Editors Note: This is Part Three of a Four Part series being collaboratively written by Andy Cohen & Doug Porter.
Thus far we’ve taken a look at Congressman Paul’s Foreign (Part 1) and Domestic policy positions (Part 2). Now we’ll explore the economy according to Ron Paul. Money, after all, is at the root of everything, and Paul’s largely libertarian positions on banking and currency are at the core of what defines his candidacy and differentiates him from others in both parties. Whether you agree with his proposals or not, Ron Paul has the distinction of being the candidate who’s actually done his homework on these issues. He knows how to answer the hard questions about the gold standard. His wonky answers on the economy in press accounts are often buried by more titillating fare, like quips about marijuana or Afghanistan.
Therefore, it’s important to understand just what it is he has in mind for the economy. In this article we’ll examine his views on the Federal Reserve Bank, Currency Standards, and Regulations. Remember, folks, these articles are overviews, not encyclopedic. If this interests you—and it should—you’ll want to do more research on your own. For most folks, regretfully, it’s as boring as watching grass grow.
Ron Paul’s message has been consistent since Day One: abolish the Federal Reserve, stop printing money and go back on a gold standard. It all sounds simple, but Paul knows it’s not. And if you read past the headlines and media sloganeering, his answers are nuanced in a way that demonstrates his understanding of the situation.
The False Prosperity of the Gold Standard
When you say the words “Gold Standard” most people assume that you are talking about U.S. Government currency backed by reserves of precious metals. In that reality paper money exists as a convenience, allowing consumers to make purchases without having to lug bars or coins of heavy metal around. Paul’s vision of returning to the gold standard involves a transition period to ease the economic shock such a transition would cause. After all, an immediate conversion from Federal Reserve currency (what we currently use) to a “pure” gold standard would immediately remove nine trillion of dollars from the economy. (Or raise the price of gold to $5k an ounce.) In recent years Ron Paul’s point of view has been modified somewhat to include a proposal that would peg currency value to a market basket mixture of commodities in place of simply gold.
The Paul point of view is driven by the fact that precious metals can not be completely devalued—a gold coin minted two thousand years ago still has value as a trading instrument—whereas paper currency only retains value as long as the entity that created it can maintain the illusion of its worth. Such currency is known as “fiat money”, meaning that its value rests solely on the government’s proclamation as to its value.
In the long term, the Congressman asserts that currency should be created by private industry and that trading in precious metals like gold and silver should be exempt from taxes, with the only proviso being that such currency and trading cannot be fraudulent.
Ultimately, this point of view is flawed due to the rapid evolution that is going on with the global economy. The Congressman’s position on sovereignty, i.e., “we can only solve our problems”, show the weakness in his policy. The problems of currency valuation are global in nature. Since many other economies have tied the value of their currency to the dollar, any act that affects the dollar may raise challenges for those nations.
One thing Paul is right about is that moving back to gold standard would have a strong limiting effect on the size and structure of the U.S. government. Programs like Social Security, for instance, would have to be phased out during any conversion period to a precious standard. Governments simply would not be able to afford it. In fact, government wouldn’t be able to afford much of anything. And that’s exactly the point. Why run for office declaring that you’re going to cut the services that many voters have come to expect when you can simply eliminate the financial basis for them? Why it’s even better than Proposition 13!
Globalization and the raw power of multinational entities (mostly corporations) are posing a challenge to the very existence of the Nation-State as we know it. I don’t pretend to have the answers here, but it seems to me that retreating into the shell of physically defined borders and proclaiming that the Constitution is carved in stone doesn’t seem like a very viable long-term strategy for any kind of prosperity.
The basic needs that a society has for any currency—domestic and international stability and a relative ease in being converted to goods—are the guides that we need to have in mind while viewing the issue of currency valuation standards going into the future. It’s also important to understand that a currency based on a “precious” value (whether it’s gold or a market basket) historically has a tendency towards devaluation, which means governments are inclined to dump “precious” standards in the face of economic challenges like war and recession. Ron Paul would have us believe that war will be gone should he be elected and that poverty can be reduced by the magical free hand of the market place. I think that’s a lot of wishful thinking.
The Federal Reserve Bank
“End the Fed” has become a popular slogan among occupistas around the country. Indeed, some commentators view this tendency as proof of the influence that Ron Paul’s followers have within the Occupy movement. Many of these folks, including Paul supporters have no idea of what the “Fed” is or does. All they know is that the Fed involves big money, big government and big banks, making it nice big target for people’s frustrations with the economy.
So let’s start out with what the Fed is: As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government. Therefore, the Federal Reserve can be more accurately described as “independent within the government.” Whoa. But wait! It gets better!
There are twelve regional Federal Reserve Banks, which were established by Congress as the operating arms of the nation’s central banking system, which are organized much like private corporations. The Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
Does all this make sense? Then we are forced to travel down conspiracy lane, because a big and powerful institution is ripe for theorists. If you work backwards on any of the claims from groups demanding the end of the Federal Reserve you will end up in a wonderland of paranoid fantasia: Judeo-Masonic conspiracies, the Bilderberg Group, the Council of Seven, the Rothschilds, the Illuminati… Wikipedia has a fascinating page on all these conspiracies, should you want to learn more. And if you’re traveling down the “right” side of this highway, as the Ron Paul folks certainly do, then you’ll find sources that prove these theories are always tied to various white supremacist and/or anti-Semitic groups.
My personal favorite among these is from Eustace Mullins, who tells of learning the secrets of the Fed from poet Ezra Pound,
In 1949, while I was visiting Ezra Pound who was a political prisoner at St. Elizabeth’s Hospital, Washington, D.C. (a Federal institution for the insane), Dr. Pound asked me if I had ever heard of the Federal Reserve System. I replied that I had not, as of the age of 25. He then showed me a ten dollar bill marked “Federal Reserve Note” and asked me if I would do some research at the Library of Congress on the Federal Reserve System which had issued this bill. Pound was unable to go to the Library himself, as he was being held without trial as a political prisoner by the United States government. After he was denied broadcasting time in the U.S., Dr. Pound broadcast from Italy in an effort to persuade people of the United States not to enter World War II.
