Platform of Ron Paul

>>Originally Posted by billwald
>>I disagree with Paul regarding "Inflation and the Federal Reserve." Most Libertarians (Austrians) are living in the 19th century and don't understand the nature and function of the electronic transfer fiat money system. Neither do they understand the vast numerical gulf between the (real) rich and the poor.


>Your statement calls into question some of the greatest theologians of all time.

Say again? Please name them?



>As well, money transfer systems would not be eliminated in such a system. Rather, it would become more reliable than the current system.

Say again???

When the world was on the gold standard "Money" WAS a "store of value." Austrians complain about our fiat money system but refuse to admit that money is no longer a store of value but simply a government countersigned IOU for goods and services aka a medium of exchange.


>Rather, Austrian economists understand the gulf between the rich and poor and see that the problem is not Austrian economics, but the Federal Reserve system who exacerbates the system.

And you would prefer Congress to determine monetary policy????

> We oppose a top-down approach where people in Washington plans for the many, not the people planning for themselves.

You prefer a top down approach where the hyper rich make plans for us all. Austrians refuse to see that there are two parallel economies, one for those who work for wages and one for those who use money to make money.

Austrians don't understand the vast difference between the working class which spends 80% of their wages on monthly bills and the hyper rich who spend less than 20% of their annual increase on consumer goods and services and re-invest the unspent 80%.


> In an Austrian economic system, there would not be inflation that hurts the poor.

In the Austrian system - under the gold standard - 80% of the population lived in poverty and never owned any gold. A controlled inflation helps the working class and removes unneeded assets from those who make money from money.

>As well, the unemployment would not be at 9% and there would be greater freedom for upward mobility than is currently allowed.

Unemployment is over 9% because our owners have set 80% of manufacturing jobs off shore. Most every consumer good except food is now made off shore. A "third world nation" is generally one which exports raw materials and imports manufactured consumer goods - a description of the USA.

 

First, I meant economists not theologians. When I reread my post hours later, I noticed the error but could not correct it. SOrry for the error.

I want you to quote one Austrian economist who is against electronic transfer of money. Just one. Yet, let me show you why I know you are wrong from history.

While America had rejected Austrian economics by the 70's, we were not on fiat money. The electronic system will still be around. If you remember back in the Nixon Administration when Nixon took us off the Gold Standard, causing Friedman (though, many attribute the original quote to Nixon) to remark "We are all Keynesians now", the reason was because we were going to be called by Britain on over promising our money supply. They wanted our gold brought to the exchange.

We can learn many lessons on this issue. First, "IOUs" is allowed thus money transfers are allowed in places called the exchange. They are done today and money is exchanged today by private businesses or when you go to the bank. This is not merely all just electronic transfers, there are actual transfers of goods to each individual person. This was occurring before Nixon when there was a gold standard and into the 19th Century and before, the most famous exchange is in New York. Where we went wrong is when America began promising more than it had available. This took great form in the 60's thanks to two Aministrations who expanded our spending. when Britain threatened to collect the gold, we didn't have enough to cover our expenditures. Nixon then pulled us off the Gold/silver Standard to save bankruptcy. If you don't have the money to back up your paper money, you go bankrupt and cease to exist. This is simple economics.

Finally, can you cite me when under Austrian Economics that 80% lived in poverty. I want the era and the citation please. If you are talking about the Great Depression, that was not caused by Austrian Economics, but by a Central Banking system. I will be glad to clearly show this. Some cite the 1870's, but modern economists actually see that era as a boom, not a bust, in our economics.

 

Let me add an important piece to this discussion. I may have fallen for your use of mixed illustrations that makes this discussion more foggy.

First, Austrians do not want to regulate private currency. Austrians believe, unlike Keynesians, that two private people can use whatever means for commerce. For instance, if a store will accept Gold and a Federal Reserve note (or even a state's own currency) then that is acceptable. Thus, between a business and an individual, they should have the right to negotiate their currency of choice, including IOU's.

Austrians are limiting the notes that the Federal Government uses, that they must be backed up by Gold (which is Constitutional and is the only currency allowed by the Constitution). Therefore, we see a point where an employee may negotiate to be paid in gold rather than American notes. Or, they may negotiate to be paid in property (as some did in previous generations).

