Ron Paul vs. the Fed et al.
For 94 years, Americans were supposed to be awed and bored by the central bank, and pay no real attention to the greatest counterfeiting machine in the history of the world.
Yet Ron has made an issue, and a huge one, out of the Federal Reserve and its destructivism and business cycles. Last month, 2,000 University of Michigan students cheered his calls for sound money by chanting "Gold, Gold, Gold." And last night, as he was walking through National Airport, a man with a British accent approached him. "Congratulations on making monetary policy a live issue," he said. "I never thought it could be done. I'm an economist at the IMF," he added, "And I also agree with you about this: the IMF should be abolished!"
Comments (25)
I think it's the fact that the Euro and the Loonie have shot past the dollar that has gotten a lot of people's attention. Ron Paul has the answer, I hope people will listen before it's too late.
Published: November 7, 2007 7:32 PM
"I never thought it could be done. I'm an economist at the IMF," he added, "And I also agree with you about this: the IMF should be abolished!"
So, begs the question, why on earth does the Man With The British Accent work there?
Just like, why does Stephen Kinsella work as an IP lawyer when he's against IP?
Published: November 7, 2007 8:17 PM
Taylor,
That is if you assume Kinsella to be a prosecuting IP attorney. What if he works to defend people from IP litigation?
Published: November 7, 2007 8:37 PM
Of course, most world currencies are more or less as fiat as the U.S. dollar, or even based on the dollar, so all will get their comeuppance in due course. Then, how will the pundits explain everything costing more everywhere? We do indeed live in interesting times!
Published: November 7, 2007 8:39 PM
Other countries may laugh at the $, but keep in mind that it's one of the major reserve currencies. As we inflate, so do their reserves and their money supply.
Published: November 7, 2007 8:48 PM
The party is over people. China is holding a trillion dollars worth of US assets, about have of them are Treasury notes. They don't need to nuke us.. all they have to do is cash them in and we're done..put a fork in us. And why shouldn't they start cashing them in? Our dollar is declining so fast, the longer they hold them..the less they're worth. Japan is in a similar situation, and hold almost as much US assets as China. How long do you think we can keep printing money before be fly through a recession into a depression? Oh yeah..160,000 jobs created in WalMart and Taco Bell this past month.. so the economy must be great, right?
Published: November 7, 2007 9:05 PM
Hi iceberg,
Funny you should mention it. Here's a direct pull from the Bio of Mr. Kinsella's website, http://www.kinsellalaw.com--
"Stephan Kinsella is a registered patent attorney in Houston, where his practice focuses on patent prosecution and IP counseling."
So, there you have it.
Published: November 7, 2007 10:05 PM
People are talking as if China will come out unscathed from the devaulation (dare I say destruction) of the dollar. The peg China keeps to the dollar is maintained only by expanding money supply enough to keep up with the dollar. Most likely, there is a huge bubble building up in China. But on the bright side for them, the manufacturing base (net exporters) has moved from the US to China.
However, the banker is safe because he gets paid in yen. (I hope...)
Published: November 8, 2007 12:18 AM
" But on the bright side for them, the manufacturing base (net exporters) has moved from the US to China."
This hits on the biggest problem facing the U.S. going forward. And, is one of the key links in the chain dragging down the value of the U$D.
Published: November 8, 2007 9:29 AM
"Oh yeah..160,000 jobs created in WalMart and Taco Bell this past month.. so the economy must be great, right?"
On LewRockwell.com, you can find transcripts of Ron Paul's conversations with Greenspan over the past ten years, in which the congressman brings up this point: America has moved from a manufacturing to a service-based economy. Unless we're planning to begin exporting bean burritos, this is a real problem.
And I agree with the fact that it's about time monetary policy became an issue, since it affects each and every one of us, not to mention the rest of the world.
Published: November 8, 2007 12:06 PM
Sadly, I see R.P.'s focus on "manufacturing jobs" to be one of his few panderings.
The relative number of service vs. manufacturing jobs is irrelevant. The only thing that matters is how much imbalance is caused by government interference.
