Ron Paul - Pro, Con, ???

I agree with Ron Paul almost 100%. The only thing he has ever said that I had a problem with in the last presidential campaign is that he did not want to escalate a little in the Afghanstan conflict. I was in favor of some escalation but not the large escalation that President Obama had started. So, Ron Paul's position has been proven correct even though I disagreed with him at the time.

I love promoting Ron Paul. Always have since I heard about him around 30 years ago.


Concerning the VA hospitals, two points:

1) In health care reform debates, those who are against government-run health care point to the VA hospitals as an example of what we shouldn't have.

2) Your link states: "He believes that government should pay to treat veterans in private hospitals." Wouldn't that be better than government-run hospitals?

 

I voted for Ron Paul in the last Republican primary, and I'll vote for him again. I agree with him more than any other candidate, and he is the most Constitutional in his doctrines.

(How did we get to the point that Constitutionality is considered radical?)

 

The trouble with Austrian economics is that no one has ever run a country that way at least not in the last 1000 years. It sound good in principle but the devil is in the details.

The big problem with Paul and the Austrians is they classify "money" as the greatest "good." Good as in useful commodity. Since the world went off the gold standard the civilized world has adopted an electronic transfer money system in which money functions as an iou for goods and services. Money is NOT a store of wealth and neither is gold because the value of both is determined by the international money traders.

For example, the Fed can effect the consumer bank rate by changing the interest rate to the local bank and reserve requirements but the big money, treasury bills and notes, are auctioned and Fed can only control the auction by bidding against itself.

Less than 2% of the US money in circulation is cash and half of that is outside the US.

Paul would require the banks to have a 100% reserve - would have to have a dollar in liquid assets for every dollar loaned. One obvious result would be the end of credit cards. Personally, we make great use of credit cards and I would hate to see them go.

 

Is Ron Paul perfect? No, he is not. He is the best defender of limited government in the Congress.

If one expects a candidate to be perfect in order to support him/her, then such a person will never vote for anyone.

 

I fail to see the fault.

 

That is because a truly constitution republic with a system of checks and balances with democratically elected officials is a new concept relative to history. Most of history has had monarchs who govern with certain powers to do what they want at the expense of the people.

Austrian economics is not simply a suggestion for an economic system. It also explains and predicts the problems of other economic systems.

That is because promises to sacrifice tomorrow to enjoy today more fully pleases people and gets votes. This leads to publicly funded education regimes. Public education teaches history, philosophy, and views of government the feed itself. These views encourage electing politicians that promise more centralized government that funds public education through pork.

Truth is often stranger than fiction.

Money is the "greatest good" as in the most prevalent by virtue of it being a medium of exchange. Sound money requires that it be reliable, divisible, fungible, relatively scarce, and useful. Markets have preferred gold and silver as reliable money for thousands of years. Any civilization that has attempted to remove the freedom of sound money and the checks on government (by virtue of leaders clipping or debasing coins or forcing people to use funny money) has ultimately faced economic ruin.

Gold is not incompatible with electronic money and accounts just as it is not incompatible with representative paper. I have a GoldMoney account that I have transferred funds to and from. The only thing that gold does is restrict financiers and governments from enriching themselves dishonestly at the expense of the people.

The value of money in any medium is determined by markets. If some government could truly create real wealth by manipulating the money supply, then the secret to wealth is a printing press or a computer.

We know that this is not true. As you said before, money is a form of "IOU" on goods and services. The market creates goods and services through freedom and reward motives. The value of money is determined by its relationship to the supply of goods and services.
If the supply of money increases relative to available goods and services, the value of any unit of money goes down.
If the supply of money decreases relative to available goods and services (either deflation of money or increase of goods and services), the value of any unit of money goes up.

Any government that does not understand that markets--not government--determine the value of things wreaks havoc. The U.S. went off the gold standard not because of the failure of gold as a market commodity and money, but because of the failure of government to maintain integrity by honoring contracts and promises. The Bretton Woods system was fatally flawed because it expected the world to treat dollars as gold but provided a backdoor for the U.S. not to do the same. Therefore, the inflationary spending from 1944 to 1971 was really a dishonest looting of purchasing power from other countries to fund foreign adventures and welfare programs.

The collapse of Bretton Woods showed that markets demanded gold. The U.S. was losing wealth because other countries were redeeming dollars for gold as the Accords allowed. Nixon closed the gold window allegedly to prevent this loss, causing prices to skyrocket. These prices really reflected the inflation that was happened. Before, the inflation was occurring by a loss of real money--gold. Closing the gold window caused the inflation to manifest itself in more dollars relative to available gold.

