My Ron Paul Post For the Day

I had a friend on Facebook post a notice to his Ron Paul "friends" to go elsewhere or they would be deleted. I had to chime in and I think the resulting post is pretty damn good so, I thought I would share. Enjoy or ridicule. :)

I try and reach out to them. I really do. I know a few of them personally and I assure you they are incredible people who really want to improve the direction of this nation. I just feel many of them lack "formal" education. I don't mean this as a slide to anyone but some stuff you have to learn in school...

They do not clearly understand why conspiracies are mostly just poking holes in stories, not actually giving a full researched timeline of all events. Asking questions and ignoring reasonable and rational explanations is not proof of anything other than ignorance.

Even in controlled settings, like a lab, you will witness inconsistencies that cannot be fully explained. There can be theories presented and as long as they are rational and well documented, they should be accepted. If these oddities occur in well controlled environments, imagine how many occur when the environment is not controlled.

Then there is that tricky little "2nd Law of Thermodynamics" they refuse to accept. This is a hard one for many to understand since ultimately all systems are "closed." If the universe were an open system, then we would not be witnessing an expansion of the universe as we have known for many, many, many years. The word expansion implicates the increasing volume of a closed area....but, anyway...this is one that comes up when discussing one their many conspiracies.

It is interesting to also note their quotes from economists who support a currency backed by gold. What intrigues me is how they conveniently forget to read these SAME economists' words, written years later, retracting their previous beliefs. "Why?," you ask? Well, because they realized they were WRONG.

Pay attention Ron Paul-bots:

Let's say the government has 100 dollars worth of gold and they print 100 dollars worth of currency. The rest of the world controls 90 percent of the gold supply. All of a sudden the nation is flooded with gold to destroy the value of the dollar. Oh, and all those 100 "gold-backed" dollars are now backed by nothing.

NOW do you see why the "gold standard" is ...shall we say...F@CKING STUPID?!?!?!

Okay...sorry for the rant here...I had to let it out! :D

My point is, how does Ron Paul NOT know this??? Either he is the most stupid man alive or he is evil.

Okay, I made a mistake at the end of the post and presented a false dichotomy. There is definitely a third option - he really is insane.

I also forgot to mention that the world could also restrict the supply of gold, causing an equal amount of damage. Manipulation of the gold supply by other countries will only result in a total take over from our foreign enemies. The poor of this country will be the first to suffer. The impact of such policy would cause riots that could then precipitate to government having to declare something many fear - martial law.

As far as all the supposed conservative economists that support the gold standard, many Paul-bots love to use Reagan as an example. It is true that at one time Reagan did support the gold standard but, he also had a team of other supporters do a study and the final conclusion was that the gold standard was unrealistic, ultimately leading to him dropping the issue completely.

Hayek, is famous economist who also once advocated a gold standard. This is someone that Paul supporters like to cite but, unfortunately for them, Hayek had abandoned his belief back in 1943.

Forced to choose between two conflicting principles, Hayek made the wrong choice, opting for defense of the gold standard rather than for stabilizing nominal GDP. He later changed his views, disavowing support for the gold standard as early as 1943 in a paper (“A Commodity Reserve Currency”) in the Economic Journal (reprinted as chapter 10 of Individualism and Economic Order) and reaffirming his opposition to the gold standard in The Constitution of Liberty (p. 335).

 He also affirmed his belief in not restoring the gold standard later on.

In 1976, in a paper on The Denationalization of Money,[43] Hayek advocated that rather than re-instituting a government-mandated gold standard, a free market in money be allowed to develop, with issuers of money competing with each other to produce the best, most stable and healthy currency.

During the Gilded Age, a time when the world was under the gold standard, from 1870s to 1914 the U.S. suffered from 3 depressions. Since removing itself off of the gold standard, the U.S. has not seen the types of depressions it witnessed from the gold standard. Somehow, this fact is ignored when talking to those who support going back to the gold standard. They try to argue that one had nothing to do with the other, but how can that be so if the proof shows that depressions occurred when we were on the gold standard?

Before World War II, eight U.S. recessions worsened into depressions (as happened in 1807, 1837, 1873, 1882, 1893, 1920, 1933, and 1937). Since World War II, under Keynesian monetary policies, there have been nine recessions (1945-46, 1949, 1954, 1956, 1960-61, 1970, 1973-75, 1980-83, 1990-92 ), and not one has turned into a depression. In fact, no nation in the world has suffered a depression under Keynesian policies.

The Gilded Age was known for major shifts due to the ever changing supply of gold. Deflation was not immediately seen when gold supply shrank, since prices rarely respond by decreasing due to ever increasing demands for higher pay and higher prices, the result was unemployment. When the supply of gold was increased, dramatic inflation could be found. The rigid climate that a gold-backed currency is known for producing is why we moved towards a fiat currency in the first place. This is exactly why it is hard for people to understand why anyone would want to move backwards, and support a gold standard. It simply does not work because the idea that the market will immediately respond has been proven wrong over and over again. It is why major economists from either side of the aisle do not support our money being backed by a finite supply of metal.

