gold standard... really?

[AaronC]

i love the vast majority of what Ron Paul believes in, and I have found no other candidate with his level of consistancy of beliefs and ability to thwart popular misconceptions on ways to deal with economics.

however, i saw an interview where he wanted to return to the gold standard. i would be interested in any other economist's view on how this would be possible given dollarization.

i am also curious if Ron Paul considers this a foreign policy decision or an economic one. (it has been said we are on the oil standard)

[My First Name Is Paul]

Ron Paul is also supporting the constitution, which only gives congress the power to mint money based on gold and silver. It's quite explicit, so the fiat system today is unconstitutional.

I might suggest reading some Milton Friedman. In both of this books Free to Choose and Capitalism and Freedom he provides some very convincing arguments in favor of the gold standard. Friedman was strongly against the Federal Reserve system because it puts too much power in to the hands of too few, and he would use the Great Depression as evidence to support this claim. Basically, the Federal Reserve made the Great Depression significantly longer and more painful than if the gold standard were left in place, in which case he felt it would have been at worst a severe recession.

[amy31416]

RP wants to legalize competitive currencies, whether based on gold, silver or squirrel pelts. He does seem to like the gold standard the best though.

[Truth Warrior]

How much oil can you buy today with an ounce of gold? How much in 1913?

[Patronus]

I might suggest reading some Milton Friedman. In both of this books Free to Choose and Capitalism and Freedom he provides some very convincing arguments in favor of the gold standard. Friedman was strongly against the Federal Reserve system because it puts too much power in to the hands of too few, and he would use the Great Depression as evidence to support this claim. Basically, the Federal Reserve made the Great Depression significantly longer and more painful than if the gold standard were left in place, in which case he felt it would have been at worst a severe recession.

woah, woah, woah...

Milton Friedman was a great advocate of free markets, but unfortunately a champion of the Fed - just that they act "sensibly". Now I haven't read Free to Choose, but in Capitalism & Freedom, Friedman advocates the existence of the Federal Reserve, but the notion that they should increase the money supply 3-5% annually. No honest libertarian can claim that some entity should have such power over the country and just trust that they'll use this power reasonably.

Ron Paul likely follows the Mises School of a commodity based currency. The transition to this in our current economy would have to begin with the legalization of precious metals as legal tender. For more on the Austrian school's stance, read Rothbard's What Has Government Done to Our Money? http://mises.org/money.asp

[JosephTheLibertarian]

RP wants to legalize competitive currencies, whether based on gold, silver or squirrel pelts. He does seem to like the gold standard the best though.

uh no.. he wants our currency backed by gold and silver. Legalization of competition is another topic, but I believe he supports that as well.

[wild03]

woah, woah, woah...

Milton Friedman was a great advocate of free markets, but unfortunately a champion of the Fed - just that they act "sensibly". Now I haven't read Free to Choose, but in Capitalism & Freedom, Friedman advocates the existence of the Federal Reserve, but the notion that they should increase the money supply 3-5% annually. No honest libertarian can claim that some entity should have such power over the country and just trust that they'll use this power reasonably.

Ron Paul likely follows the Mises School of a commodity based currency. The transition to this in our current economy would have to begin with the legalization of precious metals as legal tender. For more on the Austrian school's stance, read Rothbard's What Has Government Done to Our Money? http://mises.org/money.asp

I Agree 100% here, Friedman has done more damage for the Libertarian cause than Good. He is viewed by the mainstream as the poster child for free market economics and that it was under his guidance that free markets have failed.

Read This article on Friedman by Rothbard for more details.

http://www.lewrockwell.com/rothbard/rothbard43.html

[amy31416]

uh no.. he wants our currency backed by gold and silver. Legalization of competition is another topic, but I believe he supports that as well.

Funny, I've heard him say that he wants competing currencies--especially gold-backed many times.

[Bradley in DC]

Hi Aaron, and welcome to the forums.

I was Dr. Paul's banking legislative staffer in the Congressional office and still work with them pretty closely. They helped me with this presentation to the Austrian Scholars Conference at the Mises Institute a few weeks ago. I explain how to transition to sound money:

http://www.ustream.tv/recorded/AfycBeR,mnEYaL2pa,BtD5.VBYK3cgTY

[wild03]

however, i saw an interview where he wanted to return to the gold standard. i would be interested in any other economist's view on how this would be possible given dollarization.

i am also curious if Ron Paul considers this a foreign policy decision or an economic one. (it has been said we are on the oil standard)

I'm not sure what exactly is that you are asking, I would refer you to this article by Ron Paul
http://www.lewrockwell.com/paul/paul431.html

You can find many other articles at mises.org and lewrockwell.com,

I think this will be an economic decision not foreign policy. After all it is our own economic "ignorance" the one responsible for our current economic state.

I don't know about the oil standard and this seems unlikely, It will mean a currency backed by oil, ours is not. The Fed does not wait for new oil to be available to print money. It just Prints money.

[Bradley in DC]

I might suggest reading some Milton Friedman ... Friedman was strongly against the Federal Reserve system because it puts too much power in to the hands of too few, and he would use the Great Depression as evidence to support this claim. Basically, the Federal Reserve made the Great Depression significantly longer and more painful than if the gold standard were left in place, in which case he felt it would have been at worst a severe recession.

Friedman had said publicly that the country would have been better off had the Fed never been created. ;)

[brandon]

Funny, I've heard him say that he wants competing currencies--especially gold-backed many times.

Yea competing currencies is what he advocates as a viable solution. He knows the dollar is too far gone to go back to a gold standard. The dollar is going to be destroyed one way or another, and allowing people to legally "opt out" and use different currencies is what he talks about.

From his economic plan



Return Value to Our Money. Legalize gold and silver as a competing currency.
Level the long-term boom and bust business cycle by passing H.R. 4683, which would repeal provisions of the federal criminal code relating to issuing coins of gold, silver, or other metal for use as current money and making or possessing likenesses of such coins.


Nothing about the gold standard in here... http://www.ronpaul2008.com/prosperity/

[Mahkato]

This thread sort of got off on the wrong start. AaronC asked a good question about the gold standard and an argument sort of appeared out of nowhere.

AaronC, there's an excellent book called "The Politically Incorrect Guide to Capitalism" by Robert P. Murphy. I recommend you check it out from your local library (maybe through interlibrary loan) or purchase it to learn a lot more about how money and the markets work together. It's written in the style of the "for Dummies" books so it's really quite an easy (yet informing) read, even if you've never really studied economics before.

[Bradley in DC]

It's also to important to understand how we got "money" in the first place. See the last chapter, especially, of Carl Menger's The Principles of Economics:

http://mises.org/etexts/menger/eight.asp

[sophocles07]

Aaron, one-post, ? (ie where ya at?)

[Bradley in DC]

i am also curious if Ron Paul considers this a foreign policy decision or an economic one. (it has been said we are on the oil standard)

One reason to oppose the Fed as it is (and a benefit of sound money) is that the Fed can monetize debt for war finance that people don't support.

[Truth Warrior]

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire -- that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other." -- Alan Greenspan
http://www.usagold.com/gildedopinion/Greenspan.html

[Bruno]

i love the vast majority of what Ron Paul believes in, and I have found no other candidate with his level of consistancy of beliefs and ability to thwart popular misconceptions on ways to deal with economics.

however, i saw an interview where he wanted to return to the gold standard. i would be interested in any other economist's view on how this would be possible given dollarization.

i am also curious if Ron Paul considers this a foreign policy decision or an economic one. (it has been said we are on the oil standard)

If we were on on a oil standard, if I understand correctly, then you wouldn't see prices rise like they have lately. They would be based on the value of oil. The rise in gas prices and price-per-barrel is a sign of the weakened dollar.

And welcome to the forums! :)

[Danke]

It might be buried here:

http://www.ronpaul2008.com/articles/?tag=Federal%20Reserve


I remember reading his ideas on money and it wasn't just returning to a gold standard. It was more detailed than that, but I can't find the exact article he wrote.

[AaronC]

ty all for that great welcome and the reading suggestions. i hadn't gotten back until now because i have been mobile (and still am hence the abundant typos). i have a feeling i will learn economics here faster than my undergrad.

the oil standard comment came from john perkins. paraphrasing him, he said the dollar is now backed by the confidence in the ability to purchase oil with americain dollars due to our relations with saudi arabia. they agreed to only sell oil for dollars as part of our protection agreement with them.
if you are unfamiliar with him i highly suggest his book, Confessions of an Economic Hitman. or at least you tube his longer interviews. (the short ones don't do his story justice).

i have a flight shortly, but will be doing most of the suggested reading.

[JosephTheLibertarian]

Funny, I've heard him say that he wants competing currencies--especially gold-backed many times.

who cares? we won't be getting either anytime soon.

[bander87]

Ron paul speaks about the gold standard in NH:
http://youtube.com/watch?v=RKQmYfY3R7c

He says we wouldn't extactly go back to the gold standard, but have gold and silver be legal tender.

[AaronC]

Ron paul speaks about the gold standard in NH:
http://youtube.com/watch?v=RKQmYfY3R7c

He says we wouldn't extactly go back to the gold standard, but have gold and silver be legal tender.

much better stance :) glad i asked

[Xenophage]

I Agree 100% here, Friedman has done more damage for the Libertarian cause than Good. He is viewed by the mainstream as the poster child for free market economics and that it was under his guidance that free markets have failed.

Read This article on Friedman by Rothbard for more details.

http://www.lewrockwell.com/rothbard/rothbard43.html

Funny, I think Rothbard has done more damage to the libertarian cause than good.

What an eye-roller that article is. Friedman's own philosophies changed over the years, as any thinking human's ideas are apt to. Attacking professors at the University of Chicago that were his predecessors is not attacking Friedman, though Rothbard makes it sound so. Rothbard's own grasp of Austrian economics is questionable in this article, where he talks about the discrepancy between "perfect competition" and "real world" competition. According to Austrian theory, the "perfect competition" model that Friedman prefers would naturally arise in the absence of meddlesome government, and the "real world" competition that Rothbard apparently embraces is only the result of mixed economics. Who then, is really out of step with Ludwig von Mises?

Rothbard sure knew how to attack his allies.

[SeanEdwards]

woah, woah, woah...

Milton Friedman was a great advocate of free markets, but unfortunately a champion of the Fed - just that they act "sensibly". Now I haven't read Free to Choose, but in Capitalism & Freedom, Friedman advocates the existence of the Federal Reserve, but the notion that they should increase the money supply 3-5% annually. No honest libertarian can claim that some entity should have such power over the country and just trust that they'll use this power reasonably.

