Response to my friends argument against Dr Paul

[fade]

My friend wrote this to me after he saw that I support Ron Paul. I'm not expert on these issues, nor do i know a lot about history... For those of you that do, I'd be interested in a good response to this, as well as an explanation if possible.

Thank you.

*********
"When I watched one of the earliest republican debates on CNBC, (I think it was called something like "Politics and the Economy" or" Republicans and the Economy") I was pretty sure, when asked about his taxation policy, Ron Paul answered something to the effect of he had none because he was against all government taxes. Perhaps he has since altered his stance.
I, of course, agree that it is not the responsibility of the government to take care of its citizens from cradle to grave. I do, however, disagree on your definition of the government's role. I do not think their only role is that of protection and to preserve; it extends much further in my mind. For example, I believe the government's position should encompasses the roads and highways that cross state boundaries. If left to the states to determine, the national highway system would be chaotic and unorganized, don't you agree? Also, if there are no federal taxes, who is to bail out the regional banks?

"I'll give you another example of why I don't think Senator Paul's taxation policy is sustainable (although it pains me to do so since, after all, he is a fellow Texan haha): The credit crunch that America is currently observing/witnessing would be all that much more dangerous and closer to a recession if the central bank had not lowered the Federal Funds rate, which is a target for the overnight loan rate which banks charge each other in order to meet federal reserve requirements. I'm aware that this is a federal function and, if Ron Paul were elected, would undoubtedly be abolished. However, if there is no central bank, and thus no reserve requirements to meet, the economy would undoubtedly be in a depression at this very moment, as evidenced by the Great Depression (a time before the national bank was established). Without reserve requirements, any time the economy takes even the slighest dip, fear arises in the common American's eyes and this is how "bank runs" come about.

"Again, as we saw in the Great Depression, this often serves as a catalyst for recessionary times. History, my dear friend is difficult to debate."
**************


I have a feeling history is on my side, since it is quite obvious that Ron Paul is much smarter and I have a feeling this kid doesn't know a lot of his views.


Thanks guys..

Fade

[Adamsa]

History is in your favor, generally as the "central bank" made the great depression a whole lot worse. I don't think I'm able to give you a detailed enough answer to help though, so it's best to wait for someone else.

[JordanL]

First, RP is a Congressman, not a Senator.


Again, as we saw in the Great Depression, this often serves as a catalyst for recessionary times. History, my dear friend is difficult to debate.

The rub of the Great Depression was people buying STOCKS on margin, which artificially and drastically inflated stock prices, which also drove irrational margin spending.

The banks weren't prepared to absorb such an idiot driven problem, and that was how they failed, although that isn't a terrible "failure" in my mind.

Now a days banks have ways of determining how risky a loan or any other type of credit is, and thus know full well the "cost" of doing business in such markets, and by the very virtue that we have things like credit scores coupled with a free market, the ONLY thing which can catapult us back down the path we took in the early 20th century is runaway inflation, which you can only combat AT THIS POINT by fixed exchange rates and a gold standard, which again only works if you abolish the Fed.

Looking at history and taking it as the primary example of reality misses the fact that we have not performed every possible mistake in our past, and if we don't acknowledge that we are sure to perform them in our future. Ron Paul is not arguing against our history, he is arguing against our future.

[BLS]

Good god, I can't even reply to this uninformed dribble.

Somebody PLEASE inform his friend.

[RonPaulCult]

Ron Paul is not against all taxes he is against all taxes not legal according to our constitution (THE INCOME TAX).

He has stated that we'd still get 60% of the tax money we collected in (I think he said) 2000 without collecting a dime from the income tax.

[noxagol]

Actually, the guy has a lot of shit all wrong.

One, Ron Paul is a Congressman, not a Senator.

Two, he states with absolute certainty that the highway system would be chaotic if held to the states, this is a mere probability. It is also a probability that it would have been done much much better than the fed did.

Three, why do banks need bailed out? If they fail, they are failing for a reason. Assurance of security is one area where banks can compete for business, it is in fact one driving measure for what a bank would set its interest rates at if the Fed Reserve didn't do it for them.

Four, lower taxes would boost the economy because it would give everyone any automatic 20-30% raise when they actually get to keep all of their paycheck for once. He is crazy if he thinks the taxes we have are good for the economy.