Currently, such negotiations are illegal.

 

Typos, no problem.

The Constitution requires that our provinces (nee states) only issue money backed by gold. There is no such limitation on the Federal government.

Sorry, my sloppy writing. You are correct that Austrians teach that people should be able to use any sort of money they choose and this is EXACTLY how the US "works." You may use any sort of money you choose. The only limitation is that taxes must be paid in US currency and that other forms of money may not appear to look like, have any visual characteristics of US currency. If you can convince your local Safeway manager to accept Russian or "Monopoly" money the transaction would be legal.

Austrians are not consistent when it comes to federal currency. Why should you care if the Feds issue fiat money? If federal currency became valueless compared to other currencies only government employees, US bond holders, and those living on SS or whatever would get screwed. The local butcher and barber could barter or use francs, whatever they chose. The only legal requirement would be that taxes would be paid in federal currency which people would want to dump . . . Gresham's Law.

I don't know how to post formatted charts.

from http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Do Americans know their country's wealth distribution?

A remarkable study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of "net worth") is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents -- whatever their gender, age, income level, or party affiliation -- thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control about 85% of the wealth (refer back to Table 1 and Figure 1 in this document for a more detailed breakdown of the numbers).

Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It's a number I haven't even mentioned so far, and it's shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% -- seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it's at the top and the bottom that they don't have any idea of what's going on.

Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.


Also see

http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States

http://www.census.gov/hhes/www/income/data/historical/inequality/

https://docs.google.com/viewer?url=http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pdf

 

Actually, the opposite is true. I will outline below how a fiat currency hurts people. Let’s take, for instance, Social Security recipients. If we went to a commodities based system for the Federal Government, then they would not be hurt by inflation. This is the first year a several where they get a cost of living increase. Yet, they would not need a cost of living increase if we had a fiat currency, there would be no inflation if we got rid of the Federal Reserve and had a commodities based system. If they saved $1,000,000.00 in their retirement, it would not lose 3% of their value every year. Rather, it would keep its value. If they can live on $40,000.00 a year, they know that their retirement will last 25 years. However, that same person retiring today with a retirement would need at least $1.6 million to get the same guarantees. Yet, that is not all, this is only assuming 3% inflation rates. If we calculated the last 25 years and that determined our possible inflation for the next 25 years, that person would actually need over $2.5 million dollars. Fiat currencies run the inflationary course and hurt those on a fixed income. The fixed income people are hurt more the longer they live.

Before I get into the major issues of the currency, I am not concerned with wealth distribution here. Keynesianism, our current economic policies, encourages wealth distribution to be centered on the wealthy; Austrian economics is a much more bottom up approach. In fact, central planning is a key principle of Keynesianism. Only we believe that the individual person, not those with big government interest, are more important. We encourage plans by the many, not plans by the few.

Now onto currency policy.

A standard currency backed by a commodity for the federal government is needed to keep the value of the money. This prevents inflation and maintains our currency. If we do not maintain our currency we can have things like stagflation that was a result of a poor currency in the '70's, inflation like today, and deflation that can ruin economies.

Now, note that our dollar from 1793 to the 1913 kept it's value (1.00 to 1.01). From 1913 to the present day our dollar has lost value due to Woodrow Wilson's policies and creating the Fed. By 1933, the consumer price index more than doubled, in other words it took more dollars to buy more material.

Alan Greenspan noted:

Why is this important? Let's say I was saving up for a home. I place my money into the bank, but unless I am making over 3% on that money (or more, depending on the inflation at the time), I am actually losing money. Yet, from 1793 to 1913, if I placed my money in the bank and received any interest, I would not lose money. My savings would remain constant and my dollar would buy tomorrow what it buys today.

Yet, there are greater implications to a fiat currency. Currently, economists of all stripes are saying that the collapse of Italy will destroy the Euro. A fiat currency is only as good as the economy that it represents and if that economy is in question, the currency will collapse. If the economy falters the monetary system falters. Thus, this makes way for hyper-inflation. Since Fiat currency is not backed by anything, it fluctuates and is more at risk of crashing. A commodity based monetary system is not at risk of collapsing and investments into this currency

Why is this important for the Federal Government? If the government engages in a non-commodity based system, then they run the risk of the destruction of their entire economy. This is especially true when our Government outlaws other currencies. Thus, when Government prints money, in our case, to pay debts, they are devaluing their currency to pay debts and establish their future guarantees. This is called currency manipulation and is something we claim other economies do (like China) and consider it illegal and fraud. I agree, it is not only illegal, but immoral.