Ron Paul likely follows the Mises School of a commodity based currency. The transition to this in our current economy would have to begin with the legalization of precious metals as legal tender. For more on the Austrian school's stance, read Rothbard's What Has Government Done to Our Money? http://mises.org/money.asp

I believe Friedman actually argued that the FED should be replaced by a computer program. Something that would adjust the money supply automatically in response to market conditions.

[Zippyjuan]

Even a computer could be manipulated if that was desired. Who would write the program? Who would decide what inputs about the current economy would be entered into it to influence its decision for any particluar year?

I am reminded of a song by Donald Fagan (of the band Steely Dan in a solo effort from the 1980s) called IGY which stands for the International Geophysical Year- an optomistic look at the future.

http://www.lyricscafe.com/f/fagen_donald/031.htm

Standing tough under stars and stripes
We can tell
This dream's in sight
You've got to admit it
At this point in time that it's clear
The future looks bright
On that train all graphite and glitter
Undersea by rail
Ninety minutes from New York to Paris
Well by seventy-six we'll be A.O.K.

What a beautiful world this will be
What a glorious time to be free

Get your ticket to that wheel in space
While there's time
The fix is in
You'll be a witness to that game of chance in the sky
You know we've got to win
Here at home we'll play in the city
Powered by the sun
Perfect weather for a streamlined world
There'll be spandex jackets one for everyone

What a beautiful world this will be
What a glorious time to be free

On that train all graphite and glitter
Undersea by rail
Ninety minutes from New York to Paris
(More leisure for artists everywhere)
A just machine to make big decisions
Programmed by fellows with compassion and vision
We'll be clean when their work is done
We'll be eternally free yes and eternally young
What a beautiful world this will be
What a glorious time to be free


The IGY year itself was actually in 1957- 58. http://en.wikipedia.org/wiki/International_Geophysical_Year

[wild03]

Funny, I think Rothbard has done more damage to the libertarian cause than good.

What an eye-roller that article is. Friedman's own philosophies changed over the years, as any thinking human's ideas are apt to. Attacking professors at the University of Chicago that were his predecessors is not attacking Friedman, though Rothbard makes it sound so. Rothbard's own grasp of Austrian economics is questionable in this article, where he talks about the discrepancy between "perfect competition" and "real world" competition. According to Austrian theory, the "perfect competition" model that Friedman prefers would naturally arise in the absence of meddlesome government, and the "real world" competition that Rothbard apparently embraces is only the result of mixed economics. Who then, is really out of step with Ludwig von Mises?

Rothbard sure knew how to attack his allies.

And you are entitled to your opinion, You argue the his philosophies changed, but towards what? Alan Greenspan's philosophies also changed over the years :)

I didn't take the attacks on his predecessors as a direct attack Rothbard is just explaining where Friedman came from and hence his ideas at the time.

I would like to see where does Austrian Theory defines "perfect competition" and how it actually arises in the real world???.

The "perfect competition" that Friedman prefers. (a world in which every firm is so minute that nothing it does can affect its demand and the price of its products) is completely unrealistic as the most efficient companies will tend to grow. In some markets there might be few competitors and in other there could be just one main one.

Austrian economics allows for monopolies to occur. In a free market it might just happens that company (MS) is the best at making an OS for the PC. This is a monopoly (not a coercive monopoly) but a monopoly, Which is not bad at all, since (MS) would still have to walk a fine line or be dethroned by the market forces.


"the "real world" competition that Rothbard apparently embraces is only the result of mixed economics. Who then, is really out of step with Ludwig von Mises?

I don't know where you get that, in the article he clearly states
"An infinitely superior view of competition is found in the totally neglected school of "Austrian economics" which scorns the "perfect competition" model and prefers the real world of free-market competition"

To answer your question: "out of step" Friedman!

[wild03]

Even a computer could be manipulated if that was desired. Who would write the program? Who would decide what inputs about the current economy would be entered into it to influence its decision for any particluar year?
[/url]

Exactly, Friedman's ideas that money could be manipulated by the government is a disaster. To increase it by a magical percent every year "IS INFLATION"

Here's another article on the matter:

http://www.lewrockwell.com/sennholz/sennholz16.html

Either you have a free market or you don't, To compromise on something as important as money is the doom a free market from the start!

[LibertiORDeth]

woah, woah, woah...

Milton Friedman was a great advocate of free markets, but unfortunately a champion of the Fed - just that they act "sensibly". Now I haven't read Free to Choose, but in Capitalism & Freedom, Friedman advocates the existence of the Federal Reserve, but the notion that they should increase the money supply 3-5% annually. No honest libertarian can claim that some entity should have such power over the country and just trust that they'll use this power reasonably.

Ron Paul likely follows the Mises School of a commodity based currency. The transition to this in our current economy would have to begin with the legalization of precious metals as legal tender. For more on the Austrian school's stance, read Rothbard's What Has Government Done to Our Money? http://mises.org/money.asp

Quite right. Can't remember the book but in one I read he claims that neither a fiat nor gold backed currency is practical or intelligent, and claims to support a "middle ground," not sure exactly what that is though.

[SeanEdwards]

Even a computer could be manipulated if that was desired. Who would write the program? Who would decide what inputs about the current economy would be entered into it to influence its decision for any particluar year?


Congress could vote on the parameters of the monetary policy, and then that policy could be turned into software.

[idiom]

Congress could vote on the parameters of the monetary policy, and then that policy could be turned into software.

That would be pretty awesome result, given that the budget is also voted on by congress and the Fed was created by congress.

[SeanEdwards]

That would be pretty awesome result, given that the budget is also voted on by congress and the Fed was created by congress.

It'd be an improvement over the current secretive gaming of the system. Let the monetary policy be in the open. Report the M3 stats. Let the actions of the FED be totally predictable and exposed to public scrutiny. The worst damage done by the fed is that it creates bubbles and malinvestment. If the reactions of the central bank were hard-coded this would not be nearly the issue it is today. Nobody would be guessing what Bernanke was going to do, they'd know in advance.

[WRellim]

I believe Friedman actually argued that the FED should be replaced by a computer program. Something that would adjust the money supply automatically in response to market conditions.

Which could easily be "gamed" by anyone with a half-functioning brain. Thus providing additional proof that even in his old age, Friedman was still an ID10T. (Good at pandering to whoever was in power, regurgitating the ideas of others, and turning it all into applause, book money and speaking gigs... but not the sharpest tool in the shed.)

BTW, Milton Friedman's "gift" -- his MAIN accomplishment in life -- was the whole "payroll tax withholding" scheme -- the way the IRS and States TAKE money from your paycheck every week (via threats to your employer) -- 100% Milton Friedman's idea in service of Roosevelt during WWII. (Betcha didn't know that, did you? :eek: )

And while in later years Friedman admitted this was a "mistake" (as in the "mistakes were made" meme) he never really ever DID admit the sin much less beg forgiveness... instead he always made excuses and continued to argue that "at the time in was necessary, and thus a good idea" (even though it was both unnecessary, and NOT a good idea as it ignored the long-term consequences, unlike Friedman (who thought the "cash-flow" was needed) the Roosevelt administration embraced it because it created a self-enforcing "filing" of IRS returns -- in order to get that *blessed* "refund" money -- prior to withholding, significantly fewer people filed Income Taxes returns.)

Ref on "Withholding," the trouble it caused (and causes) and Friedman as its main "architect":
http://www.ntu.org/main/press.php?PressID=256&org_name=NTU


Nuff said. There are much better authors... IMHO, start with Henry Hazlitt.

[Bruno]

Found some fun stats here: http://www.whatprice.co.uk/financial/how-much-gold.html (apologies for the poor readability)

A question :- If all the gold ever produced in the world was formed into a single block how long would its edge be?

The length of a tennis court [22 metres] ?
The length of a football pitch [100 metres] ?
The length of a golf shot [200 metres] ?
In fact at 19 metres it's quite a bit shorter than a tennis court, and that includes all the privately held gold coins, bars and jewellery in the world - some 75% of the total. The world's monetary gold reserve is a block of only one quarter that volume, and America's gold reserve is only one quarter of that. Fort Knox hides only a modest hole in the ground.

There's not much gold left elsewhere in the ground either. Approximately 50,000 tonnes (about a third of what is already out) remains un-mined and will cost in excess of $300 an ounce to extract. Meanwhile - after steadily more detailed worldwide surveys - the mining industry consensus is that large mineral deposit discoveries are now a thing of the past.

In fact gold is - as it always has been - extremely scarce.

Here is a table of gold amounts and values. Take a deep breath before the last few lines.


Kilograms Gold Value @ 390$ / Oz Litres How much
0.008 $100 0.00041 A British sovereign coin
0.031 $390 0.00161 US Eagle / Canadian Maple coin
0.100 $1,254 0.00518
0.500 $6,269 0.02591
1 $12,539 0.0518 1 kilo - a golf ball sized sphere
2 $25,077 0.1036
3 $37,616 0.1554
4 $50,154 0.2073
5 $62,693 0.2591
6 $75,231 0.311 A can of 'Coke'
7 $87,770 0.363
8 $100,309 0.415
9 $112,847 0.466
10 $125,386 0.518
12 $156,000 0.645 A standard 400 oz bullion bar
20 $250,772 1.04 A litre bottle of water
50 $626,929 2.59
100 $1,253,858 5 A good sized deposit box
1,000 $12,538,580 52
10,000 $125,385,802 518 Half a cubic metre - fits in a corner of a small bank vault.
100,000 $1,253,858,025 5,181
1,000,000 $12,538,580,000 51,813 A small living room - and more than twice Britain's gold reserve.
8,139,000 $102,051,504,000 421,710 The US gold reserve fits into a town house.
30,000,000 $376,163,190,000 1,554,404 The world's total financial reserve of gold (central banks + significant global financial institutions like International Monetary Fund and Bank for International Settlements)
100,000,000 $1,253,858,024,000 5,181,347 The approximate total of all privately held jewellery, bullion and coin
140,000,000 $1,755,401,234,000 7,253,886 All the gold in the world - A block with edges 3 metres short of a standard sized tennis court.
$7,000,000,000,000 The approximate value of US sovereign debt (which excludes future welfare obligations, none of which have been reserved in the public accounts [see below - generational debt])
$25,000,000,000,000 The approximate value of the world's nominal sovereign debt.
$44,000,000,000,000 The approximate value of the US generational debt - the cost of providing to the current working population what it believes itself entitled to in future welfare. i.e. the extent to which the US government has failed to reserve assets to pay for implied promises.

[My First Name Is Paul]

This thread has a lot going on, but something I find is that many people who criticize Friedman don't seem to have read any of his books. Kudos to Xenophage for properly pointing out that people change over time, and for Friedman, that was really a long time! The man lived into his 90's, and was very much in control of himself up until the very end.

