Posted on 11/01/2007 6:38:53 AM PDT by traviskicks
It sometimes seems as if someone is playing a cruel practical joke on Ron Paul. He goes to a college and delivers the same speech he's given for the past 30 years of his political career, the one espousing the Austrian school of economics. Only now the audience is packed with hundreds of kids in RON PAUL REVOLUTION T shirts who go nuts — giving standing ovations when he drones on about getting rid of the Federal Reserve and returning to the gold standard. After a speech at Iowa State last month, when nearly half the crowd had to stand because there were only 400 seats, a hipster-looking student worked his way through the half-hour-long line to shake Paul's hand. This was surely it — the moment when the straight faces would break and Paul would be wedgied up the flagpole. "When you see Bernanke," the kid said, "will you tell him to stop cutting rates when gold hits 1,000?"
Politics might be rock 'n' roll for nerds, but the nerds aren't supposed to be quite this nerdy. The leader of the disaffected in next year's presidential election — the Howard Dean, the Ross Perot, the Pat Buchanan — is a kindly great-grandfather and obstetrician whose passion is monetary policy. Paul, a 72-year-old hard-core libertarian Republican Congressman who is against foreign intervention, subsidies and the federal income tax, is not only drawing impressive crowds (more than 2,000 at a postdebate rally at the University of Michigan last month) but also raising tons of cash. In the third quarter of 2007, Paul took in $5.3 million (just slightly less than GOP rival John McCain), mostly in small, individual donations. On Oct. 22, he aired his first TV ads, $1.1 million worth in New Hampshire.
(Excerpt) Read more at time.com ...
Why should a Central Bank, with no oversight, control our currency and interest rates?
Yes, there will be some difficulty in getting rid of it, but the damage that it is doing would be worth it in the long run.
It is funny, that Ron Paul supporters are accused of thinking that utopia will happen when he is elected, yet, we hear about doom and gloom if he were elected from those opposed to him.
Paul would follow the Constitution and expect Congress to do its job and he would not undertake to do more then what the President was suppose to do.
I think the United States could survive that.
Yes, and plunged us into our nations greatest depression!
Why, because they tried to manipulate the money supply and keep prices stable, when they should have been falling due to rising productivity.
That caused malinfestment of capital goods.
but it was the rapid expansion of Federal power and regulation under the New Deal that prolonged that depression into 1939-40.
True.
While inflation has been an ongoing problem since the 1950s, the almost unending string of budget deficits the Federal government has incurred in that period has been a major element in price rises.
Not true, the Fed has been responsible for inflation by increasing credit and the money supply beyond what the market dictated.
While some have complained of the Fed's independence, the reality is that is not sufficiently so, as the central bank has been effectively blackmailed by Congress and the White House on many occasions.
No doubt, but the real problem is that no organization can substitute for the market, that is why we reject socialism, it cannot get it right.
Money is the life-blood of the capitalist system, and it is too important to be left to the bankers and politicians to control.
As for earlier economic boom-busts cycles, if one investigates it, you can find that it was because there was still much government intervention in the monetary system going on that caused a dislocation of prices and capital resources.
I don't trust the government controlling the price of milk directly, why should I trust them controlling it indirectly?
And that is a bad thing?
Imagine getting college students excited about politics and this is suppose to be a negative part of his campaign?
Are we allowed to vote for men?
And that means...?
Really?
He did raise 5 million did he not?
Ron Paul's legitimacy does not come from phony polls, or false reports, it comes from his defense of the Constitution.
If you are a Thompson supporter, why don't you post Thompson's views instead of bringing up irrelevant items about Ron Paul?
We then rationally discuss where we agree and disagree.
“But the money supply won’t just magically grow at a steady pace merely because you abolish the Fed.”
I received an emailed article from the VonMises Institute this week. Essentially, the article argued that any increase in the money supply was inflationary. In fact, the rate of inflation would be equal to the rate of increase in the money supply. IOW, the Austrian School believes that the money supply should be constant.
The problem with this is that if the money supply is constant and the population increases, then the per capita supply of money must decrease, ie, the deflationary rate would be equal to the rate of population increase.
Now, I’ve had Austrians argue that this would be offset by falling prices. Well, maybe, but that means that the value of your house would decrease at the same rate the population increases. And, the amount of money you would have to pay your mortgage will decline in proportion to the increase in population.
“with no oversight”
There is oversight. It was intended to have a measure of independence, so that monetary policy would not bend to political winds. But that is not how it has worked out. It bends quite easily to political winds. And of course, Congress can change it at any time, if we’re not happy with its performance. In order to believe that we’d be better off without the Fed, you have to start from the assumption that the money supply would magically grow at the right rate without the Fed. There is no explanation in economic theory for why that should happen. And history shows that it doesn’t.
There is oversight. It was intended to have a measure of independence, so that monetary policy would not bend to political winds. But that is not how it has worked out. It bends quite easily to political winds. And of course, Congress can change it at any time, if we’re not happy with its performance. In order to believe that we’d be better off without the Fed, you have to start from the assumption that the money supply would magically grow at the right rate without the Fed. There is no explanation in economic theory for why that should happen. And history shows that it doesn’t.