The example I often cite is a private example. Let's say I loaned you $100.00. You agree to pay me $110.00 back. So far so good. Yet, if you devalue your money system then you actually make it so that the $110.00 you pay back is less in real dollars. Thus, if you waited two years to pay back the $110.00, the person actually receives only $3-4 in profit. They would have been better off never loaning you the money as the risk factor is too low. Spread this over a number of other loans, it would take very few defaults to result in catastrophe from the loaning company.

Can you understand why several countries want to get rid of our fiat money system as the "world's currency?" The only reason our dollar is doing well is because it is a default currency. However, the world is moving away from our system which will result in even more fluctuations. This week I listened to a lecture by some Keynesians who agreed that we could see a collapse of the dollar in a few years given our current fiat strategy (glad they joined what Austrians have been saying for years). If we used a commodity based system, this would not be an issue.

Because of this, the Federal Government now guarantees certain loans and enforces certain interest rates to guarantee investments by the middle and lower class. Thus, our entire banking system is reliant upon a system that is propped up in order to guarantee the economy is maintained. Or else, if we let the interest rates rise to meet the rising inflationary rates, we will make it impossible for anyone to really borrow money except the rich. In an Austrian market, inflation rates are market based, the monetary system is secure, and investments are truly investments, not hedges against inflation. Savings accounts would actually be an investment and the bond market would not be as volatile.

Rather, in Austrian economics, we say that a federal reserve system must be linked to a commodity. This will inhibit inflation, encourage savings, and produce an economy not reliant upon subsidies by the government.

As for taxes, I think taxes should be paid in a commodity based currency. The lesson of the Civil War is that when a monetary system is not based upon a commodity, if the system is in trouble, the entire currency becomes worthless, less than the value of the printed paper. In reality, fiat currency is nothing more than a form of investing in an economy.

 

Thanks for the reply!!!

The bottom line Austrian error is that information is available to every person and that every person acts in their own best interest. Being Social Darwinists, Austrians forget to factor our sin nature into their economic ideas. As Ayn Rand inferred, poor people starving to death is a good thing because it cleans
the gene pool.

>Let’s take, for instance, Social Security recipients. If we went to a commodities based system for the Federal Government, then they would not be hurt by inflation.

Republicans (and Libertarians?) Complain that SS payments are indexed for inflation but not for falling prices thus in the long run inflation has helped people who depend upon SS. It is a correct analysis and a good thing.

>This is the first year a several where they get a cost of living increase. Yet, they would not need a cost of living increase if we had a fiat currency, there would be no inflation if we got rid of the Federal Reserve and had a commodities based system.

Under the present system the Fed controls monetary policy and Congress controls fiscal policy. You saying that under a gold standard there would be no monetary policy and/or there is no need for a monetary policy?


> If they saved $1,000,000.00 in their retirement, it would not lose 3% of their value every year.

First, would the people keep their million under the bed? When I was a kid passbook savings paid 3% to 4% and Mortgages were 4% to 5%. The banks were making a "fair" profit of about 25% over their borrowing cost. These days passbook savings pays around 1% and mortgages around 4%, 400% of their borrowing cost. Is this analysis approx correct? Is this a "fair" increase? If so what would be an "unfair" increase?

Banks borrow at 1% from customers and the Fed, lend to credit card customers at 18%. If this "fair?"

Sidebar:When I was a kid credit cards had not been invented, a mortgage required 20% down, and except for some car sales, there was no consumer credit. People put consumer goods on "lay away" (which is returning).

Second, how does a person making minimum wage to $10/hour, even $20/hour these days save a million in 40 years when every month he pays out 75% of his net for food and shelter? VERY few people have as much as 2 months pay equivalent as their net assets.

>If they can live on $40,000.00 a year, they know that their retirement will last 25 years.

