Ron Paul
I really want to like Ron Paul. Really, I do. It’s so nice to hear a Republican point out the ear-bleedingly obvious fact that the Iraq War is an ongoing disaster and we should leave. Now.
It’s so refreshing to hear someone - anyone - say, hey, pushing Iran into a corner with threats (Shiite Iran, remember, not Sunni Al-Qaeda) is probably not going to work. It’s also nice to hear a voice - a lone voice, but a voice nonetheless - call for Washington to dismount the gravy train and tighten its belt, for a change.
Unfortunately, I could never vote for Ron Paul for the simple reason that some of his other ideas are completely crazy.
Not crazy as in “That man has lost his mind.” He seems like a perfectly sane and logical person to me. Rather crazy the way only a complete ideologue can be.
It slips out a little bit in this interview with Judy Woodruff. He makes some great points, and he really makes you want to rally to his cause with his corn-fed Texan common sense, but then he says stuff like, for example, that deficit spending means the government is just printing more money, and it will therefore cause inflation.
Now, I’m no economist, but first of all this isn’t post-World War I Germany. The vast, vast, vast majority of money in “circulation” doesn’t even get printed anymore, and as far as I know, deficit spending has little to do with inflation, although I’d be happy to cede the point to any actual economist.
Neither do I understand why he’s so hung up on his gold standard schtick, and to be honest with you, I’m not really interested in entrusting our country’s monetary policy to an obstetrician who’s had the same theories since the 1970s.
His fetish for the intentions of the Founding Fathers is also worrisome, because I think he really means it. Never mind that the Founding Fathers thought they were founding a loose amalgamation of agrarian states who hated Britain, held slaves, and elected presidents by committee.
Without combing through the rest of Ron Paul’s quirks the give me the willies, here we can cut back to the chase: Ron Paul would be a bad president because he’s an ideologue. Any ideologue, from the Communists to fundamentalist Muslims to the neo-conservatives, are bad news in my book because rather than adapting their theories to reality, they try to explain away reality with their theories.
This, of course, explains why the “youth” or whatever are flocking to Ron Paul. The youth love ideologues. The youth are stupid. Hopefully they will grow out of it.
Personally, I would rather have a morally flexible president that doesn’t much care about big ideas or core beliefs, but rather seeks the approval of the American people with reasonable policies, a president that’s capable of flexing and twisting to deal with all the contradictory and hypocritical decisions an American president has to make in order to keep us all comfortable in this messy, democratic, common-law country of ours.
That’s why I’m voting for Hillary.
Dan Hugger wrote:
Peter I agree with your skepticism concerning Ron Paul although I consider myself a reluctant supporter.
1) On the monetary policy question I’m in almost complete agreement with you except on the question of the relationship between deficits and spending. It’s a pretty universal consensus amoung economists that deficit spending is a cause of inflation.
2) As to the founding fathers fetish again I tend to agree. Too often Paul’s arguments seem to be reduced to “because thats what the constitution says we should do”. That being said his devotion to the rule of law, even if it boarders upon the fanatical, is something I find refreshing in our present political climate.
3) I don’t think Ron Paul is anymore of an ideologue than anyone else in the race. In my mind Rudy is the most ideological of all the candidates in that every single policy question he answers he sees through the lense of terrorism and a fiery islamophobia. Paul in fact I think has the effect of making other candidates ideological commitments more clear (By having Paul on stage the ideological consensus of candidates of both parties internationalism, globalization, big centralized government, etc. becomes easier to recognize.
I think most of Ron Paul’s support young or old comes from people who are disenchanted with our interventionist foreign policy and pay little attention to Paul’s other policies. Most Paul supporters will shift to voting for a third party candidate who best embodies this resistance to our present foreign policy be they of the right or the left. It’s going to be an interesting election.
Posted on 14-Oct-07 at 9:05 am | Permalink
pjk wrote:
good points all, although I think you get “ideologue” confused with “demagogue” when it comes to Rudy.
your last point is especially good. like I said, he almost wins me over too. but his domestic ideas are just too wacky.
