1

That will get the Paul backers out. For some reason, I get about a dozen Paul hits when I mention him, much more than when I mention other candidates.

You are correct in that government has never been as libertarian as they think it was and also how over-the-top Paul's vision is.

However, I think you're doing Paul a disservice, erasing civil rights along with big government in your vision of a "Pauline" world. It's a similar trick that liberals do when conservatives want to bring back the family values of the pre-60s; liberals will point out the institutionalized racism and sexism of the 50s, even though the vast majority of conservatives wouldn't want to go back to Jim Crow and almost as many don't want to roll back women's rights, either.

I don't like it when liberals do it to us, so I'll speak up when I see a good conservative do it to someone else.

2

Boy, Joe! You were doing fine up until here:

Or what if we just take the individual elements that appeal to Paul's supporters -- elimination of the IRS, the gold standard, and (presumably) OSHA and the EPA, etc.

Most of these Libertarians (and they are almost always white and middle class) seem to believe not only that their lives would be as safe and prosperous as it is today, but that they would be even better! How odd that they think they would have been born into the landed gentry of Agrarianism or the industrialist elite of the Gilded Age.

The truth is that most of them would be doing what most common folk did in pre-New Deal America: eeking out a living as dirt farmers, getting black lung in a coalmine, or punching a clock in some dark, dreary factory waiting for the latest economic depression to end. They would also be eating their lunch at segregated lunch counters (so that they wouldn’t have to sit near the slaves and free blacks) and complaining about the influx of immigrants from China, Germany, and Ireland.

In their nostalgic longings, they seem to forget that America in 2007 is not the America of 1790, 1861, 1909, or even 1962. They also have a static, rather than dynamic, view of history as seen through the lens of minarchy. They seem to forget that many of the advances of society have come from direct government intervention. The fact is that much of what we take for granted in the 21st century is a result of policies that are directly opposed by libertarians.

You've very subtly made a package-deal of returning to pre-1900 political policies with returning to pre-1900 economic/technological/cultural conditions. Ron Paul doesn't want to turn back the clock on history so that people are working in tenant farms, Dickensian sweatshops or in mines without modern health & safety. Nor would any employee in modern American society contract to have such jobs that pay such wages. Nowadays, only migrant immigrants and other extreme fringes of society would be willing to even consider that type of work, and modern machinery renders much of that raw manual labor of the 1800s obsolete.

Dickensian conditions of yesteryear were not caused by the lassez-faire policies of the 1800s. They were inherited from the extreme poverty and ignorance of the 1700s and the pre-industrial Dark Ages before then. The 1800s was long, hard process of climbing out of those conditions, which would've been just as long and hard regardless of government intervention. In fact, statist attempts to remove economic and social inequality in industrial societies has proven disasterous, as shown by Soviet Russia.

3

Mark However, I think you're doing Paul a disservice, erasing civil rights along with big government in your vision of a "Pauline" world.

I don't want to imply that the Paul libertarians want to "roll back" civil rights. In fact, I will go so far as to say that they, like most decent Americans, would be horrified at the thought to going back to that sort of discrimination.

But that was the point I was trying to make. If they are consistent they have to admit that their agenda would have made the civil rights era all but impossible. They can't simply denounce "intrusive government" and then selectively pick out the good times when the government intruded rightly.

I've noticed, though, that this is exactly the game they play. It's a cherry-picked libertarianism--choosing to adhere to their philosophy when it fits their liking and admitting that it is "currently untenable" when the obvious problems are pointed out.

For example, its easy for them to say they are against the draft or NATO after WWII and the Cold War have been won. But what if their agenda had been applied consistently before? History provides an excellent testing ground for their theory -- and shows time and time again why it is lacking.

4

The Constitution was ratified in 1788. It went into effect on March 4, 1789. Perhaps you are confused because the last of the original 13 states to approve it was Rhode Island in 1790.

I generally agree with this post, except for your humorous comment that "conservatism is progressive." Next you'll be telling us that black is white.

I fear that you are wasting your time by trying to argue with Paul supporters. True believers are hard to sway. Trust me on that. You've got accept that ou guys have Paul and Tancredo while we've got Kucinich and Gravel. Plenty of loons to go around. Thankfully, the four of them together have less support than Bill Richardson.

5

"They seem to forget that many of the advances of society have come from direct government intervention. The fact is that much of what we take for granted in the 21st century is a result of policies that are directly opposed by libertarians.

Government is too big and too intrusive."

Attributing the advances of the 21st century to government is largely misplaced. Governmental intervention only causes inefficient allocation of resources because government is always less efficient in the allocation of resources than the private market.

The advances of the 21st century were made possible by access to cheap and abundant energy. Therefore, the advances of society were done in spite of government. If government played a positive role at all it is only in that the Constitution had chained it down so tightly. However, it has largely burst those chains and we are starting to see the generous effects such as bridge collapses which provide political benefit to the State.

The rise of the large Welfare and parasitic states is a natural result of democracy and their bloated state has only been made possible by access to the cheap energy.

6

Joe's reflections here are very useful in helping Constitutionalists know better what sort of objections (and misconceptions) "conservatives" have with Constitutionalism. If their bottom-line objection is "who wants to go back to the bad ol' days of poor social conditions?", then Ron Paul's candidacy is in no danger from conservative critics. What Ron Paul supporters need to do is continue working for greater Constitutional education of fellow citizens.

http://www.constitution.org/

7

Attributing the advances of the 21st century to government is largely misplaced. Governmental intervention only causes inefficient allocation of resources because government is always less efficient in the allocation of resources than the private market.

While libertarians can really cook up some beauts when it comes to addressing market failure without regulation, the fact is that there never really was an effective pure market solution to a number of serious and persistent market problems--pollution, working conditions and consumer safety among them. What has seemed to work well for us so far is market responses to government regulation that addresses market failure. The market failed to deliver clean air absent regulation, so the government began to regulate emissions from automobiles. The market then responded with ever more efficient means of meeting the regulations.

It isn't perfect, but it works OK. I can tell you straight up that growing up in Southern California in the 60s and 70s, the air is amazingly clearer and healthier now than it was then, and there are more cars on the road. That's thanks to the market and regulation.

8

The biggest argument *against* Ron Paul is his supporters. I don't know what's in the Kool-Aid, but I don't want to drink it. Creepy.

9

getting black lung in a coalmine,

Wait a minute! That's a liberal concern! On a recent Left, Right, and Center, Tony Blankley mocked the very idea of coal mine safety regulation. That getting citations for violations was in any way a moral outrage. Hearing things like this is what makes non-neoconservatives stay non-neoconservatives.

Government is too big and too intrusive.

Oh, okay, I see you mock mine safety, too. When business owners who care little about things like black lung want to roll back the regulations and protect their subsidies, they put this message out.

My view is that on any issue of morality (social justice) like SUV&oil subsidies or wage oppression or black lung, the libertarian position is interesting and the conservative one is just plain evil. The reason is that the libertarian, who is truly NEUTRAL on social change, wants to take government out of the fight. The conservative wants to use the state to protect a REGRESSIVE movement in social change.

Take rBGH. NY State Senators with "Conservative" party affiliation were promoting a law that would prevent any dairy farmer from stating publicly that they refused to use this dairy growth hormone. Of course, pinko libs might want to ban rBGH, but the libertarians would just say get the government out of the question altogether.

Q: Which state had a law about slander against beef?

10

NY State Senators with "Conservative" party affiliation were promoting a law that would prevent any dairy farmer from stating publicly that they refused to use this dairy growth hormone.

You would really have to explain why this type of restriction of commercial speech is consistent with conservative philosophy before I would be tempted to turn in my Conservative de-coder ring. What it sounds like is typical special interest politics where one special interest is trying to limit competition.

You've very subtly made a package-deal of returning to pre-1900 political policies with returning to pre-1900 economic/technological/cultural conditions. Ron Paul doesn't want to turn back the clock on history so that people are working in tenant farms,

It seems wildly optimistic to assume that a roll back to 19th century political policies would have uniformly positive impacts on 21st century political/technological/cultural conditions.