Most financial advisers say it safe to pull 5% a year max out of their investments. That's $50K from a million in investments. With zero inflation and 1% passbook interest, the max would be . . . 1%. The person with a million savings would have to live on $10,000/year. "Savings" never was "investment" thus a zero inflation rate would not help the bottom 20% very much if all they did was "save." A "saving" person would have to save half his net pay to live on his savings for 20 years.

Social Security was sold to the people because they knew their parents were living on poverty. If their parents and grandparents were living OK on the gold money system the SS law would never have passed.

>We encourage plans by the many, not plans by the few.

You can encourage the many till the cows come home but it isn't going to happen. Why not? Because most people are terrible at risk analysis. Or as Michael Harrington described it back in the late 1950's, "event horizon." If a person sees his parents and their generation dying at 60 they are not going to plan living to 80. When SS was enacted most people were dead by 65. This is an argument for raising retirement age, not killing the system.

Say the US was to return to a 100% gold standard. The govt claims to own about 1 oz of gold per family. What would be the initial value of gold in new dollars? Would the price be high enough to cover ALL "money" in circulation or, say, enough to cover median family income? Say $30,000/ounce?


>Can you understand why several countries want to get rid of our fiat money system as the "world's currency?"

NOT EXACTLY! They want to replace the US dollar as the reserve currency with their own currency.

(I'm just finishing Greenspan's autobio. So far, he has not mention the long term effect of 80% of our "union" manufacturing jobs going off shore.

 

Actually, just the opposite. Austrian economics recognizes people will do evil. Thus, they distribute the economic powers to as many as possible. Keynesian economics and socialism centralizes the economics. In other words, a few people attempt to steer the economy. If those people are corrupt, it corrupts the entire system. In the Austrian economics, if there are a few corrupt people, we are so decentralized that the impact is more limited.

I do not know the quote you attribute to Ayn Rand, but she will say that there must be winners and losers chosen, not be the few who select who will prosper and who will suffer, but by the many.

I have never heard that argument from Austrian economists.

There would be a monetary policy because there is borrowing and lending that occurs as a part of the Federal Government. However, there would not need to be inflationary practices that produce bubbles and busts.

Yes, it is fair to increase the interest rates. The interest rates should be based upon the money supply that is saved. If it is not based upon the money supply saved, then you will always get a bust. When you make interest rates too low, people will take out more loans and increase debt. There are only a limited supply of resources. The grasping for those resources will reveal there are too few. Either you must dramatically increase inflation or there will be a bust, or both.

The problem with our current system is that we had to bail out so many large banks. This is evidence that we kept rates too low for too long. In the early years this resulted in a boom, but predictably resulted in a bust.

Thus, proof is that we were not making money to make up for the people who could not pay for the rates. The rates were too low which resulted in a bust.

I don't believe in credit cards, but it is fair if the free markets allow for this rate. Again, if you negotiate a term and you agree to the term. Personally, I would never borrow money at 18%. I don't even borrow money for a new car. I live a consistent Austrian Economic life.

Yet, let's look at the alternative. If we force lower rates then the credit card companies have two options. First, they can only give to people who have established credit and can pay it back. They will take fewer risks and fewer people will be able to get credit.

Credit cards are extremely dumb so I do not partake in this service, but prefer debit cards.

I think 20% for mortgages are a great thing. It lessens the risk and if everyone did this then home prices would drop even further. I also believe 30 year loans are rather stupid. I disagree with lay-a-ways, but it is a service people provide for others. If people agree with the terms, that is fine.

Yes, you can save. I could give a personal testimony. In fact, loans help inflate prices even further. The most recent proof is in the education sector. As loans have increased so have the cost of tuition. Inflation on tuition has risen faster than health care and other sectors. Rather, if no one would take out loans (which is being subsidized by government making it easier to obtain). The winners? Not the poor, but the big Academic institutions who are more profitable now than ever.

The solution is to let the market work. This will allow fewer student loans, tuition will fall, and more people will be able to afford it. When I went to College, I worked 40 hours a week to go to school full time. It was hard, but I was able to afford College. Now, I would not be able to get the same education unless I took out student loans.

