When a politician mentions price controls run for the hills.

It is important that the level of economic understanding in this country is sufficient to overcome the upcoming onslaught of wrongheaded ideas which are doubtlessly coming down the pipe. Recently a politician in South Carolina proposed capping the price at which gasoline could be sold. This was done under the guise of protecting the cash strapped consumer who simply couldn’t afford the higher prices.

That this politician reveals his economic ignorance in such a pronouncement is the understatement of the century. First off he does absolutely no questioning of the fundamental reasons why gasoline prices have risen. Perhaps it is implied to be the typical bogeymen, the greedy capitalist or maybe the always vilified speculator.

In actuality, the reason gasoline prices are higher is the same reason corn, wheat, soybeans, coffee, gold, silver and almost all commodities are making record highs. It is because of the actions taken by the Federal Reserve, the central bank of the United States. The Fed has created trillions of dollars out of thin air. This has diluted the purchasing power of all the existing dollars in circulation and caused all prices to be higher than they would be otherwise.

The Quotable Ron Paul:

Congressman Ron Paul:

"When the federal government spends more each year than it collects in tax revenues, it has three choices: It can raise taxes, print money, or borrow money. While these actions may benefit politicians, all three options are bad for average Americans."

"Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers."

"1913 wasn't a very good year. 1913 gave us the income tax, the 16th amendment and the IRS."

"A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank."

The Quotable Bernanke:

Federal Reserve Chairman Ben Bernanke:

(November 21, 2002) "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."

(July, 2005) "We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though."

(November 15, 2005) "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."

The Quotable Mises:

Ludwig Von Mises:

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

"The issue is always the same: the government or the market. There is no third solution."

"If one rejects laissez faire on account of mans fallibility and moral weakness, one must for the same reason also reject every kind of government action."

"There is simply no other choice than this: either to abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way."