A lot of that manufacturing loss is because of unions raising the cost of labor. It's easy to blame government for giving unions special status, but it's still cheaper to pay foreign labor for unskilled work than American labor.
If all government intrusive regulation and interference were removed, in my opinion, manufacturing jobs would still decline for the same reason that farm jobs declined from their level in the past: It just doesn't take that many people to make things in large numbers.
All that said, I dearly wish R.P. weren't the only representative that took the Fed to task. But then, I dearly wish there were no Fed, so the former is kind of a given.
Published: November 8, 2007 12:47 PM
No it doesn't. Manufacturing is overrated. DVDs can be mass produced (manufacturing industry) in China, but America is the top creator of content (service industry) for those DVDs. I'd argue that the US is in a more profitable position in this case.
Published: November 8, 2007 2:25 PM
"I never thought it could be done. I'm an economist at the IMF," he added, "And I also agree with you about this: the IMF should be abolished!"
So, begs the question, why on earth does the Man With The British Accent work there?"
Well sometimes the best way to work to get rid of an organisation you disagree with is to work for it.
It takes a sound man to say that his own job should be done away with ! And a man confident he can find another job once this one is accomplished.
Published: November 8, 2007 9:25 PM
This is true in peacetime.
Otherwise?
The bets are off.
Let's just hope that global free trade really has made world war impossible.
Published: November 8, 2007 9:33 PM
I've often thought that a true libertarian conversion would require that America fall into a deep depression again. Even then, the spin masters would probably pass the blame onto some group, and the sheep will still not understand. But this is the closest we've come to having the chance to elect a libertarian president, and it might be that the money crisis plus the war will finally get us someone like Ron in the White House.
Published: November 8, 2007 11:22 PM
Eric is absolutely right. The American public is so sunk in lethargy that it will unfortunately take a financial crisis or severe squeeze to get them to act. But the financial constellation has arranged itself thusly, as if crying out for the Austrian solution, and the dollar crisis, which Dr. Paul, the Hammer of the Financial Malafactor, has been pounding on is finally spreading to the rhetoric of other members of the finanace committee. And then, the c-span viewer at home says, "Gee, we have a dollar crisis. Yes, that is bad." And Alaron's Phil Flynn states that yes the higher oil price is due in large part to the weaker dollar. I'm just not sure if it will be depression or hyperinflation that will prod the financial sheep. But something will soon bust, and folks will get mad. I'm afraid you're right that a group will be blamed, when the real culprit is the American spendthrift lifestyle combined with electing collectivist politicians. Most of us share the guilt in some way. A lot of Americans own stocks either individually or by force through their govt. or corp. retirement funds. In a sense, by investing in such a risky vehicle, they are the ones endangering the economy, though you can't blame folks for doing it, especially when the constant brainwashing is "Buy stocks, buy stocks." W D Gann, the great commodity trader, would never deal in stocks, except for a few short term quirky situations. He thought they were far too risky.
Published: November 8, 2007 11:57 PM
A crisis, whilst a nasty thing, could actually be what is necessary for a paradigm shift in economics (anyone familiar with Kuhn will understand what I mean.) However, that doesn't mean it will be the correct one. I am concerned that even after discovering the fraud that is the Fed, people will put their trust in some other snakeoil salesman blaming 'private' enterprise, and thus again move in the wrong direction. Ron Paul's success so far might be reason to suspend such pessimism though.
Published: November 9, 2007 6:32 AM
Remember the last huge economic crisis?
Every ignorant American was chanting, "Mr. Roosevelt is going to save us all." Every ignorant German supported Hitler, the red army destroyed the white army, and peasants of china support Mao.
Who knows, maybe depression part two would destroy communism like part one destroyed capitalism. Nah, I doubt it.
Either way, I'd assume we'd get hyper-inflation instead, which would probably lead to the downfall of the government. (As much as I'd like that, I don't want it to happen under those conditions.)
