World Affairs Brief, September 26, 2008. Commentary and Insights on a Troubled World.

Copyright Joel Skousen. Partial quotations with attribution permitted. Cite source as Joel Skousen’s World Affairs Brief.


The real agenda is to use this and other future financial crises to demolish what constitutional restrictions remain against government intervention and control of financial markets. A tremendous power shift is inherent in this bailout, so the $700 billion is not nearly as dangerous as the precedent that is being set for future intervention in the markets and the transfer of public funds to financial insiders. This is a devious means to raid the public purse as the nation sinks into financial ruin.

One of the most interesting exchanges to emerge in this debate between Congress and Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke was the questioning of Congressman Ron Paul (R-tx), the sole member of the House banking committee willing to challenge the legality of this bailout and demand to know who is going to pay for it.

After complaining to Bernanke about setting a high fixed price for the toxic debt the Fed will buy back from banks and other insider financial institutions (way too generous, in his opinion) Paul demanded of Bernanke where he thinks he has the authority to bailout these institutions with taxpayer money. Bernanke responded that he gets all the authority he needs from the Federal Reserve Act of 1916. “When you authorized the Federal Reserve, you gave us the power.” Paul was not given the opportunity to rebut. If he had, he no doubt would have said something like, “I have read the act, Mr. Bernanke, and it gives you no such authority. And, even if it did, as you claim, then why are you and Mr. Paulson coming to Congress to authorize this bailout–if you already have the authority?”

I would also have demanded to know, “and why have you and others inserted the demand that “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” If you are so sure of your authority, why are you afraid of a court review?

It’s because there is no constitutional authority for these bailouts and Paulson and Bernanke know it. The PTB used the same language restricting court review to make sure the courts did not have any say in the Telecom immunity and wiretapping bill, or the Military Commissions act. Of course, the courts don’t have to abide by this language. Any bill passed by Congress is invalid if it is in violation of the Constitution. What I fear, however, is that this language gives the courts an out to evade declaring it unconstitutional.

As for the cost, only Ron Paul demanded to know how this was going to be paid for. “We certainly aren’t going to tax the American people for this–no one is proposing that.” That only leaves deficit spending–and Paul had plenty to say about that and the whole issue of fiat money that got us into this debacle in the first place.