Who is hurt by this policy? The poor. Loans are a detriment to prices which are a detriment to hard work. I went to college, despite being in poverty, because I worked hard. You are depriving this same opportunity to others, making it harder for someone to live off minimum wage and survive.

Yes it would, zero inflation would help them even more. You are talking about inflation on goods, not merely on your income. When you factor in accumalated interest. BTW, the inflation is closer to 3%, in 2010 it rose to over 6%.

First, the problem was not the gold system, but the central planning. I find it hard to believe that the poverty you are blaming is on Austrian Economics, we have not had Austrian economics since 1913. The poverty you are claiming is blamed directly on central planning, not Austrian Economics.

There is a lot of speculation in the above issue. But the biggest thing I wonder, are you advocating having a few people plan for everyone in the world, ignoring their dreams and passions? You want someone to plan for you, and not you plan for yourself?

To be honest, I can plan better for myself and I believe most people can.

There are plans to equilibrate the currency. You cannot do it overnight, but you have to do so.

Actually, not. In a recent summit there have been much talk about a new reserve currency. The IMF has been involved in these talks and are working towards such a currency.

 

The problem with a currency backed by a commodity, i.e. gold, is that there is a finite amount of gold in the world and increasing population and consumption. If you peg the value of the dollar to gold and declare, for example, 1 ounce of gold = $1,000, you will eventually need to readjust the value of gold as the population increases and as more and more goods and services are created. Alternatively, you would need to find more gold to back the increased dollars needed because of increasing population and consumption.

So basically, you don't have a gold standard, you have the government deciding and adjusting how many dollars there are in an ounce of gold.

Another problem is if another government decided they were going to hoard gold. Supposing China started buying up gold and hoarding it. What would happen to the value of the dollar?

 

Your problem contains the actual solution. If there is only a limited supply of gold and you keep the money at a stated level (and you have the gold on hand) then you actually sustain the value of the dollar. One dollar will not lose value and one dollar will buy more than it current buys, thus fewer dollars will need to be printed. The shorter the supply, the more valuable the currency becomes. Just like a $100.00 bill today, fewer are needed because their value is more than a $1.00 bill.

Currently, we need to print more dollars because the dollar has lost value.

BTW, we have plenty of gold to supply the dollar to everyone. I do not know of one economist who has stated this as a reason to not move to a commodity based system. As well, this system could be a combination commodity based system (gold and silver).

 

I found this from the library of economics and liberty concerning economic policy and felt this discussion would be benefited:

Money is defined as the commonly accepted medium of exchange. If government policy distorts the monetary unit, exchange is distorted as well. The goal of monetary policy should be to minimize these distortions. Any increase in the money supply not offset by an increase in money demand will lead to an increase in prices. But prices do not adjust instantaneously throughout the economy. Some price adjustments occur faster than others, which means that relative prices change. Each of these changes exerts its influence on the pattern of exchange and production. Money, by its nature, thus cannot be neutral.

This proposition’s importance becomes evident in discussing the costs of inflation. The quantity theory of money stated, correctly, that printing money does not increase wealth. Thus, if the government doubles the money supply, money holders’ apparent gain in ability to buy goods is prevented by the doubling of prices. But while the quantity theory of money represented an important advance in economic thinking, a mechanical interpretation of the quantity theory underestimated the costs of inflationary policy. If prices simply doubled when the government doubled the money supply, then economic actors would anticipate this price adjustment by closely following money supply figures and would adjust their behavior accordingly. The cost of inflation would thus be minimal.

But inflation is socially destructive on several levels. First, even anticipated inflation breaches a basic trust between the government and its citizens because government is using inflation to confiscate people’s wealth. Second, unanticipated inflation is redistributive as debtors gain at the expense of creditors. Third, because people cannot perfectly anticipate inflation and because the money is added somewhere in the system—say, through government purchase of bonds—some prices (the price of bonds, for example) adjust before other prices, which means that inflation distorts the pattern of exchange and production.

Since money is the link for almost all transactions in a modern economy, monetary distortions affect those transactions. The goal of monetary policy, therefore, should be to minimize these monetary distortions, precisely because money is nonneutral.

 

>The problem with our current system is that we had to bail out so many large banks.