He was very much a Keynesian early on and did advise FDR on those various policies, but he discovered that he was wrong, as is very clear by the time he published Capitalism and Freedom in 1962. Also in that book he discussed how he believed that zero government interference in the free market is the best policy. At least since then he has never argued otherwise to my knowledge.

In the video series Free to Choose there is a group discussion on the Fed after the video on the Fed. One of the chairmen who served under Nixon and others before Nixon says that the always asked Friedman's opinion on important matters and Friedman immediately responds with "never listened."

I only ever saw Friedman argue in favor of the gold standard and against the fiat system. I often see people taking his discussion of the Great Depression and the Fed out of context. He uses this discussion to show how too much power in the hands of too few will invariably produce serious problems for the many, as happened in the Great Depression. He went into great detail about how the gold standard would be much better than the fiat money system. He did the same thing in Free to Choose. Then in the 2002 preface for the Fortieth Anniversary Edition of Capitalism and Freedom, he stated that the only regret he had was not linking civil freedom to political and economic freedom - nothing to do with the gold standard.

For those of you who may not have read Capitalism and Freedom, the first two paragraphs I think give a pretty good idea of where he goes with it:

IN A MUCH QUOTED PASSAGE in his inaugural address, President
Kennedy said, "Ask not what your country can do for you -- ask
what you can do for your country." It is a striking sign of the
temper of our times that the controversy about this passage cen-
tered on its origin and not on its content. Neither half of the
statement expresses a relation between the citizen and his gov-
ernment that is worthy of the ideals of free men in a free society.
The paternalistic "what your country can do for you" implies
that government is the patron, the citizen the ward, a view
that is at odds with the free man's belief in his own responsibility
for his own destiny. The organismic, "what you can do for your
country" implies that government is the master or the deity, the
citizen, the servant or the votary. To the free man, the country
is the collection of individuals who compose it, not something
over and above them. He is proud of a common heritage and
loyal to common traditions. But he regards government as a
means, an instrumentality, neither a grantor of favors and gifts,
nor a master or god to be blindly worshipped and served. He
recognizes no national goal except as it is the consensus of the
goals that the citizens severally serve. He recognizes no national
purpose except as it is the consensus of the purposes for which
the citizens severally strive.

The free man will ask neither what his country can do for
him nor what he can do for his country. He will ask rather
"What can I and my compatriots do through government" to
help us discharge our individual responsibilities, to achieve our
several goals and purposes, and above all, to protect our free-
dom. And he will accompany this question with another: How
can we keep the government we create from becoming a Frank-
enstein that will destroy the very freedom we establish it to pro-
tect? Freedom is a rare and delicate plant. Our minds tell us,
and history confirms, that the great threat to freedom is the
concentration of power. Government is necessary to preserve our
freedom, it is an instrument through which we can exercise
our freedom; yet by concentrating power in political hands, it is
also a threat to freedom. Even though the men who wield this
power initially be of good will and even though they be not
corrupted by the power they exercise, the power will both attract
and form men of a different stamp.

-- Capitalism and Freedom, 1962, Milton Friedman

I think that Friedman became in some ways a poster child for those who wanted an image of intelligent economics policies. Also in the 2002 preface he basically states that all the people who listened to him also did little to "tame the beast".

[wild03]

This thread has a lot going on, but something I find is that many people who criticize Friedman don't seem to have read any of his books. Kudos to Xenophage for properly pointing out that people change over time, and for Friedman, that was really a long time! The man lived into his 90's, and was very much in control of himself up until the very end.

He was very much a Keynesian early on and did advise FDR on those various policies, but he discovered that he was wrong, as is very clear by the time he published Capitalism and Freedom in 1962. Also in that book he discussed how he believed that zero government interference in the free market is the best policy. At least since then he has never argued otherwise to my knowledge.



Don't get me wrong, Even if he changed, the damage was already done. What people are pointing out here are the mistakes he made. Let's not put Friedman on a golden pedestal for the sake of doing it. People who are new to economics should be aware of what his mistakes were.
If no one criticizes him here new readers might get the idea that everyone in this forum agrees with him. People should be aware that's all.

[Mongoose470]

Don't get me wrong, Even if he changed, the damage was already done. What people are pointing out here are the mistakes he made. Let's not put Friedman on a golden pedestal for the sake of doing it. People who are new to economics should be aware of what his mistakes were.
If no one criticizes him here new readers might get the idea that everyone in this forum agrees with him. People should be aware that's all.

Yeah fer chrissakes! :p That half wit retard Stephen Hawking was wrong on the information paradox. Just want you to be aware of that before we put him on a pedestal. He might be wrong on global warming as well.

[My First Name Is Paul]

Don't get me wrong, Even if he changed, the damage was already done. What people are pointing out here are the mistakes he made. Let's not put Friedman on a golden pedestal for the sake of doing it. People who are new to economics should be aware of what his mistakes were.
If no one criticizes him here new readers might get the idea that everyone in this forum agrees with him. People should be aware that's all.

I would be seriously surprised if someone read a Friedman article from when he was still a Keynesian, which would be something from at least before 1962 and would be very hard to find. And what damage was done? Isn't it a good thing that a very intelligent economist who spent a great deal of his life pouring through numbers and statistics concluded that a free market system is superior to a centrally controlled one? That a people cannot be free without both economic and political freedom? That someone who advised a president on economic matters then later in life decided that those recommendations were not very good ones? Aren't these the kinds of things that we're trying to get others to do? Seems like a great example to me.

I am not going to claim that everyone in this forum agrees with Milton Friedman, but I will state that none of Ron Paul's platforms is in contradiction with Friedman.

[wild03]

I would be seriously surprised if someone read a Friedman article from when he was still a Keynesian, which would be something from at least before 1962 and would be very hard to find. And what damage was done? Isn't it a good thing that a very intelligent economist who spent a great deal of his life pouring through numbers and statistics concluded that a free market system is superior to a centrally controlled one? That a people cannot be free without both economic and political freedom? That someone who advised a president on economic matters then later in life decided that those recommendations were not very good ones? Aren't these the kinds of things that we're trying to get others to do? Seems like a great example to me.

I am not going to claim that everyone in this forum agrees with Milton Friedman, but I will state that none of Ron Paul's platforms is in contradiction with Friedman.

If this is indeed true I can agree with your point. However, The following worries me, This article does not say when this occurred and I wonder if he continued on this train of though.
"It is strange that Professor Friedman and his fellow monetarists, who are such defenders of the market order, should call on politicians and bureaucrats to provide the most important economic good – money. Granted, monetarists do not trust them with discretionary powers, which led Friedman to write a detailed prescription, a Constitutional Amendment; however, the Constitution is supreme force, backed by courts and police. The amendment is a political formula to be adopted by political authorities and, when enacted, a constitutional prohibition of monetary freedom."
http://www.lewrockwell.com/sennholz/sennholz16.html

On this point alone, I think it is important to bring it up. Many other good Austrian economist call for the private issuing of money.
www.mises.org media section.

"What about Milton Friedman 1963 book, A Monetary History of the United States. where he claims that the Federal Reserve System could have intervened to save the American banking system from a wave of bankruptcies in 1929–32.
Rothbard made the same argument in America’s Great Depression, also published in 1963. But his book was ignored by the academic world for the opposite reason that Friedman’s was accepted: He showed that the FED’s policies in the 1920s had caused the boom, which produced the bust when the FED ceased inflating. Friedman’s book was a call for further FED inflation. Rothbard’s was a call for no more inflation. "

http://www.lewrockwell.com/north/north456.html

http://mises.org/rothbard/agd.pdf

This said, when did Friedman change his monetary views? If he did, great, But he had already published a book that gave the FED a nice excuse to play with the money supply. To any critic they could now say "We are no experts...but Friedman said so"

BTW: Whether Paul's views and Friedman's do not contradict is irrelevant. I am more interested on whether they are right than in agreement.

[wild03]

Yeah fer chrissakes! :p That half wit retard Stephen Hawking was wrong on the information paradox. Just want you to be aware of that before we put him on a pedestal. He might be wrong on global warming as well.

Don't you mean Al gore? :D

[My First Name Is Paul]

If this is indeed true I can agree with your point. However, The following worries me, This article does not say when this occurred and I wonder if he continued on this train of though.
"It is strange that Professor Friedman and his fellow monetarists, who are such defenders of the market order, should call on politicians and bureaucrats to provide the most important economic good – money. Granted, monetarists do not trust them with discretionary powers, which led Friedman to write a detailed prescription, a Constitutional Amendment; however, the Constitution is supreme force, backed by courts and police. The amendment is a political formula to be adopted by political authorities and, when enacted, a constitutional prohibition of monetary freedom."
http://www.lewrockwell.com/sennholz/sennholz16.html

On this point alone, I think it is important to bring it up. Many other good Austrian economist call for the private issuing of money.
www.mises.org media section.

"What about Milton Friedman 1963 book, A Monetary History of the United States. where he claims that the Federal Reserve System could have intervened to save the American banking system from a wave of bankruptcies in 1929–32.
Rothbard made the same argument in America’s Great Depression, also published in 1963. But his book was ignored by the academic world for the opposite reason that Friedman’s was accepted: He showed that the FED’s policies in the 1920s had caused the boom, which produced the bust when the FED ceased inflating. Friedman’s book was a call for further FED inflation. Rothbard’s was a call for no more inflation. "

http://www.lewrockwell.com/north/north456.html

http://mises.org/rothbard/agd.pdf

This said, when did Friedman change his monetary views? If he did, great, But he had already published a book that gave the FED a nice excuse to play with the money supply. To any critic they could now say "We are no experts...but Friedman said so"

BTW: Whether Paul's views and Friedman's do not contradict is irrelevant. I am more interested on whether they are right than in agreement.

Have you read any of Friedman's books?

[spacehabitats]

You might want to check out a very powerful graph showing that the price of oil has not gone up --- per ounce of gold.

http://www.ronpaulforums.com/showthread.php?t=135992

A very clear testament to the instability of the Federal Reserve note (and Euro) and a very clear argument for gold backed currency.

[wild03]

Have you read any of Friedman's books?

how is this relevant to the points I made on my previous post?

[My First Name Is Paul]

how is this relevant to the points I made on my previous post?

You are going out of your way to criticize Friedman, but all you do is quote articles from others. You don't quote Friedman himself. It's a weak argument.

[Bern]

Critics have raised a number of theoretical and historical objections to the gold standard. Some have called the gold standard a "crazy" idea.

The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration.