Of course most Americans have forgotten that “political prisoner” Ezra Pound was Mussolini’s “Tokyo Rose” and an openly anti-Semitic fascist sympathizer. And it’s these key omissions that cloak the conspiracy theories of the right with a seeming aura of believability. Trust me, if you push a rabid Paul supporter for hard evidence of the Fed’s historical role, you’ll end up visiting Mullins’ work (if you’re lucky). One such argument that I had about the Fed with a Paul supporter turned out to be backed with quotes from “StormFront” a neo-nazi organization.
All of this is not to say that a case can’t be made for the Federal Reserve being an obvious collusion point for Big Government and Big Banks to the determent of those of us that live on the other side of the tracks from the 1%. Their records are mostly hidden from the public (Board meeting minutes are kept confidential for five years). And, although it’s hard to understand the meanings of all their moves during the 2008 financial meltdown, it is pretty clear that the welfare of ordinary people wasn’t at the top of their list.
So I’m willing to buy into the Federal Reserve as an instrumentality dedicated to making the rich richer and bureaucracies more odious. But spare me the conspiracy crap. Nobody cares except you and your buddies over at StormFront.
Ron Paul says the important thing to understand is that Federal Reserve created our economic problems. (Of course, we had a Fed during periods of high growth in the past, and the thing that really changed was how we regulate -or don’t- the financial sector, but no sense in trying to have that debate with Paul.) Paul promises that “he will lead the charge to end the dishonest, immoral, and unconstitutional Federal Reserve System, enabling America to take a giant step toward economic security, financial responsibility, and lasting prosperity.” We’re supposed to take it on faith that Congress won’t just turn around create an identical entity and call it something different like, say “Blackwater”.
Hi. I’m From the Government and I’m Here to Help…
Last, but not least, we must broach the slippery slope of Government Regulations. More lies get told in this genre than any other, save what people put up on those web dating sites about themselves. If you hear a story about how a little girl was forced to shoot her new puppy at close range with an uzi due to government regulations, trust me, it’s made up.
My personal favorite fable that I’ve come upon recently was actually from a Paul supporter who said something to the effect of saying that the Savings and Loan Crisis of the late 1980’s was caused by too much government regulation. As somebody who lost a business (in part—actually they seized my landlords assets, I just happened to be a poor schmuck in one of his properties) due to fallout from the S&L crisis, I think I remember that crisis well. I’ll let Wikipedia say it for me:
In 1979, the financial health of the thrift industry was again challenged by a return of high interest rates and inflation, sparked this time by a doubling of oil prices. Because the sudden nature of these changes threatened to cause hundreds of S&L failures, Congress finally acted on deregulating the thrift industry. It passed two laws, the Depository Institutions Deregulation and Monetary Control Act of 1980 and the Garn–St. Germain Depository Institutions Act of 1982. The deregulation not only allowed thrifts to offer a wider array of savings products, but also significantly expanded their lending authority. These changes were intended to allow S&Ls to “grow” out of their problems, and as such represented the first time that the government explicitly sought to increase S&L profits as opposed to promoting housing and homeownership. Other changes in thrift oversight included authorizing the use of more lenient accounting rules to report their financial condition, and the elimination of restrictions on the minimum numbers of S&L stockholders. Such policies, combined with an overall decline in regulatory oversight (known as forbearance), would later be cited as factors in the collapse of the thrift industry.
Show me a regulation that’s odious and not hiding behind some business or special interest group looking to cut corners and cheat the public and I’ll help you fight to get rid of it. But you’ll have to really prove your case, because it’s been my experience (all of it in the private sector, thank you) that most of these “stories” about regulations hurting businesses are made up. The really odious regulations that do exist out there are largely designed to protect large corporations and industries from new competition from smaller businesses. It’s my opinion that Ron Paul is no different than any other politician in this area—he’s playing on people’s fears and fantasies to get elected.
Finally, let me take one parting shot at the folks who’ve written in claiming that we’re part of the cabal that wants more government all the time. My impression is that Ron Paul is running on the premise that government is bad; that individuals can and should do a better job of addressing society’s problems. I say neither statement (gov’t is bad or that individuals are inherently better when free) is true. I’ll go further and say that I think the day of the “Nation-State” as we’ve come to know it is coming to an end in the not-so-distant future. Does this mean World government? I don’t think so. Given how complex and unpredictable humans are the only thing I’m know for sure is that it won’t be what either one of us thinks it will be.
{ 67 comments… read them below or add one }
I can actually name one industry that has been affected by government intervention without any single person I know who denies this. Organic foods. Yes, the organic foods has been hurt by the limitation on the types of seeds produced, all by special interests and the lobbying of companies like Monsanto. The result is a decrease of species types for grains and plants that are produced in this nation. As a result of this, a single species pandemic could cause widespread shortage of that grain type and drive price controls. In addition, protocols are more rigid for organic, raw, and non-gmo food sources. While I would say that departments such as the FDA do serve a vital function, some of the functions have gone entirely too far.
And you would be correct, as I noted in the story. The FDA does everything it can to protect the interests of vast corporations like Monsanto & Nestle. Does this mean we should abolish the FDA or should we remove the shills for industry from the agency and insist that it protect the public?
It means we should abolish the FDA as the alternative you mention is nothing other than rhetoric which is impossible to put into practice.
There is an alternative to government regulation, it’s called the free market. Ever heard of the website Angie’s List? It’s a single example of how the free market can be used to promote those with good business practices. AAA rates hotels and other services.
To believe that without the government regulations there would be no regulations at all (essentially economic anarchy) is to not understand the checks and balances of the free market.
The mythical “free market” is just that: It’s a MYTH. There is nothing “free” about the market. When you deregulate and allow “the market” to do whatever it wants, it will ALWAYS be easily manipulated by the powerful special interests and corporations, and what we’ll be left with is a series of monopolies, since all competition will have been wiped out. There is no such thing as the “free market.” It does not exist. Never has, never will. It’s merely a religion thought up by those in a position to reap the benefits of the windfall that will come their way when the rules are eliminated and they are free to act in whatever manner they choose.