11

Joe,

At least you have some sense to realize that you don't have it all figured out. There are many out there that won't ever admit that. However, I think we need to clarify further the point that Ron Paul is making.
1. Government should protect the freedoms of the people and not be secretive in its actions. If you have been paying attention at all to this administration there is a LOT that they do behind closed doors and when asked they invoke Executive Privilege. That should make anyone question the motives of that group of people. Does it make any sense what our government has done since 9/11? The Patriot act which allows for parentless searches on loosely defined term of enemy combatants. Wiretapping on all calls both inside and outside the US. The removal of habeas Corpus(lookup Jose Padilla). No closing and protecting our borders. How about the North American Union? A National ID card with track able RFID chips in May of 2008(Rev 13). Is that freedom?
2. There is no way Ron Paul plans to take us back to 1789, however, there are a lot of good principles that they had back then that we no longer espouse to.
3. Our current monetary system makes the rich richer and the poor poorer. He wants to reduce our outrageous unaccounted government spending and put us back on a monetary policy that does not benefit the halves in this world. The income tax goes solely to paying the interest on out national debt; NONE of it goes to improving our social living.
4. Finally, I want to be clear on this because I heard a radio show host completely butcher his idea on Foreign policy. Our policy is the sole reason for the hatred of the Islamic faith. If you are objective enough to study it, you will see that we have been putting our fingers in others business for years. We actually created Al Queda back in the late 70's to fight the Communists in Afghanistan. We actually sold Iraq the weapons that we accused them of having back in the 1980's when they were fighting Iran. Once they stopped fighting Iran then Iraq became our enemy. You see, if you eat Big Macs every meal you are bound to have heart disease and get fat. If you interfere in someone else's culture you are going to get what the CIA calls Blowback, unintended consequences, like 9/11. Ron Paul NEVER said we American’s deserved 9/11, like Hannity and others would like us to believe. He said our actions have resulted in hatred to the point that 9/11 was the results. Ron Paul, is the ONLY one on the republican side that understands this, or at least is willing to admit it. The more we are over there the worse it will be, and if it doesn't stop now Iran will be next which will not make China and Russia happy. Is that what we want? As conservatives we need to wake up and realize that the GOP has lost its way. The "leaders" of the GOP don't want to change a thing as far as the direction of this country. I have to say, I look at it objectively and I see nothing but a dark cloud on the horizon unless we wake up to the reality that if things don't change the future of this great nation is in grave jeopardy.

P.S. I have heard some crazy folks claim that Ron Paul is a 9/11 truther. He has stated several times that he does not follow that line of thinking. Don't buy that lie.

12

Joe,
David Hackett Fischer in Albion's Seed traces four folkways of immigration from the British Isles into separate regions in the colonies. These pathways still affect politics today. The fourth and latest immigration wave formed the "backcountry", which was arguably recognizably libertarian. Examples of statesmen from this region include Patrick Henry and President Andrew Jackson.

On the other hand, while libertarian it was also highly provincial and very violent ... features which repulse modern Libertarians. I think a serious unanswered question for those Libertarians who want to be seen as not as pie-in-the-sky dreamers is to demonstrate that those features are not essential to real (non-drawing room) Libertarian society.

13

Government is too big and too intrusive. On that point, we conservatives agree with our libertarian friends. The difference is that conservatism is progressive, relying on incremental changes that are derived from a host of first principles

Did you write that with a straight face? I used to think that, but all evidence is to the contrary. "Conservatives" don't mind at all at increasing the bigness and intrusiveness of government.

14

The monetary ideas of the luddite Paul supports is what makes no sense. Economics may not be a hard science like physics or chemistry, yet there are ways to come up with provable hypotheses. One of the great advances in the economic stability of this country was the creation of the federal reserve and a sensible monetary policy that prevents the crushing Depressions that were a feature of the first 150 years of American history.
What strikes me most about the Paul supporters is their curiously anachronistic view of economics combined with their head in the sand understanding of America's role in the world. America can't just pack up go home.

15

We actually created Al Queda back in the late 70's to fight the Communists in Afghanistan.

Actually we didn't, and it's sad that after 10-15 years of varying degrees of battle against this group that apparently thoughtful and intelligent people still believe this. Yes we provided arms and support to Muslims who were fighting against the Soviets in Afghanistan. No, Al Qaeda and bin Laden were not among them. We never gave them a penny let alone "created" them. Rumors that the CIA supported bin Laden have been discredited by people who a) would have been in a position to know and b) have no truck in pretending otherwise. See Robert Baer's memoirs and comments. He's been profoundly critical of our support and obsequience to the Saudis, but he said that nobody, nohow, nowhere in the CIA ever gave support or even met with bin Laden.

16

"Did you write that with a straight face? I used to think that, but all evidence is to the contrary. "Conservatives" don't mind at all at increasing the bigness and intrusiveness of government."

That is because many who say they are "conservative" are actually Neo-Conservatives and the worst part is that the "Christian Right" leaders have made their bed with them. Ron Paul is a true conservative and the only one that will say that preemptive war and nation building is not a conservative thing to do. And NO, this philosophy did not and should not have changed since 9/11. Ron Paul says we should have sent in a small group of elite mercenaries to take out those responsible for 9/11 and the came home. If we did that we would not be spending a trillion per year on this mess we are in now. I don’t think the Christian Right leaders will change but I think the base is smart enough to realize that it is not smart to make your bed with politicians or a political party.

17

Please actually learn about what's going on in somalia before just spouting off what you hear in the news.

Contrary to popular belief, Somalia is better off than it was before without a central government, and most of the violence in the area is caused by UN involvement in trying to set up another central government.

Read this article for an overview history of Somalia and some interesting statistics.

And if you attribute some of the major advances to government, you really aren't studying your history. It's entrepreneurs and other visionaries that have kept pushing us forward, like James J. Hill, in spite of government interference.

And I find it laughable that you actually think it was government involvement that pushed the Civil Rights movement and so on and so forth, when it was that precise government involvement, both federal and local, that allowed and encouraged the system of repression to exist in the first place!

If someone breaks something, then fixes it, do you praise them as a hero for saving the day? Or do you say it's about time they fixed what they broke in the first place?

18

Zeke,

You are going to need to provide sources because it is fact that we created the Mujahideen to fight the soviet invasion of Afghanistan. We financed, trained and armed them by our CIA, Ronald Reagan praised them as Freedom Fighters. Osama Bin Ladin was part of that group and broke away in 1988. This stuff is fact man, the evidence is overwhelming.

Google:
Mujaheddin
Mujaheddin CIA
Mujaheddin US backing

This is history man, I would certainly like to hear where you are getting your info from but I don't think it is truth. There are many in the CIA that back this version of the story, including Michael Scheuer, who "He served as the Chief of the Bin Laden Issue Station". I think he would know.

19

One of the great advances in the economic stability of this country was the creation of the federal reserve and a sensible monetary policy that prevents the crushing Depressions that were a feature of the first 150 years of American history.

This is good stuff. Seriously

20

One of the great advances in the economic stability of this country was the creation of the federal reserve and a sensible monetary policy that prevents the crushing Depressions that were a feature of the first 150 years of American history.

This is good stuff. Seriously

21

I would call Ron Paul's libertarianism more originalist than regressive, and more idealistic than utopian.

Having said that, I am no fan of the overall philosophy, but can see why it appeals. Liberalism gives the hand (and laws) of civil government plenty of say in economics, but little in enforcing morality. Conservatism does the reverse, when based on a biblical foundation. Recent Republicanism has put civil government everywhere in life, while Libertarianism wants as little as possible, hence its current appeal.

But the answer to bad government is not no government, just as lawlessness is not the cure for legalism.

Ron Paul seems idealistic to the point of reckless, like the eccentric uncle everyone loves but nobody trusts with responsibility. I don't agree with several of Joe's criticisms of him, but there's no way I'd vote for him either, unless he were the only way to keep Kucinich out of office.

22

Jeff,

Here is refutation of your point about the CIA creating bin Laden.

On April 17, 1987, Osama bin Laden led 120 of his most fierce Arab mujahedin into battle. The attack was planned for months and billed as a major offensive for the warriors of God against the atheistic Soviet Red Army and its apostate Afghan puppets. The target: an Afghan government position on the outskirts of Khost.

Things went so poorly one wonders what "FUBAR" is in Arabic. None of the mujahedin positions had been supplied with ammunition, which was stuck in a car far from the battle scene. Men were so exhausted from carrying their own rockets and mortars -- they didn't have enough mules -- that some went back to their cave and passed out from exhaustion before the battle even started. And nobody remembered to pack those pesky wires used for connecting rockets to detonators. A lone government soldier heard the racket Bin Laden's men made and kept the entire force pinned down with a machine gun until Bin Laden ordered a retreat.

