Ron Paul??? What the Heck???

[Perd Hapley]

Got a better argument than a screenshot from an awful movie?

You are a bad, bad man.   

[cassandra and sara's daddy]

they still pushing the coins with pauls picture on em?  big sucess that

[GigaBuist]

First, this has been fun to follow along with.  I'm a "Paulian" and I understand why going back to a gold standard is a bad idea and this thread has been quite informative.

Wrong. If you bought gold in the early 80's, you'd just now be breaking even on value, accounting for inflation. Barely breaking even.

Yeah, that's a great investment there.

I think that was the point of the user you responded to.  Gold as an investment is horrible, but it is inflation proof.  Well, at least when compared to holding onto actual FRNs. That's always a losing position in today's world.

Now, gold wouldn't be that stable if the US was using the gold to back their dollars.  I have no illusions of that. If we were then other countries, like China as Manedwolf has pointed out, would, or at least could, be playing games with our currency.  Then again, under our current system the Chinese still hold about 1.3 trillion in US dollars that could be dumped on the market any time.  I have no idea what that'd do to inflation because I have no idea how many dollars are actually out there.

Does anybody at this point?  We don't even know what's going on with the "M3" index or whatever it is anymore. Yes, I realize just mentioning "M3" sends up flags that I pay attention to the tin-foil hat brigade of the finance world.

It isn't so much what is backing the US dollar that bothers me.  It's that there's nothing backing it.  As far as I know, and I could be entirely wrong on this, there's nothing that would stop the Federal Reserve from just doubling the money supply in a single night.  That sort of bothers me.  

I've never taken Ron Paul's words on the Fed and the gold standard as him insisting that we return to the gold standard itself. Perhaps I'm reading him wrong.  I think he just uses it as an example of how the US worked before the Fed could print money willy-nilly.  Said system was obviously far from perfect as Mike Irwin has pointed out.  We don't ever want to go back there again.

But, to tie the money supply to something -- anything -- outside of the whims of the Fed seems like a decent idea to me.  That could mean a cap on what percentage increase they're allowed in a year. If done wrong, as in set too low, recessions and depressions might ensue, but if done right then we'd at least know what kind of yield on investments we'll need to counteract inflation.

Now, I'm not so ignorant to believe that we can do something as silly as say no more than X% of the money supply may be increased in a year.  The formula would be much more complex than that, taking into account increase in the national GDP, our rank in the world marketplace, and God knows what else.  

All I want are some agreed upon rules for how our money supply is managed.  I don't think "GOLD!111elventy!! R0N PAUL IS G0D!" is the answer. I'm not real keen on letting the Federal Reserve control the whole damned thing either.  It's certainly better then the former, but it still seems far from ideal to me.

[Headless Thompson Gunner]

But, to tie the money supply to something -- anything -- outside of the whims of the Fed seems like a decent idea to me.  That could mean a cap on what percentage increase they're allowed in a year. If done wrong, as in set too low, recessions and depressions might ensue, but if done right then we'd at least know what kind of yield on investments we'll need to counteract inflation.

Now, I'm not so ignorant to believe that we can do something as silly as say no more than X% of the money supply may be increased in a year.  The formula would be much more complex than that, taking into account increase in the national GDP, our rank in the world marketplace, and God knows what else. 

All I want are some agreed upon rules for how our money supply is managed.  I don't think "GOLD!111elventy!! R0N PAUL IS G0D!" is the answer. I'm not real keen on letting the Federal Reserve control the whole damned thing either.  It's certainly better then the former, but it still seems far from ideal to me.

Monetary policy is one of the more interesting debates in economics.  Having established that the money supply does in fact need to be expanded periodically, just how much should it be expanded?  Who should make the decision?  What should the decision be based on?  What should their intentions be?

Google "monetarism" and read away.  I bet you'll like what you see.  I suspect that when most extreme Libertarians argue in favor of a gold standard, what they really want is a strict monetarist policy, which they mistakenly believe a gold standard would deliver.

There have been several formulas proposed for determining the growth of the money supply, formulas which attempt to gauge the demand growth for money and increase the supply to match.  I don't think any have ever been tested in the real world.  But they look good on paper, and their reasoning seems sound to me.  They look far better than the gold standard.