In a study covering many decades in a large sample of countries, Federal Reserve Bank economists found that "money growth and inflation are higher" under fiat standards than under gold and silver standards. Nor is the gold standard a source of harmful deflation. Alan Greenspan has testified before Congress that "a central bank properly functioning will endeavor to, in many cases, replicate what a gold standard would itself generate."

This study addresses the leading criticisms of the gold standard, relating to the costs of gold, the costs of transition, the dangers of speculation, and the need for a lender of last resort. One criticism is found to have some merit. The United States would not enjoy the benefits of being on an international gold standard if it were the first and only country whose currency was linked to gold.

A gold standard does not guarantee perfect steadiness in the growth of the money supply, but historical comparison shows that it has provided more moderate and steadier money growth in practice than the present-day alternative, politically empowering a central banking committee to determine growth in the stock of fiat money. From the perspective of limiting money growth appropriately, the gold standard is far from a crazy idea.

Is the Gold Standard Still the Gold Standard among Monetary Systems? (http://www.cato.org/pub_display.php?pub_id=9181)

Click the link to see the full article/analysis.

[wild03]

You are going out of your way to criticize Friedman, but all you do is quote articles from others. You don't quote Friedman himself. It's a weak argument.

Do I have to? Are you saying that the sources are incorrect? If they are not, then who cares who I quote, I'm after the truth no matter were it comes from.

Weak argument? Must I read Mein Kampf to criticize Hitler? Or should I take the word of respectable scholars until they are proven wrong? I have not seen a single solid argument from you discrediting these sources or their arguments. Look at your last two responses, Nothing about Friedman's monetary policy.

Aren't you going out of your way defending him? :rolleyes:

[wild03]

Is the Gold Standard Still the Gold Standard among Monetary Systems? (http://www.cato.org/pub_display.php?pub_id=9181)

Click the link to see the full article/analysis.

Great paper! Couldn't help but notice that Friedman is mentioned here too!

"Friedman wanted to substitute for gold a less costly paper money standard bound by a strict money growth rule. But in the 1980s he changed his mind about the feasibility of getting the Fed to commit to anything of the sort, reconsidered the costs of inflation in the absence of a strict rule, and began to call for abolishing the Federal Reserve System (though not replacing it with a gold standard, because he thought no government would any longer consent to be constrained by a gold standard)."

So let's see, It was not until the 1980s that he called for abolishing the FED, and even then he supported what? some sort of fiat currency?


I am not going to claim that everyone in this forum agrees with Milton Friedman, but I will state that none of Ron Paul's platforms is in contradiction with Friedman.

Not that this matters but listening to Ron Paul talk about gold I'm not so sure about this one anymore.

[GunnyFreedom]

Funny, I've heard him say that he wants competing currencies--especially gold-backed many times.

Yes, that's correct. At the veterans rally in Charleston, I asked him point-blank how do we get rid of the Fed, he said we do it by legalizing competing currencies such as gold and/or silver currencies, and then the strongest currency wins, thus bakrupting the Federal Reserve, and so destroying the Fed without having to do it legislatively.

[My First Name Is Paul]

In Capitalism and Freedom, published in 1962, Friedman plugged the gold standard.

The issue with debating an article is that it will contain many assumptions. I draw serious issue with the first few paragraphs. The first thing missing is the heinous amendment that is discussed. Not one single quote nor the text of the amendment is presented, only a discussion about how the government is evil and we hate it and should not give more power. Not debating the specific points of Friedman, only debating something else, is a logical fallacy (I think it's a red herring, but I don't have time to look up which one right now).

Let's look at this act of heresy:

Amendment XXVIII Limiting Taxation and Voting to Specific Dates

1. Each year all Federal, State, and local government shall hold two elections for public offices: a primary election the first Tuesday in May and a general election the first Tuesday in November.
2. All taxes and set-asides, except the collection of sales taxes by sellers from direct consumers, shall be paid twice annually, due two weeks before the primary and general elections.
3. The Congress shall have power to enforce this article by appropriate legislation.

Friedman hated taxes. There is the famous Friedman quote, "I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible." What he wanted to accomplish with this amendment was to put very fresh in everyone's mind while the are electing public officials how much they pay in taxes. Right now roughly 50% of national income goes to taxes, and that is the number that he was trying to keep down, and he wanted to affect this by making certain that lower taxes are always at the center of debate in every election. Note that the proposed amendment does not give authorization to any specific tax for the government to collect.

Everyone has an amendment they would like to see added to the constitution, but this is not the first one that I would support, although I don't think it's nearly as terrible as the author of that article suggests. I think it is easy to see why he threw out that red herring.

Ron Paul says that we should follow the constitution, which sates that congress may only mint money from gold and silver. I believe he has said he would like to change the constitution, but that is secondary to first following what the constitution currently states.

The author states that Friedman was in search of economic stability, but this is not what I have read in his books. His arguments against the fiat system, against regulating industries, against over taxation, all give respect to the fact that a free market system is constantly changing. There are people who are losing work, retraining, and moving to new industries. He argues that this is not perfectly stable, but far better than centrally controlled economies. "A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both." As before, the author provides red herring with his sermon about how some economists are ignorant and vain, but provides no direct arguments against Friedman.

At the end of the article the author is attacking monetarists. I am not clear on how he is attacking Friedman because Friedman did not agree with having a federal reserve controlling the currency, so I am completely unclear on how this is an attack on Friedman.

What if this were the only article that you ever read about Ron Paul:

http://www.reason.com/news/show/124426.html

What would you think of him? I am concerned that this is what happens too often with Milton Friedman. Many have read nothing from Friedman and only lots of poor criticisms. There are much better criticisms of Friedman than that article, although even those are often not very strong.

Friedman's arguments on why he was proud of what he did in the great depression are little different than people understand. Imagine if prominent economists visited Bush and suggested that he cut the government spending dramatically, say to only 25% of national income, lower taxes, begin paying off the national debt, and switch to a gold standard. And imagine that after such consultation Bush actually did those things. That is what Friedman was proud of. He freely admitted and actively promoted that Keynes' theories were not correct and that he pushed the wrong policy. Few economists have worked as hard as he did to inform the public of the virtues of a free market system.

There is a popular quote from George Shulz about Friedman, "Everybody loves to argue with Milton, particularly when he isn't there."

[wild03]

In Capitalism and Freedom, published in 1962, Friedman plugged the gold standard.

The issue with debating an article is that it will contain many assumptions. I draw serious issue with the first few paragraphs. The first thing missing is the heinous amendment that is discussed. Not one single quote nor the text of the amendment is presented, only a discussion about how the government is evil and we hate it and should not give more power. Not debating the specific points of Friedman, only debating something else, is a logical fallacy (I think it's a red herring, but I don't have time to look up which one right now).

Let's look at this act of heresy:

Amendment XXVIII Limiting Taxation and Voting to Specific Dates

This is not the amendment in question at all, It had little to do with taxes or voting. The proposed amendment was outlined by Milton & Rose Friedman
and info can be found in

A Program for Monetary Stability, by. Dr. Milton Friedman and in
Free to Choose by Dr. Milton & Rose Friedman



The author states that Friedman was in search of economic stability, but this is not what I have read in his books.


Maybe, just maybe there's more to Friedman than the books you read. I don't have a problem with the Friedman views that you mentioned. In fact I will probably agree with him on most if not all his views, except "monetary policy" This is where all the articles attack him on, in fact I read nothing but praises of him on every other point.

I'm not saying that he was a bad economist, all I'm saying is that there's plenty of evidence that his monetary views are worth looking at as they draw plenty of criticism from other Austrian economists.

[therealjjj77]

Yes, that's correct. At the veterans rally in Charleston, I asked him point-blank how do we get rid of the Fed, he said we do it by legalizing competing currencies such as gold and/or silver currencies, and then the strongest currency wins, thus bakrupting the Federal Reserve, and so destroying the Fed without having to do it legislatively.

Interesting. That's the exact same conclusion I came to. Anyone who has studied the issue at any length also comes to this same conclusion, that the way out is not by abolishing the fed, but simply removing the legislation that prevents the free market from competing. If no one has a monopoly on the money supply, we would live in a very prosperous world. The other contender you'll have to deal with is the controlled media. That would require eliminating the FCC and all of the barriers it puts in the way of the free market from taking back over the airwaves.

[wild03]

Interesting. That's the exact same conclusion I came to. Anyone who has studied the issue at any length also comes to this same conclusion, that the way out is not by abolishing the fed, but simply removing the legislation that prevents the free market from competing. If no one has a monopoly on the money supply, we would live in a very prosperous world. The other contender you'll have to deal with is the controlled media. That would require eliminating the FCC and all of the barriers it puts in the way of the free market from taking back over the airwaves.

I read somewhere that "bad money drives out good money"
I wonder how this point is being addressed by defenders of competing currencies
For example, Having both fiat and gold will cause people to save the gold since it retains it's value and use the fiat money asap. thus causing the fiat to circulate.

[GunnyFreedom]

I read somewhere that "bad money drives out good money"
I wonder how this point is being addressed by defenders of competing currencies
For example, Having both fiat and gold will cause people to save the gold since it retains it's value and use the fiat money asap. thus causing the fiat to circulate.

The idea of people holding gold but spending FRN's is not a bad thing. It may appear on the surface that this will perpetuate FRN's but I don't think so. The Federal Reserve is going bankrupt with or without competing currencies. Whether it circulates or not will not change that fact. The difference will be found in the fact that people will request payment in the stronger currency as the Fed goes bankrupt.

I know from my perspective, in a world of competing currencies, if I get paid in FRN's I would immediately exchange that currency for gold notes. The only place my FRN's would circulate, is at the exchange. And I bet I'm not alone in that. As the exchanges become filled with surplus FRN's, the value of them will continue to plummet, which will further motivate people to either request payment in gold notes, or to immediately exchange FRN's for gold notes which won't lose 2% in daily depreciation.

[wild03]

The idea of people holding gold but spending FRN's is not a bad thing. It may appear on the surface that this will perpetuate FRN's but I don't think so. The Federal Reserve is going bankrupt with or without competing currencies. Whether it circulates or not will not change that fact. The difference will be found in the fact that people will request payment in the stronger currency as the Fed goes bankrupt.

I know from my perspective, in a world of competing currencies, if I get paid in FRN's I would immediately exchange that currency for gold notes. The only place my FRN's would circulate, is at the exchange. And I bet I'm not alone in that. As the exchanges become filled with surplus FRN's, the value of them will continue to plummet, which will further motivate people to either request payment in gold notes, or to immediately exchange FRN's for gold notes which won't lose 2% in daily depreciation.

Right, but the FED won't go down easy, It can easily mandate that all government obligations be paid with FED notes. This will force the FRNs to be kept in circulation no matter how much they depreciate.