Five, lowering the rates means printing of more money which means the dollar gets weak, which means prices go up, which means a weaker economy. The government should not regulate such rates, as this is yet another area that banks can compete in for business.

Six, there would be no reserve requirement set by law, however, if customers want security in their bank, then the banks would be wise to set a reserve limit that they contractually promise to keep and make it known to their customers. And we ARE in a recession and probably tipping on the point of depression. All of these rate cuts are going to come back and bite everyone in the ass soon.

Seven, the Federal Reserve was well in existence during the great depression and in fact caused it with a lot of what we are seeing happening now. A lot of pumping of money into the economy putting it on a mega sugar high from which it will enevitably crash with a thunderous thud.

Eight, reserve requirements could easily be set by a bank on itself in order to show that it has measures of security in place to protect the peoples' money in order to get an edge on their competitors. This hinges on the the lynch pen of all central bank arguments and that is that the government has to set the interest rates and reserve requirements or no one will.

He is correct, history is difficult to debate, and history has shown that Ron Paul is right on the money and that your friend needs to listen to Alan Greenspan when he says that the Federal Reserve caused the great depression.

[Question_Authority]

First, have them watch this video:

http://www.youtube.com/watch?v=XaxdUPNYj2s

RP would only eliminate the INCOME TAX, not all taxes.

[user]

There is so much misinformation in this thread, it's just scary.

First, fade's friend is absolutely wrong, even on the facts. The Federal Reserve was established before the Great Depression, not after, and in fact caused it.

There wouldn't be a credit crunch now if not for an artificial credit expansion caused by the Fed earlier. This is a case of the government subtly causing a problem and then telling everybody only they can solve it.

And RonPaulCult, the income tax IS constitutional now because of the Sixteenth Amendment. Ron Paul would want to see this amendment repealed.

[apc3161]

My friend wrote this to me after he saw that I support Ron Paul. I'm not expert on these issues, nor do i know a lot about history... For those of you that do, I'd be interested in a good response to this, as well as an explanation if possible.

Thank you.

*********
"When I watched one of the earliest republican debates on CNBC, (I think it was called something like "Politics and the Economy" or" Republicans and the Economy") I was pretty sure, when asked about his taxation policy, Ron Paul answered something to the effect of he had none because he was against all government taxes. Perhaps he has since altered his stance.
I, of course, agree that it is not the responsibility of the government to take care of its citizens from cradle to grave. I do, however, disagree on your definition of the government's role. I do not think their only role is that of protection and to preserve; it extends much further in my mind. For example, I believe the government's position should encompasses the roads and highways that cross state boundaries. If left to the states to determine, the national highway system would be chaotic and unorganized, don't you agree? Also, if there are no federal taxes, who is to bail out the regional banks?

"I'll give you another example of why I don't think Senator Paul's taxation policy is sustainable (although it pains me to do so since, after all, he is a fellow Texan haha): The credit crunch that America is currently observing/witnessing would be all that much more dangerous and closer to a recession if the central bank had not lowered the Federal Funds rate, which is a target for the overnight loan rate which banks charge each other in order to meet federal reserve requirements. I'm aware that this is a federal function and, if Ron Paul were elected, would undoubtedly be abolished. However, if there is no central bank, and thus no reserve requirements to meet, the economy would undoubtedly be in a depression at this very moment, as evidenced by the Great Depression (a time before the national bank was established). Without reserve requirements, any time the economy takes even the slighest dip, fear arises in the common American's eyes and this is how "bank runs" come about.

"Again, as we saw in the Great Depression, this often serves as a catalyst for recessionary times. History, my dear friend is difficult to debate."
**************


I have a feeling history is on my side, since it is quite obvious that Ron Paul is much smarter and I have a feeling this kid doesn't know a lot of his views.


Thanks guys..

Fade

Ok I will make a counter argument to every single point.

-With regard to INTERstate highways, that is the federal governments job to take care of the them, article 1 section 8 of the constitution clearly says that highways are necessary for postage etc. However, this does not apply to intrastate roads, the states should take care of those. So the constitution explicitly states that it is the role of the federal government to maintain interstate highways.