Nixon then committed yet another economic fallacy. He implemented wage and price controls. In other words, he thought that he could force the market to accept treating a dollar with a certain value while the government through the Fed was borrowing and printing new money to pay for wars and welfare. The laws of supply and demand always overcome any government attempt to suppress them. The cost of producing goods became greater than the prices that people were legally allowed to sell them. Therefore, the wage and price controls caused artificial supply shortages.

Gold prices rocketed from the initial unsustainable $35 per troy ounce to over $800 per troy ounce. Why did this happen? Because the supply of gold became smaller and smaller relative to the supply of dollars. The laws of supply and demand will always prevail.

And what does this artificial manipulation cause? When rates are lower than the market would normally expect, people get into more debt than they should and prices for luxury assets become higher than they should, causing a bubble that will burst when the debt bills become due.
When rates are higher than the market would normally expect, people save much more but are much less willing to invest capital projects that could increase true productivity, stifling economic growth.
The laws of supply and demand will always prevail.

This is a recipe for currency problems in the future as other countries are beginning to lose trust in the dollar. As long as they continue to support the dollar, the U.S. benefits at the expense of these other countries. This setup does not create wealth, it transfers wealth.

Under a full reserve standard banks would store money and charge a small fee for this service. This may not appear ideal, but the money itself would have more value than it does now in an inflationary fractional reserve banking system. Do you like the fact that too many banks today operate on moral hazzard and gamble your deposits away for their own profit and consumption? Sound money would force banks to be more open with their actions and more accountable to their depositors.

One obvious result would be that we would not need credit cards to purchase many things that we seem to need them for now. Houses, education, vacations, and many other things would be much cheaper because the demand for debt would not be artificially bidding up prices. Which would you rather, work hard for one year and then purchase something and own it, or purchase something with money that is not yours and have to work hard for five or more years to pay off a debt? All the time you are in debt to pay for something that costs much more than necessary, you are using something that someone else owns. If you make a mistake, harm the property, or face disablement, you suffer the debt. All the while the debt that you are paying is much higher than the dwindling value of the good that you are working to purchase and own.

 

I remember this controversy. The problem is that the budget is already fixed. The so-called "pork" that Ron Paul supports for his district comes from a "discretionary" budget. Anything left that has not been appropriated becomes discretionary that could fund less than ideal federal pork projects. Paul is simply trying to allow the people to have as much say in their own money as possible so that less is available for the federal government to spend as they see fit.

The ideal system would not have such a central budget from taxation that districts must reclaim or see blown by federal special interests.

 

Absolutely. So far from being a fault, it is how a lone conservative must operate to reign in the federal government as much as he is able.

 

Great explanations, AresMan. :thumbs:

 

>>It sound good in principle but the devil is in the details.

>That is because promises to sacrifice tomorrow to enjoy today more fully pleases people and gets votes.

That is because of our sin nature and nothing basic is going to change until Jesus returns.

>Money is the "greatest good" as in the most prevalent by virtue of it being a medium of exchange.

but "medium of exchange" mean what? Pragmatically, a conversion factor between the value of one's time and various consumer goods and services, types of assets. In the same way that "2.2" is the conversion factor between pounds and kilograms, "money" is functions as a conversion factor between work hours and rent or between hot dogs and ice cream.

> The only thing that gold does is restrict financiers and governments from enriching themselves dishonestly at the expense of the people.

The other thing gold does is prevent the working class from accessing cheap credit.

>Gold prices rocketed from the initial unsustainable $35 per troy ounce to over $800 per troy ounce. Why did this happen? Because the supply of gold became smaller and smaller relative to the supply of dollars. The laws of supply and demand will always prevail.

Most always.

>When rates are lower than the market would normally expect, people get into more debt than they should and prices for luxury assets become higher than they should, causing a bubble that will burst when the debt bills become due. . .

>The laws of supply and demand will always prevail.

Human greed will always prevail until Jesus returns. Some are better at it than others.

>This is a recipe for currency problems in the future as other countries are beginning to lose trust in the dollar.

That's what I have been telling myself since 1962 but so far our crooked politicians are doing better than other politicians because the US dollar is doing OK on the money market.

>Under a full reserve standard banks would store money and charge a small fee for this service.

When the international system ran under these rules 80% of the people were working poor and/or poor poor. The working class had to go to the Mafia or the hock shops to get credit.

>This may not appear ideal, but the money itself would have more value than it does now in an inflationary fractional reserve banking system.

Money only has value in terms of the cost of hard assets, goods, and services. If consumer prices are controlled for taxes and regulations, labor has never been more valuable in terms of what an hour's labor can be traded for.


>Do you like the fact that too many banks today operate on moral hazzard and gamble your deposits away for their own profit and consumption? Sound money would force banks to be more open with their actions and more accountable to their depositors.