The “free market” is based on competition. But if you want competition, you must have fairness. And in order to have fairness, you must have rules, and rules mean regulations. Eliminate the rules, and you no longer have a “free market.” Just ask ANY economist whether he/she thinks monopolies are a good thing. Sure the corporate overlords think it’s wonderful, but that’s only because they’re the ones that get to run the monopoly. And the Republicans are ALL beholden to the corporatocracy which has weaseled their way to power within our government.
This religious zealotry for the “free market” that you Republicans/Libertarians have is just plain comical and reveals just how gullible you are to whatever your Koch overlords tell you. It’s like if they told you the sky was green you’d believe them and insist to all the world that the sky is, indeed, green. There is no basis in reality for it. It’s pure fantasy. But then again, we shouldn’t be surprised…………you folks do all live in Wonderland……..
Of course – that sounds much fairer than saying “This company needs to do better, so let’s skew the market in their favor.”
PJ O’Rourke said it best – “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.”
That of course isn’t stopping the oil companies from acting as a collective “monopoly” because of government regulation. Sure they blocked the merge of ATT and T-Mobile, but it’s not like their prices are vastly different.
A free market would ENCOURAGE people to use renewable energy.
A free market would ENCOURAGE people to explore different forms of health care.
A free market would ENCOURAGE people to use mass transit and bike to work.
Lastly – A free market would have NOT bailed out the banks and dump our debt on our children.
The flaw in your premise is that there is regulation of the oil industry in the first place. You know better. The oil industry sets the rules. They write the legislation, and when they break the rules, they have the Congress (in particular the Republican members) in their back pockets, and thus are never punished. What good are regulations when they’re not enforced?
If you want good government, then start sending people to office that are actually willing to WORK for good governance. Stop sending people to Washington whose only mission is to eliminate government altogether. Government works when want it to work. When we don’t, we send idiots to Congress.
The problem with your premise is that if we are going to send people to work for GOOD governance, then we need to send them there for LESS governance.
The law of supply and demand > any law that congress can make.
If you favor taking away the FDA, I hope you also favor strengthening each citizen’s right to sue for liability from damages from bad food or bad medicines.
Because if you’re taking away the protections the FDA provides (flawed as they may be) you’d better be compensating us regular people with protections in other areas. And it’s ridiculous to suggest that we could trust something like Angie’s List to do a thorough job. We’d have the have the right to clobber offenders with liability lawsuits.
NO NO NO!!!! Can’t have that! ‘Cause that would only make the dirty TRIAL LAWYERS rich, and we all know how much the Repubs/Libertarians HATE the trial lawyers.
No consumer protections, and no consumer recourse. Of course, it won’t matter much because most of those harmed by bad products will be dead anyway, and therefore unable sue in the first place. And then there’s the medical bills that pile up for those who don’t die, yet still have now recourse……
Libertarians don’t hate trial lawyers – If an individual subjects him/herself to unhealthy habits that leads to taking an advertised product which subsequently leads to adverse side affects not forseen by a government organization as well as a subsequent class action lawsuit – Then more power to the trial lawyer for recognizing they can make a buck off of it.
Of course if individuals took more responsibility for their own actions in the first place, then this wouldn’t happen.
It seems a bit much to ask an individual to become proficient in evaluating the safety and fitness of every good they consume without any guidance.
Good luck becoming an expert on car air bags, meat processing, drywall composition, jet engine maintenance standards…it gets worse when you take away those pesky government regulations that help you educate yourself, like the rules that make appliance manufacturers disclose their energy ratings, auto makers disclose the fuel efficiency of their vehicles, or whether or not your kid’s pajamas are fire retardant.
Right – Because we need the government to educate us on what is good and what is bad.
Every individual should be able to make their own determination of what is good and what is bad.
I spent probably 100 hours researching economy compact sedans before buying my Honda Civic a few years ago…I can only imagine how long it would’ve taken me had there been no government disclosure standards to help me in making my own determination.
And I can’t even imagine trying to feed my family if I had to do the same research on every dairy before buying milk or cheese, or on every pasta factory before buying spaghetti because there were no laws in place saying food suppliers have to produce a safe product.
For the whole “free market” thing to work, we’d need an ideal marketplace. This assumes that all participants have perfect information about a product, its cost, and about replacement products and their costs.
But markets don’t control people, people control markets. People lie about the flood damage they’ve covered up that’s causing toxic mold that you can’t see to grow in the walls of the house you’re about to buy. People send tainted food to market rather than wasting product. People take shortcuts and build products that look good but aren’t safe. And to say that “the market will self-regulate” is to say that “eventually Canned Food Brand X will kill so many people with toxic tuna they’ve promised is safe that smart people will switch to Brand Y.” Is the only punishment Brand X faces a loss of market share?
Hi Dave and others,
Yes, people will sometimes commit fraud for profit. The alternative to the FDA monopoly is to open up the market to companies that test and grade products. This way you have competition in the field, reducing corruption, bribed officials grating favors, and so forth. Any company that endorses a product would put its reputation on the line. Products could be advertised as having been reviewed and approved by various competing companies, who want to build a good reputation, thereby offering more safety than at present, transparency, and even better – getting valuable products on the market much faster and cheaper that they are now. This is the market answer — not that each person has to become an expert in everything- impossible! And yes, having to pay liability for damages is also a control, since human nature is to take the easy way.
Anybody remember how Laetril (ground up almond pits, I think) was going to cure all cancer, if only the FDA would stop persecuting the John Birchers who were selling it?
The sellers made a lot of money. A bunch of people died and eventually the Birchers could no longer find shills to testify so it went away. That’s the market place in action; a bunch of suckers died and nobody on the Laetril marketing team could be bothered to say, hey, we were wrong…
The FDA is no more than the control of who lives and dies. How can say that we have a war on drugs and then import around 400 metric tons of raw opium from Turkey every year, raw coca leaves and amphetamine from south america for “Pharmaceutical Purposes”. This year there where less Deaths by Auto Accidents than Deaths from Prescription medication. When people agree that medical marijuana is bad then ingest opiate based pain meds i can only laugh.
To start off as you say “The False Prosperity of the Gold Standard”, is complicated and does effect the world. Your argument is baseless if you are talking about the U.S. economy. As you said above, “Many other economies have tied the value of their currency to the dollar, any act that affects the dollar may raise challenges for those nations”. Under this premise, if one knew that the dollar was going to drop and gold was going to skyrocket, even a small investment in gold by anyone would pay off world wide. This is the first step in ending government control of trade and wealth world wide.
