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What Ron Paul Wants: A Quartet of U.S. Currencies
Daily Finance ^ | Jan 3, 2011 | Peter Cohan

Posted on 01/04/2011 9:49:48 AM PST by Toddsterpatriot

In the new Congress, Ron Paul (R-Texas) will head the House committee that oversees the Federal Reserve. Thanks to the title of his book, we know he wants to end the Fed and paper money. But what will he replace it with? The short answer: metal-based currencies.

I recently participated in a hour-long radio debate on the Progressive Radio Network's Freedom News Hour with two Paul supporters who wanted to take me up on the challenge of being proven wrong in my disagreements with seven of Paul's points about the Fed. I really enjoyed this debate and learned some important things.

Of these, none is more significant than what my debate partners believe Paul would do if he could end the Fed. According to them, Paul isn't ready to go directly back to the gold standard. Instead, he wants to keep the dollar and add three more currencies. Those would be based on gold, silver and copper.


(Excerpt) Read more at dailyfinance.com ...


TOPICS: Business/Economy; Government
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Just what we need, multiple currencies.

That'll be $22, 22.90 in copper, 22.16 in silver or 22.47 in gold.

I guess the Americans who can't add or subtract now will have no problem converting between 4 different currencies.

1 posted on 01/04/2011 9:49:50 AM PST by Toddsterpatriot
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To: 1rudeboy; Mase; expat_panama; Rusty0604; Jim 0216; xjcsa; VegasCowboy; 10Ring

Bad idea ping!


2 posted on 01/04/2011 9:50:31 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot
22.90 in copper, 22.16 in silver or 22.47 in gold.

..but this price is only good for the next five minutes... oops, the price changed, it is now 22.60 in copper, 22.59 in silver and 40.78 in gold... oh wait, South Africa just dumped a bunch of gold into the system, the prices changed again.. I guess we'll need a 'Federal Commodity Reserve' to stabilize the prices and prevent outside influence from effecting our currency because our overall infrastructure is no longer based on mining and producing these materials.

3 posted on 01/04/2011 9:55:16 AM PST by mnehring
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To: mnehring
No kidding. Gold is down about 2.5% today, I mean gold is the same, the dollar strengthened by 2.5%.

Quick, change all the price tags in the store.

4 posted on 01/04/2011 9:59:56 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

A dungeons and dragons currency system! Gary Gygax would be so proud!


5 posted on 01/04/2011 10:02:31 AM PST by Peter from Rutland
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To: Toddsterpatriot
I agree this is a bad idea. If for no other reason than the dollar is well on it's way to being as worthless as tits on a boar hog.
Gold is selling at near $1400.00 per ounce.
So a dollar is worth 1/1400th of an oz of gold.
That is a damn small piece of gold. Probably would need an atomic microscope to see it.
6 posted on 01/04/2011 10:04:35 AM PST by Tupelo
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To: Toddsterpatriot
...none is more significant than what my debate partners believe Paul would do if he could end the Fed. According to them, Paul isn't ready to go directly back to the gold standard. Instead, he wants to keep the dollar and add three more currencies. Those would be based on gold, silver and copper.

Unsurprisingly, Paul's supporters appear to be just as crazy as he is.

7 posted on 01/04/2011 10:06:40 AM PST by Mase (Save me from the people who would save me from myself!)
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To: Toddsterpatriot
Really, really, stupid idea. Besides, it's not like you can't buy gold or pay in gold now. It's just nobody wants to.

Fiat money under the Federal reserve has been considerably more stable than the gold backed dollar of the 1800's.

Yes, you read that right! The fiat dollar has not been as good of a long term store of value. So if you're goal is to hoard wealth in your wall or mattress for 100 years, then metal will serve you much better.

But if your goal is currency stability, so that the business engines of wealth creation can perform well, the fiat dollar has significantly outperformed gold.

Goldbugs point to the dollar having lost 70% of it's value in 80 years. But did you know the gold backed dollar did that in just 3 years? The gold backed dollar saw inflation as much as 25% in a single year, and years with deflation almost as bad.

