emazur
12-15-2010, 02:21 AM
http://www.dailyfinance.com/story/investing/seven-ways-ron-paul-wrong-about-fed/19757159/#Comments
I'll copy some of the article here:
# The U.S. should return to the gold standard. Paul believes fervently that the only time we had "sound money" is when paper was backed with gold. I'm not sure what he means by "sound money," but the U.S. economy has been leading the world in the nearly 40 years since the U.S. went off the gold standard under Richard Nixon in 1971. I'd love to hear his explanation of how the U.S. has prospered for many decades with unsound money.
# Bernanke sets the price of money around the world by printing worthless paper. The price of money is interest rates, and Paul argues that the Fed sets interest rates for the world. If that were true, then why are there such enormous gaps among the interest rates in the leading countries. For example, the rate on two-year government bonds in Greece is 11%, while it sits at a minuscule 0.64% in the U.S. Why does Paul think the Fed is setting Greece's interest rate or the rate for any other country?
# The Fed is producing unsupervised inflation. Paul insists that the Fed's ability to create money leads to inflation. And he's exactly right that the Fed has created money -- witness the latest $600 billion program of quantative easing. One little problem with Paul's theory is that inflation is nonexistent these days. In fact, at 0.2%, U.S. inflation in October was at the lowest level in 53 years. Besides, the Fed has a 2% inflation target, and if it starts to get close to that level, it'll raise rates and buy back some of that money it created.
See full article from DailyFinance: http://srph.it/glIvMV
Here was the comment I submitted (feel free to critique):
Sound money means money that is stable in value (especially over the long run) and money with a supply that cannot be artificially increased by government, and cannot be be created out of thin air for the purpose of bailing out banks that made bad decisions. It is money that has inherent value that will not be lost and which need not be risked in the stock market or on "AAA" investments rated by a government protected cartel of rating agencies. It is safe. You may try and point out a graph of gold with wild swings in value in an attempt to prove that gold is unstable, but I ask you - unstable compared to what? Would a graph showing a downward spike in gold indicate that gold has lost value against ALL other commodities, or is it possible the government manipulation of paper money is what is responsible for such shifts in the value of gold? And do you think it would be so hard for me to show you a graph that not only shows wild spikes in the value of the dollar, but also a long-term consistent devaluation of it? Even if 2 items were prone to wild swings, I will gladly hold onto the one that doesn't slowly go down with the ship.
And I'm so glad to hear you think that inflation is OK as long as it's not too high. I wonder if you would say that it's OK if your stock portfolio goes consistently down, so long as it's only about 2 to 3% a year. And if you get fatter every year, I guess it would be OK so long as your weight only increases by less than 3% on your annual weigh-in. And if you get cancer, that would be fine if it only ate away maybe 1% of your cells every year. Fiat paper money is cancer and it is something I want no part of. As for inflation being non-existent, my rent just went up $45 a month, Comcast is set to raise its fees, rising commodity prices are bringing higher prices at the supermarket, and I'm paying a lot to fill up my car. But maybe that's all in my mind.
And you say all the Fed chairmen seem pretty smart to you? Why did Nixon and the previous chairman create such a huge mess for Volcker to clean up? Why did Greenspan leave us teetering on collapse? Have you ever searched the term "Ben Bernanke was wrong" on youtube? Maybe you should. It doesn't matter if these men "seem" smart, the fact is central planning doesn't work as evidenced by the collapse of communism, and if the U.S. economy is struggling, we can simply draw a straight line from the Federal Reserve to the 5th plank of the Communist Manifesto: "Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly."
And yes, low interest rates do steal from savers. You think the supply of gold is too limited to be used as money and that interest rates would go sky high? If interest rates truly were so high in the first place, the prices of goods would go down until an equilibrium was reached. Supply and demand is economics 101.
And yes, the Fed is a dictator that controls all of the economy. Though to be precise, it INFLUENCES the whole economy by manipulating interest rates and bailing out favored companies. It only controls HALF the economy since the money it creates out of thin air is one half of every transaction, the other half being the good or service the money is being exchanged for. U.S.S.R. commissars would set the price of steal and set the price of grain and set the amount of money in circulation, I suppose we should all be grateful that you only feel the need to have U.S.S.A. commissars setting the interest rates.
And the recession is officially over? Hallelujah! Wait... things still seem pretty bad to me. Come to think of it, the Great Depression didn't become great until the government continually made bad decision after bad decision. Since the government is repeating many of the same mistakes, maybe that's why Ron Paul is saying that we are in or are heading to a depression.