There is not enough gold on the entire planet to support the U.S. economy. More “Free Market Cult” nonsense……..
That is quite a statement. Source please?
See Ron Paul interview. First link in the story.
I asked Andy Cohen for a source and you come to his defense citing your own (and to an extent, his) first attack on Ron Paul due to his foreign policy is ridiculous.
As a US citizen and resident of San Diego that has lived in Ocean Beach and has much more respect to someone that predicted the housing bubble is preposterous.
I keep an open mind and I don’t endorse RP yet, but for you to say “Look at this guys view on foreign policy” – Tell me you have something more substantial from an economic standpoint.
Thanks for the mostly honest article. It would be hard to make the case that the financial services industry should not be regulated. Actually, I just spent a semester doing independent research and my term paper on this very subject. In spite of everything I have read (by the way I recommend that everyone go see Inside Job asap), it’s a very tricky issue. After all, you could argue, as I presume Paul does, that the very reason that all of the innovation in financial services even happened was due to the artificially low interest rate set by the Federal Reserve. I would not be opposed to bare minimum regulations in this industry (Adam Smith advocated bank regulation by the way!).
All things considered: Ron Paul 2012.
This is the Pot calling the Kettle black:
“So I’m willing to buy into the Federal Reserve as an instrumentality dedicated to making the rich richer and bureaucracies more odious. But spare me the conspiracy crap. Nobody cares except you and your buddies over at StormFront.
Ron Paul says the important thing to understand is that Federal Reserve created our economic problems. (Of course, we had a Fed during periods of high growth in the past, and the thing that really changed was how we regulate -or don’t- the financial sector, but no sense in trying to have that debate with Paul.) Paul promises that “he will lead the charge to end the dishonest, immoral, and unconstitutional Federal Reserve System, enabling America to take a giant step toward economic security, financial responsibility, and lasting prosperity.” We’re supposed to take it on faith that Congress won’t just turn around create an identical entity and call it something different like, say “Blackwater”.”
This is a great point, “In 1979, the financial health of the thrift industry was again challenged by a return of high interest rates and inflation, sparked this time by a doubling of oil prices” . O my god you might be on to something. Here is a regulation that i would like you to think about. Hell how about you read a book on it. The regulation on “Industrial Hemp”. As bio diesel it would cost 55 cents a gallon to produce and during the growth would convert the Co2 to O2. Hemp has no THC value so it is not a drug. Competing markets would end Big oils strangle hold on the world. Yes the transition would be hard but no more wars for oil sounds good to me.
When you discuss the Fed you imply that Paul’s objection is grounded in one of the conspiracy theories that you cite. This is not true and you never mention his real objection to central banking which is based in the Austrian theory of the business cycle. In short, the Fed distorts the price of money (interest rates) through the availability of credit which causes malinvestment and leads to greater booms and busts than would have otherwise occurred in an economy based on hard currency and market interest rates. Paul’s contention, and the contention of the Austrians, is that central planners cannot anticipate the needs of the economy as well as the market.
You fail to point out Paul’s objections to fiat currency: that is enables the government to spend money it does not have on things like war; that inflation – intrinsic to fiat money – hurts savers and those on fixed incomes because the value of their money is diluted to the benefit of the government and the big-business.
Finally, Paul agrees that many, if not most, regulations are either written to benefit big business, or are misapplied or compromised because regulators are often “captured” by those they regulate. Your answer is to fix the corrupt regulatory apparatus, although you don’t explain how you would accomplish this. Paul’s answer is to dismantle it and let customers determine the fate of companies in the market place.
Are there any nations employing those Austrian principles? Or any that recently tried? Any examples of a market-driven economy in the modern world?
Because the modern world is doing such a great job in economics right now… ???
Outstanding Video – The Nazi Banksters’ Crimes – Ripple Effect
http://chasvoice.blogspot.com/2011/12/outstanding-video-nazi-banksters-crimes.html
I am glad to be able to part of this conversation before it gets locked. Dr Paul is very right about the inflation going on with the U.S. dollar and the artificially low interest rates being forced on us by the federal reserve. As an American who has lived nearly half of his life outside the country (I am currently living in Japan where the dollar is trading at historic low prices) I can see the effects a lot more clearly. The destruction of the value of the dollar is causing prices to rize and peoples savings will be badly hit.
A quick internet search of historic exchange rates of the dollar against the Euro and the Yen, the two most traded curriencies behind the dollar, will clearly show the pounding the dollar is taking. Say for example you put away $10,000 in a bank for a family vacation to France ten years ago, with the forced low interest rates and the over printing of money by the federal reserve, you would have wasted your time because you would have a lot less buying power today. However if you would have bought $10,000 worth of gold instead, like Dr. Paul advocates, your time and investment would have been very well worth it.
Now while saving $10,000 and a trip to Europe is just a pipe dream for most Americans these days, I just used it as an example to get my point across. With the current global economy we live in, the destruction of the U.S. dollar will be felt all across the United States. Peoples life savings will continue to dwindle and prices will continue to rize.
Ron Paul, a Stormfront favorite
Ron Paul, a ThyBlackMan.com favorite.
And this darkie supports Dr. Paul as well.
What if Stormfront was really into Janis Joplin?
this is simply the most egregious example of the connections between RP’s followers–not RP himself–and racists.
“So let’s start out with what the Fed is: As the nation’s central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government”
First off the Fed derives it’s authority OVER, (not from) the US Congress, particularly from unnamed private bankers who sit on the Fed’s board. They control the monetary policy of the US, NOT the government, or the treasury (which was suppose to control monetary policy WITH congress). People like Geithner (Goldman Sachs) oversee the amount of treasury bonds sold back to the Fed from the taxpayer WITH interest. And he is helping to usher the destruction of the US, and global economy through flooding the market with T-bills, which hold interest on debt that has never, and will never exist.
And in the end the only people that benefit from the destruction of the US economy, are unnamed financial oligarchs who are hell bent on complete economic control over EVERYTHING. Otherwise known as elite psychopaths with a blueprint. Look into your history books, and research what the House of Rothschild did to England during the Napoleonic War’s Battle of Waterloo. Problem-Reaction-Solution.