-the credit crunch we are currently observing is the fault OF the central bank. They artificially lowered interest rates too low after 9-11 to prevent a recession. This caused people to take out mortgages and loans that they really couldn't afford (no one told them that rates would inevitably raise and their payments would go up, so they were under the impression that they could afford them). Once the interest rates started to rise though and their monthly payments increased, a lot of these people defaulted on their payments which has resulted in the current problem. So you can blame the fed for artificially lowering interest rates, and you can blame the banks for being irresponsible children and giving out loans to people who wouldn't be able to afford them once rates rose. The banks should pay the price of their own incompetence (not the taxpayer). What the Fed did was basically create credit ( sort of like printing money) and buy up a lot of the mortgage backed securities so that they wouldn't be worthless and the banks wouldn't feel as much heat. However, when you create credit like that, that increases the money supply and the value of the dollar goes down, otherwise known as the inflation tax. So indirectly all the Americans holding dollars had to pay for the bad decisions of these banks.

When the FED bailed them out it created two problems,

1) it lowered interest rates again (when inflation is already pretty high), this will increase the money supply and lead to further inflation

2) it allows the banks to be careless. In the future, why should they be careful and prudent with regard to how they loan out money, because apparently every time they make a mistake the know the FED will just bail them out, this is called "moral hazard". So they'll probably just keep giving out risky subprime loans even in the future because they think the FED will have their back. If every time they make a mistake, the FED just bails them out, why should they act responsibly?

Now with regard to the great depression, you do know the Federal Reserve was DIRECTLY responsible for that right? They raised interest rates and held onto gold reserves at a time when the market needed an expansionary money supply and liquidity. The federal reserve has even admitted this:

Ben Bernanke agreed that the Fed had made the Great Depression worse, saying in a 2002 speech: "I would like to say to Milton [Friedman] and Anna [J. Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

You can learn more about that here:

http://youtube.com/watch?v=O7pnjzCuSv8

that is a video of Milton Friedman (arguably the best american economist of all time) explaining why the federal reserve was retarded and caused the recession to turn into a depression.

So please don't let your friend have this idea that the FED is this infallible bank that cant make mistakes. They make mistakes all the time. The first major mistake of theirs was the great depression, the most recent one was this subprime mortgage crisis.

The fed makes mistakes all of the time.

[AlexMerced]

just have our friend read this thread

[user]

Ok I will make a counter argument to every single point.

-With regard to INTERstate highways, that is the federal governments job to take care of the them, article 1 section 8 of the constitution clearly says that highways are necessary for postage etc. However, this does not apply to intrastate roads, the states should take care of those. So the constitution explicitly states that it is the role of the federal government to maintain interstate highways.

-the credit crunch we are currently observing is the fault OF the central bank. They artificially lowered interest rates too low after 9-11 to prevent a recession. This caused people to take out mortgages and loans that they really couldn't afford (no one told them that rates would inevitably raise and their payments would go up, so they were under the impression that they could afford them). Once the interest rates started to rise though and their monthly payments increased, a lot of these people defaulted on their payments which has resulted in the current problem. So you can blame the fed for artificially lowering interest rates, and you can blame the banks for being irresponsible children and giving out loans to people who wouldn't be able to afford them once rates rose. The banks should pay the price of their own incompetence (not the taxpayer). What the Fed did was basically create credit ( sort of like printing money) and buy up a lot of the mortgage backed securities so that they wouldn't be worthless and the banks wouldn't feel as much heat. However, when you create credit like that, that increases the money supply and the value of the dollar goes down, otherwise known as the inflation tax. So indirectly all the Americans holding dollars had to pay for the bad decisions of these banks.

When the FED bailed them out it created two problems,

1) it lowered interest rates again (when inflation is already pretty high), this will increase the money supply and lead to further inflation

2) it allows the banks to be careless. In the future, why should they be careful and prudent with regard to how they loan out money, because apparently every time they make a mistake the know the FED will just bail them out, this is called "moral hazard". So they'll probably just keep giving out risky loans subprime loans even in the future because they think the FED will have their back.

Now with regard to the great depression, you do know the Federal Reserve was DIRECTLY responsible for that right? They raised interest rates and held onto gold reserves at a time when the market needed an expansionary money supply and liquidity. The federal reserve has even admitted this:

Ben Bernanke agreed that the Fed had made the Great Depression worse, saying in a 2002 speech: "I would like to say to Milton [Friedman] and Anna [J. Schwartz]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

You can learn more about that here:

http://youtube.com/watch?v=O7pnjzCuSv8

that is a video of Milton Friedman (arguably the best american economist of all time) explaining why the federal reserve was retarded.