Since the great depression, we've had almost no deflation. And inflation has been relatively moderate most years, far better than gold's performance.

Of course with the Fiat dollar, the year to year changes are always going in the same direction, a slow march of inflation. That does mean the dollar is not a good long term store of wealth. But it's far better than gold for year to year business decisions and economic stability.

8 posted on 01/04/2011 10:06:50 AM PST by DannyTN
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To: DannyTN

-—But did you know the gold backed dollar did that in just 3 years?-—

Which three years?


9 posted on 01/04/2011 10:09:27 AM PST by bert (K.E. N.P. N.C. D.E. +12 .....( History is a process, not an event ))
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To: Peter from Rutland

[ A dungeons and dragons currency system! Gary Gygax would be so proud! ]

So are banking transactions going to require the mastery of 20 sided dice?


10 posted on 01/04/2011 10:19:39 AM PST by GraceG
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To: bert
Which 3 years?

1862 to 1864. The CPI increased 14.2% in 1862, 24.8% in 1863 and 25.1% in 1864. In total the CPI went from 8.54 in 1861 to 15.23 in 1864 an inflation of 78%.

Source = Measuringworth.com

11 posted on 01/04/2011 10:20:15 AM PST by DannyTN
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To: Toddsterpatriot

We would be better off backing our currency off of the Megawatt Hour.

That would mean that opening a Nuclear power plant would be like mining gold, and energy is always useful.


12 posted on 01/04/2011 10:21:23 AM PST by GraceG
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To: Toddsterpatriot

What’s the difference? It’s now 3.15 in gallons of gasoline.


13 posted on 01/04/2011 10:25:37 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Toddsterpatriot
And since you've quite obviously never actually read the Constitution it's not surprising you're completely ignorant of what it says about money.

From Article 1, Section 8:

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

Therefore all Congress has to do is exercise it's lawful authority to regulate the value of any coinage. For instance Congress could legally declare that a one dollar bill is legally exchangeable for 1/1000th of an ounce of gold or 1/25th ounce of silver at any Federally chartered bank.

This would be far more in line with the wishes of the Founding Fathers than this idiotic paper money shell game they're running now.

You do believe in the Constitution, don't you Toddster?

14 posted on 01/04/2011 10:31:35 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: mnehring

Gold’s value changes very little. It’s the fluctuations in the paper value that cause the variances spoken of in the article.

Proof? The value of an ounce of gold in 1900 would buy you a decent suit. The same is true today. The same argument goes for most fungible commodities: their cost in real terms has remained the same or has dropped over time.

It’s paper money is dropping in value that makes inflation possible. Get rid of fiat currency, and inflation could not exist.


15 posted on 01/04/2011 10:34:57 AM PST by Don W (I keep some folks' numbers in my 'phone just so I know NOT to answer when they call...)
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To: Toddsterpatriot

How ‘bout just a commodity based currency?
Just use a big ‘basket’ of commodities from bread to iron to determine the value of the dollar?


16 posted on 01/04/2011 10:37:12 AM PST by Little Ray (The Gods of the Copybook Heading, with terror and slaughter return!)
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To: Lurker
And since you've quite obviously never actually read the Constitution

You're obviously mistaken. Again.

Therefore all Congress has to do is exercise it's lawful authority to regulate the value of any coinage.

Yes, they could certainly do that. It's a bad idea, but they can do it.

You do believe in the Constitution

I do. I also believe Ron Paul is a clown.

17 posted on 01/04/2011 10:38:04 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Don W
It’s paper money is dropping in value that makes inflation possible. Get rid of fiat currency, and inflation could not exist.

Of course it can. Check out the results of Alexander the Great dumping two centuries of accumulated Persian taxation into the market all at once, or the results of the Spanish exploitation of the mines of Mexico and Peru. Both being changes between the relative values of gold and "stuff."