[Glock Glockler]

Having established that the money supply does in fact need to be expanded periodically, just how much should it be expanded?

How about an increase in the money supply corresponding to overall growth in the GDP?  I'm thinking that would keep inflation in check and keep prices relatively stable, now how do we get the Feds to limit spending?

[WeedWhacker]

If you bought gold in the early 80's, you'd just now be breaking even on value, accounting for inflation. Barely breaking even.

Yeah, that's a great investment there.

Cherry-pick your arguments much?

And you point, for "proof", to a site that has this banner? 
[... completely irrelevant avoidance of issue snipped ...]

You know, damned well, that you picked the speculation bubble of the 80s to base your otherwise craptastic argument upon.

The practice of picking your data to match your argument is called "cherry picking", and you sir have been caught red handed.

Everyone else, see the attached images to get straight to the point - if anyone has a bone to pick with the data, go right ahead and show your proof.

I probably shouldn't get into this but... what the hell.

"You're telling us that the cost of a pound of flour in Thurungia in a.d. 872 was the exact same as a pound flour in Detroit in 1932?"

I can't tell you much about flour but I do have this little tid-bit:  In Roman times a laborer who worked in the fields for about a month was paid (in today's funds) about $500.  In fact, that was what Judas was paid for betraying Jesus -- 30 pieces of silver.  As I type this, silver is worth $16.74 an ounce -- $502.20!!  Evidently, metals do hold their value pretty well over the years.

Wrong. If you bought gold in the early 80's, you'd just now be breaking even on value, accounting for inflation. Barely breaking even.

Yeah, that's a great investment there.

So, Manedwolf, care to try to answer oldfart again, with an intellectually honest answer this time?

[WeedWhacker]

Everyone else, see the attached images to get straight to the point - if anyone has a bone to pick with the data, go right ahead and show your proof.

Here's another chart - the spike in historical terms is much more blatant.

[Manedwolf]

You know, there's a point at which arguing with the True Believers is absolutely fruitless. They'll just look at you blankly, get that beatific smile, and start all over with the tract they've memorized.

Why don't you just buy some gold, Weedwhacker? You know, it might go to $2000 an ounce! 

(If the illuminati doesn't manipulate market forces, of course. Roooon Pauuul could saaaave you...) 

[Scout26]

Damn, I gotta come up with some jingoistic products to sell to Paulians. I mean, wow. Talk about easy marks.

That's why I'm heavily invested in the Chee-to and Wookie Costume markets...


 

[WeedWhacker]

[... kindergarten taunting snipped ...]

So, the best non-response you have is displaying banner ads and repeating "nyah nyah nyah"?

I guess you win at internets.

[MicroBalrog]

Google "monetarism" and read away.  I bet you'll like what you see.  I suspect that when most extreme Libertarians argue in favor of a gold standard, what they really want is a strict monetarist policy, which they mistakenly believe a gold standard would deliver.

Yes, because we never read. Because I don't know what monetarism is, or what a Gold standard is, and I have never read an introductory economics course, nor have I read Marx, Friedman, Hayek, Mises, and Rothbard, and am not familiar with either Keyenesian nor any other economics, and I just lift my ideas by randomly reading conspiracy-theory tracts.

[oldfart]

Okay folks, let's go back over some stuff. 

I think most of us believe the second Amendment to the Constitution should be taken literally.  I know, there are those who feel it needs to be "interpreted" as if it were written in Sanskrit or Mayan and those languages had no words for "arms" but since it was written in English we (again, most of us) think it pretty well says what it is supposed to.

So if that idea is good enough for the Second Amendment, why are we debating the meaning of the first paragraph of Section 10, Article 1 of the main body of The Constitution?

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

Was that originally written in Sanskrit?  Does it need to be interpreted, ignored or deleted from the document entirely?  Of course it might help if we were just a bit more consistent and less hypocritical...  Or maybe not.

[K Frame]

Interesting article, with much original source material, on the subject.

Even as the Constitution was passed and ratified there was SIGNIFICANT disagreement among the framers as to whether the government could issue paper money.

http://www.geocities.com/CapitolHill/Senate/3616/flaherty3.html



But, if you wish to return to a strict, literal reading of the Consitutiton, no problem.