So please don't let your friend have this idea that the FED is this infallible bank that cant make mistakes. They make mistakes all the time. The first major mistake of theirs was the great depression, the most recent one was this subprime mortgage crisis.

The fed makes mistakes all of the time.
I want to remind people that although Milton Friedman blames the Fed, his conclusion was that they should have intervened more, not less.

The Austrian School explains how the Fed caused the Great Depression in the first place.

[apc3161]

I want to remind people that although Milton Friedman blames the Fed, his conclusion was that they should have intervened more, not less.

The Austrian School explains how the Fed caused the Great Depression in the first place.

Friedman argued something along these lines:

The great depression was an artificially created problem, and thus had to be artificially fixed (in the form of increasing the money supply). However, if the FED had just left everything alone, they wouldn't have been a problem.

So he argued you had to take an active approach to an artificially created problem, in the future though if you just like the market take charge, things will work themselves out.

[Taco John]

You're friend is all sorts of backwards... He's, in fact, the worst sort of backward: the kind that talks about it anyway.

The worst comment... the absolutely worst, was his comment that "if there are no federal taxes, who is to bail out the regional banks?" Even the fact that he would ask such a question hurts my brain.

Have him read the conclusion to this speech by Federal Reserve Chairman Ben Bernanke, where he admits the Federal Reserve was responsible for the Great Depression (http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm)

After that have him go to www.ronpaulaudio.com and get him to listen to the Doc first hand.

[Adamsa]

Tempted to enroll in the Mises school now... :P

[user]

Friedman argued something along these lines:

The great depression was an artificially created problem, and thus had to be artificially fixed (in the form of increasing the money supply). However, if the FED had just left everything alone, they wouldn't have been a problem.

So he argued you had to take an active approach to an artificially created problem, in the future though if you just like the market take charge, things will work themselves out.
But he advocated constant inflation from a central bank, not letting the market take charge...

[apc3161]

But he advocated constant inflation from a central bank, not letting the market take charge...

He advocated that the money supply should grow at the rate of the economy right? Such that inflation would essentially be zero. This is what would naturally happen.

Thats the impression I got from his writings. I plan on reading them again this winter and its been a while so you might be right.

[ronpaulfan]

g** d*** m***** f****** p***** of s***

forum post with "my friend/mother/uncle doesn't like Ron Paul because" = TROLL

[jonahtrainer]

And RonPaulCult, the income tax IS constitutional now because of the Sixteenth Amendment. Ron Paul would want to see this amendment repealed.

Yes, RP wants the 16th Amendment repealed.

No, the income tax as applied is not constitutional. If you trace through the income tax cases you will find the IRS often makes presumptions, follows them for a while then they become custom and upheld in court. The early cases apply income to corportions only; not individuals.

Why? Because one's basis in themselves is not nothing as the IRS presumes. In other words, individuals own themselves and not the IRS. The exchange of labor for wages creates no income because one's labor has basis equal to the wages. However, the IRS has presumed one's basis in the labor to be zero so the recognition of income on the wages is whatever is received. That is why Dr. Paul says the income tax is wrong as a matter of principle; as applied it has turned us into slaves.

I know a fellow who challenged the income tax on its face and the 4th Circuit said that despite the evidence it was a 'nonjusticial political question.' In other words, even if the income tax as currently applied is unconstitutional we, the judicial branch, will not rule so and you must seek change through the legislative because we have been doing this so long and the changes that would result so great that the issue has now come under the political question doctrine. Yes, a rare instance of the black robed tyrants refusing to use their power.

[ursamajor]

a few quick points: the federal highway system is FAR from well managed. it is very chaotic, very unorganized, and particularly dangerous. without getting into massive amounts of urban design/city planning... let me just say that highways, and the federal government's involvement in them, are an incredible contributing factor to excessive energy consumption, crime, obesity, depression, frustration and general dissolution of community in our nation. i hate highways.

also... the central bank was formed in 1913, i believe. along with the income tax, yes?

[user]

He advocated that the money supply should grow at the rate of the economy right? Such that inflation would essentially be zero. This is what would naturally happen.

