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Ron Paul's Freedom Report
A publication of the Foundation for Rational Economics and Education
Volume 4, No. 5 JUNE / JULY 2000
Editors note: this special double issue features Dr. Paul's comprehensive address to the U.S. House of Representatives on free trade and the World Trade Organization. In addition, Rep. Paul's statements during committee hearings on his Freedom and Privacy Restoration Act, and to the House on the Federal Reserve's manipulation of interest rates, are included in their entirety.
[TUESDAY, MAY 2, 2000]
Dr. Paul addresses the House
WHAT IS FREE TRADE?
Madam Speaker ... [w]e are going to be dealing with permanent normal trade relations with China soon, and I have introduced a privileged resolution [to withdraw from the World Trade Organization], H.J.Res 90, that will also be brought to the floor. The discussion in the media and around the House floor has been rather clear about permanent normal trade status, but there has not been a lot of talk yet about whether or not we should really be in the World Trade Organization.
I think there is a lot of misunderstanding about what free trade is. There are not a whole lot of people who get up and say I am opposed to free trade, but quite frankly, I think many of those who say they are for free trade have a distorted definition of what free trade really is…[A]s a strict constitutionalist and one who endorses laissez-faire capitalism, I do believe in free trade; and there are good reasons why countries should trade with each other.
Number One: The Moral Argument
The first reason…is a moral reason. There is a moral element involved in trade. …[W]hen governments come in and regulate how citizens spend their money, they are telling them what they can or cannot do. In a free society, individuals who earn money should be allowed to spend that money the way they want. ...[I]f they find that they prefer to buy a car from Japan rather than Detroit, they basically have the moral right to spend their money as they see fit. Those kinds of choices should not be made by government. There is a definite moral argument for free trade.
Many years ago, Patrick Henry touched on this when he said, "You are not to inquire how your trade may be increased nor how you are to become a great and powerful people but how your liberties may be secured, for liberty ought to be the direct end of your government." We have not heard much talk of liberty with regards to trade, but we do hear a lot about enhancing one's ability to make more money overseas through trading with other nations. However, the argument, the moral argument itself, should be enough to convince anyone in a free society that we should never hamper or interfere with free trade.
The colonies did not thrive prior to the Constitution, and two of the main reasons why the Constitutional Convention was held were: one, there was no unified currency and that provided for a great deal of difficulty in trading among the States; and two, there were trade barriers between states.
Our Constitution was designed to make sure that there were no trade barriers, and this was what the Interstate Commerce Clause was all about. Unfortunately, in this century the Interstate Commerce Clause has been taken and twisted around and misused as an excuse for regulating even trade within a state…[activities] that have nothing to do with interstate trade. This misuse of the Interstate Commerce Clause is a wild distortion of the original intent of the Constitution, but [facilitating] free trade among the [original] states, having a unified currency, and breaking down barriers certainly was a great benefit for the development and the industrialization of the United States.
Number Two: The Economic Argument
The second argument for free trade is an economic argument. There is a benefit to free trade. Free trade means that you will not have high tariffs and barriers that prevent you from buying products and exerting your freedom of choice by buying outside. If you have restrictions and you only buy from within, it means you are protecting industries that may not be doing a very good job and there is not enough competition.
It is conceded that it probably was a blessing in disguise when the automobile companies in this country were having trouble in the 1970s as a result of the American consumer not buying their [products]. Better automobiles were coming in, and it should not have been a surprise to anybody that all of a sudden American cars got to be much better and they were able to compete.
There is a tremendous economic benefit from the competition of being able to buy overseas. The other economic argument is that in order to keep a product out, you put on a tariff, a protective tariff. A tariff is a tax. We should not confuse that; we should not think a tariff is something "softer" than a tax in doing something good. A tariff is a tax on the consumer. [A tariff means] those American citizens who want to buy products at lower prices are forced to be taxed.
If you have poor people in this country trying to make it on their own, not on welfare, but able to afford clothes or shoes or an automobile or anything [that is less expensive] from overseas, they are tremendously penalized by forcing them to pay higher prices to buy domestically.
No Need For Managed Trade
Competition is what really encourages producers to produce better products at lower costs and keep the prices down. If one believes in free trade, they do not enter into free trade for the benefit of somebody else. There is really no need for reciprocity.
o Free trade is beneficial because it is a moral right.
o Free trade is beneficial because there is an economic advantage to buying products at a certain price.
o The competition is beneficial.
o There really are no costs in the long run; free trade does not require management.