Just as King Henry the First produced sticks of polished wood as money, and since only this Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people no choice but to accept these as money for more than 700 years I believe.

[therealjjj77]

I read somewhere that "bad money drives out good money"
I wonder how this point is being addressed by defenders of competing currencies
For example, Having both fiat and gold will cause people to save the gold since it retains it's value and use the fiat money asap. thus causing the fiat to circulate.

If no one wants FRNs then they won't want to accept them for payment. Or they will require an enormous amount of them. So what you're saying is that the demand for FRNs falls drastically, relative to gold, then people will be more prone to wanting to be paid in gold instead of FRNs and places will prefer gold payment instead of FRNs and their prices will reflect this as it will take more and more FRNs to buy something and less and less gold to buy something until equilibrium is reached where FRNs are worth their real value (0) and gold reflecting a it's currency value.

[spacehabitats]

Right, but the FED won't go down easy, It can easily mandate that all government obligations be paid with FED notes. This will force the FRNs to be kept in circulation no matter how much they depreciate.

Just as King Henry the First produced sticks of polished wood as money, and since only this Tally Sticks were accepted by Henry for payment of taxes, there was a built in demand for them, which gave people no choice but to accept these as money for more than 700 years I believe.

I remember hearing stories about there being a black market in the Soviet Union for dollars. It was against the law to possess or exchange competing currencies.

[JohnMeridith]

The real question is if we go to a gold standard, do we actually have any gold left? Some say the central banks hold a vast majority of the worlds gold. If this is the case, they will be able to inflate and constrict the money supply as they do now.

Silver backed notes may be better from what I'm seeing right now, that or even as some say, a very finely and truly government regulated fiat currency like Abes greenbacks and the abolishment of fractional reserve banking.

[Misesian]

To anybody that thinks Friedman changed, there was an article on LRC about him just the other day. His austrian friend tried to make a point to him but he didn't get it: http://www.lewrockwell.com/north/north629.html

Not sure how anyone that believes in a free market can call for compulsory bank that inflates at 3-5%. It's like saying income taxation isn't bad if we just kept it at 1% and was flat. The whole notion of income taxation is evil and will NEVER stay flat and will NEVER stay low when left in the hands of government, just like with banking.

It's amazing to find critics of Rothbard on this forum when it comes to all things, of money! What is wrong with his position on this? I haven't seen where it's changed and haven't seen it even come close to the flaws in Chicago school banking.

[wild03]

To anybody that thinks Friedman changed, there was an article on LRC about him just the other day. His austrian friend tried to make a point to him but he didn't get it: http://www.lewrockwell.com/north/north629.html

Not sure how anyone that believes in a free market can call for compulsory bank that inflates at 3-5%. It's like saying income taxation isn't bad if we just kept it at 1% and was flat. The whole notion of income taxation is evil and will NEVER stay flat and will NEVER stay low when left in the hands of government, just like with banking.

It's amazing to find critics of Rothbard on this forum when it comes to all things, of money! What is wrong with his position on this? I haven't seen where it's changed and haven't seen it even come close to the flaws in Chicago school banking.

Great reading! Another article to add to the list I posted earlier.

I guess people must be waiting for the right benevolent leader to implement Friedman's ideas properly. ;)

[bander87]

The real question is if we go to a gold standard, do we actually have any gold left? Some say the central banks hold a vast majority of the worlds gold. If this is the case, they will be able to inflate and constrict the money supply as they do now.

Silver backed notes may be better from what I'm seeing right now, that or even as some say, a very finely and truly government regulated fiat currency like Abes greenbacks and the abolishment of fractional reserve banking.

I think we sold most or all of it off.
The probably with silver is that it's becoming more and more rare and in demand. Or is that not necessarily a problem?

[Misesian]

The real question is if we go to a gold standard, do we actually have any gold left? Some say the central banks hold a vast majority of the worlds gold. If this is the case, they will be able to inflate and constrict the money supply as they do now.

Silver backed notes may be better from what I'm seeing right now, that or even as some say, a very finely and truly government regulated fiat currency like Abes greenbacks and the abolishment of fractional reserve banking.

John,

Why does the supply of gold matter? If we had a 100% reserve gold standard wouldn't the medium of exchange flow to where the greatest economic prosperity exists?

How do you create wealth out of green paper? It wouldn't matter if we had 100% reserve fiat currency because the currency is literally grown on trees.

I wonder where we'd be out now if instead of allowing the banks to inflate via fractional reserve requirements, the fed simply printed new greenbacks to accomodate the banks borrowing needs. In the end you'd still have inflation but I'm guessing the opportunity for massive deflation wouldn't exist, as it's happening now with the banks folding.

The first point of business to righting this ship is passing Ron Paul's two monetary bills as promoted at www.HonestMoney.org. Abolishing legal tender laws will inevitably create a de facto gold standard.

[jon_perez]

I remember hearing stories about there being a black market in the Soviet Union for dollars. It was against the law to possess or exchange competing currencies.Not only in the Soviet Union but also in many other countries which have extensive currency controls. In those days and in those situations, the dollar was indeed perceived to be "as good as gold" and considered a "hard" currency.

It seems to have softened somewhat since... hehehe

[jon_perez]

The real question is if we go to a gold standard, do we actually have any gold left? Some say the central banks hold a vast majority of the worlds gold. If this is the case, they will be able to inflate and constrict the money supply as they do now.

Silver backed notes may be better from what I'm seeing right now, that or even as some say, a very finely and truly government regulated fiat currency like Abes greenbacks and the abolishment of fractional reserve banking.You know what the irony here is? At a certain point in the history of the United States, having silver backing for the then exclusively gold-backed money was considered inflationary. See William Jennings Bryan and his "cross of gold" speech.

Even more ironic.... at that time the conspiracy theory was that it was the bankers who wanted to remain on a pure gold standard because it meant that they, holding most of the gold, had control over the money supply. Going to silver meant [supposedly] that they would lose such control (as well as induce inflation).

My how times have changed.

[jon_perez]

John,

Why does the supply of gold matter? If we had a 100% reserve gold standard wouldn't the medium of exchange flow to where the greatest economic prosperity exists?

How do you create wealth out of green paper? It wouldn't matter if we had 100% reserve fiat currency because the currency is literally grown on trees. Gold isn't exactly true wealth either. It is just a form of money whose main differentiating factor from fiat money is that it is effectively impossible to expand its supply at will.

This has its pros and cons, but of course it is very hard to convince Austrians and similar thinkers about the latter.

[jon_perez]

RP wants to legalize competitive currencies, whether based on gold, silver or squirrel pelts. He does seem to like the gold standard the best though.We should keep in mind that even in this current climate, the fact that we can freely trade gold and silver does mean that they are effectively "competing currencies".

The real problem is that because you get taxed on capital gains when you convert gold and silver back to the government currency. Their use as effective currency is artificially hobbled through taxation.

[jon_perez]

woah, woah, woah...

Milton Friedman was a great advocate of free markets, but unfortunately a champion of the Fed - just that they act "sensibly". Now I haven't read Free to Choose, but in Capitalism & Freedom, Friedman advocates the existence of the Federal Reserve, but the notion that they should increase the money supply 3-5% annually. No honest libertarian can claim that some entity should have such power over the country and just trust that they'll use this power reasonably.I have been asking on this forum from nearly day one, that in the case of a gold standard, what would prevent the financial institutions (that will inevitably arise to deal in gold currency) from gaining the same effective power as the Fed (and possibly worse because they are not subject to government's - aka "the people's" - scrutiny).

I have not really gotten any satisfactory answers. In a fiat standard, the central banks (supposedly in cahoots with the big banks) get to create money [supposedly] at will [but actually with a lot of scrutiny from the public - most of whom unfortunately have no idea what is going on...].

In a gold standard, the banks get to eventually hold all the gold anyway and the power ends up being concentrated in them either way! :D

Heads they win, tails you lose. Time to study Finance and become a banker. :p

[jon_perez]

I Agree 100% here, Friedman has done more damage for the Libertarian cause than Good. He is viewed by the mainstream as the poster child for free market economics and that it was under his guidance that free markets have failed. How did you say have free markets failed again?

[ronpaul4ever2008]

This issue is one of the biggest reasons of why Ron Paul is viewed as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. No reasonable person who knows a little about economics believes abolishing the Federal Reserve on a whim and going back to the gold standard would work. It pained me to see Paul talk so much about this because it's something that will never happen and is completely crazy.

[jon_perez]

One reason to oppose the Fed as it is (and a benefit of sound money) is that the Fed can monetize debt for war finance that people don't support.In other words the next time Miss Universe is asked what she wishes for and subsequently answers "world peace" (hackneyed, but in my opinion, not a bad answer every time), she should be smart enough to follow that up by saying, "and to accomplish that, we should all go on the gold standard..." :D

[jon_perez]

I believe Friedman actually argued that the FED should be replaced by a computer program. Something that would adjust the money supply automatically in response to market conditions.Given all the arguments for and against this or that approach in adjusting the money supply, I'll bet you could do far worse than just simply adjust the money supply according to the percentage growth or reduction in population. Seriously.

I don't remember the link at all, but I remember Hayek had some pretty wild ideas about the money supply (and if I understood correctly, Hayek actually believed in fiat money??)




Ah yes... his ideas for "private" fiat money... wow those are far out... perhaps in the future?

http://mises.org/story/1854

So if Rothbard is supposed to be the most anti-statist of them all, for Hayek vs. Friedman, who is more of a free marketer and who is more of a statist?

[jon_perez]

You might want to check out a very powerful graph showing that the price of oil has not gone up --- per ounce of gold.

http://www.ronpaulforums.com/showthread.php?t=135992

A very clear testament to the instability of the Federal Reserve note (and Euro) and a very clear argument for gold backed currency.This is strong evidence for inflation in terms of fiat money, but I don't believe there is anything magical between the correlation between gold and oil. If peak oil were indeed the case and we still depended on oil as heavily as we do today, the price of gold would be left behind by the price of oil.

If, on the other hand, adoption of alternatives like hydrogen power, etc... were to proceed at breakneck pace, then the value of oil would plummet in relation to gold.

Perhaps a more reliable measure would be how many kilojoules of energy can an ounce of gold buy? If that were constant regardless of technological innovation, then I'd find that to be a real eye-opener and maybe just might convince me that there is something "magickal" about the idea of gold as money.

