"Ron Paul would create civil war!"

[Reason]

I quoted RP in a facebook discussion,

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

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

[Agorism]

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."


Hard to have a civil war when the president is so heavily armed. The president has a bigger army than any leader in the history of the world.

[acptulsa]

'...redistribution effets towards present wealth holders...'? So, he's saying that those with money when there's deflation have the value of their money increase. But that goes for anyone that has thirty-seven cents in his pocket. A person whose money is buying more than before is going to go to war because Trump's savings account is increasing in value by a much greater amount?

Pfft.

[Agorism]

So when Ron Paul pops the government's version Bernie Madoff ponzi scheme he'll get blamed.

Maybe but who cares?

[Petar]

market correction ≠ arbitrary redistribution

[heavenlyboy34]

I quoted RP in a facebook discussion,

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

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:
/facepalm! your prof neglects the fact that sound money would prevent wealth transfer from middle/lower classes to elites by the central bank. This system would help stabilize society and ease class envy, preventing a "civil war" of any sort. Also remind your prof of Bernanke's war against the middle class and poor. ;)

[Carehn]

I think he is assuming that inflation redistributes from the rich to the poor. At least thats the only way i can see him saying that it could cause some civil war. Just tell him inflation is not good for anyone but the owners of industries built to service government fancies at the time.

[anaconda]

I don't follow the professor's argument. I suppose in deflation you would want to hold as much cash as possible as opposed to hard assets.

[awake]

When one portrays the solution to a problem as the greater of two chosen evils, every dull minded individual naturally embraces their inner conservative. The left always plays this trick to keep everything in place and progressing toward more power for the state, and it works very well.

The professor makes the case that because a thief has enriched himself through robbery, that returning the property to its rightful owners may make the thief violent and aggressive. That it would much better to keep the peace and let him alone to continue his career of crime than ever bother to think about the victims.

Albeit an imperfect analogy, a deflation does not bless the victims of inflation with justice. But to correct a grave mistake is worth the temporary pain.

[kah13176]

Why would there be any deflation whatsoever. No Fed = constant money supply?

[AuH20]

Deflation would return goods and services closer to their intrinsic value. In turn, all the parasitic price additions we have grown accustomed to, would cease to exist causing a massive upheaval in the social hierarchy. I disagree however with the professor, who thinks this would be a bad turn of events.

[BarryDonegan]

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

Any political argument that professes the election of a particular person to President will in certainty cause a civil war has a serious requirement of evidence.

[kah13176]

Deflation would return goods and services closer to their intrinsic value. In turn, all the parasitic price additions we have grown accustomed to, would cease to exist causing a massive upheaval in the social hierarchy. I disagree however with the professor, who thinks this would be a bad turn of events.

Why would there be deflation whatsoever? Constant money supply means constant prices....?

[low preference guy]

Why would there be deflation whatsoever? Constant money supply means constant prices....?

Not really. Constant money supply and an increase in supply of products means lower prices.

[AuH20]

Why would there be deflation whatsoever? Constant money supply means constant prices....?

In the current environment of massive digital currency manipulation, Austrian policies would ignite deflation, albeit a natural correction to the mean.

[kah13176]

Not really. Constant money supply and an increase in supply of products means lower prices.

I've always thought deflation/inflation, in the Keynesian sense, is affected really only by changes in aggregate demand. The majority of Austrian and Chicago school economists reject the theories of aggregate demand EXCEPT for when the money supply changes. This may be flawed, but when I think of inflation or deflation, I do not think of rising or falling prices. I think of a rising/falling money supply.

In this case, it would seem that a rise or fall in price would affect everyone equally...

[low preference guy]

I've always thought deflation/inflation, in the Keynesian sense, is affected really only by changes in aggregate demand. The majority of Austrian and Chicago school economists reject the theories of aggregate demand EXCEPT for when the money supply changes. This may be flawed, but when I think of inflation or deflation, I do not think of rising or falling prices. I think of a rising/falling money supply.

In this case, it would seem that a rise or fall in price would affect everyone equally...

I didn't talk about inflation at all in my post. I talked about prices, in response to this:


Why would there be deflation whatsoever? Constant money supply means constant prices....?

I meant to respond to the second question.

[Ninja Homer]

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war Second American Revolution and make violence an even bigger reality than the violence of taxation Paul resents..."