The Fed Gov't can mint tin, lead, copper, aluminum, and zinc "coinage."

Nothing in the Constitution says that gold and silver coinage has to be made available to the public, and nothing in the Constitution says that the coin that is minted has to be backed with gold or silver. The Constitution says only that the Feds coin the money.


The section you have quoted?

It says only that the States cannot require anything but Gold and Silver coinage be used to pay debts. No similar prohibition exists against the Federal government.

So.

Who wants a $100 face value zinc coin?

[oldfart]

As I remember, we had Siver Certificates for many years.  They could be taken to a bank and traded for actual silver money or if that supply was exhausted, a small envelope of silver filings in an amount equal to the value of the certificate.  Then the Fed called all those Silver Certificates in and re-issued Federal Reserve Notes in their place.

Obviously, the Silver Certificates were backed with actual silver money.  The new Federal Reserve Notes were backed with a promise to tax your children to cover your debt.

That's progress, I guess.

[WeedWhacker]

It says only that the States cannot require anything but Gold and Silver coinage be used to pay debts. No similar prohibition exists against the Federal government.

Not having researched this specific line of argument enough, I only have one thing to say in response to this specific point:

Be very careful in assuming that simply because there is no rule barring the federal government from doing an arbitrary thing, it is therefore allowed to do so. If Congress' list of enumerated powers includes the power to "coin" "money", then arguments should be based upon that, rather than what isn't prohibited.

[mtnbkr]

And gold is nothing more than a metal. A pretty metal, but like zinc, copper, and iron, nothing more than a metal. The only reason gold has been recognized as a currency is because people agree that it has some intrinsic value. In that sense, gold is NO different than that $20 bank note of ink and paper.

Thank you.  People seem to ignore that tidbit.  Gold/Fiat Money/etc are only a store of value.  At some point, you and I agree that an hour of my labor is worth X amount of currency (gold or paper) and tha X amount of that currency is worth an hour of your labor or a given amount of your goods.  It's merely a way of trading my labor for your labor or goods.  It makes it easier to trade my labor in Va for your goods produced in China and sold via your store in Kentucky.

Just as people may decide fiat money (to use a phrase) isn't worth anything, they may also decide that about gold.  People may decide, in a true TEOTWAWKI sitation that trading with gold is too risky and prefer to trade goods for goods or labor for goods (ie barter).

Chris

Chris

[K Frame]

"And gold is nothing more than a metal. A pretty metal, but like zinc, copper, and iron, nothing more than a metal."

Which I have been saying, REPEATEDLY, in this and other threads for months.

But no, the "Gold = God, the solution to all of the world's problems" people never seem to comprehend that. It's as if gold has some mystical properties above and beyond a nice sheet, good conduction and ductability.

The only reason that gold has a value is because people agree that it has a value.

That's no different than with today's currency.

[WeedWhacker]

Gold/Fiat Money/etc are only a store of value.  At some point, you and I agree that an hour of my labor is worth X amount of currency (gold or paper) and tha X amount of that currency is worth an hour of your labor or a given amount of your goods.  It's merely a way of trading my labor for your labor or goods.  It makes it easier to trade my labor in Va for your goods produced in China and sold via your store in Kentucky.

Just as people may decide fiat money (to use a phrase) isn't worth anything, they may also decide that about gold.  People may decide, in a true TEOTWAWKI sitation that trading with gold is too risky and prefer to trade goods for goods or labor for goods (ie barter).

Agreed; obviously, as you've explicitly stated, currency in either fiat money or asset-backed money could become less desirable than a hard good at any point. A gold standard isn't meant to fix that "problem".

A principle reason for tying a currency to a hard asset is that the only way to inflate the currency is to produce more of said asset - unlike fiat currencies, which can be inflated at the push of a button nowadays... and are.

[Manedwolf]

A principle reason for tying a currency to a hard asset is that the only way to inflate the currency is to produce more of said asset - unlike fiat currencies, which can be inflated at the push of a button nowadays... and are.

You mean like China dumping gold on the world market, or withholding gold from the world market?