Posted on 14-Oct-07 at 11:23 am | Permalink
Rich wrote:
How come you did not post my post on the monetary system. So again if you want to learn more about Dr.Pauls views on the economy. Here is the link again it contains over 100 articles and speech’s from Ron on the issue. http://www.ronpaullibrary.org/topic.php?id=9
As far as the founding father stuff do you have a problem with the Bill of Rights I do not see them as outdated as they are the very basis of our government
Posted on 14-Oct-07 at 6:13 pm | Permalink
pjk wrote:
because it looked like ron paul spam. but now that I can see you’re actually a person…
Posted on 14-Oct-07 at 6:16 pm | Permalink
Dan Hugger wrote:
Rich,
Thanks for the link. It’s been a while since I read up on monitary theory. Your argument for the Bill of Rights however is just the sort of argument that I (and I believe Peter also) finds objectionable. To say the Bill of Rights is the foundation of our government isn’t really an argument as to why we should adhear to it. I’m sure you could make reasonable arguments for why the Bill of Rights is important, and where it has been neglected and or underminded by government but you also need to say why that is a bad thing simply stating that it’s the foundation of our government doesn’t make a case for anything else but prehaps personal admiration for the document and the founders.
Posted on 15-Oct-07 at 8:05 am | Permalink
neill wrote:
Rich — Ron Paul doesn’t understand what the Federal Reserve actually does, which is depressing to me because he, you know, *should* being that he’s in Congress and all.
Posted on 15-Oct-07 at 12:15 pm | Permalink
dave wrote:
Dear Uncle Krupa,
Why the oddly-placed resentment? You concede that Ron Paul is basically the only contender who doesn’t want to get America into a war with entire Middle East and, yet, go on to support Hillary.
Hillary?
The woman who voted for one of the worst foreign policy decisions of our time and wants to keep that up until at least 2013?
Uncle Krupa, Hillary is not just the candidate for new-right liberals who get Lou Dobbsian boners, but she is also someone for you men who rebelled against their own burning neo-conservatism and still feel it occasionally well up in a weird still-sneak-a-read-of-the-New-York-Post way.
Hillary is for someone who takes comfort in criticizing minor problems with an unlikely winner instead of going after the major problems of those already in power.
And, of course, Hillary is for someone who — much like myself — would exchange a chance to stand for something significant for a shot at dropping a shit on someone else’s party.
Much love.
Posted on 16-Oct-07 at 3:22 am | Permalink
pjk wrote:
wow dave, such poetic condescension. honestly, though, you’ll have to dismount your rhetoric if you want to say something here, cause for the most part I have no idea what you’re talking about.
Posted on 16-Oct-07 at 5:23 am | Permalink
luke wrote:
Krupa,
I find myself feeling pretty much the same about Ron Paul (want to like him, yet at times he seems totally crazy…), but for me the question then of voting for him is a little different. I don’t vote for the person who I think would make the best president. I never have. Instead I vote for the person I would be least ashamed to say that I voted for when my children/grandchildren (or anyone else at any time) ask me. (Wow, that might be worse motivation than voting straight tickets…or maybe not.) Therefore much of my candidate analysis is focused on projecting the possible legacy of said candidate. Will Ron Paul go down in history for being a wacko that never had a chance in winning the election? or What will his wikipedia entry say twenty years from now?
Posted on 17-Oct-07 at 4:29 am | Permalink
audendi » Blog Archive » A video for supporters of Hillary Clinton wrote:
[…] As my friend PJK can’t support Ron Paul due to his monetary policy and ideological consistency, he has decided to throw his support behind a more capable, Machiavellian candidate, namely Hillary Rodham Clinton. I thought that he, and all you other Hillary supporters out there, would appreciate this interesting video: […]
Posted on 17-Oct-07 at 9:33 am | Permalink
Tyler Watts wrote:
I’m encouraged that you want to support Ron Paul. That’s great! I’m a big Ron Paul fan myself; I celebrate his entire catalogue (except his immigration policy).