In conversation on the House floor, it is too often implied that free trade and turning over the management of trade to the World Trade Organization that serves special interests are equivalent. Well, that is not free trade; that is a misunderstanding of free trade.
Free trade means you can buy and sell freely without interference. You do not need international management. Certainly, if we are not going to have our own government manage our affairs, we do not want an international body managing these international trades.
Nor does free trade imply opening the doors to subsidies. It's inevitable, however, that as soon as we start trading with somebody, we accept the notion of trade that is managed by the World Trade Organization and immediately start giving subsidies to our competitors.
Sending U.S. Tax Dollars To Our Competitors
If our American companies and our American workers have to compete, the last thing they should ever be required to do is pay some of their tax money to the government, only to have it sent as subsidies to their competitors - but that is what is happening. American workers are forced to subsidize their competitors through foreign aid.
o They support their competitors overseas at the World Bank.
o They subsidize their competitors in the Export/Import
Bank and the Overseas Private Investment Corporation.
o We literally encourage the exportation of jobs by providing overseas protection in insurance that cannot be bought in the private sector.
If a company in the United States goes overseas for cheap labor and then, for political or economic reasons they go bust, who bails them out? The American taxpayer, once again - the very people who are struggling and have to compete with the free trade. It is so unfair to accept this notion that free trade is synonymous with these subsidies overseas, but essentially, that happens all the time.
Free trade should never mean the management of trade to retaliate to stop dumping. This notion that if somebody comes in with a product at a low price, you can immediately get it stopped and retaliate is something we should not endorse, yet this is done in the name of free trade. It might be argued that we endorse this type of managed trade and subsidized trade; but what is wrong - and I want to make this clear - what is wrong is to call it free trade, because that is not free trade.
Most individuals that I know who promote free trade around Washington, DC, either do not really understand what free trade is or they do not really endorse it. They are very interested in the management aspect, because some of the larger companies have much more clout with the World Trade Organization than do the small farmers, small ranchers or small businessmen who do not have the same access to the World Trade Organization.
For instance, there has been a big fight in the World Trade Organization between the Europeans and the Americans over exportation of bananas. Well, bananas are not grown in Europe. They are not grown in the United States. Yet that is one of the big issues of trade managed for the benefit of some owners of overseas corporations that make big donations to our political parties. That is not coincidental.
Powerful international financial individuals go to the World Trade Organization to try to get an edge on their competitors. If their competitors happen to be doing a better job and selling a little bit lower, then they go immediately to the World Trade Organization and say, Oh, you have to stop them - that is dumping. We certainly do not want to give the consumers the benefit of having a lower price.
...[I]t is important that we try to be clear on how we define free trade. We should not accept management of trade or subsidizing trade and call it free trade. Free trade is the ability of an individual or a corporation to buy goods and spend their money as they see fit, and this provides tremendous economic benefits.
A World At Peace
The third benefit of free trade which has been known for many, many centuries, is the peace effect from trade. It is known that countries that trade with each other and depend on each other for certain products - where trade has been free and open, and communications are free and open, and travel is free and open - are much less likely to fight wars. I happen to personally think this is one of the greatest benefits of free trade: it leads us to policies that direct us away from military confrontation. Managed trade and subsidized trade do not. I will mention just a little later why I think they do exactly the opposite.
Eroding American Sovereignty
There is a little bit more to the trade issue than just the benefits of free trade - true free trade, that is - and the disadvantages of managed trade. When we have a vote on normal trade status with China, or on getting out of the World Trade Organization, we are dealing with the issue of sovereignty.
The Constitution is very clear. Article I, section 8, gives the Congress the responsibility of dealing with international trade. It does not delegate it to the President, it does not delegate it to a judge, it does not delegate it to an international management organization like the World Trade Organization.
International trade management and trade law are to be dealt with by the U.S. Congress. However, too often the Congress has been willing to renege on that responsibility through fast-track legislation that delivers this authority to our President, as well as through other agreements, laws passed and treaties, that deliver this authority to international bodies such as the UN, IMF, and World Trade Organization where they then make decisions that affect us and our national sovereignty.
The World Trade Organization
The World Trade Organization has been in existence for five years. We voted to join the World Trade Organization in the fall of 1994, in the lame-duck session after Republicans took over control of the House and Senate, but before the new Members were sworn in. In a lame-duck session it was brought up, and by majority vote we joined the World Trade Organization, [through an agreement] which, ... clearly to anybody who has studied the Constitution, is a treaty. That means we have actually invoked a treaty by majority vote.