Fixed it.

[AuH20]

I've always thought deflation/inflation, in the Keynesian sense, is affected really only by changes in aggregate demand. The majority of Austrian and Chicago school economists reject the theories of aggregate demand EXCEPT for when the money supply changes. This may be flawed, but when I think of inflation or deflation, I do not think of rising or falling prices. I think of a rising/falling money supply.

In this case, it would seem that a rise or fall in price would affect everyone equally...

Well, in our present case, an abnormal money supply (accomplished by zero percent interest rates and other governmental enablers) buttresses abnormal prices. Case in point, the entire housing market.

[acptulsa]

Those who refuse to learn from history are doomed to repeat it.

Yes, there is both inflation and deflation with a somewhat fixed money supply. This is one of the key arguments for a 'managed' currency. Of course, this is a fallacy as any currency can be manipulated. In the case of pm type money, one has to either hoard it or spend it/loan it out to manipulate it, but it has been and can be done. And then there's the remote possibility of the discovery of another Comstock Lode, or the perfection of alchemy.

That said, there will be periods when things run well, and when that happens everyone will want jewelry. And then there will be lean times, when the jewelry is getting melted. These things affect both sides of the supply/demand equation. But over the long term, the gold in your mattress will roughly hold its value.

For the noobs. No complete escape from inflation/deflation. Just long-term protection and relief from bubbles.

[freshjiva]

Ask him to define deflation.

His response will probably be something to the tune of "A gold standard would require monetary tightening which would reduce the supply of credit, thereby strangling economic growth and trigger falling prices."

That might be giving him/her too much credit, because it's an elegant critique of what the gold standard would require.

To this, you respond that no move towards a gold standard or any system of sound money would forcibly peg the dollar to any amount of gold significantly lower than the current market rate (i.e. $1400/oz). A return to sound money would be orchestrated naturally:

1) Raise the Fed Funds target rate roughly equivalent to where the market is pricing shortterm bonds (2-year Treasury bills, currently yielding roughly 0.70%). Do this immediately.

2) Capital gains, personal, and corporate income tax cuts across the board.
3) Repeal elements of Sarbanes-Oxley, Dodd-Frank, Obamacare, FDA and EPA that imposes regulations and red tape.

The combination of Fed tightening and pro-growth measures work together harmoniously and have in the past (see Clinton tax cut period of 1996-1999, Reagan tax cuts period of 1981-1985 and Kennedy tax cuts period of 1962-1964).

Keep an eye on the S&P 500-to-Gold ratio. As economic production mops up the excess liquidity the Fed has created over these past two years with all their QE, gold will naturally sink.

When the market prices gold at its 20-year moving average (roughly $500-600/oz), that would be the opportune time to peg the dollar to gold. No deflation nor inflation, because the free market has brought gold down to those levels. This model would usher in a new age of prosperity for the next century.

[Ninja Homer]

There's already an incredible redistribution effect towards present wealth holders, so whether he's right or wrong about his supposition, his point is moot.

He probably thinks (like most people who only know Ron Paul from what they see/hear in the media) that Ron Paul's solution is an immediate switch to a gold standard. That's definitely not the case... he wants to legalize competing currencies. This allows for a gradual shift, and then the Fed has to either compete or die.

[TheeJoeGlass]

I quoted RP in a facebook discussion,

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

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

He is simply saying liberals will become violent when there scams(programs) stop working.

[kah13176]

I didn't talk about inflation at all in my post. I talked about prices, in response to this:

I was just explaining where my reasoning came from. I understand a little more clearly now.

[AuH20]

He is simply saying liberals will become violent when there scams(programs) stop working.

Well, their shepherds would lose control and their cherished programs would die. I think he'd be right with that assumption.

[acptulsa]

He is simply saying liberals will become violent when there scams(programs) stop working.

Oh. Violent liberals. Gee.

[cindy25]

I don't see civil war, but civil unrest from the parasites who would lose their handouts. 45% now receive govt handouts; the most pitiful are the seniors who use the excuse that they paid into it.

[anaconda]

Why would there be any deflation whatsoever. No Fed = constant money supply?

constant money supply + increasing GDP = deflation.

[torchbearer]

constant money supply + increasing GDP = deflation.

prices going down is bad?
as production increases and our ability to produce more ipads for less time and money, means more goods chasing fewer dollars.
that is called winning for the consumer.