First, there is very little if any oversight.
These bankers can essentially do what they want and no one can say anything about it.
Second, money is like any other market item and that is the miracle of the Market that it does work.
Just like millions of items have the right price on them daily and supply the needs of the consumer, so money would have the right purchasing power and stability.
If Americans don't trust a group of men to set prices on oil, why would they trust them to set the price on money and credit, which indirectly affects the price of oil.
A problem with that argument, though, is that money is an artificial construct. It’s easy to get carried away and think that money is like any other commodity. But it’s not. It’s the thing that greases the gears in the economic machinery. It’s not something God made. It’s something we invented to make our economic life easier. We could rely solely on barter, or private bank notes, like they used in the Colonial days, but an official currency is something that has very important advantages. It doesn’t make a lot of sense to go to the trouble of creating such an official currency, and then do nothing to define its value or manage the supply of it. That would be sort of like firing a gun randomly into the air in the hopes that you might hit some bird.
Actually, money is a product of the market.
Mises makes it clear that all money can be traced to some use value on the market.
Money also follows the same economic laws of supply and demand.
Money represents the highest order of the capitialist system, and if it is destroyed, as has happened often in the past, the economic system reverts back to barter.
The Free Market is a dynamic system, not a perfect one, but no man or group of men can duplicate it or substitute for it.
That is what the failures of all government interventionism has shown us.
“if it is destroyed”
How would you propose that it be protected? Shouldn’t there be some official control over its value to protect the value? What good is a standard that has no degree of uniformity over time? There is no market process which will ensure that the supply of money grows at a rate that will ensure uniformity over time. Since that is the case, the only thing you can do is go to the institution that created the money in the first place, and ask them to make sure that the supply of the money they created is growing at some particular rate. Otherwise, you’ll likely have spurts of inopportune growth, as well as inopportune contractions.
Now, I realize that classical economic theory will tell you that it doesn’t matter whether the supply of money goes up or down because prices will simply adjust to accommodate any level, but unfortunately, the price adjustment mechanism is not that perfect. It takes time, and in the meantime, you’ve got real economic dislocations. Otherwise, we would not be having this conversation because the supply of money would not be important.
Pg.305 deals with the 'Regression theorem', that traces money (like gold), back to a commodity that could be priced on the market for its use value.
http://www.mises.org/rothbard/money.pdf
Well, as I said the market is dynamic, not perfect.
The problem with putting its control into the hands of men is that they and not millions of consumers make the decisions.
The Market deals with price differences by people who attempt to profit on these and predict what is going to happen next.
The Socialists could never figure out how millions of prices could be made and everything got sold.
Thus, they tried to make the market 'fair' and 'predictable' and ofcourse, they did neither.
Millions of consumers can’t control the supply of money, though. They might control the interest rate, given a particular supply of money, but they don’t control the supply. If they did, and they were able to control it at a level that made economic sense, then we would not have had the Depression, we in fact would not have any recessions or inflation. Yet we do. I’ll grant you that the Fed also does not have complete control over this, and if it did, it could not choose the precisely perfect level anyway, but they at least have some control, and are able to resist unfavorable trends to some degree. The hard part is that there are times when you’ve got unfavorable trends in every direction. Hence, we’ve got both inflation and slow growth. The Fed obviously can’t fix that, and must choose between the two or arrive at some happy medium, but if the economy is headed downward, as well as prices, like in 2001, then the Fed has a simple decision, and had better make it, or we end up in a Depression. Without the Fed, it would be pure luck if the money supply grew at the right rate.
Money is controlled and created by the market, like any other good.
Now, the Government's responsibility is make sure that the money is legitimate.
It is not the Government's role to make the money, no more then it is it's role to make any other good.
The cause of depressions is the Fed, flooding the system with money it created out of thin air.
That in turn causes interest rates to be artificially low, sending wrong messages to the market and causing maleinvestment in capital.
When the inflation finally wears off, the market contracts in response, thus, a depression.
The Government must protect the market, not disturb it with phony money and credit.
The Government does that by controlling the rate at which it is made. Too fast, and it loses its value. Too slow, and it increases in value. Either result is bad. I don't know of any reputable economist who thinks that the Depression was caused by excessive monetary growth. Even the monetarists contend that the central bank could have prevented the Depression by increasing the money supply faster at the outset of the Depression. But at the time, the central bank had a hands off policy like the one you espouse, so it did nothing much in response to the warning signs.
Ron Paul’s campaign has PROVEN to me that there is LITTLE difference in the Republican and Democratic party.
Both have their own agendas and both are fearful of anyone entering the arena and up setting their own carts.
Yes, he has some radical ideas.. but the same was said about Ronald Reagan too while he was running for his first presidential bid.
Will he win? I doubt it.. but the bickering on this board and several others are interesting.
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