The way we have dealt with this issue is a serious blunder, in my estimation. We have accepted the idea that we will remain a member based on this particular vote.
Fortunately, in 1994 a provision was put in the bill saying that any Member could bring up a privileged resolution that would give us a chance to at least ask whether it is a good idea to be in the World Trade Organization or not. Now, my guess is that we do not have a majority of the U.S. Congress that thinks it is a bad idea. But I am wondering about the majority of the American people. I am wondering about the number of groups that are growing wary of membership in the World Trade Organization when you look at what happened in Seattle and the demonstrations here in DC So a growing number of people from various aspects of the political spectrum are now asking what this membership means to us. Is it good or is it bad? A lot of them are…saying it is bad.
It is also true that while some who object to membership in the World Trade Organization happen to be conservative free enterprisers, others who object are coming from the politics of the left. But there is agreement on both sides of this issue dealing with one aspect, and it is the sovereignty issue.
Now, there may be some labor law or some environmental law that I would object to, but I more strenuously object to the World Trade Organization dictating to us what our labor law or environmental law ought to be. I highly resent the notion that the World Trade Organization can dictate tax law to us.
We are currently under review, and the World Trade Organization has ruled against the United States because we have given a tax break to an overseas company. They have ruled against us, and said that this tax break is a tax subsidy, language which annoys me to no end. They have given us until October 1 to get rid of that tax break for our corporations, so they are telling us, the U.S. Congress, what we have to do with tax law.
You say, oh, that cannot be. We do not have to do what they tell us.
Well, technically we do not have to, but we will not be a very good member [if we don't], because this is what we agreed to in the illegal agreement. Certainly it was not a legitimate treaty that we signed - but in that agreement, we have come up and said that we would obey what the WTO says. Our agreement says very clearly that following any ruling by the WTO, the Congress is obligated to change the law. This is the interpretation and this is what we signed. This is a serious challenge, and we should not accept so easily this idea that we will just go one step further.
This did not just happen five years ago; there has been a gradual erosion of the concept of national sovereignty. It certainly occurred after World War II with the introduction of the United Nations. Now, under current conditions, we do not even ask the Congress to declare war, and we still fight a lot of wars. We send troops all over the world, we are involved in combat all the time, and our presidents tell us they get the authority from a UN resolution. So we have gradually lost the concept of national sovereignty.
I want to use a quote from somebody that I consider rather typical of the establishment. So often we talk about the establishment, but nobody ever knows exactly who they are. But ... an individual who is pretty typical of the establishment is Walter Cronkite. He says: "We need not only an executive to make international law, but we need the military forces to enforce that law and the judicial system to bring the criminals to justice in an international government." "But," he goes on to say (and this he makes very clear, and this is what we should be aware of) "the American people are going to begin to realize that perhaps they are going to have to yield some sovereignty to an international body to enforce world law, and I think that is going to come to other people as well."
So it is not like it has been hidden, it is not like it is a secret. It is something that those who disagree with me about liberty and the Constitution certainly have a right to believe. They believe in internationalism and the World Trade Organization and the United Nations, and they certainly have the right to those beliefs. But they contradict everything America stands for, and they contradict our Constitution, therefore, we should not allow this to go unchallenged.
...[T]he whole idea that treaties could be passed that would undermine the ability of our Congress to pass legislation, or undermine our Constitution, was thought about and talked about by the founders of this country. They were rather clear on the idea that although a treaty can become the law of the land, a treaty could never be an acceptable law of the land if it amended or changed the Constitution.
That would be ridiculous, and they made that very clear.
It could have the effect of the law of the land, as long as it was a legitimate constitutional agreement that we entered into. But Thomas Jefferson said if the treaty power is unlimited, then we do not have a Constitution. Surely the President and the Senate cannot do by treaty what the whole government is interdicted from doing in any way.
That is very important. We cannot just sit back and pretend that it was not a treaty by which we entered into the World Trade Organization. The agreement says we have to do what they tell us, even if it contradicts the whole notion that it is Congress' and the people's responsibility to pass their own laws with regard to the environment, with regard to labor and with regard to tax law.
Yes, I think this is important material. I think this is an important subject - a lot more important than just the vote on trade with China. I think we should trade with China. I think we should trade with Cuba. I think we should trade with everybody possible, unless we are at war with them.
I do not think we should have sanctions against Iran, Iraq or Libya. It does not make much sense to me to be struggling and fighting and giving more foreign aid to a country like China, and at the same time have sanctions on and refuse to trade or talk with Cuba. That does not make a whole lot of sense.