Young man, I would suggest you do your homework on the history of the Fed before posting misinformed quotes from Wikipedia (the last place you should look for information on the Fed) I recommend a book by Ed Griffin titled “The Creature From Jeckyll Island”
Otherwise, it’s not a bad article, just think you should correct some misnomers in your article.
Young? ha-ha-ha-ha-ha. So 61 is young? I’m sorry that I didn’t use all Ron Paul approved sources for the story, but when I did a google search, all the stuff that expressed a differing point of view had been buried. (Google rankings can be manipulated and RP fans are masters at it.)
And Ed Griffin? Really? The guy who promoted laetrile as a cure for cancer? the one who’s on the Board of the John Birch Society? The guy who says that the United Nations, the Council on Foreign Relations, and the World Bank are working to destroy American sovereignty through a system of world military and financial control? He’s credible?
okay you FDA haters…
There is no such thing as a free market. Never has been, never will be. Just like there is no such thing as “pure” communism.
And Ron Paul is o.l.d. So if he dies, does God come down from heaven and appoint Rand Paul president?
There are very few candidates running for Congress that would buy on to RP’s platform. Do you really think he can use executive orders to dismantle the present system?
Ron Paul’s age is rather high for a potential president. If he were to get GOP nomination, who might his vice prez be? I can’t think of too many qualified candidates who share Ron Paul’s views… except maybe Rand Paul?
actually I remember in 2008 there was talk of a Ron Paul/Dennis Kucinich ticket… imagine that!
If Ron Paul gets elected, that would a CLEAR message to congress to change or GTFO.
Silly idealist. That’s what Obama thought.
Don’t know how to be civil about this, but you guys are clueless about how the gold standard works. Your statement that certain programs would have to be phased out is ignorant at best. The only thing the gold standard doesn’t allow is deficit spending. If you want it, you have to pay for it. Second, why would 9 trillion be taken out of the economy? Under a gold standard, you can peg the dollar to any amount of gold you want. And nominal growth isn’t the same as real growth, which gold allows. And folks, it took 200 years for this country to accumulate 400 Billion (with a B) in debt, and 397 Billion of that occurred with the Fed running side by side with Gold. It only took 40 years to accumulate the other 15.6 Trillion (with a T).
So there would be no such thing as a credit card? Those without gobs of cash would have no buying power whatsoever?
Look, even in Medieval times there was such a thing as credit. And it was the Knights Templar that invented the basis for the modern banking system. Going back to the gold standard as you suggest would mean no purchasing power for ANYONE but the uber wealthy. Without the Fed, no one could buy a house.
The system ain’t perfect, but it’s certainly a lot better than the Wild West days where you carried around a coin pouch with your life savings……..
Like your last example, you are taking his response to the extreme and call your less than mediocre example better than the extreme.
Of course there would be credit, but the gold standard helps ensure SOUND credit. In today’s society, not everyone should get a credit card.
If the fed hadn’t been lowering rates during Bush’s first term, then there was NO WAY he would have been elected to a 2nd term. It’s amazing that with 8 years of hindsight you’d still rather take a pill to treat the symptom than going to the root cause.
Woody’s analysis lines up with how I understand how a potential conversion might work.
I’d just add that this issue, gold standard versus fiat currency, is perhaps the most difficult-to-understand of any the issues in front of the nation. I think for a lot of people, perhaps me included, it comes down to who are you going to believe.
To the extent I’m in that position, I lean toward believing the candidate who calls out US imperialism for the immoral waste of money that is, and who speaks the truth about the drug war, too.
Even Ron Paul admits–that going to a gold standard would take $7 Trillion out of the economy–if you take that much out of the GDP, then government has no choice but to drastically scale back. It won’t even be an option to consider keeping social security. (follow the first link referenced in the story, which is a Ron Paul interview)
there’s a quote in that link where RP says “They’re working on trying to get rid of the debt by more rapid depreciation of the currency, so if you can get that currency say 50% more depreciated here in the next couple of years, the debt would only be $7 trillion.” I think there he’s talking about the current fiat-based approach reducing debt from $14 to $7 trillion via inflation.
Another part where interviewer says “But even if we had half the amount of debt we have now, there literally isn’t enough gold in the world. So we would have to have the gold price rise to $5,000 or sop $9 trillion out of the system .” RP: “That’s probably what would happen.”
I interpret this as saying that, in the event of a future switch to gold standard, the price of gold would have to rocket upward to make the gold reserve valuable enough to back up all the dollars in circulation.
“Of course, we had a Fed during periods of high growth in the past, and the thing that really changed was how we regulate -or don’t- the financial sector, but no sense in trying to have that debate with Paul.”
What you fail to understand is that the “periods of high growth” that can often be attributed to actions of the Federal Reserve are followed by downturns and recessions. When the FED sets the price of money (the interest rate) below the market level, they encourage over investment in a particular sector of the economy. Either what ever the hot new thing is or housing for example. When the interest rates are too low banks tend to lend more money than they normally would under pure market conditions. This vast increase in credit drives up prices and creates the bubbles! Sure, everyone is really happy and the economy looks great for a while (periods of high growth) but at some point, the prices become unsustainable. As in the housing bubble, the moral hazard was made even worse due to the GSEs who were buying up all of the mortgages with the stamp of approval of the Federal Government. This creates a false sense of security with the belief that the Government is backing all of the loans. This removes the risk from the lenders (which encourages them to make risky loans) and puts the liability on the tax payer. When people start to experience trouble paying their loans, banks will tighten credit, prices begin to fall and companies and their share holders lose money! This is how the correction or recession begins. The severity of the recession is directly related to the amount of mal-investment. The recession is the medicine that the Free Market needs to revalue the overpriced assets and liquidate the debt due to mal-investments!
As for your assertion that a return to the gold standard or competing currencies would cripple the global economy is a little short sighted to say the least. As paper receipts were circulated at one time in order to ease the transaction process, the same could be done today, only it would be done 1000 times better! With the advancements in modern technology, gold, silver etc… can be divided up into ever smaller measurable amounts. With that said, you could have a debit card that would be linked to an account held in gold…. and since we have the benefit of computers today, ever smaller transactions in gold could be made! You could buy a “Snickers” with 1/1000 of an ounce of gold.