This sort of thing was typical among the so-called Arab Afghans, a few thousand ragtag religious misfits imported from the Arab world, interested not so much in Afghan liberation as global jihad. The real Afghans considered the Arab forces clownish and lousy fighters. They were more like the Keystone Kops than battle-hardened mujahedin.

But the following month, Bin Laden helped lead the Arab Afghans in their most successful military effort: defending their mountain lair, the so-called Lion's Den. The battle was militarily successful in the sense that the already retreating Red Army was held at bay on its way out of Dodge.

"From the Soviet perspective the battle of the Lion's Den was a small moment in the tactical retreat from Afghanistan," wrote Lawrence Wright, my source for all of this, in his Pulitzer Prize-winning book, "The Looming Tower." But for Bin Laden and his followers, it was divine proof that the mujahedin crushed the mighty Soviets. There was, according to Wright, "a dizzying sense that they were living in a supernatural world, in which reality knelt before faith. For them, the encounter at the Lion's Den became the foundation of the myth that they defeated the superpower."

Armed with this useful myth, the Arab Afghans became the core of a new global jihadist insurgency called Al Qaeda.

Bin Laden and his lieutenant, Ayman Zawahiri, were convinced that they were the protagonists in a world historical drama, when in fact they were more like Rosencrantz and Guildenstern, jabbering outside of the limelight.

For years, some of the shriller voices on the left have argued that 9/11 was a classic example of "blowback" from our support of the mujahedin's struggle against Afghanistan. But the fact is we didn't "create Bin Laden" -- he largely created himself. And to the extent that any superpower can claim credit for him, it's the Soviets. It was their withdrawal, not our support, that convinced the foreign fighters that their pinpricks felled the Soviet bear.

23

You are going to need to provide sources because it is fact that we created the Mujahideen to fight the soviet invasion of Afghanistan. We financed, trained and armed them by our CIA, Ronald Reagan praised them as Freedom Fighters. Osama Bin Ladin was part of that group and broke away in 1988.

Bin Laden was one of a group of foreigners who made their way to Afghanistan to fight the Soviets...a loose analogy but you might compare them to the left wing idealists who made their way to Spain to fight Franco's forces before WWII.

I don't believe he ever received direct funding from the CIA, he probably didn't but it's a stretch to say he was created by the US. Many Muslims went to Afghanistan because they believed they were liberating fellow Muslims from foreign domination. Many gov't's and individuals in the Muslim world also provided funding.

The problem with this line of argument is that it seems to assume everything that happens in the world is the result of US policies and everyone else are just passive actors instead of free agents of their own.

Oclarki quoted the "Rosencrantz and Guildenstern" article from the National Review Online. I read that as well and was thinking about it.

You do have a point about neo-conservatives, though. The world is complicated and our knowledge is limited. What we are suffering in Iraq is less about some single villian (Iran or Al Qaeda) and more about the fact that we cannot manage all the various factions that are fighting each other or itching to fight each other. This is a foreign culture where we don't even have enough people who speak the language. It would take a massive effort and a long time to really understand what's going on and the learning curve is soaked with blood and money. Going into Iran will be the same problem (but probably even worse).

This is probably why there is such hostility towards the neocons. They refuse to get it and refuse to learn anything. The fact that Iraq is such a mess doesn't even give them a bit of pause. At the end of the day, until they start showing they can learn rather than bash their critics as traitors or pro-terrorist sympathizers, they are a danger to the US and need to be removed from making policy decisions.

24

Boonton,

You're right, and I shouldn't have posted that snippet without proper attribution.

A final word on Ron Paul. If the candidtate I was supporting had the majority of the 9/11 conspiracy theorists as his supporters, I'd have to take a hard look at why that was the case.

25

More deception Joe, you're not being honest with us or yourself.

"the 1790's were "an era of consistent growth in government power that produced some of the most tyrannical policies and apocalyptic rhetoric in American political history."

Much like a child, gov't is expected to grow rapidly when it is first birthed. When you're starting from essentially zero gov't, you would expect such a thing to happen. What libertians have a problem with is a 200 yr old gov't still growing at its birth rate.

"Most of these Libertarians (and they are almost always white and middle class)"

What was the point of this comment. Most republican supporters are white and middle class too, no suprise considering thats the largest group in the entire country. I call foul.

"what most common folk did in pre-New Deal America: eeking out a living as dirt farmers, getting black lung in a coalmine"

Are you serious? Do you honestly believe that the New Deal and not the Industrial Revolution is the vechile that helped make America rich. I find it interesting that other nations which experienced the Industrial Revolution, but not the New Deal still managed to prosper, hmmmmm.

"They would also be eating their lunch at segregated lunch counters"

Gov't mandated, not very Ron Paulish don't you think. Another cheap shot.

"many of the advances of society have come from direct government intervention"

Nobody denies this. We all know the gov't send a man to the moon and helped develop the internet. The question is how are this programs helepd by taking away American's civil liberties? Will NAFTA, the PAtriot Act, the Dep. Of Ed., help the gov't find the cure for cancer?. NO! You seem to think if the gov't is sucessful in one area it will sucessful in others. Right after you say "The fact is that much of what we take for granted in the 21st century is a result of policies that are directly opposed by libertarians." Can you please give an example of how gov't intrusion has helped us?

"Government is too big and too intrusive. On that point, we conservatives agree with our libertarian friends"

Under Bush the gov't has grown more then under Clinton. Then Bush was relected. Sorry Joe, but if you truly believe this you stand alone among your conversative friends, especially once they get to office.

"relying on incremental changes that are derived from a host of first principles"

Can you please list this principles so I can compare them to libertian principles?

"no taxes, no regulations, no federal law enforcement, no drug laws, etc. It's called Somalia. And, brothers, it ain't no Utopia."

Here for his conclusion Joe relates Ron Paul's vision to Somalia. Do you honestly believe this, I doubt it. Once again another cheap shot.

Conclusion- After reading both posts and seeing the words Joe choses carefully as he says, it becomes pretty clear Joe is not an objective observer. Joe already has his candiate Fred Thompson picked out (a fact he doesn't hide), so to expect him to be fair in addressing Ron Paul is to much to ask. Anyone reading Joe's words would do well to remember that.

P.S- I responded to you in the last post, comment 82, but haven't gotten a reply back. Feel free to respond when you have the time.

26

You are going to need to provide sources because it is fact that we created the Mujahideen to fight the soviet invasion of Afghanistan. We financed, trained and armed them by our CIA, Ronald Reagan praised them as Freedom Fighters. Osama Bin Ladin was part of that group and broke away in 1988. This stuff is fact man, the evidence is overwhelming.

First of all, the mujahideen were not a monolithic organization. They were a very loose collection of tribes, warlords, and extranationals, many of whom had nothing to do with one another.

As has been previously mentioned in this thread, bin Laden was a free agent player in that fight. He raised his own money. Here's at least one source for you from CNN terrorism expert Peter Bergen, in response to this question::

"This is one of those things where you cannot put it out of its misery.

The story about bin Laden and the CIA -- that the CIA funded bin Laden or trained bin Laden -- is simply a folk myth. There's no evidence of this. In fact, there are very few things that bin Laden, Ayman al-Zawahiri and the U.S. government agree on. They all agree that they didn't have a relationship in the 1980s. And they wouldn't have needed to. Bin Laden had his own money, he was anti-American and he was operating secretly and independently.

The real story here is the CIA didn't really have a clue about who this guy was until 1996 when they set up a unit to really start tracking him."

27

Much like a child, gov't is expected to grow rapidly when it is first birthed. When you're starting from essentially zero gov't, you would expect such a thing to happen. What libertians have a problem with is a 200 yr old gov't still growing at its birth rate.

This is awkward. Gov't did not start 'at zero' in 1787. State gov't was there as well as the articles of confederation. From a liberty point of view it isn't clear how you measure gov't's growth. For example, the states could and did tax people back then to support a 'state church'. The 14th Amendment eventually stopped that. From the POV of individual liberty this was a decrease of gov't. From the POV Of a state it was an increase in the power of the Federal Constitution.

