidential

however, is not an isolated phenomenon. It is only one piece in
the total framework of politico-economic and socio-philosophical
ideas of our time. Just as the sound money policy of gold standard
advocates went hand in hand with liberalism, free trade, capitalism
and peace, so is inflationism part and parcel of imperialism,
militarism, protectionism, statism and socialism.”

Mises used
liberalism in its original meaning: limited government, low taxes,
and free trade. The term has been hijacked in the 20th century by
the proponents of big government.

War, credit
bubbles, runaway government spending, a bankrupt entitlement system,
are the result of big government liberalism and neo-conservatism.

Last Saturday,
Paul clearly and passionately spoke
the truth about these issues
at the Iowa Straw poll conference center. Coming in fifth place
with just under 10 percent of the vote is a great
in his long-shot campaign for the GOP presidential

GOP voters realize where inflation and war are taking the country,
they will rally around Ron Paul, the only candidate for peace, freedom
and prosperity.

14, 2007

Sabrin, Ph.D. [send him mail],
is professor of finance in the Anisfield School of Business, Ramapo
College of New Jersey, where he is executive director of the Center
for Business and Public Policy.
He is the author of Tax
Free 2000: The Rebirth of American Liberty. Sabrin’s weekly column
appears Monday on,
and he blogs on

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