Again. GOLD IS NOT A SOLELY AMERICAN RESOURCE. We don't even produce most of it! 

Why is that so hard to understand? You'd be giving that "inflated at the push of a button" button to another, hostile country!

[Gewehr98]

Gold is just a metal - period.

If and when we get into a Mad-Max SHTF situation, gold will be no more desirable than silver coins minted with Ron Paul's face, or any other existing currency.

What will work is X number of chickens for a bag of flour, or X number of .30-06 rounds for a tank of propane.

As for Fiat money, that's the amount I spent to keep my 1979 124 Spider running all those years before I sold it.

Weedwhacker - a synonym for beating around the bush? 

[K Frame]

Manedwolf, I'm surprised at you!

Everyone knows that Americans, and ONLY Americans, own God, Guns, and Gold.

One of the worst financial episodes of the 19th century was caused by severe flucutations in the availablility and control of the gold supply.

The struggle over control (NOT production) of gold kicked off dramatic fluctuations in the value of gold and let to widespread business failures and a catastrophic drop in the stock market.

[oldfart]

"The only reason that gold has a value is because people agree that it has a value.

That's no different than with today's currency."

Yeah, you're right of course but people have considered gold to be more valuable than, say - paper, for thousands of years.  Why?  Because it takes a lot of labor to produce gold, whereas paper can be made by a bunch of mindless wasps.  Gold has a finite value.  I know a lady in Alaska whose family owns several gold claims that have been assayed as worth over forty million dollars.  Problem is, it'd cost fifty million to get it out of the ground.

Paper and ink, on the other hand, are relatively easy to make and combine as a medium of exchange.  That's why counterfeiters go into business in the first place.  That's why North Korea has been printing "funny-money" for distribution here in the U.S. for years and why the Mugabe government in Zimbabwe has pushed their inflation to over 100,000%.

Laying here in my desk drawer is a 1 ounce silver 'round.'  According to this morning's tally, it's worth about $16.50.  A few weeks ago it spiked at $21 so you could say that I've lost about $4.50.  When you consider that I bought it several years ago for $5.50 it takes on a somewhat better value.  I wish I had bought a bushel of them then but I've said the same about those $75 Chinese SKS's too.  The value of that silver piece will fluctuate over the years depending on supply and demand but it will always be worth whatever another, similar piece is worth. 

Pennies and nickles are now worth less than the metal they're made of and are due to be re-formulated soon.  The intrinsic value of a "real" dollar bill is worth almost exactly what a $100 bill is.  Paper money is worth whatever is printed on it and if the printer just happened to be a counterfeiter it's only worth whatever the holder can con someone out of without getting caught. 

Try counterfeiting a Double Eagle.  I suppose it could be done but the profit margin would be pretty slim.

[WeedWhacker]

If and when we get into a Mad-Max SHTF situation, gold will be no more desirable than silver coins minted with Ron Paul's face, or any other existing currency.

Weedwhacker - a synonym for beating around the bush?

Agreed; obviously, as you've explicitly stated, currency in either fiat money or asset-backed money could become less desirable than a hard good at any point. A gold standard isn't meant to fix that "problem".

Neither does it much matter if the chosen commodity is gold, silver, copper, etc.

I've said as plainly as possible, and often, what the big problem with a paper-only, backed-by-nothing currency is: ease of manufacture.

If you've a problem with the smallish size of the gold market (justifiable), it doesn't negate any other asset with both some base use which also requires work to produce.

Feel free to continue avoiding any of the points anyone outside your narrow circle of thought presents, or failing that, find something unrelated to nitpick about while basing some more misleading arguments around the '80s' spike in gold prices.

[Manedwolf]

And, as before, weedwhacker is completely ignoring the fact that China and Russia have far more control over the amount of gold on the world market than we do.

Here's a visual reminder for you to make it harder to ignore.

[WeedWhacker]

And, as before, weedwhacker is completely ignoring the fact that China and Russia have far more control over the amount of gold on the world market than we do.

If you've a problem with the smallish size of the gold market (justifiable), it doesn't negate any other asset with both some base use which also requires work to produce.

Neither does it much matter if the chosen commodity is gold, silver, copper, etc.

*ahem*