Also you glide over the fact that gov't is more than just a legal entity. When a town organized a lynch mob and ran out a religious minority...is that liberty because on paper the 'government' is small and has few powers and has no law authorizing abuse based on religion? If the state gov't organizes a police force that stops such mobs forecefully is that an expansion of government or a transfer from a primitive gov't by mob to a more sophisticated type?

which brings us to:
Are you serious? Do you honestly believe that the New Deal and not the Industrial Revolution is the vechile that helped make America rich. I find it interesting that other nations which experienced the Industrial Revolution, but not the New Deal still managed to prosper, hmmmmm.

I'm not aware of any prosperous nation that doesn't have something like the New Deal. All the European countries have social welfare systems in place. Everyone has a central bank, regulation of the financial markets and money supply. Maybe they didn't enact them all under something called "New Deal" but there was clearly a transition towards them.

We could get into an endless fight over cause and effect but it seems to me the two are very much entangled. The industrial revolution happened because of inventions and individual efforts but it also happened because of changes in law such as the evolution of corporate law that enabled huge amounts of capital to be transferred to fictional entities called corporations. Which is really cause and which is really effect?

How much of your income is coming indirectly from the system you don't notice? For example, you don't spend much time worrying about your bank going bust. That's because your bank must pay for deposit insurance and is restricted from doing certain types of things like loaning all their deposits to the fund the bank President's hair-brained get rich quick scheme cooked up by his brother-in-law.

To really split hairs, if I told you that these regulations mean you earned $0.75 less interest last year on your savings account is that gov't infringement on your liberty? What if you would have had to spend twenty hours last year closely monitoring your money if those protections were not in place?

28

Zeke,

this is turning into a he said he said. To me it makes more sense to accept the idea of blowback for the reasons why we were attacked on 9/11 than because they don't like our freedoms. If we where interfering in their business then they wouldn't care what kind of freedoms we have. I am tired of the lie that people think Ron Paul is saying American deserve to die because of his theory on blowback. Like I said before, if you eat bigmac's every meal you will get fat and have heart problems, blowback to poor eating. If you setup based on other countries and interfere in their business they are going to get mad, blowback. It has nothing to do with 9/11 truthers, it has everything to do with stopping our aggressive foreign policy.

I hope the point is clear, we have a great nation, our laws are great, our aggressive policy stinks.

29

For example, you don't spend much time worrying about your bank going bust. That's because your bank must pay for deposit insurance...

Are you kidding me? That FDIC guarantee is bogus and couldn't help you if people made a run for their money. Where are you going to get all that money when the fractional reserve system is designed to loan out non existent "real money" at ten times its worth to the banks and they get to recreate the same ten-fold fraud on the bank customer. How can you guarantee the money? This is the fraud of the Federal Reserve and central banking. Want to change this criminal fraud? Listen to Ron Paul and we can reverse this criminality...uhh...because it is criminal...get it?

30

That's the beauty of the whole thing. People don't make a run for their money because there's no need too. And the money doesn't have to be guaranteed in the infinite and impossible sense you seem to be demanding of it. I know that in theory I could imagine a situtation so bizaar and dramatic that the FDIC guarantee wouldn't be worth anything. Then again so could any other insurance policy. Nuclear war would probably leave my homeowners insurance company out of business. Nonetheless, I wouldn't exactly describe my policy as wortheless.

Now where is this fraud that you're talking about? You and I know how the banking system works. We know the theoretical dangers that exist as well as the benefits. Yes if I put my money in the bank and the world turns into a Mad Max movie I can say I would have been better off just holding gold in my basement. On the other hand, if you hold gold in your basement and that costs you the benefits you could have had with a bank...well that's your business.

Either way I don't see where you're getting fraud and criminality. Is it fractional banking? that has nothing to do with the gold standard....just advocate a 100% reserve requirement...but even then you can have runs on the bank.

31

And hows this; if you think the money is worthless then where's the fraud? If money is worthless then you can't lose anything if your bank goes bellup and the FDIC doesn't come thru for you.

I don't want to be mean but I think the gold bugs suffer from an inability to listen and from a phobia of...well...abstraction. The financial markets do indeed live in a strange type of virtual world that often does seem fictional. It's bizaar that so much behavior is motivated by bites in computers. Then again is it really any more rational to let a little bit of yellow metal dictate your behavior?

32

Selective history goes both ways. It may be true that we see U.S. history as overly minarchist, but I think you're presenting U.S. history as overly statist. It's probably more near the middle.

Here's an analogy: Christian conservatives believe the founding fathers were all Christian and that this is a Christian country, which isn't true because a lot of them were deists. But the opposite of that also isn't true: it isn't true that most of the founding fathers were distrustful of religion, only a few of them (especially the more famous ones). But each group can cherry-pick the quotes so that they appear either way; one group can point to Jefferson saying rights come from God, another group can point to him editing his own version of the Bible with all supernatural elements removed. How can we know which is truer?

Likewise, how can we know here, without being scholars of history, which neither you nor I are?

33

Also, the problem with fiat currency as opposed to a gold standard isn't which works better. That's not the issue. Maybe fiat currency actually does work better, despite all the economists who disagree.

But the main issue is *constitutional* -- the constitution clearly says that nothing may be legal tender *except* gold and silver. By going off the standard without amending the constitution, we are acting unconstitutionally.

Even those who believe that the current monetary system is okay have to agree that it's unconstitutional.

34

I guess I missed making my point as I don't consider myself a good writer but allow me to try again.
As I understand it, one of the constitutional roles of our government is to regulate and dispense our
money spply. I guess the immediate question that begs is if this is so then why are we allowing
"private" entities to control the money supply at a profit when there would be no need to charge
interest on the debt created by the money supplier if the governement was to be in charge of our money?
Am I being too simplistic here?
Why are we obligated to this fraudulent entity called the federal Reserve?
Can't we print our own money?
Why are they allowed to dictate economic policy without any Congressional overview and why are the
names of those involved in this private banking consortium not shown or known? Although we know
some of them because they have been expose through journalistic investigations and not because they announced themselves.
The reason the money is worthless is because they have carte blanche to print it out of thin air and with nothing
to be held as its value or collateral. Mind you, the Fed holds all OUR gold as collateral for our 9 trillion dollar debt to them.
Nice scam I would say. The Mafia is kicking itself for not coming up with this fraud.
Please explain to me why this FED is a good thing, as I seem to be missing the point. Thanks.

35

But the main issue is *constitutional* -- the constitution clearly says that nothing may be legal tender *except* gold and silver. By going off the standard without amending the constitution, we are acting unconstitutionally.

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

Sorry, doesn't say anything about gold or silver.

You may be thinking of this:

Section 10. 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.

Notice 'state' up there. The whole section is about what states cannot do, not the Fed. gov't. That was the only hit when I searched on the word 'gold' in the Constitution.

36

BTW, let me remind everyone that the Paul supporters have been telling us they do a better job than everyone else in studying the Constitution.

37

Henry,

I'm kind of skeptical that you're asking legit. questions and just making speeches:

Can't we print our own money?

We can and do all the time. That's what checks are. You can also print your own money. If someone is willing to accept it then you're good to go!

The reason the money is worthless is because they have carte blanche to print it out of thin air and with nothing to be held as its value or collateral.

I will be happy to take off your hands any and all of that 'worthless money' you may be holding. Let me know and I'll give you my address.

Mind you, the Fed holds all OUR gold as collateral for our 9 trillion dollar debt to them.

We have no debt to the Federal gov't and the fed. gov't has very limited gold holdings.

As I understand it, one of the constitutional roles of our government is to regulate and dispense our
money spply.

In all honestly the Constitution doesn't say much about monetary policy. It, clearly, was not very well developed back then.

Congressional overview and why are the names of those involved in this private banking consortium not shown or known?

The Board of Governors of the Fed are well known and often have to testify in front of Congress. In a moment Congress could dissolve the Fed's monetary powers and put just about anything it wanted in its place.

38

Booton's got you all dead to rights on monetary policy.

39

BTW, let me remind everyone that the Paul supporters have been telling us they do a better job than everyone else in studying the Constitution.

Well, so much for a measured discourse. Here comes the childish comments on your mental superiority.

I will be happy to take off your hands any and all of that 'worthless money' you may be holding. Let me know and I'll give you my address.