Has more to do with our sin nature than the economic system. Any human system WILL be corrupted.

>>One obvious result would be the end of credit cards. Personally, we make great use of credit cards and I would hate to see them go.

>One obvious result would be that we would not need credit cards to purchase many things that we seem to need them for now.

I don't NEED credit cards. My AMEX/COSTCO monthly statement provides a list of where the money was spent, the account kicks back about $500 a year which I wouldn't have if I paid cash, and a credit card provides "float," the substitute for writing a check an having it clear the bank.

>Houses, education, vacations, and many other things would be much cheaper because the demand for debt would not be artificially bidding up prices.

Seems to me the net effect of credit bids DOWN retail prices because of sales volume.

>Which would you rather, work hard for one year and then purchase something . . . .

If someone enjoys their job then the work isn't hard! But yes, in most cases it is better to pay up front than to use credit.

 

Exactly. Because of man's depravity, all ultimately act according to their own interests. Therefore, Austrian economics with a limited constitutional government serving to protect liberty provides the checks and balances necessary to minimize one fulfilling one's own desires at the expense of another's well being. Power corrupts and absolute power corrupts absolutely. The more power is concentrated in a few hands on behalf of the many, the more likely the powerful few will exploit the many for the benefit of the few at the expense of the many. They do this "for your own good."

Correct, but money is limited in supply by nature. Money is a good in the same sense that all other tangible and intangible items are goods. What makes money a "medium of exchange" is its divisibility. Gold and silver (and platinum, palladium, nickel, copper, zinc, etc.) are fully divisible to fit this necessity for a medium of exchange to eliminate the awkwardness and inefficiency of direct barter. However, for money to be reliable, its supply must be relatively dependable. Markets have favored gold and silver as reliable money and stores of wealth because they fulfill all necessary properties of a medium of exchange, plus they have intrinsic worth. Someone will always demand gold and silver. Both metals have utility in the auto industry, dentistry, computer manufacturing (gold is used in USB cables, etc.), and many other uses. The scarcity and utility of these metals gives them their market value. Supply and demand will always prevail.

I understand your view and I agree that technically anything can ultimately be used as money, including paper, tally sticks, seashells, and even electronic bits. However, the acceptance of any form of medium of exchange lies squarely in the confidence of keeping it in limited supply relative to available goods and services. A central authority can require markets to use a certain good as a medium of exchange, but the markets themselves will always determine the value of any individual unit of this "money" according to the laws of supply and demand.

Central authorities and stewards of money supply favor easy money because they can automatically transfer wealth from others to themselves by simply creating more units and trading them for real assets from the pool of productivity. Inflation results in transferring real wealth from those that produce it to those that do not.

And they would not have to because the cost of their standard of living would be much lower.

Cheap credit bids up prices for the most expensive assets, making them ultimately unaffordable without the credit itself. Without credit producers would have to compete for consumers to sell products and services, thereby lowering prices. Consumer credit causes consumers to compete with each other for the goods and services of producers, thereby raising prices.

Consumer credit benefits producers more than it does consumers. Producers get paid in full with amounts significantly higher than the cost of production. Consumers get long term debts for inflated prices. Consumer credit is one of the primary causes of the astronomical costs of education, real estate, health care, and other expensive assets. The more the "bleeding heart" government tries to force easier access to credit to more people, the higher prices for the most expensive assets become. Cheap credit makes things more expensive, not cheaper.

As Henry Hazlitt explained in Economics in One Lesson, Keynesians can only see the now and the visible effects; they cannot see the later and the indirect effects.

Hmmm. I would like examples of the laws of supply and demand not functioning as expected. Most likely any explanation of an example you would provide would miss at least one factor of measurement.

I agree with this completely. The laws of supply and demand demonstrate human nature itself. However, you cannot rectify greed by putting an elite few in charge of everyone's well being. Because the elite few are also greedy, they will unbalance things in their favor. The only thing humans can do is restrain the effects of greed by making it dependent upon improving the lives of others. Checks and balances and the widest possible division of power lessens the damage of greed.

That is because other countries are still buying our treasury bonds with real assets. Some economists have called the years since 1971 "Bretton Woods II." As long as our dollar is doing "OK" on international markets while we borrow, inflate, and spend it beyond our own means, we are getting a free ride by other countries sacrificing their own standard of living. However, another problem is that we are going deeper into debt to fund non-productive consumption and borrowing from other countries. Once other countries realize that we cannot pay our debts with anything worth the purchasing power that they lent us, we will face inflation on a greater scale. Just as countries such as France began redeeming their dollars for gold before the collapse of the Bretton Woods system, so countries like China will begin redeeming their dollars for real assets such as real estate, companies, precious metals, and agriculture. They will dump their dollars and be able to buy things from us cheap. We will be stuck with a dwindling supply of goods and services and an increasing supply of worthless dollars.