NO, the problem is that we bailed out the banks. <G>

I don't believe in credit cards . . . but prefer debit cards.

I haven't paid credit card interest in 45 years but run most of my spending through a COSTCO/AMX credit card which kicks back about $500/year. My savings on coffee pay for the Costco dues. Debit cards offer no protection against fraud. Charges can't be disputed.

>You are talking about inflation on goods, not merely on your income.

Economists most always use money inflation and ignore the price of consumer goods in terms of man hours required to purchase. Until this current depression almost all basic consumer goods are cheaper in terms of work hours.

150 years ago people spent half their work time obtaining food, now it is about 5%.

When gasoline cost 25 cents most people made less than $2/hour, 8 gallons/work hour. Now most people can still buy more than 4 gallons/work hour. The price has less than doubled in the last 70 years. New family cars have cost about a half year's pay since WW2. Clothing, tools, appliances are much cheaper.

Medicine would be cheaper if people got 1950 quality treatments. On a square foot basis, housing is cheaper and most of the increase in housing building costs are the building permits, fees, and taxes.

>To be honest, I can plan better for myself and I believe most people can.

Then why DON'T they? You are not a typical American. Most people think they are BETTER than average. The food chain (pyramid) will always exist and the majority will always be on the bottom. EVERY form of government has a pecking order/food chain.

Most Libertarians and Republicans think they work harder and smarter than everyone else and would be rich if only the government and the unions would get out of THEIR way. Republicans and most Libertarians think the people on the bottom DESERVE to be on the bottom, have EARNED their place on the bottom because they are stupid and lazy.

Socialists think that people with great (God given) ability have a moral obligation to protect the less fortunate. Socialists think the working class should cooperate for their mutual benefit. Capitalists think the working class should be serfs because they are lazy and stupid. (My personal opinion)

An open market system is more efficient because under central planning no one knows what anything is worth or needed. That has nothing to do with the working class cooperating for mutual benefit.

>Your problem contains the actual solution. If there is only a limited supply of gold and you keep the money at a stated level (and you have the gold on hand) then you actually sustain the value of the dollar. One dollar will not lose value and one dollar will buy more than it current buys, thus fewer dollars will need to be printed. The shorter the supply, the more valuable the currency becomes. Just like a $100.00 bill today, fewer are needed because their value is more than a $1.00 bill.

50 years ago My Old Man said, "An ounce of gold always buys a very good man's suit." This is still true. In other words, the price of gold paces the price inflation of most everything else in the aggregate.

>Money is defined as the commonly accepted medium of exchange

TRUE! Money is only a convenient method of comparing apples and oranges and functions as an IOU for goods and services, NOT as a store of value.

>Any increase in the money supply not offset by an increase in money demand will lead to an increase in prices.

ONLY if the increase is used to buy goods and services. The several trillions recently created have NOT caused inflation because they are not in the market place. More money is NOT chasing fewer goods.

>The quantity theory of money stated, correctly, that printing money does not increase wealth.

TRUE!!!!!! But it redistributes wealth.

> Thus, if the government doubles the money supply, money holders’ apparent gain in ability to buy goods is prevented by the doubling of prices.

Not in the last 3 years. Prices reflect supply and demand of goods and services, not the increase of the money supply. The increased money supply is going to the rich people who are NOT spending it on consumer goods and services but ARE buying natural resources and the means of production.

>But while the quantity theory of money represented an important advance in economic thinking, a mechanical interpretation of the quantity theory underestimated the costs of inflationary policy. If prices simply doubled when the government doubled the money supply, then economic actors would anticipate this price adjustment by closely following money supply figures and would adjust their behavior accordingly. The cost of inflation would thus be minimal.


Agree! The invented new money is being used to make the rich, richer and the poor, poorer. It is an intentional method of destroying the middle class.

YOU TELL ME . . . what happens to the bottom 80% when the top 0.1% owns or controls 99% of everything worth owning or controlling, the real estate, the natural resources, the infrastructure, and the means of mass production?

 

This is called deflation. That's a whole 'nother can of worms!

As far as I know the amount of gold that the U.S. has in reserves is kept secret.