Gold bugs also face an enormously challenging question: what kind of gold standard would they like to create? One based on fractional reserves? But that led to countless bank runs. Furthermore, as a practical matter, it doesn't stop banks or governments from changing the money supply, simply by changing the amount of fiduciary notes.

You can also click the title of this post to see an interesting article that goes further into detail about the start of currencies and the result of the gold standard vs. the fiat currency system.

In addition to the problems listed above, a government would immediately seek to subsidize any mining for gold here and abroad. We would be forced to supply an enormous amount of protection for gold, so that citizens could be assured their precious metal is safe and sound. The cost for all of this still results in the government issuing standards and the ability to manipulate the market at will. It could easily be argued that more government would be needed to be involved in applying the gold standard than would be just sticking with our current system.

Since 90 percent of the world's gold supply is elsewhere, an open-invitation for foreign countries to either flood or limit the supply of gold would only produce the same radical shifts from panic to inflation that we have well established as being the normal reaction when currency is tied to a finite source of metal. Is this what people really desire or is this gold-standard argument one that is being sold to people who are being misled and clearly have an ignorance of either history and/or economic principles?

The supporters of Ron Paul will tell you they support freedom and open-markets so, how is it they fail to understand that a fixed supply a.k.a. LIMITED SUPPLY of money reflects anything but freedom? Why would the words "fixed," "finite," and "limited" somehow translate to "freedom, " "more choice," or even, "less government," when discussing something so important as our currency?

The fixed prices that are the product of this policy ultimately pushes the economy into a state that reflects nothing that looks like freedom. During scare periods, people will hoard their money for fear of inflation but since the market cannot react with any flexibility due to the rigid conditions advocated by so-called proponents of freedom, further unemployment and slow down in economic activity are inevitable.

So what is the solution? What would be the perfect money system? I believe that some balance could be made here that could produce moderate results that could possibly alleviate rapid shifts in the economy- moving from inflation to deflation and vice versa. Perhaps there is an argument to be made concerning deflation. Allow me to indulge this argument. Deflation could help increase the value of the dollar which could ultimately be a great thing but, as we have seen, it is very difficult for the market  to respond quickly to changes, especially in the opposite direction. Would it not make more sense for the government to respond to the current economy by slowly and steadily reducing the amount of cash, rather than switching to some insane gold standard? Whether you agree or not, it certainly makes more sense to stay with the fiat currency we have and create the same effect, in a more subtle manner that the market can adjust to, rather than slam in to. Plus, this leaves room for unexpected changes that could be a result of disasters, war, disease, terror attacks, etc. You certainly do not want to go on the gold standard and the next day another 9/11 occurs.

Yes, there are arguments from those that support the gold standard that are consistent with conservative values and a Laissez-faire economy. At the same time, these people also support the restrictions that are inherent in money that is backed by a limited supply of a commodity. Is there no in-between with Ron Paul supporters? It seems to me the "libertarian" of current times is one who only supports economic freedom for the very wealthy and drug freedom for the poor.

While I do not care for currency that is readily printed at the drop of a hat, I also understand that many things that seem appealing do not always work when they are actually applied. It makes much more sense to make slow changes. The fluidity of currency supply allows us to make tweaks here and there, making stabilization much more attainable. It makes our currency much more free, since fiat is not tied to some commodity. It also prevents other countries from being able to control the supply of gold and consequently the value of our dollar.

One of the linchpins of Ron Paul’s insurgent campaign is a return to the gold standard. The Initiative on Global Markets, at the University of Chicago’s business school, asked its panel of economic experts — all of them scholars at the top research universities, Republicans and Democrats alike — whether they agreed with the following statement:

If the US replaced its discretionary monetary policy regime with a gold standard, defining a “dollar” as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

The results were unambiguous, with the only disagreement among the experts lying in the degree to which they disagreed with the proposition. (Forty-three percent merely disagreed, while 57% strongly disagreed.)

The fact is, this has nothing to do with party affiliation. It has to do with critically evaluating history and then forming educated opinions, based on all you have learned and witnessed. Economists agree that this is not sound economic policy. Not only because we lack the gold but, we could not even afford to protect ourselves from foreign countries. We must make room for random changes in the economy that are either physical or psychological. A simple panic scare tactic could create large amounts of people hording their gold. A random act of violence could also create a ripple effect of people hanging onto their fortunes, instead of helping others.   Hell, riots could break out. The resulting culture is one that we have seen before in history during the gold standard era or Gilded Age- a greedy, survival of the fittest, ruthless people who care only of themselves.

Hmmm... interesting, isn't? I guess one has to ask why anyone would support such radical change? Most Americans do not and will not.

My plea:

I get so frustrated with you Paul-bots who seem to enjoy engaging in a candidate that espouses such extreme views. It just is not going to happen so please, stop wasting your vote on this guy. You may think he is awesome but you need to accept that your views are not viewed as "normal" or sane. From economics, to social values, and foreign policy, Ron Paul comes off as a very ignorant and insane individual. I implore  you to stop reading infowars.com or some other Paul-misinformation-revisionist-history site. Please explore another argument that is counter to yours. I have no problem with you being in the Republican party and working within the system to perhaps move the party more in your direction but that change must be realistic and incremental. Holding onto radical ideas and actually expecting your candidate to win is absurd. Think about it for awhile.