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Thread: RT Interview With Jim Grant-Talks About Gold Standard vs. Ron Paul Approach

  1. #1

    Default RT Interview With Jim Grant-Talks About Gold Standard vs. Ron Paul Approach

    In watching this recent interview of Jim Grant on RT News he directly compares the gold standard to 'the Ron Paul Approach which involves denationalization of money...' and goes on to imply, to my understanding at least, that governments would not have the authority to set honest weights and measures under Ron Paul's approach (see 18 min 47 sec to 21 min 04 sec)

    What Grant seems to suggest is that there be an international organization that sets the weights and measures of gold and it's value, while my understanding of Ron Paul's approach is that governments (either county, State, Federal or whatnot) could only set honest weights and measures (you can't commit fraud and call a 28.36 gram gold coin a troy ounce) but not legally fix the value of said gold to a government issued script or to another commodity. In other words, the market, not the government, decides the value of gold relative to all other commodities at any given time, while the government is restricted to regulating the market with regards to weights and measures.

    Is my understanding on this correct? It seems to be a non-trivial distinction to me and one I see argued over here and elsewhere, but never quite so plainly stated.

    All constructive or humorous input appreciated, but please be forthcoming with your premises.
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  3. #2

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    I think you are correct. Ron Paul's approach would allow the market to choose what it would use as money and set the value. Government could prosecute fraud, as in misrepresenting the metal content of a coin. I don't think Ron Paul would outlaw paper currency. But it could not be supported with coercion (legal tender laws) and the market would reject it.
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  4. #3

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    See HR 1098 link in my sig for Ron Paul's approach. The market decides the value of metals. People are free to trade metals in any form (weight/size/purity) they wish.
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

  5. #4

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    Is this a point that is deliberately misstated by opponents of Ron Paul or are there folks like Jim Grant who seem very smart but haven't thought the issue through?

    That is is everyone who argues for a government-backed gold standard just as guilty of supporting a flawed economic system as we currently have or are they cynically and deliberately misconstruing the Austrian/Ron Paul approach to free-market based money (with free-market directly implying a governmental agency to protect against fraud and theft and coercion and corruption ect.) as opposed to no government regulation on the marked whatsoever?
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  6. #5

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    Government was charged with setting standards. That is a proper role of government.
    Section. 8.

    To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
    They accomplished that goal for money with the Coinage Act of 1792. Alexander Hamilton was instrumental in setting the standard for money. I am not sure if he knew bimetallism was price fixing and would screw things up, or if he fixed the price of gold to silver on purpose to screw things up. Nonetheless, rather than just setting the standards, Hamilton fixed the prices of gold to silver and copper. It did mess things up.

    EAGLES--each to be of he value of ten dollars or units, and to contain two hundred and forty-seven grains and four eighths of a grain of pure, or two hundred and seventy grains of standard gold.

    DOLLARS--each to be of the value of a Spanish milled dollar as the same is now current, and to contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver.

    CENTS--each to be of the value of the one hundredth part of a dollar, and to contain eleven penny-weights of copper.
    A standard is simply a definition. An International standard is better than local standards for commerce, construction, and trade because they are uniform. Hamilton accomplished the International standard for the Dollar by measuring the amount of silver in the Spanish milled dollar and matching it. But then the gold Eagle was fixed at $10 Dollars or equal to 3712.50 grains of silver. Fixing the price of gold to silver and copper is where he messed up.

    If he had simply set the Eagle to 247.5 grains of pure gold, the Dollar to 371.25 grains of silver, the Cent to 11 penny-weights of copper, and left the rest of the definition out, then the values of the Eagle, Dollar, and Cent would have floated against each other. It would have been much more of a pure standard.

  7. #6

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    Love Grant. Another great interview. Just listening to him talk about deflation and inflation was worth the 30 minutes. I want to someday get to the point where I can describe it as eloquently as he did.

  8. #7
    Member Austrian Econ Disciple's Avatar
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    No, the Government would not set the weights and measure, the market would. In other words, banks could issue their own scrip redeemable in whatever amount of whatever people demanded. This was generally how it was done up in the North (Canada) where they had a good 100 year run or so of free-banking, completely stable and competitive.

    Over-time however a general standard would come about due to market demands (aka price) of the scrip. You don't want the Government price-fixing, it's bad mojo and yes, that even means weights and standards. If you are wondering about fraud, fraud is say, Stewarts Oakland Bank sets his scrip @ 5.5 gram per 1$ Oakland scrip, however, does not redeem it for 5.5 gram or changes the value ex post facto.

    I don't want the Government to have any business in money, neither did Hayek.
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  9. #8

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    Who defines the standard gram, grain, liter, meter, etc. if not government?

  10. #9

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    who defines C++ language if not the government?

  11. #10

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    Quote Originally Posted by Harald View Post
    who defines C++ language if not the government?
    C++ language is not a weight or measure.

  12. #11

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    My point was that

    ANSI is a private organization that oversees the development of voluntary consensus standards for products, services, processes, systems and C++ is one of the standards that is produced under umbrella.

    ISO is a similar international organization governing standards.

    ISO 80000 gives you a weight and measure standard. No government needed

  13. #12

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    Quote Originally Posted by Travlyr View Post
    A standard is simply a definition. An International standard is better than local standards for commerce, construction, and trade because they are uniform. Hamilton accomplished the International standard for the Dollar by measuring the amount of silver in the Spanish milled dollar and matching it. But then the gold Eagle was fixed at $10 Dollars or equal to 3712.50 grains of silver. Fixing the price of gold to silver and copper is where he messed up.

    If he had simply set the Eagle to 247.5 grains of pure gold, the Dollar to 371.25 grains of silver, the Cent to 11 penny-weights of copper, and left the rest of the definition out, then the values of the Eagle, Dollar, and Cent would have floated against each other. It would have been much more of a pure standard.
    ^^^ THIS

    And spot on.

    In reality, those values were established, or "felt" and responded to dynamically by the market anyway, as gold and silver drove one another out of circulation at different times. Had they simply floated against one another, neither would have driven the other out.

    The government should never have attempted to establish "exchange value" in the first place. That was Hamilton's gross error, deliberate or not. Just standard weights and measures. Eagles of gold, Dollars of silver, Cents of copper, no different than Acres of farmland or Gallons of milk -- just references to accurate, predictable, reliable measurement standards, while leaving the actual exchange value determinations of each to the free market.

  14. #13
    Site Staff - Moderator Brian4Liberty's Avatar
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    It's kind of ironic that the government "corrected" it's mistake of attempting to fix prices of metals by going to fiat currency with no set value. Problem solved!
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