The population is ever increasing. More and more goods and services are being invented and created. Demand is increasing. Take a look around your house and name all the things you now own (or could own) that you didn't have 25 years ago--cell phones, desktop computer, laptop computer, tablets, printers, fax machines, iPods, HDTV's, MP3 players, internet access, satellite TV service, etc.

This was a big issue in the 1890's.

If we went back to the gold standard, found out it wasn't sufficient and wanted to add silver to the money standard there would be hoarding and bidding up of the price of silver. You'd have the same problems all over again with a new metal added to the mix. Now the government would declare how many dollars an ounce of silver is worth. There would also be cross indexing of gold vs. silver (how many ounces of silver equals one ounce of gold in value.)

 

The standard was sufficient, and we saw a huge economic growth in the late 19th early 20th Century, economists note that this growth was one of the biggest in our country's history. I do not think there was ever at time when our supply was strained. When 1913 came about, we went to a Federal Reserve system and the devaluation was a result.

Most of your objections are not objections to the actual system, just objections that it would be hard to move back towards this system. I agree, it would be difficult. However, it is necessary.

 

I agree, and the only recognized economists arguing against the bailouts were the Austrians.

That is actually not true. If you use a debit card as a debit card, you are limited in your protection. Yet, according to my customer service agreement, if you use the debit card like a credit card, they you are given the same protections.

This is due to increased technology and economic growth, not inflation. It takes fewer man hours to harvest 100 acres of corn than it did 150 years ago. The solution was not inflation, the solution was technology and creative destruction.

Again, this is technological advances, not inflationary advances. We would have had these savings without any inflation (probably moreso) than with inflation.

Housing is always cheaper on the square foot when you include technology, bigger houses, larger mortgages, and longer terms. It is cheaper to build a larger house than a smaller home per square foot. However, home prices have skyrocketed far past the rate of inflation.

I agree, every form of government has a pecking order, and if you are in that pecking order you get your kick-backs. Austrians want to get rid of that pecking order. However, I still think that when our country did the best, individuals were planning for themselves.

This is not exactly our viewpoint. First, Libertarians are not always Republicans. Secondly, we do believe in hard work, that is Biblical. As well, there are more important things to me than being rich. The issue, though, is not who is on the bottom and who is on the top, but who benefits the most from a free market. The ones who benefit the most are the individual, not the corporate executives. They executives benefited under Bush and Obama, but they would not have under Austrian Economics.

Socialism and communism is evil. Have you read the Communist Manifesto? As well, have you read Hayek's "Road to Serfdom"? We don't want serfs. Yet, socialism makes people serfs/slaves to the state. The evil power is placed in a few men, to do as they please. I don't trust anyone to plan for us. They choose winners and losers. Can you tell me the moral greatness of communism? Don't you think the communist party in China rewards their "people" and "supporters"? There are people in China who get kickbacks. Even in Washington, there are people getting kickbacks. Austrian economics is the only one that says, "Get the government out of people's life, stop propping up one business against another, and let the market work." When we did, we saw the greatest economic engine this world had ever seen from the late 19th Century and early 20th Century. People became rich, worked hard, and had jobs. Central planning has never been able to replicate this.

Are you arguing for or against central planning. Both Socialism and Keynesianism supports central planning. Austrian economics is the only system I know that rejects central planning.

It is causing inflation. If we measured inflation the same way we measured it 30 years ago, then we would have experienced double digit inflation this year.

It does not redistribute wealth. Printing money makes the rich even richer. WHo has benefited in the printing of money the last few years? Not the poor. In fact, I will say that we have more poverty today than we did just a few years ago. The results of printing money is that the fat cats connected in Washington got more money. the inflationary rates caused the poor to be hurt more, more went into poverty, and the rich got richer. The redistribution occurred, but it was the top that got richer.

Supply and demand is always a part of the equation, but we have seen a dramatic increase in things like food. The demand for food has not skyrocketed, but the food inflation has still occurred.

The only way around from the top .1% of controlling everything is to de-centralize our economy. That is austrian economics. The more centralized (socialism and keynesianism) the system becomes, the more money is filtered to the top .1%. It was the government and central planning that propped them up.

Only Austrians are for getting rid of government involvement on all levels of business except for basic regulatory laws that keep things fair and just. If you hate the big companies for their profits, the only group who has a plan for stopping fat cats from rewarding their people are the Austrians.