Also, you must recognize the effect that the FED has on savings. Their stated goal is to keep the rate of inflation around 2% a year (the historical average rate of inflation year to year is 3.43%). The problem with this is that 2% a year growth in the money supply is exponential growth. N = 1.02^x where as, if there was no inflation, N = 1.00^x. So if you’re just holding onto your money or if it is in a savings account that pays less than the average rate of inflation then you are losing money!!!! The FED destroys savings (real capital) and almost forces savers into the stock market a place many people don’t belong.
While I thought your article was written well and fair, I just want to point out a few errors.
Anyways, you should seriously watch this video :http://www.youtube.com/watch?v=KONpt9a6HrI
I got a late start on the series presented here. So, some of my comments might actually have been more appropriate in the other articles.
You originally wrote “You are, by the way, welcome to disagree with us and express your disagreements here. Just play nice.”
Ok, here goes.
The Constitution isn’t living, breathing, evolving, stagnating, or any other ‘ing. It is in fact mostly being ignored by all but one Paulitician. The generic error is not reading it literally. Notice I didn’t bother to divine the founders intent? That is because the document was written by several overlapping committees. Each had knock down, drag out, dog eat dog arguments over what should be said. The literal words are the intent as well as the concensus.
So, if the amendment reads “Congress shall make no law…..” That means that quite literally congress is forbidden from making law on that/those topic(s).
The Supreme Court is often wrong. Just because a panel of eminent math geeks decided that 2+2=4.1 doesn’t make it right.
Why bother with a rulebook if you are not going to play by the rules?
On money: Our currency needs to be backed by something tangible. I don’t care if it is gold, oil, or tupperware. And, if government cannot afford to provide services that it isn’t allowed in the enumerated powers… so be it.
Social darwinism has always existed. It simply changes clothes every other decade. The problems of poverty, greed, etc are people problems. Government has a lousy track record at solving people problems.
I appreciate that you have a different opinion than I do. I also understand that you, like most everyone else, are conditioned to believe that the government exists to be a benevolent force.
Any more benevolence and we all will need lobotomies and appropriate meds.
If you want a real lesson in economics – Check it and dislike it if you watch the whole thing.
http://www.youtube.com/watch?v=3dl1y-zBAFg&
Phil and others opposed to government – why do I say opposed – because the GOP and Ron Paul have yet in over 20 years to describe one positive governmental role; one need for government at all. Yet look honestly at their behavior and you realize that the GOP envisions a government that does things TO people, not FOR people. Even in the face of threatening to destroy the government, leading the way to bankruptcy they want new laws to control private lives (anti-abortion intiatives). We are sharply divided – that’s also true. And it’s not ok to disagree, not on these things. They are too fundamental to our civic lives. So to those who opoose government, consider the alternatives. We have much of it now – Goldman-Sachs lies and deceives customers, commits open fraud and yet Martha Stewart goes to jail. Haliburton destroys evidence to conceal their cheating on the Deep Water well in the gulf of Mexico – no charges are being considered that the public knows about. Free trade and posioned products from China – people died, dogs died, property is contaminated – you have no recourse. That is the product once called fascism – when the private sector is stronger than the public sector. People struggled and died to create a government the people had some say in. But we the people, we don’t pay attention we mostly don’t do our part (voting?). And the naysayers, you embrace theories while denying empathy for the communities crumbling around you and hope dies. Stay the course – I trust you enjoy violence.
For JEC and a couple of others.
I personally do not oppose Government. I oppose the one-size-fits-all Federal Government approach.
I think a minimum wage is a great idea. But I think it should be imposed ideally by the community where you work. So, a minimum in NYC is relevant to the local cost of living. It would be lower in Texas since the cost of living is lower.
Look at building codes. In Louisiana and California the dangers of construction are different. Wouldn’t it make more sense for each state to set the building code that matches local conditions?
The Federal Government does have a role, and it is explicitly defined in the Constitution. All other roles are to the States and People.
Your comments about trade and such do have merit. And, while I feel it is overly broad, literally speaking the commerce clause allows the Fed to be involved.
Our so-called Anti-government stance is nothing more than a desire to play by the rules as they are written. And if we disagree on that; The rulebook actually sets down a method of changing said rules. Isn’t that a better solution than expecting judicial legislation to do it? Isn’t that a better solution than allowing the politicians to simply ignore them altogether?
1. I agree with you on both your arguments regarding minimum wages and building codes being a local concern.
2. Minimum wages are largely set locally – the federal minimum is (my estimate) about 1/3 of what it takes to live in the cheapest part of the country. In places like California, our minimum wages is higher, so that you’d be half way to self sufficient in a low-wage part of the country but at least you’re making 1/5 of a living wage here instead of 1/8 or so based on the federal standard. What I’m getting at is that minimum wages are already set locally, and they’re a complete joke, universally.
3. Having worked in the real estate industry and sold housing in every county in the state of California, I can tell you building codes are VERY MUCH a local matter. Even here in San Diego County there are tremendous differences between Chula Vista and El Cajon, El Cajon and San Diego proper, San Diego proper and unincorporated county land…if you knew anything about how hyper-localized building codes were your head would spin.
Actually I selected the Minimum Wage specifically because I know for a fact that there is a Federal Minimum. I selected building codes because I don’t think there is a federal standard.
As others have noted, both make sense at the local level. IRT the minimum wage, it should literally be set by the local .gov. That would allow me as a worker and you as a business owner to make our case directly to the deciding authority. And since it is local, we can get the neighbors involved.
Hyper-Localized? Great. That means that you, you personally that is, can directly challenge them in a forum where the voice to representative ratio is in your favor. Try that at the Federal or even State Level; be prepared for tears of frustration.
Again, I am not anti-Gov. I am for Local Government being what you read most of the news about. Then a bit less news on your state government. Finally, the Fed should have a minimal direct influence on your life.
Okay Phil, I think I get it – you’re using minimum wage and building codes as examples of how things run better on a local scale (construction law) and how they could run even better on a more local scale (minimum wage). If that’s the case, great!