[jon_perez]

This issue is one of the biggest reasons of why Ron Paul is viewed as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. No reasonable person who knows a little about economics believes abolishing the Federal Reserve on a whim and going back to the gold standard would work. It pained me to see Paul talk so much about this because it's something that will never happen and is completely crazy.Hence the idea to remove (or heck at least minimize!) capital gains taxes on gold and silver trading instead. Which is much much much more realistic and can be done. The more frictionless gold and silver trading becomes the less leeway the central banks have to act under (which may be good or bad depending on your political and economic inclinations).

Unfortunately, Ron Paul's previous writings are pretty much in categorical favor of a pure gold standard, and hence do much to affect people's perceptions of his views.

[jon_perez]

http://www.ustream.tv/recorded/AfycBeR,mnEYaL2pa,BtD5.VBYK3cgTYAt 12:00, this seems to be the same thing that Gary North has observed. M1 is supposed to be contracting not expanding.

At 19:30 or thereabouts, I can understand why Ron Paul would like to use units of weight as the name for a currency. This is to avoid the sleight-of-tongue that has caused people to equate a "dollar" with essentially some abstract measure of value as opposed to X ounces of a commodity. In fact, in the very act of naming a currency is the first step - the original sin if you may - towards divorcing money from a concrete underlying value. If you believe that gold=money, then you have to call your money X ounces of gold or X ounces of silver... rather than a "dollar" (or euro or anything else). E.g. switch to a money system ala Dungeons & Dragons ;)

At 22:30, William Barnett could always go Islamic... ;)

[jon_perez]

The more I think about this gold standard issue, the more I realize this has very little to do with saving the value of the US dollar. The USD has gained its status as hard currency from US productivity and the perceived stability and influence of the issuing country.

If China, for example, eventually ends up producing half the world's goods, you can peg the dollar to gold all you like, people will still want to hold fiat yuan (assuming the Chinese central bank does not go bonkers printing them) and gold or silver in terms of yuan might actually end up quite cheap.

[wild03]

Gold isn't exactly true wealth either. It is just a form of money whose main differentiating factor from fiat money is that it is effectively impossible to expand its supply at will.

This has its pros and cons, but of course it is very hard to convince Austrians and similar thinkers about the latter.

What are you talking about? what is true wealth to you? 7 chickens? 8 cows? but then If we all agree that in order to solve the "double coincidence of wants" problem we decide to start converting our goods into sea shells, and everyone thinks it's a great idea. Isn't sea shells wealth in this society?

Gold became the medium of exchange for several reasons, and as long as people accept it as such it will be a measure of wealth. If tomorrow all the rocks turn into gold, then it will become worthless and another medium if exchange will surface. until then, people are happily trading it away. What are the cons?

[wild03]

I have been asking on this forum from nearly day one, that in the case of a gold standard, what would prevent the financial institutions (that will inevitably arise to deal in gold currency) from gaining the same effective power as the Fed (and possibly worse because they are not subject to government's - aka "the people's" - scrutiny).

I have not really gotten any satisfactory answers. In a fiat standard, the central banks (supposedly in cahoots with the big banks) get to create money [supposedly] at will [but actually with a lot of scrutiny from the public - most of whom unfortunately have no idea what is going on...].

In a gold standard, the banks get to eventually hold all the gold anyway and the power ends up being concentrated in them either way! :D

Heads they win, tails you lose. Time to study Finance and become a banker. :p

Why are you assuming that this institutions will not be subject to scrutiny? Just like other businesses these private banks will provide a service. They will allow you to deposit your gold there for safe keeping. You do not have to allow them to lend it out. meaning this gold will always be there waiting for you. These banks will have a reputation on the market, better banks will do better.

How is this going to generate POWER? it is not their gold. they will only be able to lend the gold that people allow them to lend. Meaning that you would be using the bank for investing your gold. They would get a portion of the interest.

They win you lose? I don't get it. How will I lose?

[wild03]

How did you say have free markets failed again?

Don't know, Ask the mainstream media. If you read my post, I'm saying that that's the popular believe, that free markets were tried and failed. I believe they have never been truly tried.

[wild03]

The more I think about this gold standard issue, the more I realize this has very little to do with saving the value of the US dollar. The USD has gained its status as hard currency from US productivity and the perceived stability and influence of the issuing country.

If China, for example, eventually ends up producing half the world's goods, you can peg the dollar to gold all you like, people will still want to hold fiat yuan (assuming the Chinese central bank does not go bonkers printing them) and gold or silver in terms of yuan might actually end up quite cheap.

How would it matter than gold and silver drop in value against the yuan? Unless the supply of these metals increases suddenly a drop in price would mean an increase in the value of the yuan, which would mean all other goods would drop in price too. which would mean that the purchasing power of gold compared to other goods would remain the same.

The temptation is to great to keep a fiat currency from inflating. Never gonna happen.

[wild03]

This issue is one of the biggest reasons of why Ron Paul is viewed as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. No reasonable person who knows a little about economics believes abolishing the Federal Reserve on a whim and going back to the gold standard would work. It pained me to see Paul talk so much about this because it's something that will never happen and is completely crazy.

No reasonable person? ha! Speak for yourself, You sure are making a lot of assumptions in the name of reasonable people, Knowing a little is not enough, "WHIM???" look up the definition, by all means I encourage these so called reasonable persons to know a little more, there are plenty of experts that disagree with you and not out of whim but logical thought. I suggest further reading at places like mises.org.

See if this is what you really meant to say:
"I view Ron Paul as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. I know a little about economics and believe abolishing the Federal Reserve on a whim and going back to the gold standard would not work. It pained me to see Paul talk so much about this because I think it's something that will never happen and is completely crazy"

or

"This issue is one of the biggest reasons of why Ron Paul is viewed BY SOME PEOPLE as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. A person who knows little about economics believes abolishing the Federal Reserve and going back to the gold standard would not work. It pained me to see Paul talk so much about this because THIS PEOPLE THINK it's something that will never happen and is completely crazy."

But then I would ask you why does it bother/pain you? would you rather Paul be like Obama and promise heaven on earth? and ignore causation, Well reality is inescapable. The reason he mentions it a lot its because he knows the importance of this subject.

[buffalokid777]

i love the vast majority of what Ron Paul believes in, and I have found no other candidate with his level of consistancy of beliefs and ability to thwart popular misconceptions on ways to deal with economics.

however, i saw an interview where he wanted to return to the gold standard. i would be interested in any other economist's view on how this would be possible given dollarization.

i am also curious if Ron Paul considers this a foreign policy decision or an economic one. (it has been said we are on the oil standard)

I agree...a gold standard is limiting....because there may not be enough gold and silver to supply world currency......but Ron Paul's argumnt is very legit.....the founding fathers wanted gold and silver currency since they have intristic value.....but they could not see the future 250 years or so later.....

The easiest way to preserve the founding fathers intent is to not only allow gold and silver but any hard commodity currency....

Platinum
Rhodium
Palladium
Tin
Copper
Steel

you get the idea.....

any other metal will also work.....

By using ALL metals for currency....we will have more than enough Hard currency to preserve the founding fathers original intent in modern times,,,,,,

[INforRP]

This issue is one of the biggest reasons of why Ron Paul is viewed as someone who is out of touch with reality and doesn't have realistic solutions for today's problems. No reasonable person who knows a little about economics believes abolishing the Federal Reserve on a whim and going back to the gold standard would work. It pained me to see Paul talk so much about this because it's something that will never happen and is completely crazy.

Here is an excellent interview with Paul Van Eeden, a very reasonable economist.
http://www.cnbc.com/id/15840232?video=755108158
He offers sane, articulate, explanations about the failure of increasing the money supply through the printing of more fiat currency. He further explains how this has been the cause of 90% of the increase in the cost of oil.

Then I would like to suggest an excellent treatise on the Federal Reserve:
"The Creature from Jekyll Island", by G. Edward Griffin (A Second Look at the Federal Reserve). If you can read past the first 45 pages or so of the book and still think the Federal Reserve should exist, I'd want to check to see if your heart is still beating.

The first printing of the book came out over 10 years ago and the parallels of the financial schemes that he details and what is currently going on in our country economically are astonishing.

The Federal Reserve is a private cartel of bankers, that operates to make money, lots of it, for the certain elite bankers that set it up. It was created to control the financial markets, set the financial rules in this country and have a monopoly that would eliminate competition from other banks. It has always operated with the intent to make money for the bankers that set it up, not to be a neutral governmental body.

It goes without saying that most people on this forum know that it is a misnomer; it is not a Federal organization.

[therealjjj77]

The Federal Reserve is a private cartel of bankers, that operates to make money, lots of it, for the certain elite bankers that set it up. It was created to control the financial markets, set the financial rules in this country and have a monopoly that would eliminate competition from other banks. It has always operated with the intent to make money for the bankers that set it up, not to be a neutral governmental body.


I used to believe, too, that they operated to make money. However, I found their true operation is to increase the amount of collateral being used to back the debt the provide. Once everything is collateral, then they can bankrupt our economy and gain everything of true value. They don't care about green pieces of paper. They want EVERYTHING else.

[jon_perez]

What are you talking about? what is true wealth to you? 7 chickens? 8 cows? but then If we all agree that in order to solve the "double coincidence of wants" problem we decide to start converting our goods into sea shells, and everyone thinks it's a great idea. Isn't sea shells wealth in this society?

Gold became the medium of exchange for several reasons, and as long as people accept it as such it will be a measure of wealth. If tomorrow all the rocks turn into gold, then it will become worthlessNot exactly, since gold has more intrinsic value than paper... but I believe you get my point about money being more the "measure" of wealth (even if gold) rather than the wealth itself.


and another medium if exchange will surface. until then, people are happily trading it away. What are the cons?The con is that there are sever upper limits to growing the gold money supply. Like I said, "Austrians" just don't seem to believe that too low a money supply can depress economic activity.

You have to forgive the use of the term "Austrians", by the way, since I can't find a more appropriate term (Rothbardians? Anti-Keynesians?). The fact was that Hayek (The Austrian) himself advocated fiat money (but not government issued), so Hayek himself might not have believed that a gold-based money supply was optimal.

IF Ron Paul's proposal that the government budget has to always balance (e.g. NO DEFICITS - Keynes was the one who said deficits were ok), that alone would severely curtail the growth of the money supply, even without resort to a gold standard. Political will is what's lacking.

Some of the "going back to the gold standard" proposals call for USD5000 per ounce of gold. Okay, so when the USD is back to a gold standard (at USD5000 per ounce), what guarantees that a lack of future political will not force a move away from that standard as well? So sure, I agree fully that a gold standard will just about guarantee that you won't get high inflation, but the question here is what's to prevent future generations from decoupling from gold again?

In every historical juncture one sees reasons for going fiat, it is those reasons which must be analyzed and addressed instead of merely swinging back and forth between a commodity and a fiat standard as the mood of the times dictate.