There are two videos I show people that explains our theory, which I think you confuse Austrian economics with Bush-enonomics. Bush was a Keynesian as is Obama. They advocate the same economic policy. Watch these two videos here and here. THis was put together by a well respected economist who happens to be an Austrian. I think you confuse Austrianism with other forms of economic theory.

 

>I agree, every form of government has a pecking order, and if you are in that pecking order you get your kick-backs. Austrians want to get rid of that pecking order.

How are you going to repeal human nature?

> However, I still think that when our country did the best, individuals were planning for themselves.

When was that? When "going west" to steal assets from the Indian People?

>First, Libertarians are not always Republicans.

Far as I know, Ron Paul is the only person who claims membership in both parties. I'm in the Libertarian Party. You a "small L" libertarian?

>>>The quantity theory of money stated, correctly, that printing money does not increase wealth.

>TRUE!!!!!! But it redistributes wealth.

>It does not redistribute wealth. Printing money makes the rich even richer.


Say again? You don't compute.


>The only way around from the top .1% of controlling everything is to de-centralize our economy. That is austrian economics. The more centralized (socialism and keynesianism) the system becomes, the more money is filtered to the top .1%. It was the government and central planning that propped them up.

They already own most of everything. How will anything short of a shooting revolution redistribute ownership?

We, the 90%, are all a new class of industrial serf, tied to the international corporations instead of ties to the land. Silly Americans think we are free because we can own guns and vote for our tax collectors. Why should our owners care if we own guns? We don't have the will to hunt them down and kill them.

 

By getting rid of centralized control. That was the purpose of our Constitution in the United States and the brilliance of our Constitution. Therefore, if you get rid of Centralized control, you place the power back to the individual.

The late 19th and early 20th Centuries set the stage for us to take over economic power from around the world. We became a powerhouse economically because there was more freedom economically.

I am Austrian in my economics, which would make me libertarian. Yet, I have been independent for years. There are others who are libertarian on the Republican ticket. Gary Johnson is running for President and clearly a libertarian.

Printing money often goes directly into the hands of the cronies. The inflation builds and hurts the lower class but the cronies get faster. Printing money has never proven to lift any group except those getting government payouts.

This is where the conversation has crossed the line. Advocating violence is beyond the scope of where I will engage in a conversation.

 

Looks like Ruiz confuses Ron Paul with a textbook on economics.

Ron Paul is a novelty in the Republican Party. His views are unique and although I don't agree with all of them, he does say things I like. Regardless, he has no chance of winning the primary, let alone the general election.

 

The thread topic is "platform of Ron Paul." Ron Paul "believes in" Austrian economics and supports bringing back the gold standard. Ron Paul favors eliminating the Fed and having Congress eliminate the electronic transfer fiat money system. This is monetary policy. We are discussing Ron Paul's monetary policy.

>>How are you going to repeal human nature?

>By getting rid of centralized control. That was the purpose of our Constitution in the United States and the brilliance of our Constitution. Therefore, if you get rid of Centralized control, you place the power back to the individual.

The Philly Revolution gave us the Constitution. The government and money system we now have in place is the logical and legal (Constitutional) outworking of the "Philadelphia Experiment" thus either we have what they intended or they screwed up. I lean towards them screwing up.

> Printing money often goes directly into the hands of the cronies. The inflation builds and hurts the lower class but the cronies get faster. Printing money has never proven to lift any group except those getting government payouts.

Your first sentence contradicts your second sentence. So far this year, the last 2 years?) price inflation is up less than 5%. This inflation is mostly food, mostly caused by crop problems and turning food into gasoline.

I'm a card carrying Libertarian and have signed the Libertarian Party pledge of refusing to initiate violence up to and including giving the bad guys the first nuke shot (and then dissolving them into radioactive glass).

My point about a shooting revolution is that there is ZERO chance of redistributing the wealth in the US. It is a DONE DEAL! There is a zero chance of doing it through peaceful politics. The best we can do is dig in and prepare for a long economic neo-serfdom. Buy a couple acres of good food growing land, keep accounts short, and learn skills which will pay off through bartering.