Regarding Ron Paul’s monetary policy, let me first concede that anyone advocating getting rid of the FED and returning to gold does indeed seem whacky. After all, we’ve had central banking for about 100 years, the central bankers of recent times seem to have figured out how to run it pretty smoothly, and gold-money advocacy is generally the provence of folks who stockpile canned food and ammunition and are constantly predicting impending chaos. In other words, lots of kooks are gold money advocates. Yet not all gold money advocates are kooks.
Gold has been the historical money standard because it, better than any other commodity, meets 5 criteria economists identify: Universal demand, durability, divisibility, transportability, high unit-value (relative scarcity). I want to focus on this last criterion because I think understanding the difference between gold money and paper money (hence Ron Paul’s position) relies heavily on this point. There is a finite supply of gold in the world, and mining and refining it is costly. The supply of gold-money can be increased, but within pretty confining limits. Fiat money (of which paper money/ Federal Reserve Notes is but one instance) can be increased indefinitely; if the money authority (in our case the FED) runs out of paper, it can simply alter the size of notes and add more zeros. Moreover, you’re right about most money not being in currency form. Most money is in deposit form. The FED can increase deposits merely by creating, ex-nihilo, a credit on it’s member banks’ accounts. Technically, the way it does this is by issuing a check on itself for the purchase of already-outstanding US govt. debt. So, through the FED, the government can spend money it doesn’t have by issuing debt, and then buy back that debt by issuing fresh dollars. This results in an increase in the money supply, which IS inflation, and leads to higher prices and economic distortion. So, while most of the inflation that is going on is not literally printing of banknotes, the government is using the printing press in a metaphorical sense by expanding the money supply at will.
The long and short of it is that when money is not gold (or some other suitable commodity), there is no ultimate limit to its increase. Politicians love inflation because it allows them to spend money they don’t have and achieve short-term economic booms (at the expense of long term stability and growth). We’re lucky in the US in that we have a relatively benign set of central bankers, who pretty much know what they’re doing and keep inflation moderate. However, as long as the government possesses the means to inflate at will, there is always the possibility that politicians can bring on economic disaster. Moreover, and most importantly for our day, the central-bank inflationary apparatus is a key component of deficit spending- i.e. government spending of money they don’t have. Under a gold standard, the government could not cover its debts by simply issuing banknotes or deposits; hence there would be strict limits on the amount of money government can spend- it would have to actively raise the funds through direct taxes beforehand. Inflation allows the government to spend far beyond its direct tax receipts; the cost is borne by the rest of us in the form of continually declining value of the dollar- what Ron Paul calls the inflation tax.
If you find the economics of this too abstract or difficult, let me simply propose the following: how easy would it be for the US government to initiate wars if it had to raise taxes to pay for them beforehand? As things are, the government is paying for war with a gigantic credit card account, and common citizens are footing the bills later. War and inflation go hand in hand, and it’s not by accident.
Recap: Inflation is bad; it allows government to spend money it doesn’t have and indirectly taxes everyone. The Federal Reserve system/ fiat money is crucial for inflation. The gold standard puts tight limits on inflation and, most importantly, takes the power to inflate out of the hands of government. Ron Paul’s economics are very sound and his policy is very good, in my opinion; this is why I’ve never been so enthusiastic about a presidential candidate.
Peace and Freedom,
Tyler Watts
Posted on 17-Oct-07 at 1:35 pm | Permalink
pjk wrote:
tyler, let me start by saying, you sound like a Christian gently trying to sway a soul toward Christ. this frightens me.
Now!
we can agree that the U.S. economy/system is somewhat broke, but I just don’t think re-basing the 21st century’s world economy on some arbitarily-valued mineral substance is really the right way to go.
you’re like the guy who, when a car breaks down, starts extoling the virtues of horses. they don’t stall. don’t rust. etc.