However, those who believe and promote trade with China are the ones who will be strongly objecting to trade with Cuba and these other countries. That is why I think a little bit more consistency on this might be better for all of us.
Alexander Hamilton also talked about this. He said a treaty cannot be made which alters the Constitution of the country or which infringes any expressed exception to the powers of the Constitution of the United States.
These were the founders talking about this, and yet we have drifted a long way. It does not happen overnight. It has been happening over a 50-year period. Just five years ago, we went another step further.
First, we accepted the idea that international finance would be regulated by the IMF. Then we accepted the idea of the World Bank, which was supposed to help the poor people of the world and redistribute wealth - and indeed they have redistributed a lot of wealth, but most of it ended up in the hands of wealthy individuals and wealthy politicians. The poor people of the world never get helped by these programs.
Five years ago we accepted the notion that the World Trade Organization will bring about order in trade around the world.
Well, since that time, we have had a peso crisis in Mexico, and we had a crisis with currencies in Southeast Asia. So I would say that the management of finances with the IMF as well as the World Trade Organization has been very unsuccessful. Therefore, even if one does not accept my constitutional argument that we should not be doing this, we should at least consider the fact that what we are doing is not very successful.
[ THURSDAY, MAY 18, 2000]
Freedom and Privacy Restoration Act
Statement of Dr. Paul before the Government Reform and Oversight Committee Subcommittee
on Government Management, Information and Technology
"…bind (the federal government) down with the chains of the Constitution." - Thomas Jefferson
Mr. Chairman, thank you for holding this hearing on my legislation, H.R. 220, the Freedom and Privacy Restoration Act.
Protecting privacy is of increasing importance to the American people. Since [introducing] this bill, my office has received countless calls of support from Americans all across the country who are opposed to the use of uniform identifiers. I have also worked with a bipartisan coalition of Members on various efforts to protect Americans from surveillance-state schemes, such as the banking regulators' "know your customer" scheme and the attempt by the Post Office to violate the privacy of all Americans who use Commercial Mail Receiving Agencies (CMRAs).
The Freedom and Privacy Restoration Act [is] a comprehensive attempt to protect the privacy of individual citizens from government surveillance via the use of standard identifiers. Among the provisions of the legislation is one repealing those sections of the 1996 Immigration Act that established federal standards for state drivers' licenses, and those sections of the Health Insurance Portability and Accountability Act of 1996 that require the Department of Health and Human Services to establish a uniform standard health identifier.
Recent Victories
As I am sure my colleagues know, the language authorizing a national ID card was repealed in last year's Transportation Appropriations bill and language prohibiting the expenditure of funds to develop a personal medical identifier has been included in the past two Labor-HHS-Education Appropriations bills. These victories were made possible by the thousands of Americans who let their elected representatives know that they were opposed to federally-mandated identifiers.
[Editor's note: Paul is honorary chairman of the Liberty Study Committee (LSC) and heads the caucus of
fifteen colleagues who work with him to uphold constitutional principle in the House of Representatives.
The LSC focused the public's attention on the national ID card and medical identifier at key points in the
legislative processs so that legislators might more fully access public opinion.]
Perhaps the most significant portion of H.R. 220 [is the one prohibiting] the use of the Social Security number for purposes not related to Social Security. For all intents and purposes, the Social Security number is already a national identification number. Today, in the majority of states, no American can get a job, open a bank account, get a drivers' license, receive a birth certificate for one's child without providing their Social Security number. So widespread has the use of the Social Security number become that a member of my staff had to produce a Social Security number in order to get a fishing license!
As a test of citizen resistance, the Census bureau asked 21,000 households to report their Social Security number on their census form. The Census bureau is interested in the Social Security number as a key to unlock information held by other government agencies.
IRS-Created Social Security Number
Since the creation of the Social Security number in 1935, there have been almost 40 congressionally authorized uses of the Social Security number as an identification number for non-Social Security programs. Many of these uses, such as the requirement that employers report the Social Security number of new employees to the "new hires data base," have been enacted in the past few years.
Such congressional actions do not reflect the intent of the Congress that created the Social Security system beause that Congress in no way intended to create a national identifier. In fact, Congress never directly authorized the creation of the Social Security number - they simply authorized the creation of an "appropriate record-keeping and identification scheme." The Social Security number was actually the creation of the Internal Revenue Service!
