You will know the truth, and the truth will make you free. John 8:32.

Most in our world do not enjoy full political and civil freedoms. That is, they cannot participate in bringing about changes in their government, or speak or worship freely. In biblical times, however, slaves were totally owned by their masters. But slavery can mean many things… Into this world of ‘slaves whose wills are free’ comes the Son of God promising deliverance from all the sinful, selfish or religious entanglements in our lives.

Jesus liberates us to become his servants and co-redeemers. Service for him is ‘perfect freedom’, the ultimate liberation. Read: John 8:31-41. Finding religious security in something other than a personal relationship with God is a very common problem. These Jews said ‘We’re OK as children of Abraham.’ Today it might be ‘I believe all the right doctrines, belong to the right church, partake of the sacraments, follow the best leader…’ Meditate: There are many captivities. Everyone is a slave to something: money, sex, power, ambition, others’ adulation, addictive substances, religious bigotry… What are mine?

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In our prayer, identify the things that are meant to be fulfilling, but can cause us to be ‘driven’. Name the entities which, though good in themselves, can be abused and create unfreedoms. Let us ask for strength to renounce addictions, easy formulas which save us from the hard work of thinking too much, or legalisms which result in our being known more for what we don’t believe than what we do believe.

‘Make me a captive, Lord, and then I shall be free.’ Amen.

Government Intevenes in the Economy

Before the House Financial Services Committee, Humphrey Hawkins Hearing, February 25, 2008. Presentation by Ron Paul, MD.

Mr. Chairman,

We find ourselves mired in the deepest economic crisis to afflict this country since the Great Depression. Yet, despite the failure of all the interventionist efforts to date to do anything to improve the economy, each week seems to bring new proposals for yet more bailouts, more funding facilities, and more of the same discredited Keynesian ideas. There are still relatively few policymakers who understand the roots of the current crisis in the Federal Reserve’s monetary policy. No one in government is willing to take the blame; instead we transfer it onto others. We blame the crisis on greedy bankers and mortgage lenders, on the Chinese for being too thrifty and providing us with capital, or on consumers who aren’t spending as much as the government thinks they should.

One aspect that needs to come to the fore once again is that of moral hazard. When the government acts as a backstop to insure losses that come about from making poor decisions, such poor decision-making is rewarded, and thereby further encouraged in the future. Such backstopping took place through the implicit government guarantee of Fannie Mae and Freddie Mac, it takes place through FDIC deposit insurance that encourages deposits in the fundamentally unsound fractional-reserve banking system, and it has reached its zenith in the TARP program and its related bailouts.
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When banking giants are reimbursed for their losses through redistribution of taxpayer money, what lesson do we expect them to learn? Can anyone in Washington say with a straight face that these banks will shape up their business practices when they are almost guaranteed billions of dollars in taxpayer funds? Even if this does provide a temporary lifeline, it only delays the inevitable collapse of a banking system built on an unsustainable model. Fractional-reserve banking is completely dependent on faith in the banks’ abilities to repay depositors, and when that ability is thrown into doubt, the house of cards comes crashing down. The Federal Reserve may be able to manage public confidence, but confidence only goes so far. When banks are required to hold a maximum of ten percent of their deposits on reserve, the system is fundamentally insolvent. Such a system cannot be propped up or bailed out, except at the cost of massive creation of money and credit, which would result in a hyperinflation that would completely destroy our economy.

Chairman Bernanke and others in positions of authority seem to gloss over these systemic instabilities and assume an excessively rosy outlook on the economy. I believe we are at another major economic crossroad, where the global financial system will have to be fundamentally rethought. The post–Bretton Woods dollar-standard system has proven remarkably resilient, lasting longer than the gold-exchange system which preceded it, but the current economic crisis has illustrated the unsustainability of the current dollar-based system. To think that the economy will begin to recover by the end of this year is absurd. The dollar’s supposed strength exists only because of the weakness of other currencies. The Fed’s increase of the monetary base and establishment of “temporary” funding facilities has set the stage for hyperinflation, and it remains to be seen what results.
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If banks begin to lend their increased reserves, we will see the first steps towards hyperinflation. Now that the Fed has increased the monetary base, it finds itself under pressure to withdraw these funds at some point. The question, however, is when? If it withdraws too soon, banks’ balance sheets collapse, if too late, massive inflation will ensue. As in previous crises, the Fed’s inflationary actions leave it compelled to take action that will severely harm the economy through either deflation or hyperinflation. Had the Fed not begun interfering 18 months ago, we might have already seen a recovery in the economy by now. Bad debts would have been liquidated, inefficient firms sold off and their resources put to better use elsewhere. As it is, I believe any temporary uptick in economic indicators nowadays will likely be misinterpreted as economic recovery rather than the result of Federal Reserve credit creation. Until we learn the lesson that government intervention cannot heal the economy, and can only do harm, we will never stabilize the economy or get on the road to true recovery.

Brought to you by EconoChristian.com, Ron Paul, and JMR

Written By Ron Paul and JMR
Dr. Ron Paul is a Republican member of Congress from Texas.

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