We can correct the problem in two ways:
1. Get our house in order now, raise interest rates, suffer the recession, work with our foreign creditors, and let them continue to use a stronger dollar, or
2. Keep doing what we are doing and face a currency and debt crisis and have to rebuild our economy from a much weaker position.

I would like to see your source for this.

The supply of hard assets, goods, and services relative to the supply of money determines the value of a unit of money.

Price and wage controls distort the market and cause supply shortages. Labor has value in terms of the marginal utility of what it produces. Taxes and regulations may or may not be necessary, but they are the liability side of the balance sheet. Taxes do not assign value to anything; they are only a burden on production to pay for certain upkeep. Taxes and regulation do not increase productivity. They become part of the cost of production passed down to the consumer.

 

I agree, which I have explained before. The most optimal way to deal with the depravity of humanity is to divide power among as many people as possible and to institute checks and balances so that one cannot legally and coercively benefit at the expense of another.

When two people make a voluntary trade, they both benefit because they both improved their standard of living and received what they wanted. When one steals from another, one benefits and the other loses. We need a government that legally protects the liberty of people to make voluntary trades and contracts and protects the property of people by not allowing one to steal from another. We don't need the government to steal from one to benefit another or the government itself.

The more you concentrate power in the hands of a few to dictate the well being of the many, the more you allow the undesirable effects of greed to permeate and harm more people.

And these "perks" do not come out of thin air, nor the generosity of the company. They come from you spending "credit" and acquiring more debt (or someone else paying interest on debt to provide profit for the credit card companies to offer you the incentive to borrow money from them and pay it back with interest so that they make more money).

So do debit/check cards.

What happened during the "housing bubble" during this decade? The supply of houses skyrocketed AND the sales volume of houses also skyrocketed. Cheap credit through government-supported Fannie and Freddie "guaranteeing" worthless mortgages and 1% interest rates after the dot-bomb incident caused an "asset bubble" in which speculative consumers bid up prices of houses through easy loans. People thought that housing prices could rise indefinitely and that they could use their houses as ATM's. This idea, of course, also caused other prices to rise, such as oil and other luxuries because people thought that they had wealth to spend that they really did not. Someone had to pay the underlying bills, or the banks would go insolvent.

Currently there are too many houses in inventory. Prices must fall to reflect the supply and demand of houses. What is the government's Keynesian solution to this problem? It is NOT to let housing prices fall so that new consumers would not need to borrow as much money. It is NOT to let prices come down to a realistic level where more people could actually afford to pay for them without as much credit.
No, the government's Keynesian solution is to try to keep housing prices too high. It is funny how the original mission of Fannie and Freddie was to make houses more affordable. Now they are doing all they can to keep the price of houses from becoming more affordable. The Keynesian solution is to force consumers to have to borrow more money and go deeper into debt to pay for a house so that construction companies and banks that have depended upon this lopsided rape of consumer wealth can stay in business.
This is strikingly similar to the policies of FDR during the Great Depression. He thought that the path to prosperity was to keep prices from falling to realistic market levels. He actually ordered farmers to plow away and destroy available crops to contract the supply of food to keep prices high. **face palm** Yeah, let's keep people poorer by eliminating supply of food. Let's make it more difficult for people to purchase and own a home by making them too expensive even when there is enough supply to go around. Gotta keep those prices from falling! Poor consumer, he'd rather pay more to get less.

Prices go down when producers have to compete with each other to convince consumers to purchase their wares. When consumers are going into debt for the goal of purchasing things, they compete with each other and bid up prices.

Yes, and government promises are really veiled advertisements to encourage people to work harder and receive less in return, all to make things easier for Government & Friends®. Government promises are most often promises to benefit "you" at the expense of the other guy. Notice the unmitigated appeal to greed here that has less restraint from checks and balances when government is allowed to manage and redistribute wealth.

 

>Hmmm. I would like examples of the laws of supply and demand not functioning as expected. Most likely any explanation of an example you would provide would miss at least one factor of measurement.

I don't understand the "law" of S&D with respect to wholesale and retail prices of gas. There seems to be a disconnect between wholesale and retail prices.

ECON 101 texts use the example of movie ticket prices, claiming the theater owner will raise prices until net profits start to drop. During the last big jump of $1/gal gas price (over 25% increase) the sales dropped less than 10%. Why did the stations lower their prices when wholesale prices dropped?

Second, the gas we buy today was purchased months ago by the refiners. Why was there an immediate price raise during Katrina and not in this week?