Of course, your main enemy in both of these pursuits is capitalism itself – big time builders like KB Home and Lennar don’t want to have to conform to 100 different sets of codes if they operate in 100 markets when it’s cheaper to have one set of spec home plans that work across the board. So they lobby for reduced local control – and thus business is against the exact localized control you support.
1st off, I’m not anti-capitalist. I’m not sure if I am not communicating well or if you get that and are simply putting words in my mouth. I am all for you, me, and anyone else making as much or as little as you please. I just think that the city council or county commissioners, then the state, then the feds (in that order) are the logical way to run society and, if needed, to regulate it.
The KB Home example you cited is likely very accurate since my model give the advantage to the local businessman as well. That spurs competition between communities. Competition is good because it fosters growth and improvement.
Another example of the Big Fed hurting more than helping is Education. NCLB appears, at the school my daughter teaches at, to foster additional administrative burdens without a corresponding increase in student knowledge. That’s her shortest complaint but to go further would be waaaaaaaay off the path.
I’m not saying you’re anti-capitalist, nor am I trying to put words in your mouth. My opinion that a capitalist agenda is at odds with your goal of localized control of things like building codes is exactly that – my opinion.
My point is that capitalism by definition seeks to pile success upon success – and I’m not saying that this is inherently a bad thing. But let’s keep working my hypothetical builder example. If KB builds a dominant market presence in San Diego, Los Angeles, and Riverside, and they then lobby the state to override local building codes so that they can streamline their operations in multiple markets and give themselves an advantage of economies of scale over local builders, is that the brilliance of a well-functioning system or a bastardization of an ideal?
Just so I can make clear my personal views here, I prefer local controls, not only because they take into account local concerns but because they give a comparative advantage to local companies that care about the welfare of their communities and are more likely to hire local workers. Dollars circulate much faster and create a more robust economy when they’re kept closer to home, I believe.
Education is a thorny issue. I see nothing but harm coming from federal testing mandates, but I’m also worried that certain communities could take complete local control and turn public education into religious indoctrination…
“…is that the brilliance of a well-functioning system or a bastardization of an ideal?”
A bit of each I’d think. I would like to think that the state would be reluctant to step in and blatantly remove a local prerogative. Of course we cannot expect that from the feds. They have a long history of stepping in and making threats or offering enticements to the states. Federal crack, or cash money if you prefer, is a horrible addiction.
Each level of government should have its’ role defined. Responsibilities and Power should be clearly enumerated. Our Constitution does this at a national level. We, the people, have forgotten to enforce it at the polls.
Schools should be totally local in my opinion. And, the ultimate local authority of course is the parent. I don’t think that religious indoctrination would happen. Too many parents would do as I do and vote with their feet.
But, if the community at large wants it that way, they should get their way. I already know that a large part of the population will disagree with me on that stance out of a misunderstanding of the first amendment. That very misunderstanding would, I think, prevent the indoctrination. If the school board pushed an agenda that meant the kids would not be competitive in the modern world, it would change in a hurry.
But, none of my goals will come to pass unless we unhitch the fed and return them to their constitutional role. So far there is only one candidate who is aligned in that direction.
You make your argument by misrepresenting your opponent with statements that do not accurately represent the opposing positions. Certainly Republicans and even libertarians do not advocate the elimination of government! Establishment Republicans, in fact, love government as much as Democrats, in spite of their rhetoric to the contrary. My observation is that Republicans love government when they are in control, and when they are not, they use the small government rhetoric to win elections. But they never actually do away with any government. If you would simply look at the size and scope of government and our budget, and the historical trends, you’d see that there is in fact no difference between the two parties when it comes to growing government. This is one of the problems I have with the Republican party. If they aren’t really for smaller government, they should stop using it in their campaign speeches.
Libertarians and some Republicans would like to see less government, but they are not anarchists as your post implies. And Ron Paul is a constitutionalist who is very much in favor of government, but one that operates within the bounds of the Constitution. According to the Constitution government exists to protect human life and liberty. Federal government is responsible for integrating activities between the states and to provide national defense and manage international relations. State governments, according to the Constitution, are responsible for pretty much everything else, and are given wide latitude in their authority. In fact, the Constitution does not specify what the state governments can do, it enumerates the federal responsibilities, makes a few important prohibitions on the states, but otherwise leaves the rest up to the states and their people to decide. The Constitution is a contract that defines the federal government, not the state governments.
While I agree with your identification and condemnation of corporate actors that harm the public with impunity I don’t see how your logic can tie the cause of this to a lack of government or anti-government sentiment. Corporations only get away with the abuse they perpetrate because of the protection they receive from government. Government perverts markets. It props up companies whose poor or unethical business practices would have otherwise driven them bankrupt. Government also legislates and regulates away individuals’ basic forms of recourse that have historically been enjoyed in free societies: the right to be compensated for loss of life, liberty, and property. Today, the government shields its favored companies from this exposure and allows them to scam the people, to pollute their air and water, to profit from peoples’ money that was not honestly earned, but taken at gunpoint.
This IS fascism as you point out, but by doing so, you defeat your own argument. Fascism is a form of socialism that simply changes the government’s relationship to the means of production. Rather than nationalizing production, the private ownership remains in place, but it is coopted by government. Otherwise these two forms are very similar achieving social order through central planning and authoritarian rule at the expense of individual liberty and prosperity.
If you have 40 minutes and can tolerate some pretty provocative ideas, Lew Rockwell did an excellent podcast describing the relationship between socialism and fascism:
http://www.lewrockwell.com/lewrockwell-show/2011/12/09/240-heil-obama-the-fascist-american-state/
You identify the deteriorating conditions in our communities as a lack of “empathy”, which you imply is a lack of government intervention, but do you not realize that government in America has never been so large in its size and scope as it is today? How do you reconcile the deteriorating conditions in this country, which you imply should be taken care of by more government, in light of the fact that our government has never been bigger, has never had a larger budget, and has never had more laws and regulations than we have today? Also, have you ever considered that empathy and charity is not the exclusive provenance of government; that private groups and individuals might provide better, more innovative, and more efficient social support if the ponderous government system were not so pervasive?