The Social Security number did not become a popular identifier until the 1960s. In response to concerns about the use of the Social Security number, Congress passed the Privacy Act of 1974, because, as stated within the act itself, "The Congress finds the opportunities for an individual to secure employment, insurance and credit and his right to due process and other legal protections are endangered by the misuse of certain information systems."
The Privacy Act of 1974 states: "It shall be unlawful for any Federal, State or local government agency to deny any individual any right, benefit or privilege provided by law because of such individual's refusal to disclose his Social Security number." This is a good and necessary step toward protecting individual liberty.
Unfortunately, the language of the Privacy Act allows Congress to require the use of the Social Security number at will. In fact, just two years after the passage of the Privacy Act, Congress explicitly allowed state governments to use the Social Security number as an identifier for tax collection, motor-vehicle registration and drivers' license identification. When one considers the trend toward the use of the Social Security number as an identifier, the need for H.R. 220 becomes clear.
Stop Big Brother
The Freedom and Privacy Restoration Act also contains a blanket prohibition on the use of identifiers to "investigate, monitor, oversee, or otherwise regulate" American citizens. Mr. Chairman, prohibiting the Federal Government from using standard identifiers will ensure that American liberty is protected from the surveillance state. Allowing the federal government to use standard identifiers to oversee private transactions presents tremendous potential for abuse of civil liberties by unscrupulous government officials.
I am sure I need not remind the members of this committee of the sad history of government officials of both parties using personal information contained in IRS or FBI files against their political enemies. Imagine the potential for abuse if an unscrupulous government official is able to access one's complete medical, credit, and employment history by simply typing the citizen's "uniform identifier" into a database.
This history of abuse of personal information by government officials demonstrates that the only effective means of guaranteeing Americans' privacy is to limit the ability of the government to collect and store information regarding a citizen's personal matters. The only way to prevent the government from knowing this information is preventing them from using standard identifiers.
In addition to [preventing] the federal government from creating national identifiers, this legislation forbids the federal government to blackmail states into adopting uniform standard identifiers by withholding federal funds. One of the most onerous practices of Congress is the use of federal funds illegitimately taken from the American people to bribe states into obeying federal dictates.
Certain Members of Congress are focusing on the use of the Social Security number and other identifiers by private businesses. However, this ignores the fact that the private sector was only following the lead of the federal government in using the Social Security number as an ID. In many cases, the use of the Social Security number by private business is directly mandated by the government. For example, banks use Social Security numbers as an identifier for their customers because the federal government requires them to use the Social Security number for tax reporting purposes.
Once the federal government stops using the Social Security number as an identifier, the majority of private businesses, whose livelihood depends on pleasing consumers, will respond to their customers' demands and stop using the Social Security number and other standard identifiers in dealing with them.
I hope that we in Congress will not once again allow a problem Congress created to become an excuse for disregarding the constitutional limitations of federal police powers or imposing new mandates on businesses in the name of "protecting privacy." Federal mandates on private businesses may harm consumers by preventing business from offering improved services such as the ability to bring new products that consumers would be interested in immediately to the consumers' attention. These mandates will also further interfere with matters that should be resolved by private contracts.
Furthermore, as we have seen with the administration's so-called "medical privacy-protection" proposal, federal "privacy-protection laws" can actually undermine privacy by granting certain state-favored interests access to one's personal information.
In the Name of Protecting Us
Some may claim that the federal government needs expanded surveillance powers to protect against fraud or some other criminal activities. However, monitoring the transactions of every American in order to catch those few who are involved in some sort of illegal activity turns one of the great bulwarks of our liberty, the presumption of innocence, on its head.
The federal government has no right to treat all Americans as criminals by spying on their relationship with their doctors, employers, or bankers. In fact, criminal law enforcement is reserved to the state and local governments by the Constitution's Tenth Amendment.
Others may claim that the federal government needs the power to monitor Americans in order to allow the government to operate more efficiently. However, in a constitutional republic, the people are never asked to sacrifice their liberties to make the job of government officials a little bit easier. We are here to protect the freedom of the American people, not to make privacy invasion more efficient.
The main reason Congress should take action to stop the use of standard identifiers is because the federal government lacks constitutional authority to force citizens to adopt a universal identifier for health care, employment, or any other reason. Any federal action that oversteps constitutional limitations violates liberty because it ratifies the principle that the federal government, not the Constitution, is the ultimate judge of its own jurisdiction over the people. The only effective protection of the rights of citizens is for Congress to follow Thomas Jefferson's advice and "bind (the federal government) down with the chains of the Constitution."