Published: November 9, 2007 7:43 AM
I'm still unconvinced by all those on these boards preaching Armageddon. The Dollar goes down, that's capitalism. If it goes down much more, foreigners won't be able to sell anything to America so their currencies will fall accordingly. China isn't going to use the "Nuke" option, as it would send its own economy down the toilet.
Are all of the cases for re-introduction of gold on these boards based on the same apocalyptic premise? The Bank of England (worlds first central bank) was formed to provide the King with a source of credit for war with France after Parliament refused him funds - couldn't something as mundane and predictable as England going to war with France happen in this epoch? Maybe President Giuliani could turn around and say "look guys, this economy isn't working" like his hero Reagan did? Or am I just being naieve?
In any case, the "Case for Gold" is far from proven. In an interview, Hayek, von Mises's prodigy (and best economist since Smith?) stated that if re-introduced, the Gold Standard would fail be completely abandoned again within 6 months! http://www.reason.com/news/show/33304.html
Published: November 9, 2007 2:14 PM
Mises is the best, better than Smith even. ;) At any rate, gold standard or not, getting the government out of currency should be the priority.
Published: November 9, 2007 6:19 PM
I like cats, especially the benign and approachable ones.
Published: November 9, 2007 11:05 PM
I thought of a solution that would work to reverse the dollar bubble without a depression.
Create a second central bank called the
"Social Security Bank"
directly supervised by congress that ONLY loans money to the Fed, money that is backed by Federal Reserve securities and the new Social Security Bank Fund. Interest income would begin paying interest outgo. The money that we put into Social Security would be purchases of long term Federal Reserve Securities. The Federal Reserve will have to sell these Securities to inflate the money supply. This would reverse the debt based devaluation, while covering the money growth needed to pay off debt.
The chartering of the bank would include rules removing the ability of the Federal Reserve to buy Treasury Securities and requires them to Issue Federal Reserve Securities to borrow the money from the Social Security Bank that it loans to other banks. This new bank would be directly managed by the Congress of the United States, thus making it legal under the Constitution. All the Citizenry can invest in this bank by buying retirement "Social" securities called FEDERAL RESERVE BONDS. The money we inject into this bank will buy these bonds from the Federal Reserve.
Along with the bill chartering this bank new rules will mandate all banks including the Federal Reserve to raise their reserves at a steady rate while keeping the discount and federal funds rates frozen at 5%. This intrest rate rule would end when reserves reach 100%. This will build in a demand for loans from the Federal Reserve, and thus demand for the Federal Reserve to issue Fed Securities to gain this needed money. The Social Security Bank will have NO reserve requirements except for the Federal Government demand deposits. Congress can use tax money to buy Fed bonds if needed. All interest income from these bonds would go into the Treasury.
Crazy?
Published: November 10, 2007 12:33 PM
Either way, I'd assume we'd get hyper-inflation instead, which would probably lead to the downfall of the government. (As much as I'd like that, I don't want it to happen under those conditions.)
While hyper-inflation (a la 1920's Germany) or deflation (a la John Exter) is possible, either case, in my opinion, is unlikely. The dollar will have gone long broke before either one happens. Americans will not be going to the supermarket with wheelbarrows full of paper nor will the Fed have a sudden case of reforming fiat money to real money. There are still too many Americans who remember the Great Depression. The US economy is like a truck going down a steep decline with no brakes. It will come down to a simple matter of "whoever owns the gold, makes the rules." Buy up, people!
Published: November 10, 2007 1:07 PM
"China isn't going to use the "Nuke" option, as it would send its own economy down the toilet."
I have very good reasons to believe indeed that there are political agreements in that sense.
Published: November 10, 2007 1:36 PM
TREASON AGAINST GOD AND COUNTRY
When did Giuliani's Christian God give him the right to support Human sacrifice, women killing their own children?
When did his American Constitution give him the right to sacrifice the wealth and blood of the American People, on behalf of domestic and foreign lobbies?
If neither his Christian God, nor his American Constitution, are sacred to him; why would his promises to the American People be sacred to him?
Published: November 12, 2007 5:55 PM