[acptulsa]

I don't see civil war, but civil unrest from the parasites who would lose their handouts. 45% now receive govt handouts; the most pitiful are the seniors who use the excuse that they paid into it.

Never mind that the Constitutional president can do little without Congress. Why have you ignored what Ron Paul has said on the subject of Social Security? After all, they did pay into it. And on a gold standard, they'd get to keep their savings, too, instead of having to invest them in a bubbly stock and bond market.

[anaconda]

prices going down is bad?
as production increases and our ability to produce more ipads for less time and money, means more goods chasing fewer dollars.
that is called winning for the consumer.

I didn't say it was bad. Why did you think that? Increasing production, however, does not necessarily increase productivity. I was only trying to say that a constant money supply with an increasing GDP would lower the price level.

[torchbearer]

I didn't say it was bad. Why did you think that? Increasing production, however, does not necessarily increase productivity. I was only trying to say that a constant money supply with an increasing GDP would lower the price level.

my bad. i'm just used to people expressing horror at deflating prices. when in truth, inflation is the horror.

[cindy25]

Never mind that the Constitutional president can do little without Congress. Why have you ignored what Ron Paul has said on the subject of Social Security? After all, they did pay into it. And on a gold standard, they'd get to keep their savings, too, instead of having to invest them in a bubbly stock and bond market.

I agree with you, but the president gets the blame; the civil unrest will come from the people on food stamps and medicaid. and it will happen regardless of the president; as for social security, the current recipients paid in very little to justify current benefit levels; I hear them bitching on c-span about their COLA, which they want every year even if cost of living drops

[acptulsa]

I hear them bitching on c-span about their COLA, which they want every year even if cost of living drops

Don't forget you had to work for a dollar back in the day. I remember. So don't denegrate those old contributions, please. As for adjustments without inflation, I fear we won't have to worry about that for quite some time...

[Working Poor]

yea 300 million regular folks against 20 billionaires what a war that will be

[The_Ruffneck]

From where i am sitting a civil war is inevitable in the next few years.

[ItsTime]

I would ask for the money you paid for his class back. He is not fit to be a professor.

[pcosmar]

Not a problem. he is taking one of Ron Paul's positions in a vacuum.Ignoring others.
Ron also supports the 2nd Amendment as written. He supports Armed citizens and the Militia.

That will even out the odds.

[enoch150]

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

Your prof is assuming that the largest present debt holders are the poor. That is not the case. The biggest debtors are the rich. Their wealth is leveraged many times over and requires inflation for repayment. The truly poor have little or no debt because no one would lend them any money. Many of the rich would get wiped out if the inflation suddenly stopped.

Does your prof think the wealthy elite are perpetuating the present system out of kindness for the poor? He's a fool if he does.

http://www.evilmilk.com/pictures/Net_Worths.jpg

[TNforPaul45]

Tell your professor that we are still in a state of Civil War, and that it's just went cold since 1864. The Federalists will never be our valid leaders, no matter how much longer they stay in power.

[Bossobass]

Your prof is assuming that the largest present debt holders are the poor. That is not the case. The biggest debtors are the rich. Their wealth is leveraged many times over and requires inflation for repayment. The truly poor have little or no debt because no one would lend them any money. Many of the rich would get wiped out if the inflation suddenly stopped.

Does your prof think the wealthy elite are perpetuating the present system out of kindness for the poor? He's a fool if he does.
http://www.evilmilk.com/pictures/Net_Worths.jpg

^^^This^^^

Compound interest requires an ever-growing money supply.

Inflation is strictly a monetary phenomenon. A price increase is not necessarily inflation.

A 30 year, 5% mortgage loan of $100,000.00 requires repayment of $193,255.78.

During the same 30 years, savings of $100,000.00 at 1% are eroded to $30,000.00 by 5% inflation and capital gains taxes.

Rob the saver to pay the banker, who requires an ever-growing number of debtors (Ponzi scheme).

The US has spent 40 years exporting this inflation to keep the Ponzi scheme in play. It's now coming home to roost. Disaster will accompany this event. The dollar will become extinct (unless professor shit-for-brains thinks this Ponzi scheme is immortal).

The question is, do we want to transition from that scenario to competing currencies and sound money, or the banker's alternative of a global fiat currency through a single, global central bank?