In a gold based currency, the value of a unit of gold is determined by the value of "all the stuff" divided by the number of of units of gold. If the amount of gold in the market grows faster than the amount of "stuff," gold will lose in value, or to put it another way, inflation occurs.

Conversely, if the amount of "stuff" grows faster than the amount of gold, deflation occurs as the gold becomes more valuable per unit.

All going to a gold standard does is take the determination of whether or not inflation (or deflation) occurs out of the hands of bankers and bureaucrats. This may be a very good thing.

Unfortunately, whether inflation occurs or not is then in the hands of miners and scientists. Anybody want to bet the entire world's economy that somebody can't develop a method to cheaply extract gold from seawater or convert lead to gold?

18 posted on 01/04/2011 10:54:40 AM PST by Sherman Logan
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To: Tupelo
“I agree this is a bad idea. If for no other reason than the dollar is well on it's way to being as worthless as tits on a boar hog.
Gold is selling at near $1400.00 per ounce.
So a dollar is worth 1/1400th of an oz of gold.
That is a damn small piece of gold. Probably would need an atomic microscope to see it.”

So, how functional will it be for you to buy something with your 1 oz gold coin?

How about a hotdog that costs $1 ? Will you just buy 1400 of them? You could hand out the other 1399 to your Paultard friends.

19 posted on 01/04/2011 10:54:44 AM PST by Beagle8U (Free Republic -- One stop shopping ....... It's the Conservative Super WalMart for news .)
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To: Beagle8U
They're called "silver", "copper", and "nickel". Look into it. You might also try reading Article 1, Section 8 of the US Constitution sometime.
20 posted on 01/04/2011 11:03:09 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Beagle8U
I am sorry but your response did not make a bit of sense.
Apparently you do not like Rep. Paul and anyone that you in your infinite wisdom perceive as a Paul supporter must be belittled with a stupid name like “Paultard”.
For starters, IF you can read my post, I did not in anyway say I supported the idea or supported Rep. Paul.
As I learned in college:
RTWDQ and then RTWDA
Sheech!
21 posted on 01/04/2011 11:03:22 AM PST by Tupelo
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To: Toddsterpatriot
Yes, they could certainly do that. It's a bad idea, but they can do it.

So you think the restraints laid down on the Federal Government by the Founding Fathers are a bad idea?

22 posted on 01/04/2011 11:03:56 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Toddsterpatriot

soros wants a dual global currency system.

One for billionares and governments; one for peons


23 posted on 01/04/2011 11:08:07 AM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: Lurker
Nice try. LOL!

For instance Congress could legally declare that a one dollar bill is legally exchangeable for 1/1000th of an ounce of gold or 1/25th ounce of silver at any Federally chartered bank.

Congress could legally follow your suggestion. Just because it's legal, doesn't make it a good idea.

24 posted on 01/04/2011 11:09:18 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Lurker
Yes I know what it says, but in today's economy it would be a bad idea. What would it do to our world trade? How do you grow our economy without mining more gold,silver, etc?

What happens when the ecotwits succeed in getting mining banned?

25 posted on 01/04/2011 11:10:59 AM PST by Beagle8U (Free Republic -- One stop shopping ....... It's the Conservative Super WalMart for news .)
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To: Toddsterpatriot
Just because it's legal, doesn't make it a good idea.

So you think that the Founding Fathers restrictions against Congress issuing paper money was a bad idea then or do you think that following the Constitution now is a bad idea?

Which is it?

26 posted on 01/04/2011 11:11:15 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Beagle8U
Yes I know what it says, but in today's economy it would be a bad idea.

So let me get this straight. You think the Federal Government adhering to the limits laid down by our Founding Fathers in the US Constitution is a bad idea?

27 posted on 01/04/2011 11:12:56 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Lurker
So you think that the Founding Fathers restrictions against Congress issuing paper money was a bad idea

Where did they do that?

or do you think that following the Constitution now is a bad idea?

I think following the Constitution is a good idea. I think your idea of fixing the dollar to silver and gold is a bad idea.