[winston_blade]

I can't imagine this kind of conversation going on in any other candidate's boards.

[wild03]

The con is that there are sever upper limits to growing the gold money supply. Like I said, "Austrians" just don't seem to believe that too low a money supply can depress economic activity.

Does it depress economic activity? how?

http://www.cato.org/pub_display.php?pub_id=9181



You have to forgive the use of the term "Austrians", by the way, since I can't find a more appropriate term (Rothbardians? Anti-Keynesians?). The fact was that Hayek (The Austrian) himself advocated fiat money (but not government issued), so Hayek himself might not have believed that a gold-based money supply was optimal.

You can call them free market economists, this is an ad hominem, It does not matter if Hayek, Friedman or anyone else opposed the gold standard, or whether they called themselves Austrians or not. What matters are their reasons for doing so, and how these reasons are challenged by others.

http://mises.org/etexts/goldcritique.pdf



IF Ron Paul's proposal that the government budget has to always balance (e.g. NO DEFICITS - Keynes was the one who said deficits were ok), that alone would severely curtail the growth of the money supply, even without resort to a gold standard. Political will is what's lacking.

Political will? right! All we need is the right ruler.



Some of the "going back to the gold standard" proposals call for USD5000 per ounce of gold. Okay, so when the USD is back to a gold standard (at USD5000 per ounce), what guarantees that a lack of future political will not force a move away from that standard as well? So sure, I agree fully that a gold standard will just about guarantee that you won't get high inflation, but the question here is what's to prevent future generations from decoupling from gold again?

In every historical juncture one sees reasons for going fiat, it is those reasons which must be analyzed and addressed instead of merely swinging back and forth between a commodity and a fiat standard as the mood of the times dictate.

These so called reasons for going fiat are always forced on people. Hopefully these future generations would had learn a very important lessons from the past. The more people realize how important is to keep money away from government the less likely they will be to fall for another fiat scheme. When this country left the gold standard the smart ones kept their gold well hidden. Others turned it in for paper and got burned.

The fact of the matter is that if the government turns bad, you can always hide your gold coins away and trade them on the black market later. If this happens on a Fiat system The paper is still paper and under a massive hyper inflation about the only thing you can do with it is burn it to heat your home!

Gold will always be gold, you can take a roman gold coin and it will always be worth at least its weight in gold. Try to do the same with an Argentinian peso from the 80's.

[Ninja Homer]

This is the way I explained it to a friend a while ago, and I think it makes perfect sense.

Ron Paul is multi-faceted. Ron Paul the strict Constitutionalist looks at the Constitution and it says that currency must be backed by gold and silver, and the Fed isn't allowed. However, Ron Paul the economist knows that it would be devastating to just make a sudden switch to what the Constitution says... we are already too far gone from the gold standard.

So what Ron Paul, as a strict Constitutionalist, economist, and libertarian, wants to do to fix our currency is to let the free market choose the currency. Amend the Constitution to allow competing currencies as legal tender, and the current dollar inflation problems will right themselves.

This, in turn, will put the Fed out of business. Unable to print money out of thin air, it will also mean the end of unnecessary wars, market bubbles, unnecessary government agencies, unbalanced budgets, etc. Damn near everything Ron Paul (and the US) stands for relies on ending the Fed. Kill the Fed, and almost everything else will fall into place, just because the country couldn't afford it not to.

[therealjjj77]

This is the way I explained it to a friend a while ago, and I think it makes perfect sense.

Ron Paul is multi-faceted. Ron Paul the strict Constitutionalist looks at the Constitution and it says that currency must be backed by gold and silver, and the Fed isn't allowed. However, Ron Paul the economist knows that it would be devastating to just make a sudden switch to what the Constitution says... we are already too far gone from the gold standard.

So what Ron Paul, as a strict Constitutionalist, economist, and libertarian, wants to do to fix our currency is to let the free market choose the currency. Amend the Constitution to allow competing currencies as legal tender, and the current dollar inflation problems will right themselves.

This, in turn, will put the Fed out of business. Unable to print money out of thin air, it will also mean the end of unnecessary wars, market bubbles, unnecessary government agencies, unbalanced budgets, etc. Damn near everything Ron Paul (and the US) stands for relies on ending the Fed. Kill the Fed, and almost everything else will fall into place, just because the country couldn't afford it not to.

It doesn't require an amendment. The Constitution does not restrict competing currencies. Also, the Federal Reserve should no longer be the Central Bank. That doesn't mean they can't still exist and compete on the new money market. As other local currencies pop up, those communities would tend toward those and local economies would be strong once again.

[bander87]

It doesn't require an amendment. The Constitution does not restrict competing currencies. Also, the Federal Reserve should no longer be the Central Bank. That doesn't mean they can't still exist and compete on the new money market. As other local currencies pop up, those communities would tend toward those and local economies would be strong once again.

Yeah, I think competing currencies are fine, and they already do exist. The constitution does say however that only gold and silver may be legal tender, not that one cannot except other types of money.

[therealjjj77]

Yeah, I think competing currencies are fine, and they already do exist. The constitution does say however that only gold and silver may be legal tender, not that one cannot except other types of money.

Can you tell me where the Constitution says that? Here are the two parts that talk about gold and silver:

Article 1 Section 8... To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

and

Article 1 Section 10 No State shall... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;

The idea of "legal tender" is that which the States or federal government can make payments with. It has no bearing on what private citizens can exchange.

So I cater for the library in my city (which is a division of the city, and the city is chartered by the State), then they should only pay me in gold or silver Coin.

Again, the Constitution does not bar citizens from making their own unique currency. It would just not be something that could be used as payment for debt by the federal or state governments.

[Ninja Homer]

To clarify, I'm pretty sure that Ron Paul wants to legalize competing currencies as "legal tender for all debts, public and private," like the dollar. I believe that this would require an amendment to the Constitution.

[therealjjj77]

To clarify, I'm pretty sure that Ron Paul wants to legalize competing currencies as "legal tender for all debts, public and private," like the dollar. I believe that this would require an amendment to the Constitution.

This method would bring us to a problem. If a state or the federal government chose to use a currency that is being highly inflated to pay back the debt, then we lose. The whole idea the framers had in mind is that the government should produce a currency with a set weight and measure that does not change so that it could pay off any debts incurred to citizens honestly.

What Ron Paul's bill entailed was not amending the Constitution but was to strike certain parts of the US Code. Here is his speech to congress back in December 2007:



Statement Introducing the Free Competition in Currency Act

13 December 2007

Rep. Ron Paul, M.D.

"Madame Speaker, I rise to introduce the Free Competition in Currency Act. This act would eliminate two sections of US Code that, although ostensibly intended to punish counterfeiters, have instead been used by the government to shut down private mints. As anti-counterfeiting measures, these sections are superfluous, as 18 USC 485, 490, and 491 already grant sufficient authority to punish counterfeiters.

The two sections this bill repeals, 18 USC 486 and 489, are so broadly written as to effectively restrict any form of private coinage from competing with the products of the United States Mint. Allowing such statutes to remain in force as a catch-all provision merely encourages prosecutorial abuse. One particular egregious recent example is that of the Liberty Dollar, in which federal agents seized millions of dollars worth of private currency held by a private mint on behalf of thousands of people across the country.

Due to nearly a century of inflationary monetary policy on the part of the Federal Reserve, the US dollar stands at historically low levels. Investors around the world are shunning the dollar, and millions of Americans see their salaries, savings accounts, and pensions eroded away by rising inflation. We stand on the precipice of an unprecedented monetary collapse, and as a result many people have begun to look for alternatives to the dollar.

As a proponent of competition in currencies, I believe that the American people should be free to choose the type of currency they prefer to use. The ability of consumers to adopt alternative currencies can help to keep the government and the Federal Reserve honest, as the threat that further inflation will cause more and more people to opt out of using the dollar may restrain the government from debasing the currency. As monopolists, however, the Federal Reserve and the Mint fear competition, and would rather force competitors out using the federal court system and the threat of asset forfeiture than compete in the market.

A free society should shun this type of strong-arm action, and the Free Competition in Currency Act would take the necessary first steps to freeing the market for competing currencies. I urge my colleagues to support this bill."

http://www.house.gov/paul/congrec/congrec2007/cr121307h.htm

[ronpaul4ever2008]

A lot of what Ron Paul wants to do about this issue would lead to problems, even more than we have now. No sane economist agrees with getting rid of the Central Bank like Paul wants to do with the flip of a switch. His position on this issue is one of my main disagreements with him and why many people think he's a kook. I'd also put his isolationist foreign policy up there as one of the main reasons why he failed in all of the primaries. People don't want to go back to 1900, they want realistic solutions to today's problems.

[therealjjj77]

A lot of what Ron Paul wants to do about this issue would lead to problems, even more than we have now. No sane economist agrees with getting rid of the Central Bank like Paul wants to do with the flip of a switch. His position on this issue is one of my main disagreements with him and why many people think he's a kook. I'd also put his isolationist foreign policy up there as one of the main reasons why he failed in all of the primaries. People don't want to go back to 1900, they want realistic solutions to today's problems.

My goodness! Have you read anything in this forum? Or are you just here to espouse your beliefs about a failing system?

Sane economists try to make the Federal Reserve work because they know where the flipping funding comes from for their research projects and who is going to promote them based on what they support and don't support. Research into fiat money is an all time favorite of the Fed. Self-preservation. Has nothing to do with wanting what's best for the rest of us.

Getting rid of the Federal Reserve would be more modern then the invention of the credit card. The Federal Reserve caused the Great Depression and 6 other depressions before that.

Here's what it boils down to, do you want a roller coaster economy, or do you want a steady economy that goes up at a steady 1% annual increase while no fiat inflation occurs?

Examine the first chart at this link:

http://www.econbrowser.com/archives/2005/12/the_gold_standa.html

This fella is a proponent for fiat money. However, looking at his own chart shows that 4 years after countries left the gold standard, the economy takes a down turn. This is also not adjusted for inflation. I find it interesting that even after the Federal Reserve and international bankers pulled back their 24-hour call loans in 1929 decreasing the currency in circulation by 30 fold, the countries that didn't go to fiat currency made a recovery and then saw a far larger increase in their economy 4 years later then those that went to fiat.

I've got a very good comparison that I'm going to give you later but I must get going now....

[Ninja Homer]

A lot of what Ron Paul wants to do about this issue would lead to problems, even more than we have now. No sane economist agrees with getting rid of the Central Bank like Paul wants to do with the flip of a switch. His position on this issue is one of my main disagreements with him and why many people think he's a kook. I'd also put his isolationist foreign policy up there as one of the main reasons why he failed in all of the primaries. People don't want to go back to 1900, they want realistic solutions to today's problems.