I don't think giving me your address or taking my money would be in you best interest. I am a felon and I don't suffer fools lightly (it's a learned behavior in order to survive, if you must know). I was trying to educate myself but your arrogance precludes any type of advancement in this dialogue.

40

"BTW, let me remind everyone that the Paul supporters have been telling us they do a better job than everyone else in studying the Constitution."

No, we are saying that Ron Paul seems to understand it and follow it more than any candidate in the republican party. I don't know of any Ron Paul support, and I know many that claims to fully understand the Constitution. What they do understand is the need for freedom.

41

I don't think giving me your address or taking my money would be in you best interest. I am a felon and I don't suffer fools lightly (it's a learned behavior in order to survive, if you must know). I was trying to educate myself but your arrogance precludes any type of advancement in this dialogue.

Whoo, a tough guy. You better watch your step around Hanky there, Boonton. It's no wonder RP can't get any traction with supporters like Hanky, sheesh; what a rube.

42

Well, so much for a measured discourse. Here comes the childish comments on your mental superiority.

Let's see, you guys come here telling us you're Constitutional purists, just study the Constitution etc. Since the word "gold" appears once in the Constitution and you guys are big on both gold and the Constitution wasn't it a bit strange such a mistake was made?

I didn't say it because I don't think the comment was original research but it's not so strange the Constitutional assertion was botched. I'm sure someone in this 'movement' put it out there knowing full well they were distorting what the Constitution actually said.

Here's a lesson. Whenever anyone pulls out something that seems to stump you in these arguments, call their bluff and check their sources. You will be happily surprised more often than you think.

I am a felon and I don't suffer fools lightly (it's a learned behavior in order to survive, if you must know).

I see, this is demonstrating Joe's post on "adolescent ideology" was inaccurate?

Please kill him first, since he's going to heaven it won't be so much of a problem. But seriously if you don't think your money is worth anything can you please send it to me?

43

Thanks for the reply.

Anyway, I admit it's not stated directly.

But think about what it means that the constitution states that states should not make anything other than gold or silver legal tender. Why does it say that? So the federal government could make something other than gold and silver legal tender? Would that make sense?

What is the reason it doesn't want states to make anything other than gold and silver legal tender, if it wasn't to prevent states from creating currencies which competed with the official U.S. currency (of the time) of gold and silver? If you have another explanation, I'll hear it, but offhand I can't think of any reason other than that.

44

Boonton: The Board of Governors of the Fed are well known and often have to testify in front of Congress.

Since we are talking about Ron Paul, here is some of that testimony:

http://youtube.com/watch?v=A4kxTkhwR_Q

http://youtube.com/watch?v=sVCStbbIvDg

http://youtube.com/watch?v=_8pLpI5rzKI&mode=related&search=

45

Boonton: just advocate a 100% reserve requirement...but even then you can have runs on the bank.

No... A 100% reserve requirement means the bank has everything in reserve for when the depositor wants it. No bank runs are possible. Even if everyone showed up at once, no one would be turned away. The system would have time deposits, where a depositor simply can't withdrawal before the maturity of the deposit is up. That money is loaned out and will be put back into the account before the depositor can withdrawal.

Can't we print our own money?

We can and do all the time. That's what checks are. You can also print your own money. If someone is willing to accept it then you're good to go!

Um, checks are backed by US dollars. People can't just print them. Bouncing them is frowned upon. Yet the Fed Reserve just prints new money.

This story is kind of interesting. Personally, I don't know why anyone would use Liberty Dollars unless to try to make some kind of point. Why go into a retail store and offer to buy things with silver when they are happy to take paper?

In all honestly the Constitution doesn't say much about monetary policy. It, clearly, was not very well developed back then.

It doesn't say much, but it does say that Congress has the power to coin money and regulate the value thereof. Congress does not do that. It has abdicated its responsibility to the Fed Reserve, a private entity. The Fed Reserve regulates the value thereof.

It is also instructive as to what the Constitution doesn't say. In an earlier draft, the clause To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures; included the phrase "and emit bills of credit of the United States".

James Madison's record states: "This was a favorable moment to shut and bar the door against paper money".

46

Somolia is actually an example of warlordism, not anarchy. And their economy is doing pretty good, by the way.

Unions are better suited to handle coal mine safety issues than the government.

And progressives are progressing the wrong way. Socialism is greedy, inefficient and turns citizens into serfs. After all....how can I opt out?

47

When I lost my faith in party politics and became libertarian, it was hardly from any "utopian" dream. This post is pure bad faith and statist apologetics. You're asking all the wrong questions and you've only done a surface scan, found the answers you wanted, and quit searching. I'm sure you've seen secular people do the same thing with your religious beliefs.

48

What I do not appreciate about Ron Paul is not his Libertarian views. It is his 9-11 "Truther" views and the weirdos that seem to follow him everywhere. Absolutely no thanks.

49

"Pam writes:
What I do not appreciate about Ron Paul is not his Libertarian views. It is his 9-11 "Truther" views and the weirdos that seem to follow him everywhere. Absolutely no thanks."

The people that follow Ron Paul are passionate about taking this country back from the NeoCons and Democrats. Take time to learn the issues and pick a candidate by his views and not who follows him? Who else you going to vote for is you are a values voter? Fred Thompson? Mitt Romney? Guliani? All have a jaded past. If you want a solid candidate with solid values that loves his country you need to look at Ron Paul.

50

Paul,

But think about what it means that the constitution states that states should not make anything other than gold or silver legal tender. Why does it say that? So the federal government could make something other than gold and silver legal tender? Would that make sense?

Well the section that it says this also says the states cannot make treaties or confederations etc. Yet the Federal Gov't can do that. As I said I don't think the Founders thought much about monetary policy but I can see why it would be desirable to have only the central gov't issue paper money and limit the states to coin money (coin meaning made out of precious metals, not tokens which 'represent')

Jay D
Even if everyone showed up at once, no one would be turned away. The system would have time deposits, where a depositor simply can't withdrawal before the maturity of the deposit is up. That money is loaned out and will be put back into the account before the depositor can withdrawal.

The problem is this breaks the financial system whose purpose is to move money from people with few ideas towards people with ideas. Don't think I'm getting to carried away with the word ideas. I don't mean necessarily the next Edison. It can be as mundane as "I could use a car to go to work now and make payments for the next 5 years" or even as minor as "I can buy gifts for Christmas now and pay it back after my Januray bonus check". The financial system does a wickedly good job of reallocating these resources so people with ideas have to pay as little as possible to 'rent' capital and people without it get as much as possible for lending it.

Now you're essentially saying only reallocation happens if the person with ideas happens to have a time schedule that perfectly lines up with the person without ideas. The car that gets paid off in five years must have a matching fellow who has no need for funds for five years.

Um, checks are backed by US dollars. People can't just print them. Bouncing them is frowned upon. Yet the Fed Reserve just prints new money.

True, well what about Pokemon cards? Assuming you're with people who collect them you can use them as money. You hear about smokes in POW camps? In theory you could print your own "JAY DOLLARS". If the deli guy is willing to take them them you have your own money. Sometimes this does indeed happen.

James Madison's record states: "This was a favorable moment to shut and bar the door against paper money".

And yet they didn't shut the door. Otherwise you wouldn't have such a hard time trying to tease it out of the very few words in the Constitution.

51

If you use this as a means to rethink your ideas, I'd say you have an enormous amount of work left to do. Your piece is still so riddled with inaccuracies and just unfounded attacks that it's difficult to address them all at once. Perhaps I'll come back once in a while and address a different paragraph.

Let me start with the one near the end that seemed so utterly ludicrious, and must have been based on some view of the world that is not only not based in any evangelical frame of thought that I've ever heard of, but far removed from any view of history ever spoken. I quote: "The difference is that conservatism is progressive, relying on incremental changes that are derived from a host of first principles while Pauline libertarianism is regressive, longing to return to a time in history that never existed."