I got an idea, why don’t we just fix the car?
we’re not “lucky” to have responsible people running the fed. the fed, like any other part of government, is DESIGNED to be run by responsible people. wacky, irresponsible people at the helm of ANY system of government could sink it pretty handily (since I seem to remember you being an anarchocapitalist I can anticipate your next argument. and no. just no.)
on that same note, if you think a gold standard is going to stop Americans from marching off to war for one of our holy causes, you are totally just wrong. totally. we’ll hold a fucking rubber drive.
and finally, (I use a similar argument to this one when arguing with creationists all the time): I can’t tell you exactly why Ron Paul is wrong about monetary policy. but you konw what? thanks to America’s successful non-gold-standard economy, a lot, lot, lot of people have been able to spend their careers studying economies/finance/development/business, and I haven’t heard many (any?) of them clamoring for a return to the gold standard.
I’m always open to the dawning of some new (or old) groundbreaking idea that could revolutionize things.
I’m not open to that idea coming from a retired obstitrician, just like I’m not interested in hearing about renewable energy inventions from taxi drivers (you would be surprised).
Posted on 17-Oct-07 at 4:12 pm | Permalink
D. Greene wrote:
See Krupa, that’s the problem with you.
Here we have a reasoned, detailed, coherent answer to your fears about Ron Paul vis a vis his position on the gold standard, and you don’t reply to anything he said but sort dodder off into some crazy journalistic stream of consciousness that really doesn’t say anything. Yet you accuse Mr. Frank of similar abuses. You should be ashamed of yourself.
Posted on 17-Oct-07 at 5:19 pm | Permalink
pjk wrote:
dan. please. I’m working here.
Posted on 17-Oct-07 at 6:55 pm | Permalink
dave wrote:
Mr. Greene,
Thanks?
Are we Thursday lovers again?
Mr. Krupa,
I understand your reply but, besides the sweetness of Jesus, that’s all I got.
Posted on 17-Oct-07 at 8:58 pm | Permalink
Brian wrote:
Is it really so wacky to actually listen to some of the best minds of human history and men that cemented their ideas into a Constitution?
“I don’t believe that ideas have expiration dates…” - Ron Paul
Posted on 18-Oct-07 at 12:40 am | Permalink
neill wrote:
Tyler —
1. The Fed does not print money.
2. There are regular expansions and contractions of the money supply in any event because of the ebb and flow in international trade and int’l investment.
3. The presence of international trade means that adjustment *has* to be possible in the money supply. A gold standard is unfeasible for many reasons, but the critical one for your argument is the sheer volume of interventions the government would have to make to defend its gold-pegged currency value. Don’t believe me? This is *exactly* what happened in the Depression.
This is also what happened in the immediate postwar period. Nixon took us back off the gold standard because it was impossible to maintain once trade was reestablished; the USD was no longer *worth* $35 / oz, and the alternatives were either a floating exchange rate (ameliorated by domestic money supply action by the central bank) or a devaluation, which would have–gasp–inflated the economy and deterred trade and investment.
Posted on 18-Oct-07 at 8:59 am | Permalink
pjk wrote:
ah, which explains mr. paul’s opposition to free trade…
Posted on 18-Oct-07 at 10:47 am | Permalink
D. Greene wrote:
Interesting blog about a guy who is supporting Ron Paul in spite of … Ron Paul.
Posted on 24-Oct-07 at 1:17 pm | Permalink
Tyler Watts wrote:
Peter,
You seem to imply that hard-currency advocacy is like a religion. I think nothing could be further from the truth. Ron Paul’s support of the gold standard is based on Economics, which involves both logic and historical experience. Logic explains why gold naturally arises as money on the market, and what happens when the monetary unit is debased; historical evidence shows what happens when the currency is inflated. Fiat currency is always inflated to the point of destruction. If not in a very short period of hyperinflation (e.g. Weimar Germany), certainly over decades of steady and stable inflation. If there is any faith involved with monetary economics, I’d say it lies with those who trust inherent knaves to maintain the value of a fiat currency.
Gold is not arbitrarily valued, as you assert. It is valued precisely because of its intrinsic qualities, which make it a superlative money commodity: it’s beautiful, rare, durable, portable, and divisible. Goldmember notwithstanding, peoples valuation of gold is rational. Paper money is arbitrarily valued, and the way in which it is instituted is very tricky. Currency units (e.g. Drachma, Mina, As, Pound Sterling, Thaler, Dollar) originally were names or labels for a weight of metal of a certain fineness. The US Dollar was originally defined by Congress as 1/20 Troy ounce gold, and .769 Troy Ounce silver. To place a label- “US Dollar” - that originally stood for a fixed weight of metal on an irredeemable paper note is worse than arbitrary- it is deceptive.