Thats the impression I got from his writings. I plan on reading them again this winter and its been a while so you might be right.

He said it should grow at a constant rate, which still leads to inflation and malinvestment. The regressive inflation tax would continue.

[fade]

g** d*** m***** f****** p***** of s***

forum post with "my friend/mother/uncle doesn't like Ron Paul because" = TROLL

I'm sorry I upset you with my post. The matter is that i've been lurking here, and hardly ever post since I found Ron Paul. In most matters I can handle myself, and know his views.

It just so happened that I had a friend who claimed to know more history than I did, because - frankly - I have not done my research in that area.

To make things easier on myself, and to get a better response to him - I posted it here.

I have now learned a great deal about the Great Depression, as well as the Fed. I believe the purpose of the forum has been served.

Thank you,

Fade

[fade]

As for everyone else, I appreciate your help a lot. There have been great responses and it was incredibly fast. I've definitely learned more than i hoped to.

Fade

[Arklatex]

One, there will of course be some federal taxes. The highway system won't be destroyed, lol. Two, lowering the interest rate is a short term fix, jump starts the economy but is a longterm cause of inflation.

[pdavis]

I guess we need the UN, NAU, and EU to take care of the roads between countries. :rolleyes:

[user]

At this point, the EU is a country.

[DRV45N05]

Your friend can't debate history if he doesn't know history. The Federal Reserve was created 16 years before the stock market crash of 1929.

[tsetsefly]

My friend wrote this to me after he saw that I support Ron Paul. I'm not expert on these issues, nor do i know a lot about history... For those of you that do, I'd be interested in a good response to this, as well as an explanation if possible.

Thank you.

*********
"When I watched one of the earliest republican debates on CNBC, (I think it was called something like "Politics and the Economy" or" Republicans and the Economy") I was pretty sure, when asked about his taxation policy, Ron Paul answered something to the effect of he had none because he was against all government taxes. Perhaps he has since altered his stance.
I, of course, agree that it is not the responsibility of the government to take care of its citizens from cradle to grave. I do, however, disagree on your definition of the government's role. I do not think their only role is that of protection and to preserve; it extends much further in my mind. For example, I believe the government's position should encompasses the roads and highways that cross state boundaries. If left to the states to determine, the national highway system would be chaotic and unorganized, don't you agree? Also, if there are no federal taxes, who is to bail out the regional banks?

"I'll give you another example of why I don't think Senator Paul's taxation policy is sustainable (although it pains me to do so since, after all, he is a fellow Texan haha): The credit crunch that America is currently observing/witnessing would be all that much more dangerous and closer to a recession if the central bank had not lowered the Federal Funds rate, which is a target for the overnight loan rate which banks charge each other in order to meet federal reserve requirements. I'm aware that this is a federal function and, if Ron Paul were elected, would undoubtedly be abolished. However, if there is no central bank, and thus no reserve requirements to meet, the economy would undoubtedly be in a depression at this very moment, as evidenced by the Great Depression (a time before the national bank was established). Without reserve requirements, any time the economy takes even the slighest dip, fear arises in the common American's eyes and this is how "bank runs" come about.

"Again, as we saw in the Great Depression, this often serves as a catalyst for recessionary times. History, my dear friend is difficult to debate."
**************


I have a feeling history is on my side, since it is quite obvious that Ron Paul is much smarter and I have a feeling this kid doesn't know a lot of his views.


Thanks guys..

Fade
First point, look at similar stock market plunges and bank crises before 1913 and hwo they where solved without intervention from a central bank.

2. LOL, the fed was established 1913. As for the Great Depression, first and infusion of cheap loans that most went into the already inflated Stock Market made it even worse, once the Stock Market crashed, the Fed actually contracted the money supply at a time when there was much need for that currency. This theory is contested but most explanations of the Depression do involve blame on the Federal reserve especially their pumping of cash during the 20's...

[CelestialRender]

nm

[foofighter20x]

Seven, the Federal Reserve was well in existence during the great depression and in fact caused it with a lot of what we are seeing happening now. A lot of pumping of money into the economy putting it on a mega sugar high from which it will enevitably crash with a thunderous thud.

Didn't Milton Friedman get his Nobel Prize for more or less proving the Federal Reserve (i.e. central bank) did in fact cause the Great Depression?