Bosso

[TortoiseDream]

I quoted RP in a facebook discussion,

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

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

1. Whether or not we adopt Ron Paul's "system" is irrelevant to the fact that we're on an unsustainable course which by now has accumulated so much debt that our economy requires a correction of epic proportions. That correction is coming, now or later. It is not a question of when, but how, and allowing things to progress as they are is just compounding the problem so that when the correction occurs, it will be that much worse.

2. The fiat money system we have is precisely one which reallocates wealth into the hands of the wealthy. The fed cannot produce new value, it can only create more of the medium we use to exchange existing value. Therefore printing money and giving it to XYZ is, literally, stealing value from non-XYZ people. If your professor is worried about, "...incredible redistribution effects towards present wealth holders...", he needs only look at current policy.

3. His comments are not a criticism of free market capitalism in the slightest, because the market is not the reason we're in such a giant mess in the first place. It would be like saying living a heroin-free life is bad because heroin-addicts will have withdrawal symptoms - lol no?

My $.02...wait, it just dropped to $.01...

[mrsat_98]

From where i am sitting a civil war is inevitable in the next few years.

I was under the impression that is was an ongoing mixed war.

http://books.google.com/books?id=ImIEAQAAIAAJ&pg=PA812&lpg=PA812&dq=definition+%22mixed+war%22&source=bl&ots=-iq1kmoCeu&sig=YdIeVx3Q2bWz-20JxWNIbPhCv8c&hl=en&ei=K-OhTcXDIY6atwfXwbSdAw&sa=X&oi=book_result&ct=result&resnum=3&ved=0CB4Q6AEwAg#v=onepage&q=definition%20%22mixed%20war%22&f=false


Tell your professor that we are still in a state of Civil War, and that it's just went cold since 1864. The Federalists will never be our valid leaders, no matter how much longer they stay in power.

Cold ? it is more seditious than ever.

[anaconda]

From where i am sitting a civil war is inevitable in the next few years.

There is, of course, the theory that the PTB want enough internal conflict to unleash massive civil police state style repression.

[Fox McCloud]

Considering it's typically the already wealthy who get to spend the new money first (big banks, investors, etc), thus transferring purchasing power from the middle and lower classes to the upper classes (and especially the government), his claim is laughable.

[acptulsa]

Considering it's typically the already wealthy who get to spend the new money first (big banks, investors, etc), thus transferring purchasing power from the middle and lower classes to the upper classes (and especially the government), his claim is laughable.

//

'The money was all appropriated for the top in the hopes it would trickle down to the needy. Mr. Hoover didn't know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night anyhow. But it will at least have passed through the poor fellow's hands.'--Will Rogers

[mczerone]

I quoted RP in a facebook discussion,

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

Former professors response was

"Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal. This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents..."

Thoughts? :rolleyes:

I'm guessing this was a political science professor? He glosses over causes and effects, omits any real analysis of "Paul's system" and "goals", and draws a conclusion that talks of oranges when you were talking of apples.


Ron Paul's system neglects the incredible redistribution effects towards present wealth holders by the deflationary event that would occur if he was able to achieve his goal.

First, he hasn't defined what he means by "Paul's system". Does he mean an economy without a central bank? Or one without legal tender laws? Or the system laid out in the Constitution, which merely enumerates the power to mint coins?

Second, how can he presume that there will be a "deflationary event" with the adoption of any of these systems? If you were making the case that the existence of the FED would lead to an inflationary event, he would expect you to show your work and prove your case. But he just asserts the conclusion.

Third, deflation or falling price levels (which seem to be the same thing in this debate) don't favor the wealthy, they generally favor creditors. Now there may be a correlation between the two, but there are plenty of "wealthy" people that are net debtors who would take a big penalty should deflation materialize.

Fourth, "redistribution effects" is a concealment term. Even assume the rest of this sentence is true, NO ONE IS FORCING ANYONE TO KEEP DEALING WITH WEALTHY PEOPLE. If he thinks it is a bad thing that his purchases support the building up of vast fortunes, he is free to only deal with small businesses and local producers. There is no "redistribution" of assets on the free market that is not voluntary. He pretends that this redistribution will just magically happen, but the only actor that can actively redistribute wealth involuntarily is the govt.