I think you place too much blind faith in the FED when you say it was designed to be run by responsible people. Sure, the FED leaders are responsible, but to whom? The FED was designed and implemented primarily to protect banking and financial interests; it failed miserably in this task in the early 1930’s (largely due to inexperience, political considerations, and faulty economics). It also did poorly in the 1970’s. Only since the “great moderation” began in 1982 has the FED exhibited a substantial streak of competence, but this competence serves the main constituency of the FED first and foremost: banks, financial institutions, large corporations, and the Federal Government. These groups gain much of the benefits of inflation- for the banks, the FED promises that it won’t let them go broke; for the financiers and corporations, the FED supplies a steady stream of cheap credit, so they get access to the new money first, before the price effects ripple through the markets; for the Government, the FED is an enabler of deficit spending- it buys US Treasury securities, with which the Government finances its debt, and issues fresh credit, Federal Reserve created dollars, into the economy. As I stated before and will repeat: those who bear the burden of inflation tend to be wage earners and pensioners, who face prices that continually rise before their incomes do, and who generally don’t understand the economics of it to get upset about it. One of my long-term goals is to change this by teaching Economics.
Regarding inflation and war, I don’t intend to argue that the gold standard would put an end to US initiation of war; perhaps I over-stated my case. I’m merely arguing that a true gold standard (i.e. 100% reserves) would reveal the costs of such wars more completely before and during them, as direct taxes would have to be levied, as opposed to the indirect and hidden inflation tax. Inflation is politicians’ favorite way to pay for war. The gold standard puts strict and drastic limitations on the ability to inflate. The gold standard would therefore raise the political cost of war-mongering, and hence would be at least a marginal improvement in the direction of peace.
You asserted that (paraphrasing): “We have a successful fiat-money system. No one is calling for a return to gold.”
Peter, your status-quo bias is showing! The current monetary regime is only successful if you don’t know about the economic consequences of it, or if, knowing the economics, the consequences don’t bother you. Well, the consequences do bother me, and many other economists. Do you want a list of economists who favor a return to the gold standard? How many names do you need and how prominent must they be for you to accept their opinions? (I ask in all seriousness). I could start such a list with the young Alan Greenspan, and continue with classical and neo-classical economists up to the 1930’s, and finish with some admittedly out-of-mainstream modern economists. But the popularity of an idea shouldn’t be the sole criterion of its worthiness, should it? After all, I can imagine ante-bellum Southern aristocrats saying, “You know, we have a very successful slave-based economy. No credible, mainstream voices are arguing for abolition- only a bunch of hack New-England journalists.”
If all the great ideas were already accepted, what would be the point of intellectual advocacy?
Politicians and bankers always and everywhere have powerful incentives to inflate the money supply. Their most effective means of doing so is a central bank. Inflation, even when it’s low and steady, is troublesome- it leads to economic distortions and, perhaps most insidious of all, it is a systematic plunder of the lower classes by certain entrenched interests. Gold is the citizens’ best defense against inflation.
I remain, most sincerely yours in Peace and Freedom,
Tyler Watts
P.S.
I previously conceded that our current central bank management is doing a relatively good job, since 1982, of keeping inflation low and steady. Even so, the dollar is currently at 19.4% of its 1971 value (when the last vestiges of the gold standard were destroyed) and 46.3% of its 1982 value, when the FED undertook moderation. This is according to US government statistics (http://data.bls.gov). In less than 40 years of completely fiat money, the dollar has lost more than 80% of its value.
Posted on 26-Oct-07 at 9:23 pm | Permalink
Tyler Watts wrote:
Krupa (from original post):
“It’s also nice to hear a voice - a lone voice, but a voice nonetheless - call for Washington to dismount the gravy train and tighten its belt, for a change.”
Funny that, when Ron Paul proposes perhaps the single most effective means of accomplishing this, i.e. rescinding government’s ability to deficit spend and tax indirectly through inflation, you consider this proposal “crazy.”