Is it not possible that the cause of our problems is too much government rather than not enough? How do we pay for more government when we are already borrowing 40% of the money running the one we have? Is it not possible that our problems are caused by a government that lies to us; a government that is not operating with our best interests in mind, but rather serves the interests of the elite who have used their wealth and influence to subvert government to their own ends? Is it not possible that all these laws and regulations with noble, patriotic sounding names are actually designed to control us while our wealth is systematically extracted? How would we know if this were true, considering how much attention people pay to what government is doing? We get our information from the government in 30 second scripted sound bites, and of course, it is always operating in our best interests.
As for violence, again, I would suggest that if you considered violence that the government visits upon its own people, you would be alarmed and appalled at what is already going on in this country. From the militarization of municipal and state police, to countless armed federal agencies, to the U.S. warfare machine, Americans are subjected to more authoritarian laws and greater violence every day. Just yesterday Congress passed a defense authorization bill that included a law that allows the U.S. military to indefinitely detain American citizens on American soil without charges or trial, and to render them to jails overseas. We can be assassinated by our government without due process. We can be surveilled and searched without our knowledge and without a warrant. This erosion of our privacy and our basic rights continues at an alarming rate and in direct proportion to the size and scope of government.
If we stay the course we are on, we will surely go broke as a nation, and there likely will be violence. But as usual, it will be the common people who will suffer while the elites who have benefited from government largess and protection will be safely ensconced behind their walled compounds with suitcases full of our money.
Phil, I agree, given regional differences, one size does not fit nor work; I think most can see the inherent problems. And you got me with building codes; Florida has some of the weakest codes in the country; the homes in Homestead wiped out by Hurricane Andrew in 92 were replaced with the exact same thing – code wise. Yet California finds it necessary to re-write building codes after every earthquake. Building codes are written by States to fit local conditions. Problem is with corporations and insurance – Californians with stringent codes subsidizes those with weak codes because we all belong to the same insurance risk pool. Corporate business makes moot the idea of States rights. Hurricanes and Tornados are common in parts of the country yet their buildings keep getting blown down; a hail storm justified insurance replacing 2,000 roofs in Clarksville Tn earlier this year. Yet premiums there are lower than in California. Change the risk pool change the equation. But there’s the rub. In a democracy the government must be stronger than any private business interest. But you’re right, government has been lousy. Can we own up to where the problem lies? It lies with us. Our government, this government, for good or bad is a reflection of us; a product of our society. Corrupt cultures have corrupt governments. Or, you might say we have the government we deserve. As for me I’m a utilitarian – what works the best to serve the most. We might fight and disagree but in the end we just arguing over how to do things because I think you’ll agree, our futures are tied together.
We can certainly agree on “getting the government we deserve”. At my humble blog I’ve ranted on the evils of apathy on a couple of occasions. If you do a search there for the word “leadership”, I have ranted on the lack of it by our elected pols as well.
And you are right on another area: We are all in this together for better or worse.
Mr. Porter,
Have you read Ellen Brown’s “Web of Debt?” Please don’t snarl dismissively about her book if you haven’t read it.
I’ve read “Secrets of the Temple” by William Greider, “The Creature from Jekyll Island” by Ed Griffin and Brown’s book and I find parts of all of their books most interesting. They all seem to agree that private bankers have far too much control over “our” money. Frankly, I don’t believe in a return to the gold standard, or conspiracy theories, or white supremacism.
I would greatly appreciate a link to evidence that this has been done though:
“…However, the Federal Reserve is subject to oversight by Congress, which periodically reviews its activities and can alter its responsibilities by statute…”
And like you, I’m pretty disgusted with the way our political system functions. I have very little faith that “our” congresswhores serve anyone but their largest campaign donors.
Yesh, I should have added that I’m not a Ron Paul supporter, but I don’t believe that ALL of his ideas are whack.
1) There is a link at the top of those paragraphs that goes to FactCheck.Org, where I got that information.
2) I have not read Ellen Brown’s book. But it sounds interesting. Over at “Will Blog for Food” there’s a video about her book. http://goo.gl/kqoa5 Good stuff. And it’s on my list of things to read now.
3) My (our) concern with Ron Paul and (in particular some of his supporters) are the numerous connections to the far right. We should ALL be concerned about our banking system, but we don’t need to rely on people who are racists or anti-Semites to lead us in changing the system.
Mr. Porter,
1) I read the FactCheck.Org link and it says that the Fed is subject to oversight by Congress, but I was looking for evidence that Congress had actually engaged in oversight of the Fed. Has the Fed ever been audited? When was the last time Congress passed any legislation that directly affected the Fed? When they raise the debt ceiling?
2) I’m watching the RT’s interview of Ms. Brown by Thom Hartman, thank you, I like him, and she blogs at HuffPo. Have you read chapter 22 of her book?, it’s online. (I love to recommend it to the illegal alien haters, lol)
THE TEQUILA TRAP:
THE REAL STORY BEHIND
THE ILLEGAL ALIEN INVASION
http://www.webofdebt.com/excerpts/chapter-22.php
3) Well, I am a woman and the mother of a child who just graduated from college and said child spent 16 years in public schools, so my concerns with Ron Paul may be even more extensive than yours. I didn’t want my child to be buried in student loan debt, so our savings are shot, gone, kaput. The Ellen Brown link you left has 2 parts, here is the extended interview, with her views on student loans.
4) The investment bubbles infuriate me. Why should people in Egypt go hungry (food riots ’08) because traders in Chi-town and banksters in NY need ANOTHER yachyt?
END FED: Food Speculation Behind Food Riots N Tunisia, Algeria, Sudan, Jordan, Egypt, Yemen, Morocco
http://www.youtube.com/watch?v=NbARnnTXI-s
Guess what? the mf’s are gonna do it again –
GOLDMAN SACHS: Here Is What 11 Big Commodities Will Do In 2012
http://www.businessinsider.com/goldman-sachs-commodities-outlook-2011-12
After coming back since I’ve commented on a lot of your arguments – I find it silly that you’ve deleted a lot of the comments that I have made. I suppose the media is really biased against Ron Paul.
More nonsense from a politician. Ron Paul’s real reason is political, create fear and anxiety to motivate people to vote for his party? From reading his latest claptrap, he’s full of it.
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