The Ron Paul Revolution

Time Magazine ^ | 11/1/07 | Joel Stein

[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.

[fortheDeclaration]

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.

The Gov't doesn't know how much money and credit should be in the Market, nor what the interest rate should be.

It is like any other price that is set by the Market.

As for the Great Depression, the problem was not enough 'money' but the fact that Fed had been trying to keep prices 'stable' during the 20's, when in fact, due to rising productivity, they should have been falling.

Thus, while prices didn't rise during the 20's, there was still inflation in the system effecting the investment of capitial.

When the bubble finally burst in 29, the necessary correction took place, but Gov't actions under Hoover and the raising of tarrifs prevented the correction to a swift one.

FDR ran on a policy of returning the U.S. to a sound fiscal policy of balanced budgets and the dollar backed by gold, and ofcourse once in office, started the New Deal instead.

It took WW2 to end the Depression.

Paul Johnson does a good job in explaining it in his work, 'The History of the United States'.

Now, the problem with the Monterist school of Fisher and Friedman is that they think that a little inflation is a good thing and ignore the problem of the 'boom-bust' cycle which artifical low interest rates cause.