Somehow, you've taken the very use of language and turned it against itself. Frankly, with that kind of thinking, I almost imagine that talking to you is pointless, but perhaps someone else will be prevented from being led astray by your awful teaching. Let's be clear: any kind of thought that is "progressive" is by its very nature NOT "conservative". In fact, the very definition of these two words carries the other as its antonym. If you're suggesting that "modern conservatism" might be more like the old progressivism, perhaps that could be true, but only in the context of the Bush administration. Clearly, conservatives of the past, most prominently including Reagan and Goldwater fought hard AGAINST the ideals of progressivism. In fact, you do tend to argue more as a progressive than as a conservative. I might even be inclined to accuse you of progressive thinking, and since apparently you wouldn't consider that an insult, I suggest you adopt that more appropriate name for your thoughts. There's nothing "conservative" about it, except perhaps for a smattering of social conservative ideas tossed in with your overall progressive mindset.

"Pauline libertarianism" as you call it (there really is no such thing, but I'll humor you) is regressive only in the sense that our nation does have some solid values enshrined in the Constitution that DO provide some guidance regarding how a country might be run without trampling liberties of its citizens. The fact that you can't make a distinction between that ideal and "regressive thought" (again, an accusation the left often hauls out whenever a real conservative is running) only serves to reinforce in me the recognition that you have no idea what conservative really meant before the last couple of years, nor what our national heritage is all about. You are clearly a product of our public school system, not some evangelical worldview.

I haven't been a regular reader of your posts, so I have to admit that I'm only basing my assessment of your worldview from two articles, but I have rarely seen two articles purporting to be conservative that have done such a hatchet job on conservatism. Please take a long vacation and re-evaluate where your worldview comes from.

52

If you use this as a means to rethink your ideas, I'd say you have an enormous amount of work left to do. Your piece is still so riddled with inaccuracies and just unfounded attacks that it's difficult to address them all at once. Perhaps I'll come back once in a while and address a different paragraph.

Let me start with the one near the end that seemed so utterly ludicrious, and must have been based on some view of the world that is not only not based in any evangelical frame of thought that I've ever heard of, but far removed from any view of history ever spoken. I quote: "The difference is that conservatism is progressive, relying on incremental changes that are derived from a host of first principles while Pauline libertarianism is regressive, longing to return to a time in history that never existed."

Somehow, you've taken the very use of language and turned it against itself. Frankly, with that kind of thinking, I almost imagine that talking to you is pointless, but perhaps someone else will be prevented from being led astray by your awful teaching. Let's be clear: any kind of thought that is "progressive" is by its very nature NOT "conservative". In fact, the very definition of these two words carries the other as its antonym. If you're suggesting that "modern conservatism" might be more like the old progressivism, perhaps that could be true, but only in the context of the Bush administration. Clearly, conservatives of the past, most prominently including Reagan and Goldwater fought hard AGAINST the ideals of progressivism. In fact, you do tend to argue more as a progressive than as a conservative. I might even be inclined to accuse you of progressive thinking, and since apparently you wouldn't consider that an insult, I suggest you adopt that more appropriate name for your thoughts. There's nothing "conservative" about it, except perhaps for a smattering of social conservative ideas tossed in with your overall progressive mindset.

"Pauline libertarianism" as you call it (there really is no such thing, but I'll humor you) is regressive only in the sense that our nation does have some solid values enshrined in the Constitution that DO provide some guidance regarding how a country might be run without trampling liberties of its citizens. The fact that you can't make a distinction between that ideal and "regressive thought" (again, an accusation the left often hauls out whenever a real conservative is running) only serves to reinforce in me the recognition that you have no idea what conservative really meant before the last couple of years, nor what our national heritage is all about. You are clearly a product of our public school system, not some evangelical worldview.

I haven't been a regular reader of your posts, so I have to admit that I'm only basing my assessment of your worldview from two articles, but I have rarely seen two articles purporting to be conservative that have done such a hatchet job on conservatism. Please take a long vacation and re-evaluate where your worldview comes from.

53

If you use this as a means to rethink your ideas, I'd say you have an enormous amount of work left to do. Your piece is still so riddled with inaccuracies and just unfounded attacks that it's difficult to address them all at once. Perhaps I'll come back once in a while and address a different paragraph.

Let me start with the one near the end that seemed so utterly ludicrious, and must have been based on some view of the world that is not only not based in any evangelical frame of thought that I've ever heard of, but far removed from any view of history ever spoken. I quote: "The difference is that conservatism is progressive, relying on incremental changes that are derived from a host of first principles while Pauline libertarianism is regressive, longing to return to a time in history that never existed."

Somehow, you've taken the very use of language and turned it against itself. Frankly, with that kind of thinking, I almost imagine that talking to you is pointless, but perhaps someone else will be prevented from being led astray by your awful teaching. Let's be clear: any kind of thought that is "progressive" is by its very nature NOT "conservative". In fact, the very definition of these two words carries the other as its antonym. If you're suggesting that "modern conservatism" might be more like the old progressivism, perhaps that could be true, but only in the context of the Bush administration. Clearly, conservatives of the past, most prominently including Reagan and Goldwater fought hard AGAINST the ideals of progressivism. In fact, you do tend to argue more as a progressive than as a conservative. I might even be inclined to accuse you of progressive thinking, and since apparently you wouldn't consider that an insult, I suggest you adopt that more appropriate name for your thoughts. There's nothing "conservative" about it, except perhaps for a smattering of social conservative ideas tossed in with your overall progressive mindset.

"Pauline libertarianism" as you call it (there really is no such thing, but I'll humor you) is regressive only in the sense that our nation does have some solid values enshrined in the Constitution that DO provide some guidance regarding how a country might be run without trampling liberties of its citizens. The fact that you can't make a distinction between that ideal and "regressive thought" (again, an accusation the left often hauls out whenever a real conservative is running) only serves to reinforce in me the recognition that you have no idea what conservative really meant before the last couple of years, nor what our national heritage is all about. You are clearly a product of our public school system, not an evangelical worldview.

I haven't been a regular reader of your posts, so I have to admit that I'm only basing my assessment of your worldview from two articles, but I have rarely seen two articles purporting to be conservative that have done such a hatchet job on conservatism. Please take a long vacation and re-evaluate where your worldview comes from.

54

If you use this as a means to rethink your ideas, I'd say you have an enormous amount of work left to do. Your piece is still so riddled with inaccuracies and just unfounded attacks that it's difficult to address them all at once. Perhaps I'll come back once in a while and address a different paragraph.

Let me start with the one near the end that seemed so utterly ludicrious, and must have been based on some view of the world that is not only not based in any evangelical frame of thought that I've ever heard of, but far removed from any view of history ever spoken. I quote: "The difference is that conservatism is progressive, relying on incremental changes that are derived from a host of first principles while Pauline libertarianism is regressive, longing to return to a time in history that never existed."

Somehow, you've taken the very use of language and turned it against itself. Frankly, with that kind of thinking, I almost imagine that talking to you is pointless, but perhaps someone else will be prevented from being led astray by your awful teaching. Let's be clear: any kind of thought that is "progressive" is by its very nature NOT "conservative". In fact, the very definition of these two words carries the other as its antonym. If you're suggesting that "modern conservatism" might be more like the old progressivism, perhaps that could be true, but only in the context of the Bush administration. Clearly, conservatives of the past, most prominently including Reagan and Goldwater fought hard AGAINST the ideals of progressivism. In fact, you do tend to argue more as a progressive than as a conservative. I might even be inclined to accuse you of progressive thinking, and since apparently you wouldn't consider that an insult, I suggest you adopt that more appropriate name for your thoughts. There's nothing "conservative" about it, except perhaps for a smattering of social conservative ideas tossed in with your overall progressive mindset.

"Pauline libertarianism" as you call it (there really is no such thing, but I'll humor you) is regressive only in the sense that our nation does have some solid values enshrined in the Constitution that DO provide some guidance regarding how a country might be run without trampling liberties of its citizens. The fact that you can't make a distinction between that ideal and "regressive thought" (again, an accusation the left often hauls out whenever a real conservative is running) only serves to reinforce in me the recognition that you have no idea what conservative really meant before the last couple of years, nor what our national heritage is all about. You are clearly a product of our public school system, not an evangelical worldview.

I haven't been a regular reader of your posts, so I have to admit that I'm only basing my assessment of your worldview from two articles, but I have rarely seen two articles purporting to be conservative that have done such a hatchet job on conservatism. Please take a long vacation and re-evaluate where your worldview comes from.

55

Sorry for the multiple posts...your service kept giving me an error message saying the post had not been accepted. Might be worth checking into.