Posted on 28-Oct-07 at 5:17 pm | Permalink
neill wrote:
Tyler, the prospect of you teaching economics makes me cry.
Money has real value and nominal value. By adopting a gold standard — or a fixed exchange rate, which is functionally the same thing — you are setting the real value. The government must then defend that value by engaging in reserve market operations.
There is no free lunch. When investors, traders and consumers behave in ways that are reflective of a drop in the currency’s real value — because of the attractiveness of imports/exports, because of a lack of confidence in gov’t institutions, or for any of a number of other things — that drop has to be accounted for. Either you buy back your currency (or sell it, less frequently) to defend the real price you have set (as with a fixed exchange rate), or you revalue the rate for your gold standard. In the 1970s, when everybody was pouring capital investment into the US, interest rates necessarily declined and the real value of the dollar fell. The only world in which the USD was still worth $35/oz — the price selected at Bretton Woods when it was clear that the US would have to drive the recovery of the entire global economy post-1945 — was the same elaborate fantasy where Dr. Paul is a monetary policy expert. Hence, getting off of gold.
Without mincing words — this is a solved problem. We *know* the solution, which you can find at http://en.wikipedia.org/wiki/Mundell-Fleming_Model.
There has been a Nobel awarded for work in this field. We cannot fix a currency’s value without giving up any meaningful control over our own economy or raising barriers to international trade. Neither shifting the substantive goal posts and trying to Godwin’s Law your own thread by talking about slavery change the fact that you and Ron Paul are operating from an empirically false premise, Paul’s penchant for badgering Greenspan into saying that the gold standard is theoretically sound under certain circumstances notwithstanding.
I do hope that you live your own life consistently enough with your beliefs that you don’t eat any foreign food and drive a 1971 Dodge Dart to reflect your preference for the economics of the gold standard. I’ll be over here, reaping the benefits of not living in the goddamn 1880s.
Posted on 05-Nov-07 at 11:11 am | Permalink
infragreen wrote:
No your not an economist, and no, the goverenment doesn’t print money, the Federal Reserve does. They are not part of the Government, I’m sure you knew that though. RP actually has a lot of support amongst economists, so it shouldn’t be surprising that non-economists like yourself don’t support him.
What’s wacky is your saying your voting for Hillary since you like business as usual. I’m sure you’ll get your wish. 2013, WW3 and a woman in the Oval Office. Sounds awesome.
Posted on 18-Nov-07 at 10:03 am | Permalink
Will Devine wrote:
Infragreen is correct - The Federal Reserve prints the money not the government. The government has no control over the Federal Reserve.
I believe that Ron Paul’s Ideas would work in time, but to move over to his system of government would, in the short term cause great panic and uncertainty both Globally and Domestically.
This panic I believe would be less destructive than the panic that will happen if America does not move towards his system of government, which is based on the ideals set down in the Constitution. The Constitution of America is what made America great, why it was called the land of the free and why people from around the world have looked to America for hope.
His ideas are scary, and can seem crazy at times, but there is a logic to it.
On the Dollar - Iran has just begun to sell oil in Euro’s in December of 2007. The are about to set up the ‘Iranian Bourse’, If people can start to buy oil in non dollars the dollar will crash because the value of the dollar is based around the fact that all Oil is being sold in Dollars.
Look at the figures - the crash is comming.
Ron Paul will not become President this time around. To many powerful people do not want to see that happen. I believe if there is a chance of that happening he may even be ‘killed’, but his ideas have sparked something in the people of America, and therefore the world.
Ron Paul wants the people to have the money, wants the people to run the schools, wants people to have liberty, to be allowed to do whatever they want in their home as long as it does not hurt the lives of others. He believes the governments job is to protect the liberty and freedoms of the people not restrict them, or control them.
He is the most refreshing honest and decent polititian I have seen in years,in any country.
Although I believe it would take years to implement his plan in such a way as to minimally effect the people it is worth exploring the ideas.
With Love.
Posted on 04-Jan-08 at 8:42 am | Permalink