Fifth, so what? He implies that "the rich get richer" is a bad thing. But with deflation the poor are also "getting richer", and if we assume a simple flat % deflation, the poor will see a higher utility increase from the lower prices, because of the law of diminishing marginal returns. The rich will not suddenly start buying 1.05 loaves of bread for every 1 they used to purchase, because they satisfy their desires with a single loaf anyway. But the poor person who could only afford .95 of his need for bread will be able to then satisfy his entire need for bread with a 5% deflation in bread prices.

Further, the more that vast wealth is concentrated into a few hands, the larger projects that can be completed, and the more life improves for everyone. These beneficiaries of the professor's dread "wealth effects" aren't just getting lucky, they are proving that they know how to efficiently meet the demands of the bulk of consumers. If they earn more profits, they are typically going to use them to make their products even better, cheaper to produce, and available to more markets. Why is this professor scared of prosperity?


This system would create a civil war and make violence an even bigger reality than the violence of taxation Paul resents...

Who fires the first shot in his hypothetical civil war? Last I checked, a "system" is incapable of waging war, only individuals do such things. So is your professor threatening that he will go out with an army and fire the first shots against his enemies? And who are his enemies? CEOs of Kraft, Boeing, GM, and Disney?

It appears that he is saying that envy is going to so much fill the populous, that "the people" will need to rise up and take assets away from those with whom they previously traded. Even assuming that this is true - why is it a problem to him? The professor is making the case that these fat-cats shouldn't be making all this wealth in the first place, and thus violence against them will occur. But that is violence directed at people who, if you believe the professor, were illicitly benefiting from "Paul's system".

Now if he's a pacifist, I could understand his reluctance to adopt a system where such violence is likely (which we're assuming is true, here). But he is not, for he goes on to concede that taxation is violence, and he supports it as the lesser of two evils. But who is being taxed? Is it a group of people that have illicitly out-gained other members of society as in the professor's worst case scenario? No. It is the bulk of the population that must submit to the demands for protection money. People that are just trying to make a living are coerced into funding the very institution that oppresses them, and the professor somehow thinks that this institution is more desirable than simply stopping the taxation and money controls. Violence is always committed by people, and this guy excuses his government to do violence on the grounds that some other people may get envious and seek their own vigilante justice (which he greatly over-exaggerates as a "civil war").

But isn't the ideal of the government supposed to be there to protect against the latter type of violence, and to prosecute those individuals who commit it? Doing violence to prevent others from doing violence is not (small-c) constitutional, moral, or economical.

To the last jab in the professor's statement, what is he talking about here? Is he criticizing Paul's Monetary plan or his tax plan? The conversation was about the abolition of the central bank and the return to a free market in interest and banking. The results of Paul’s purely hypothetical tax policy have only a tangential relationship to the issue of monetary freedom.

Further, the professor never says that, economically, Paul’s monetary plan/goal wouldn’t work, and settles the argument using a different measurement than the one at issue. The discussion was about Paul's monetary goals, and to be evaluated must be analyzed with counter-factual reasoning. So the question is "is the economy, by some measure, better in a situation with central banking and fiat money, or one without?" The professor is free to use "net violence" as his measure, but cannot compare the violence in the world without central banking to the violence in taxation. This is especially fraudulent since it could be the case that we lived in a world with both taxation and no central banking. The correct comparison to make is his hypothetical "civil war" vs. the violence IN CENTRAL BANKING AND LEGAL TENDER, not taxation policy.

Never before have two grammatically correct sentences been so internally inconsistent, fear-based, and flat out wrong in their conclusions.

[truthspeaker]

I have a crazy answer to that professor's assumption.

When you go about doing RP's economics along with reducing excessive government expenditures, simply ELIMINATE that money from the total cash flow. Right now, the first people who benefit from inflation are the banks and government since they actually see the inflated money first before it effects the market. By simply eliminating it, this "controlled deflation" wouldn't hurt the middle class. I call this "reverse Keynesian".

But that is only one of the steps needed: I have been working on this theory for a while. It's a work in progress.

By the way, I am a Professor too, just not of economics--my specialization is bureaucracy.

[acptulsa]

I'm not in this for a civil war. I personally figure Ron Paul is the best way to prevent a civil war.

[Qdog]

I dont follow the professor's logic? I see the CURRENT system with the Federal reserve robbing us as more likely to end in violence, than Ron's Austrian principle of sound money.