56

Boonton: Now you're essentially saying only reallocation happens if the person with ideas happens to have a time schedule that perfectly lines up with the person without ideas. The car that gets paid off in five years must have a matching fellow who has no need for funds for five years.

Well, no. That's what the bank is for. They pool time deposits and divvy them up appropriately, with adding machines smoking to juggle everything. It doesn't even take any government regulation. Just the knowledge that there isn't the safety net of government insurance. If people don't have confidence their money is safe they won't do business there.

With out a federal interest rate, and without fractional reserve banking, interest rates would be set by the market. Supply and demand. When there is a high demand goes up the price goes up. When demand for loans is high, the interest rate goes up. The higher interest rate lures savers to put their money into the time deposits.

If however, there are lots of savers, the interest rate goes down because they don't have to lure them.

In the situations described here about the harmful effects of price deflation. What happens. People get nervous for whatever reason and stop spending. What do they do with their money? Save it? If people aren't buying and instead saving, there are extra savers and the interest rate goes down, encouraging people to borrow.

57

Here's the problem, you're requiring the bank to keep 100% reserves matching time deposits to time loans. So if a bank has deposits of 100 coins it must match its loans times to those deposits. If 90 of those coins are '5 year deposits' then the bank must makes loans of 5 years or less. If loan demand, though, is for 60 coins of 30-year mortagage loans it is going to have a problem.

The beauty of fractional banking is that during the normal course of things deposits tend to cancel out withdrawls during a day, week, month etc. This makes sense. You take our $100 this morning and have spent $80 by this evening which means next morning the merchants you spent it with will be making around $80 in deposits.

Most people will not be willing to tie their deposits up so long BUT without your requirement a bank can take in lots of short term deposits yet still make long term loans.

With out a federal interest rate, and without fractional reserve banking, interest rates would be set by the market. Supply and demand. When there is a high demand goes up the price goes up. When demand for loans is high, the interest rate goes up. The higher interest rate lures savers to put their money into the time deposits.

Rates are already set by the market. The only rate not set by the market is the 3-month T-bill rate. The only reason that rate is not set by the market is because the Fed will create or destroy money as needed to maintain the rate it desires. In the early 80's the Fed didn't even do that, instead it tried to target money supply per Milton Friedman but it discovered the velocity of money was unstable so instead it reverted to interest rate targetting.

In the situations described here about the harmful effects of price deflation. What happens. People get nervous for whatever reason and stop spending. What do they do with their money? Save it? If people aren't buying and instead saving, there are extra savers and the interest rate goes down, encouraging people to borrow.

That would work if money didn't matter but it does. The decrease in interest rates caused by increased saving does not result in enough new borrowing to make up for the difference. Probably because deflation is accompanied by fear not only are people saving all they can they are reluctant to take on debt. Investment has two elements. The interest rate is the cost of the capital but the cost must be countered by an expected benefit. If spending is falling the expected benefits of a new investment will fall.

58

Boonton: Here's the problem, you're requiring the bank to keep 100% reserves matching time deposits to time loans. So if a bank has deposits of 100 coins it must match its loans times to those deposits. If 90 of those coins are '5 year deposits' then the bank must makes loans of 5 years or less. If loan demand, though, is for 60 coins of 30-year mortagage loans it is going to have a problem.

I'm not a banker so I don't know exactly how it would all work, but there are two points I would add. 1) The bank doesn't need to get all its reserves from time deposits. The bank would have a store of its own assets from profits and investors. 2) The bank owns the property until the mortgage matures. It could, I think, theoretically call the loans prematurely. It wouldn't ordinarily, but the fact that it could if it had to counts toward confidence in the bank. 3) I wouldn't require the bank to hold 100% reserves. If the banker wants to crawl a little bit out on a limb, just know that there is no government safety net below the limb.

The beauty of fractional banking is that during the normal course of things deposits tend to cancel out withdrawls during a day, week, month etc. This makes sense. You take our $100 this morning and have spent $80 by this evening which means next morning the merchants you spent it with will be making around $80 in deposits.

Interestingly, this is presumed to be how fractional reserve banking got started. Someone in town (a smith or somebody) would have a vault. People would ask to store their gold in the vault and the smith would agree (for a fee) and give them a receipt. That receipt would circulate because anyone could turn it in for gold.

The smith then noticed that most all of the gold in his vault just sat there. "What would be the harm in loaning a little bit out." he would say to himself. So he loaned it out, which added money to the local economy. Inflation. There were two existing receipts circulating for one piece of gold.

This is unsustainable for the smith. If word got out, everyone would try to reedeem their gold.

The temptation remains, however, and banks try to figure out ways to loan out more money then they actually have. The Federal Reserve is that system.

Rates are already set by the market. The only rate not set by the market is the 3-month T-bill rate.

Other rates may not be pegged, but setting one key rate artificially sets the trend for all other interest rates. If they raise the 3-month T-bill rate, all interest rates will trend upward.

59

1) The bank doesn't need to get all its reserves from time deposits. The bank would have a store of its own assets from profits and investors.

OK but this is still a massive bit of sand in the machine...actually more like pebbles, rocks and stones. Imagine, George Bailey has to wait 15 or so years before writing a new mortgage loan as he accumulates the interest profits from the first batch.

2) The bank owns the property until the mortgage matures. It could, I think, theoretically call the loans prematurely. It wouldn't ordinarily, but the fact that it could if it had to counts toward confidence in the bank.

To make the mortgage, though, the bank needs to have the money. The guy who owns the house want's to get paid before he lets the new mortgage holder move in.

3) I wouldn't require the bank to hold 100% reserves. If the banker wants to crawl a little bit out on a limb, just know that there is no government safety net below the limb.

Then the point is to eliminate the safety net? You don't need the gold standard to do that but doing so would make more booms and busts...not less.

Interestingly, this is presumed to be how fractional reserve banking got started. Someone in town (a smith or somebody) would have a vault. People would ask to store their gold in the vault and the smith would agree (for a fee) and give them a receipt. That receipt would circulate because anyone could turn it in for gold.

Indeed, but this isn't a bad thing in itself. Again money is just a way of keeping score in many respects. Imagine that the gold stays in the safe for 100 years as these receipts circulate around and around. You declare all is well because the economic growth is 'real'. Well one day the door of the vault falls open due to rust and the town is shocked to find all the gold had been stolen 99 years ago. Is all that economic growth magically 'unreal' now?

Other rates may not be pegged, but setting one key rate artificially sets the trend for all other interest rates. If they raise the 3-month T-bill rate, all interest rates will trend upward.

Only in the sense that Coke can 'control' the price of Pepsi by changing its own price. The Fed's ability to set the 3-month bill is limited to its supply of bills as well as the fact that it's probably impossible to set the bill below 0%. The market decides the spread and while things like inverted yield curves sound irrational they show up all over the place.

So far it sounds like what you're advocating would be more or less simulated by simply having the Fed target a 0% inflation rate rather than a

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Boonton OK but this is still a massive bit of sand in the machine...actually more like pebbles, rocks and stones. Imagine, George Bailey has to wait 15 or so years before writing a new mortgage loan as he accumulates the interest profits from the first batch.

So you are saying he will have to put a little work into it, maybe attract investors with a solid plan for growth. How is this different than any other business?

Then the point is to eliminate the safety net? You don't need the gold standard to do that but doing so would make more booms and busts...not less.

Non-fractional reserve banking and the gold standard are separate but related issues, so no, you don't strictly need a gold standard for that. But no government safety net would make for fewer booms and busts for a couple reasons. Bad banking practices would be exposed earlier before being allowed to continue and therefore corrective "busts" would be relatively small. Free market banks would compete against each other, so bank failures would be more localized. Finally, banks would be more risk averse if they knew there wasn't a fed to bail them out.

Well one day the door of the vault falls open due to rust and the town is shocked to find all the gold had been stolen 99 years ago. Is all that economic growth magically 'unreal' now?

That was pretty funny. Besides the initial inflation when the thieves spent their ill-gotten gains, no, that growth was not unreal. Those receipts were valued that whole time and worked as a means of exchange. One of the appeals of gold is that you can't just make more. For all the townspeople knew, they couldn't make more receipts.