28 posted on 01/04/2011 11:16:07 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Sherman Logan
If the amount of gold in the market grows faster than the amount of "stuff," gold will lose in value, or to put it another way, inflation occurs.

The Weimar experience was really bad. Printing presses going 24/7. But the amount they could print was at least limited by the physical constraints of the printing process itself. Today, a central bank can with one keystroke increase the monetary supply by whatever amount it wishes -- $1 billion, $1 trillion, $1 quadrillion... -- in an instant. The amount of gold will never, ever grow faster than the ability of central banks to "print" fiat money. Even if:

Anybody want to bet the entire world's economy that somebody can't develop a method to cheaply extract gold from seawater or convert lead to gold?

In which case gold would no longer serve as a reliable store of wealth. So people would simply move on to another commodity that would.

29 posted on 01/04/2011 11:22:30 AM PST by kevao
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To: DannyTN
We went off the gold standard with the First Legal Tender Act in 1862. We didn't get back to it until after the war. All that inflation from 1862-64 was caused by the mass issue of what became known as the ‘greenback’ (which was fiat currency issued without backing)in order to finance a little dust-up mistakenly called the ‘Civil War’.
30 posted on 01/04/2011 11:23:37 AM PST by ex 98C MI Dude (Alea Iacta Est)
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To: DannyTN
Goldbugs point to the dollar having lost 70% of it's value in 80 years.

Good points. And, if one's cash was earning a market rate of interest over that 80 year period, my guess is that cash didn't lose a dime in purchasing power. My back-of-the-envelope calc shows you'd only have to earn an average of 1.50%/year to break even.
31 posted on 01/04/2011 11:23:58 AM PST by VegasCowboy ("...he wore his gun outside his pants, for all the honest world to feel.")
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To: Little Ray
Just use a big ‘basket’ of commodities from bread to iron to determine the value of the dollar?

How would the conversion work?

32 posted on 01/04/2011 11:28:05 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: GraceG
We would be better off backing our currency off of the Megawatt Hour.

Then we'd all carry around a pocket full of batteries. "Can I get change for a D-cell?"

33 posted on 01/04/2011 11:28:19 AM PST by Bubba Ho-Tep ("More weight!"--Giles Corey)
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To: Lurker; Toddsterpatriot
So you think that the Founding Fathers restrictions against Congress issuing paper money was a bad idea then or do you think that following the Constitution now is a bad idea?

That is a common misconception of what the Constitution says. According to Article 1, Section 8, Congress was authorized to create money (the term coin meant to produce, it was a verb, not a noun in this instance) and 'regulate the value' implies a non-fixed commodity currency because a fixed commodity currency wouldn't have a third party determining its value.

According to Article 1, Section 10, it is States who are limited to only using gold or silver to pay debts. They were not allowed to create a competing currency against the US currency. If paying in anything other than US currency, they could only trade direct commodities.

Gold is just a commodity, just like oil, salt, or grain. Its value is only tied to what people are willing to pay for it.

IMHO, I am for taking our currency off of debt (which means not having debt spending) and tying it to the full production value of the US versus a single commodity that the bugs want. The latter is too risky to be manipulated by outside influence- especially as we no longer have a strong gold producing infrastructure.

34 posted on 01/04/2011 11:32:15 AM PST by mnehring
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To: Toddsterpatriot
Where did they do that?

Article 1, Section 8. Read it for yourself.

I think following the Constitution is a good idea. I think your idea of fixing the dollar to silver and gold is a bad idea.

Can't have it both ways old boy. Here it is, right from the US Constitution:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;

So once again, do you think the restraints laid down against paper money in the US Constitution were a good idea or a bad idea?

L

35 posted on 01/04/2011 11:32:58 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Lurker
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

So once again, do you think the restraints laid down against paper money in the US Constitution were a good idea or a bad idea?

I think the restraints against states issuing paper money were a good idea.

36 posted on 01/04/2011 11:37:32 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: kevao

I quite agree. I was merely responding to the claim that “inflation can’t occur” with a gold-based economy.