I once again extend my sincere appreciation to Chairman Horn and the other members of the subcommittee for holding this hearing and express my hope that this hearing begins the process of protecting the rights of all citizens to conduct their lives free from government intrusion.
[With 36 cosponsors, H.R. 220 remains in the House Government Reform and Oversight Committee, as well as the House Ways and Means Committee]
[MONDAY, MAY 15, 2000]
MANIPULATING INTEREST RATES
Dr. Paul addresses the House
The national debt is rising at an annual rate of $100 billion per year while the federal government obligation to future generations is rising even faster. Yet, little concern is shown in Congress as our budgets grow and new programs are added on to old.
Ordinary political deception has been replaced with the dangerous notion of invincibleness as Members claim credit for imaginary budgetary surpluses. The percent of our income that government now takes continues to rise, while personal liberty is steadily compromised with each new budget. But the political euphoria associated with the "New Era" economy will soon come to an end.
Although many have done well during the last seven years of economic growth, many middle-income families have had to struggle just to keep up. For them, inflation is not dead and the easy fortunes made on Wall Street are as far removed as winning the lottery. When the economy enters into recession, this sense of frustration will spread.
The Fed at Work
Business cycles are well understood. They are not a natural consequence of capitalism, but instead result from central-bank manipulation of credit. This is especially true when the monetary unit is undefinable, as it is in a fiat monetary system such as ours. Therefore, it is correct to place blame on the Federal Reserve for all depressions/recessions, inflation, and much of the unemployment since 1913.
The next downturn, likewise, will be the fault of the Fed. It is true that the apparent prosperity and the boom part of the cycle are [also] a result of the Federal Reserve credit creation, but the price that must always be paid and the unfairness of inflationism makes it a dangerous process.
The silly notion that money can be created at will by a printing press or through computer entries is eagerly accepted by the majority as an easy road to riches, while ignoring any need for austerity, hard work, saving, and a truly free-market economy. Those who actively endorse this system equate money creation with wealth creation and see it as a panacea for the inherent political difficulty in raising taxes or cutting spending.
A central bank that has no restraints placed on it is always available to the politicians who spend endlessly for reelection purposes. When the private sector lacks an appetite to lend sufficiently to the government, the Federal Reserve is always available to buy treasury debt with credit created out of thin air. At the slightest hint that interest rates are higher than the Fed wants, its purchase of debt keeps interest rates in check; that is, they are kept lower than the market rate. Setting interest rates is an enormous undertaking - it's price fixing and totally foreign to the principles of free-market competition.
Since this process is economically stimulating, the politicians, recipients of government largess, bankers, and almost everyone enjoy the benefits of what seems to be a gift without cost. But that's a fallacy. There is always a cost. Artificially low interest rates prompt lower savings, over-capacity expansion, mal-investment, excessive borrowing, speculation, and price increases in various segments of the economy. Since money creation is not wealth creation, it inevitably leads to a lower value for the currency. The inflation always comes to an end with various victims, many of whom never enjoyed the benefits of the credit creation and deficit spending.
This silly notion of money and credit gives rise to the conventional wisdom that once the economy gets really rolling, it's time for the Fed to stop economic growth. The false supposition is that economic growth causes higher prices and higher labor costs, and these evils must be prevented by tightening credit and raising interest rates. But [higher prices and labor costs] are only the consequences of the previous monetary expansion and blaming [them] is done only to distract from the real culprit: monetary inflation by the Federal Reserve.
In a free market, economic growth would never be considered a negative and purposely discouraged. It is strange that so many established economists and politicians accept the notion of dampening economic growth for this purpose. Economic growth with sound money always lowers prices, it never raises them. Deliberately increasing rates actually increases the cost of all borrowing, and yet it's claimed that this is necessary to stop rising costs. Obviously, there's not much to the soundness of central economic planning through monetary policy of this sort.
Some who see this fallacy and object to deliberately slowing the economy instead clamor for even more monetary growth to keep interest rates low and the economy booming. But this is just as silly, because it leads to even more debasement of the currency and rising prices. Instead of lowering interest rates, it will, in time and due to inflationary expectation, actually raise rates.
Fine-tuning the economy through monetary manipulation is a dangerous game to play. We are now completing nearly a decade of rapid monetary growth and evidence is now appearing that indicates we will soon start to pay for our profligate ways. The financial bubble that the Fed manufactured over the past decade or two will burst and the illusion of our great wealth will end. In time, the illusion of "surpluses for as far as the eye can see" will also end. Then, the Congress will be forced to take much more seriously the budgetary problems that it pretends do not exist.
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