So far it sounds like what you're advocating would be more or less simulated by simply having the Fed target a 0% inflation rate rather than a

I think you were going to say "gold standard". Yes a gold standard would approximate a 0% inflation rate, but that would make central banks pointless. To make a 0% inflation rate you simply don't add or subtract from the money supply. I don't think there are any significantly large gold discoveries to be made, so a gold standard would actually have a small inflation rate.

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So you are saying he will have to put a little work into it, maybe attract investors with a solid plan for growth. How is this different than any other business?

Not quite, I'm asking you to look at what the current system does as a whole. It channels money from those without ideas to those with ideas and does so in a way that doesn't make anyone mad. The person whose 'giving' his money away still retains purchasing power...even has the ability to get rewarded for holding off on that power while the person receiving the funds can implement his ideas.

What you're proposing will gum up that system. Yes there will be creative people who find their way around those roadblocks just as there are creative people who navigate rules of Islamic banking and whatnot. But to what benefit? To use a bit of corporate-speak, there's little value-added to be seen in your proposal.

But no government safety net would make for fewer booms and busts for a couple reasons. Bad banking practices would be exposed earlier before being allowed to continue and therefore corrective "busts" would be relatively small.

The fact is banks are actually quite conservative and I don't see much evidence that banks are engaging in lots of bad practices due to the presence of a safety net coupled with regulation and control of the money supply. Booms and busts have been a fraction of what they used to be. From what little we have now I don't see the merits of engaging in a radical overhaul to what? Reduce inflation 2 points per year? Make recessions lighter? The danger with any overhaul is always that you'll make the problem worse. I don't see a lot of room for great improvement but I see a lot of potential for a very steep downside.

Free market banks would compete against each other, so bank failures would be more localized. Finally, banks would be more risk averse if they knew there wasn't a fed to bail them out.

On the global scale we don't see much of a safety net and we see a lot of free market competition between hedge funds and other exotic birds. Their behavior is not localized but flocking. Money is very fluid so its nature would be to flow towards the center of gravity very quickly, not to be bottled up and 'localized'.

I think you were going to say "gold standard". Yes a gold standard would approximate a 0% inflation rate, but that would make central banks pointless. To make a 0% inflation rate you simply don't add or subtract from the money supply.

But gold doesn't have a 0% inflation rate. As I showed you in the graph I linked too, gold has had a much more wild ride for the last twenty years than the dollar. The value of a given stockpile of gold can double in value in just a few years or drop in half. From either end of the coin this is a pretty bumpy ride. While you may enjoy seeing your gold rise in value if I owed you, say, a years worth of pay in gold I would suddenly become two years worth of income in debt.

A simple equation will show what's wrong with your assertion: MV = PT. Basically it says money times its velocity must equal the price of things times the number of things sold. Your statement is only true if V and T are constants. They are not so you can have inflation or deflation even if your holding M constant. In fact, that is why the Fed. stopped trying to target M back in the 80's and now targets the 3 month bill instead.

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Boonton: As I showed you in the graph I linked too, gold has had a much more wild ride for the last twenty years than the dollar. The value of a given stockpile of gold can double in value in just a few years or drop in half. From either end of the coin this is a pretty bumpy ride.

It's not really fair looking at the value of gold for the last 20 years. Try looking at the value of gold back when it was a medium of exchange, and basically, the world's reserve currency.

With an ounce of gold, a man could buy a fine suit of clothes in the time of Shakespeare, in that of Beethoven and Jefferson, and in the Depression of the 1930’s. In fact, this statement was still true in the 1980’s, but not in the late 1990’s. Forbes, 1998 (HT)

The dollar today is worth only four cents compared to the dollar in 1913, when the Federal Reserve started. Ron Paul

Boonton: A simple equation will show what's wrong with your assertion: MV = PT.

Here is a good article on velocity.

Consider the following: baker John sold ten loaves of bread to tomato farmer George for $10. Now, John exchanges the $10 to buy 5kg of potatoes from Bob the potato farmer. How did John pay for potatoes? He paid with the bread he produced.

Observe that John the baker had financed the purchase of potatoes, not with money, but with bread. He paid for potatoes with his bread, using money to facilitate the exchange. In other words, money fulfills here the role of the medium of exchange and not the means of payment.

The number of times money changed hands has no relevance whatsoever on the baker's capability to fund the purchase of potatoes. What matters here is that he possesses bread that can be exchanged by means of money for potatoes.

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It's not really fair looking at the value of gold for the last 20 years. Try looking at the value of gold back when it was a medium of exchange, and basically, the world's reserve currency.

But what's really more relevant? If gold holds its value then why would the last 20 years make it go so crazy? That's kind of important. Suppose I offered you a car that drove itself by computer. To reassure you I show you for the last 5 years the car has been driving its owners around with a perfect record, never an accident. But for the last two weeks it's been veering all over the place and nearly killing people. Would you be a bit less inclined to buy it?

I'm also still a bit skeptical about your claims of long run stability of gold. Europe experienced a general inflation when Spain began importing mass quantities of gold from the Americas. I suspect that a lot of the stability of gold was due to the fact that it tracked economic activity well...namely for most of the last few thousand years we were all dirt poor in terms of economic production and dirt poor in terms of gold mining. As the economy has become much more dynamic in the last, say 150 years there's no guarantee gold mining can or will continue to follow economic growth in lockstep.

In other words, gold was acting like a 'dead man's switch' in the MV=PT equation where both V and T were stable. As T becomes more dynamic, though, M cannot be counted on to keep up the way it did in the past.

The number of times money changed hands has no relevance whatsoever on the baker's capability to fund the purchase of potatoes. What matters here is that he possesses bread that can be exchanged by means of money for potatoes

In this example money plays an essential role because the baker is not paying the farmer in potatoes. To see how this may come about imagine a slightly more complicated barter system. Suppose the farmer wants an iphone and because potatoes keep for a while he can afford to wait. The baker, though, needs to move now because bread goes bad fast and his loathes will soon be worthless. If, however, the iphone is not going to be released for a month the baker is out of luck. Assuming money doesn't exist in this economy and there is nothing else he desires to buy or the iphone seller only accepts bread his efforts have been lost. (Mostly, if this was really the economy human nature is probably such that the baker could find some other good that is more durable to buy that he will then trade in a month for bread from another baker to pay for the iphone to buy the potatoes...but added complication adds transaction costs).

Money, though, alters this set up. The Baker can trade his bread for a $10 bill which he can keep for a month then buy bread from another baker...pay the iphone salesman and then give the iphone to the farmer. Sounds Great!

Suppose, though, there is only one $10 bill in this economy and the other baker next door already did this trick? The baker is at a loss. He cannot convert the bread made today for the $10 bill. Next month, the baker can pay extra bread to sell to the rival baker BUT what's the point of baking bread today? He shrugs and decides to take the day off and not bake any bread as a result economic production declines. MV = PT. T goes down because V went down.

Or to use the monatarist's mantra, "money matters".

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Boonton: But what's really more relevant? If gold holds its value then why would the last 20 years make it go so crazy? That's kind of important. Suppose I offered you a car that drove itself by computer. To reassure you I show you for the last 5 years the car has been driving its owners around with a perfect record, never an accident. But for the last two weeks it's been veering all over the place and nearly killing people. Would you be a bit less inclined to buy it?

You are comparing apples and oranges. Ron Paul wants to go to a system where gold is money. The best comparison is to compare a time where gold was money. For the last 20 years, gold is not money. It is not commonly used anywhere (that I know of) in the world for transactions and it is not used as the priciple store of wealth. The price of gold in the last 20 fluctuated in relation to other factors, including the confidence of other stores of wealth.

Let me ask you this, would the dollar fluctuate wildly if it were not commonly used for transactions and was not a primary store of wealth? No, not really. Its value would actually freefall to its intrinsic value and join the exclusive club of other failed fiat currencies, continental money, confederate dollars, etc.

Boonton: I'm also still a bit skeptical about your claims of long run stability of gold. Europe experienced a general inflation when Spain began importing mass quantities of gold from the Americas.

Yes, there was a large inflation with the discovery of American gold. But unless there is an undiscovered lunar motherlode, I don't think that will happen again. In an interesting side-note, in the series Star Trek Deep Space Nine, the alien species Ferengi used gold as money. When replicators were able to replicate gold at will, their economy collapsed. They switched to a fictional substance called latinum, which could not be replicated.

I suspect that a lot of the stability of gold was due to the fact that it tracked economic activity well...namely for most of