It certainly can, although the physical constraints you mention mean it can never get as bad as it can with fiat money.

European countries all thru the middle ages and early modern periods had, sorta, metal-based currencies. When they wanted to inflate, they called in the currency and recoined it, alloying the gold or silver with more base metals. Or they could make the coin smaller while claiming it was still the same coin. The effect either way differed little from printing more paper money.

During most of the Roman Republic coins were almost pure silver. By the time of the Emperor Galerius (260) coins were <5% silver and the empire’s economy was disintegrating.


37 posted on 01/04/2011 11:38:09 AM PST by Sherman Logan
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To: Lurker
Okay, maybe I'm the one who's confused by this, but the way that I read that section is that it pertains to the States, not the federal government.

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;

Am I reading that wrong?

38 posted on 01/04/2011 11:39:49 AM PST by BlueLancer (Nuke Austin from orbit .... it's the only way to be sure.)
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To: BlueLancer

Forget it, he's rolling.

39 posted on 01/04/2011 11:48:20 AM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: BlueLancer
You are reading it correctly, that section was limitations to the States, things they couldn't do that the Fed could. For example, in the same clause, the States can't make treaties with foreign nations, yet other parts of the Constitution does give that power to the Federal branches. This is outlined in Federalist 44, Madison outlined this as a prevention from the States modifying the value of the US currency. At that, Madison was very clear that the issuance of 'paper money' was something they didn't want to grant the States but instead, retain as a centralized piece of federal authority.

Had every State a right to regulate the value of its coin, there might be as many different currencies as States, and thus the intercourse among them would be impeded; retrospective alterations in its value might be made, and thus the citizens of other States be injured, and animosities be kindled among the States themselves. The subjects of foreign powers might suffer from the same cause, and hence the Union be discredited and embroiled by the indiscretion of a single member. No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

40 posted on 01/04/2011 11:53:16 AM PST by mnehring
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To: Toddsterpatriot

Haven’t had time to read the article (first week of law school Winter/Spring semester) but I agree with Forbes and Friedman on the idea of a gold (or silver) standard.


41 posted on 01/04/2011 12:02:19 PM PST by Jim 0216
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To: ex 98C MI Dude
"We went off the gold standard with the First Legal Tender Act in 1862. We didn't get back to it until after the war. All that inflation from 1862-64 was caused by the mass issue of what became known as the ‘greenback’ (which was fiat currency issued without backing)in order to finance a little dust-up mistakenly called the ‘Civil War’."

Okay, so even if we go to metal backed currencies, the civil war proves we can and will come off it in a crisis. So it's really not secure like it's been sold. Everyone who thought their dollars were backed by gold suddenly saw 78% inflation over three years, because we can come off it with a simple legislative act.

And of course the value of the dollar popped right back after the war right? Wrong. It would be 30 years before the CPI was back down to 8.54.

How about these other episodes of currency instability while on gold? Did we come off it these times too?


42 posted on 01/04/2011 12:09:51 PM PST by DannyTN
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To: Sherman Logan
The effect either way differed little from printing more paper money.

Yes, some things just never change, like government ripping off the citizenry via currency debasement.

43 posted on 01/04/2011 12:13:22 PM PST by kevao
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To: Toddsterpatriot

Ron Paul is a NUT!


44 posted on 01/04/2011 12:23:18 PM PST by Jmouse007 (Lord deliver us from evil and from those perpetuating it, in Jesus name, amen.)
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To: DannyTN
Here is an interesting chart from one of the USFED banks:

http://www.minneapolisfed.org/community_education/teacher/calc/hist1800.cfm

From 1866-1896 was a period of persistent mild deflation. We were expanding fast as a nation, and the gold/bimetallic standard was unable to keep up, even as new sources of the metals were discovered. That is one of the chief disadvantages of the gold/silver standards. Limited monetary supply and debasement are its two greatest flaws.

The gold standard, or the bimetallic standard, or the debt standard; it doesn't matter. Legislative acts can upend them at any time. Every monetary system has its advantages and disadvantages. Today's has the great flaw of debt piled upon debt until the current system comes apart because of???