There's so much wrong with that, I don't even know where to start. I strongly suggest you read The Revolution: A Manifesto. It really is a groundbreaking book. It isn't just Ron Paul supporters buying it... there's no way that Ron Paul supporters alone could keep it on all the bestseller lists for so long.

I'll agree that "going to a gold standard" and "isolationist foreign policy" are 2 points that the media used to try to disenfranchise Ron Paul and make him seem like a kook. However, neither of those points is correct.

As thoroughly discussed in this thread, Ron Paul does NOT want to get rid of the Fed with the flip of a switch. He wants to transition away from it, and the way to do that is by legalizing competing currencies. Many economists agree with him. See http://mises.org

It's time to start thinking for yourself, rather than let the media tell you what you should think. There's a reason they call TV shows "programming"... they are working very hard to program you.

[wild03]

Originally Posted by ronpaul4ever2008
A lot of what Ron Paul wants to do about this issue would lead to problems, even more than we have now. No sane economist agrees with getting rid of the Central Bank like Paul wants to do with the flip of a switch. His position on this issue is one of my main disagreements with him and why many people think he's a kook. I'd also put his isolationist foreign policy up there as one of the main reasons why he failed in all of the primaries. People don't want to go back to 1900, they want realistic solutions to today's problems..

hehe, may I suggest another candidate that is more in line with your believes. I'm sure you'll get a lot more support at the Mccain forum,

btw, make sure you change the username accordingly ;)

[therealjjj77]

OK, now for my comparison.

Drug lords would kidnap women, usually aged 15-25, and would turn them into prostitutes. The way they would do this is by first giving them some drug, such as morphine, cocaine, etc. and then letting them get high and come down from it. They would continue to do this several times. Then they would finally give them a very large dosage, and let them fall down from it and not give them any more unless they complied with their requests. It would turn the most dignified girl into a prostitute. The girl would feel extreme depression and anxiety for days until she got her fix.

It's similar to our economy. Money is the blood of our economy. When a certain amount of money is in circulation, then the economy stays steady and sees steady growth. When someone is counterfeiting money(and on top of that loaning it out at an interest rate) then prices go up as the resources have not expanded any more then they normally would have. It benefits the people who get to use the new credit first, but that benefit to them is at the cost of others. So then people spend more then they normally would have and this uses up our resource reserves. It then seems like things are going great but then when our resource reserves are depleted, then the economy goes into a recession as prices rise. Then we have that real big downer like the prostitute going off the high of a drug.

This happened several times throughout 1913-1929 and finally the federal reserve, teamed up with FDR, crashed the economy by first drastically increasing the money in the system, raising prices, and then taking it nearly all out on Black Tuesday, 1929, by calling in all the 24 hour call loans at once. Banks and investors were scrambling to sell their assets to pay these loans off and the market got flooded and assets were going real cheap. A lot of banks had to close their doors since they couldn't meet their obligations.

Then afterwards some communities began trading in gold currency again but FDR demanded that all the gold be seized just like a drug lord demanding that the prostitute stay in a confined room with no interaction with anyone. A few communities found other things to use as currency very quickly and managed to rebuild themselves. Others, however, greatly suffered.

Finally FDR came up with the "New Deal" which was essentially communism. This "New Deal" was where FDR came in to save the day with borrowed money from the Federal Reserve, and spent this to hire people to do unneeded jobs, increasing the much needed blood back in the system. Just like when that dignified young girl is told to do awful things just so she can get her fix. She ends up viewing that drug lord as someone she is very dependent on and someone that is even good. When I talk to my grandma about FDR, she sees him as one of the greatest presidents in history.

The reality is that he knew very well what was going on. This is the system that we've inherited. You sure you want to stay hooked on it?

It's like that prostitute wanting her fix again. She would have to go through a period of withdrawal just to adjust and get back to normal and enjoy life like it is intended to be enjoyed.

Competing currencies would give us a much easier way to adjust back to normalcy.

[wild03]

OK, now for my comparison.
...
It's like that prostitute wanting her fix again. She would have to go through a period of withdrawal just to adjust and get back to normal and enjoy life like it is intended to be enjoyed.

Competing currencies would give us a much easier way to adjust back to normalcy.

Good analogy,

The problem is with those who think:

-Being off drugs is so old fashion...besides all the girls on other countries are on drugs.

-Most girls relapse, drugs is what they want and what is best for them

-I know of a good doctor that suggested a controlled 3% to 5% dose instead of quitting, then this proves that drugs is what is best for them (it is not clear if he used the girls services from time to time) ...did I mentioned that the doctor is from the same country as you...he must be right. :(

-What we need is a benevolent Drug lord.

-The girls must have had a good reason to become addicts to being with, drugs are therefore what is best for them.

-How will these girls perform their jobs without drugs? Impossible :confused:

-Maybe what we need is a better type of drug??!? :confused:

-What if they quit!, what is stopping the drug lords from doing it again?. therefore this is useless.

-See how the girl suffers when off the drug, the drug must be the best thing for her.

-There is plenty of evidence...somewhere....that quitting will not guaranty the girls happiness.

-Getting her to quit out of your "whim" is "insane" and you are obviously a "kook". You are an extremist on your position, compromise is so much fashionable, You'll be more popular if you talk to the Drug lord and maybe he'll be nicer to the girls. That's ok, I still support you because you are the only candidate that looks like my Uncle?!?!
:eek:

[spacehabitats]

OK, now for my comparison.

Drug lords would kidnap women, usually aged 15-25, and would turn them into prostitutes. The way they would do this is by first giving them some drug, such as morphine, cocaine, etc. and then letting them get high and come down from it. They would continue to do this several times. Then they would finally give them a very large dosage, and let them fall down from it and not give them any more unless they complied with their requests. It would turn the most dignified girl into a prostitute. The girl would feel extreme depression and anxiety for days until she got her fix.

It's similar to our economy. Money is the blood of our economy. When a certain amount of money is in circulation, then the economy stays steady and sees steady growth. When someone is counterfeiting money(and on top of that loaning it out at an interest rate) then prices go up as the resources have not expanded any more then they normally would have. It benefits the people who get to use the new credit first, but that benefit to them is at the cost of others. So then people spend more then they normally would have and this uses up our resource reserves. It then seems like things are going great but then when our resource reserves are depleted, then the economy goes into a recession as prices rise. Then we have that real big downer like the prostitute going off the high of a drug.

This happened several times throughout 1913-1929 and finally the federal reserve, teamed up with FDR, crashed the economy by first drastically increasing the money in the system, raising prices, and then taking it nearly all out on Black Tuesday, 1929, by calling in all the 24 hour call loans at once. Banks and investors were scrambling to sell their assets to pay these loans off and the market got flooded and assets were going real cheap. A lot of banks had to close their doors since they couldn't meet their obligations.

Then afterwards some communities began trading in gold currency again but FDR demanded that all the gold be seized just like a drug lord demanding that the prostitute stay in a confined room with no interaction with anyone. A few communities found other things to use as currency very quickly and managed to rebuild themselves. Others, however, greatly suffered.

Finally FDR came up with the "New Deal" which was essentially communism. This "New Deal" was where FDR came in to save the day with borrowed money from the Federal Reserve, and spent this to hire people to do unneeded jobs, increasing the much needed blood back in the system. Just like when that dignified young girl is told to do awful things just so she can get her fix. She ends up viewing that drug lord as someone she is very dependent on and someone that is even good. When I talk to my grandma about FDR, she sees him as one of the greatest presidents in history.

The reality is that he knew very well what was going on. This is the system that we've inherited. You sure you want to stay hooked on it?

It's like that prostitute wanting her fix again. She would have to go through a period of withdrawal just to adjust and get back to normal and enjoy life like it is intended to be enjoyed.

Competing currencies would give us a much easier way to adjust back to normalcy.

Mine is a little more simple-minded.

The Fed functions like a doctor who treats a patient complaining of "sleepiness" with ever higher doses of methamphetamine.

This "works" for awhile.

The patient stops being "sleepy" and, at first, is not even very tired.

But the doses do have to keep increasing and eventually the the patient will collapse nevertheless.

(Actually, the sooner the better, since sleep is what the patient needed all along.)
But if the doctor "succeeds" in delaying the collapse long enough, the patient won't just fall asleep, he'll die.

So much for Dr. Feelgood.

[therealjjj77]

Mine is a little more simple-minded.

The Fed functions like a doctor who treats a patient complaining of "sleepiness" with ever higher doses of methamphetamine.

This "works" for awhile.

The patient stops being "sleepy" and, at first, is not even very tired.

But the doses do have to keep increasing and eventually the the patient will collapse nevertheless.

(Actually, the sooner the better, since sleep is what the patient needed all along.)
But if the doctor "succeeds" in delaying the collapse long enough, the patient won't just fall asleep, he'll die.

So much for Dr. Feelgood.

Though complex, I still like my analogy since it perfectly addresses the Great Depression. Their entire intent was to:
A) Collaterallize all real property
B) Inventory and Collaterallize all human flesh

And what do you use to obtain credit from them? Your Socialist Insecurity Number

[Paul4Prez]

This thread is all over the map, but to answer a few of the basic questions:

Ron Paul has long advocated a return to the gold standard. He softened that somewhat in this campaign to talk of allowing competing currencies, particularly commodity-backed currencies.

Is it a foreign policy issue or an economic issue? I believe Ron Paul sees it as a Constitutional issue (as someone noted above), but also a moral issue -- by what right does any entity create "money" out of thin air?

Someone else pointed out that many conservatives labeled Ron Paul a kook for advocating the gold standard, but that indicts their intelligence and judgment, not Ron Paul's. Gold has been the money of choice throughout history, and the only one that has stood the test of time. Any other government-run currency, such as money backed by fiat, has inevitably failed miserably.

A gold standard (or simply taking the money-making power away from the government) also serves to constrain the growth of government, because any expansion would have to be paid for, and taxes aren't popular -- freedom is.

[truelies]

...............the constitution, which only gives congress the power to mint money based on gold and silver. It's quite explicit, so the fiat system today is unconstitutional.....................

.


Article1 Section 10
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.


The above applied to the STATES NOT Congress

[therealjjj77]

Article1 Section 10
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.


The above applied to the STATES NOT Congress

You are mistaken. Minting coins is not the same as paying debt. States can only pay debt with Gold or Silver tender. Congress is responsible to mint the Coin:

"The Congress shall have Power... To coin Money and regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"

[wild03]

OK, now for my comparison.

Drug lords ....

speaking of drug lords,

Check this article on the oil price bubble by Frank Shostak

http://mises.org/story/2999