I'll copy some of the article here:
# The U.S. should return to the gold standard. Paul believes fervently that the only time we had "sound money" is when paper was backed with gold. I'm not sure what he means by "sound money," but the U.S. economy has been leading the world in the nearly 40 years since the U.S. went off the gold standard under Richard Nixon in 1971. I'd love to hear his explanation of how the U.S. has prospered for many decades with unsound money.
# Bernanke sets the price of money around the world by printing worthless paper. The price of money is interest rates, and Paul argues that the Fed sets interest rates for the world. If that were true, then why are there such enormous gaps among the interest rates in the leading countries. For example, the rate on two-year government bonds in Greece is 11%, while it sits at a minuscule 0.64% in the U.S. Why does Paul think the Fed is setting Greece's interest rate or the rate for any other country?
# The Fed is producing unsupervised inflation. Paul insists that the Fed's ability to create money leads to inflation. And he's exactly right that the Fed has created money -- witness the latest $600 billion program of quantative easing. One little problem with Paul's theory is that inflation is nonexistent these days. In fact, at 0.2%, U.S. inflation in October was at the lowest level in 53 years. Besides, the Fed has a 2% inflation target, and if it starts to get close to that level, it'll raise rates and buy back some of that money it created.
See full article from DailyFinance: http://srph.it/glIvMV
Here was the comment I submitted (feel free to critique):
Sound money means money that is stable in value (especially over the long run) and money with a supply that cannot be artificially increased by government, and cannot be be created out of thin air for the purpose of bailing out banks that made bad decisions. It is money that has inherent value that will not be lost and which need not be risked in the stock market or on "AAA" investments rated by a government protected cartel of rating agencies. It is safe. You may try and point out a graph of gold with wild swings in value in an attempt to prove that gold is unstable, but I ask you - unstable compared to what? Would a graph showing a downward spike in gold indicate that gold has lost value against ALL other commodities, or is it possible the government manipulation of paper money is what is responsible for such shifts in the value of gold? And do you think it would be so hard for me to show you a graph that not only shows wild spikes in the value of the dollar, but also a long-term consistent devaluation of it? Even if 2 items were prone to wild swings, I will gladly hold onto the one that doesn't slowly go down with the ship.
And I'm so glad to hear you think that inflation is OK as long as it's not too high. I wonder if you would say that it's OK if your stock portfolio goes consistently down, so long as it's only about 2 to 3% a year. And if you get fatter every year, I guess it would be OK so long as your weight only increases by less than 3% on your annual weigh-in. And if you get cancer, that would be fine if it only ate away maybe 1% of your cells every year. Fiat paper money is cancer and it is something I want no part of. As for inflation being non-existent, my rent just went up $45 a month, Comcast is set to raise its fees, rising commodity prices are bringing higher prices at the supermarket, and I'm paying a lot to fill up my car. But maybe that's all in my mind.
And you say all the Fed chairmen seem pretty smart to you? Why did Nixon and the previous chairman create such a huge mess for Volcker to clean up? Why did Greenspan leave us teetering on collapse? Have you ever searched the term "Ben Bernanke was wrong" on youtube? Maybe you should. It doesn't matter if these men "seem" smart, the fact is central planning doesn't work as evidenced by the collapse of communism, and if the U.S. economy is struggling, we can simply draw a straight line from the Federal Reserve to the 5th plank of the Communist Manifesto: "Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly."
And yes, low interest rates do steal from savers. You think the supply of gold is too limited to be used as money and that interest rates would go sky high? If interest rates truly were so high in the first place, the prices of goods would go down until an equilibrium was reached. Supply and demand is economics 101.
And yes, the Fed is a dictator that controls all of the economy. Though to be precise, it INFLUENCES the whole economy by manipulating interest rates and bailing out favored companies. It only controls HALF the economy since the money it creates out of thin air is one half of every transaction, the other half being the good or service the money is being exchanged for. U.S.S.R. commissars would set the price of steal and set the price of grain and set the amount of money in circulation, I suppose we should all be grateful that you only feel the need to have U.S.S.A. commissars setting the interest rates.
And the recession is officially over? Hallelujah! Wait... things still seem pretty bad to me. Come to think of it, the Great Depression didn't become great until the government continually made bad decision after bad decision. Since the government is repeating many of the same mistakes, maybe that's why Ron Paul is saying that we are in or are heading to a depression.