You guessed it. Limited money supply making it unable to pay interest on the debts incurred. Even running the proverbial printing presses can only work for so long. The debts keep being incurred, and in larger amounts, as money is pumped into the system, in order to create economic activity, creating ever increasing interest payments. Eventually we run into the hyperinflation problem. The FED has avoided it rather deftly so far. But they are bailing water right now, not fixing the holes. Congress is supposed to do that, and they haven't. They have been pouring water into the boat as fast, or faster, than the FED can bail it out.

Housing isn't a very good indicator of deflation right now because the market for real estate collapsed, and for the reasons I just listed. Autos had much the same problem. They priced themselves right out of a market. I maintain that we are in a mild inflationary period that has the potential to get out of hand.

45 posted on 01/04/2011 12:36:53 PM PST by ex 98C MI Dude (Alea Iacta Est)
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To: DannyTN
There is a misconception by those who push the Austrian school of economics that it states going to a single commodity standard would eliminate inflation, deflation, recessions, etc. In actuality, the Mises/Hayek Business Model Theory (basis for Austrian economic theory) specifically states there will be inflation, deflation, recessions depressions that happen, and must happen, as market regulators.

The other falsehood is that there are only two options of extremes, the Austrian School or Keynesian. In reality, economic models proposed by people like Milton Friedman and others offered a more rational, and nationally secure approach that based currency on all production or multiple commodities instead of a single commodity- reducing the risk of outside influence and protecting economic interests. There is a reason why economies that are backed by a single commodity fail (with the exception of the Swiss Franc but there are a lot of factors as to why that is strong.)

46 posted on 01/04/2011 12:40:26 PM PST by mnehring
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To: ex 98C MI Dude
Limited money supply making it unable to pay interest on the debts incurred.

If we cut out unnecessary spending, we'd have no problem paying interest on our debt.

47 posted on 01/04/2011 12:42:47 PM PST by Toddsterpatriot (Math is hard. Harder if you're stupid.)
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To: Toddsterpatriot

Thats the part Congress is supposed to fix.

They took advantage of the smoothing of the boom and bust cycle that the FED created. If they hadn’t kept spending, there would be many years left in this currency.


48 posted on 01/04/2011 12:51:06 PM PST by ex 98C MI Dude (Alea Iacta Est)
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To: mnehring
The other falsehood is that there are only two options of extremes, the Austrian School or Keynesian. In reality, economic models proposed by people like Milton Friedman and others offered a more rational, and nationally secure approach that based currency on all production or multiple commodities instead of a single commodity- reducing the risk of outside influence and protecting economic interests.

I'm not an expert on this, and enjoy reading both sides. I will say that your post makes a lot of sense. It seems our problem is not that we are not on a gold standard, but rather that profligate spending has put us in a position where the easy way out is to print money (which is obviously enabled by the lack of the gold standard). Intuitively we all know this can't go on. That doesn't mean the only solution is to go to a pure metals-based standard, as that appears to have a lot of flaws as well.

How about we just require a balanced budget at the Federal level, and let the Fed do it's thing in tweaking money supply to account for economic growth? Isn't it that simple?
49 posted on 01/04/2011 12:54:45 PM PST by VegasCowboy ("...he wore his gun outside his pants, for all the honest world to feel.")
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To: VegasCowboy
It seems our problem is not that we are not on a gold standard, but rather that profligate spending has put us in a position where the easy way out is to print money..

BINGO! Our currency is based on the 'full faith and credit of the United States of America, which, in the past, was worth more than gold. But now, we've relied too much on the 'credit' part of that statement to the point we've over extended ourselves. Our economics are no longer based on the 'faith' in the US- that we will be the strongest producer and consumer, and instead, simply on our credit line.

An analogy, Bill Gates may be the richest kid on the block, but if he maxes out all his credit cards and takes out more than he produces, his wealth means little.

50 posted on 01/04/2011 1:03:33 PM PST by mnehring
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