You Won't Fool the Children of the rEVOLution

Why Ron Paul rises and Chuck Hagel faded

David Weigel | May 14, 2008

Before there was Ron Paul the New York Times best-selling author—go on, keep rolling that around on your tongue—there was Ron Paul, the Texas congressman who made floor statements in the House of Representatives when no one was listening. Before that there was Ron Paul, the roving libertarian politico and the publisher of countless monthly newsletters written in a voice curiously wittier than his own. And before that there was Ron Paul, founder of the Foundation for Rational Economics and Education, table-pounding advocate for the gold standard, a lecturer to anyone who would listen.

Paul is 72 years old. He has been reading libertarian philosophy for close to 50 years and writing it for more than 30. That his labors should finally bear fruit now, at the end of a presidential bid where he succeeded beyond a fool's dream by simply reiterating all those decades' worth of opinions, carries a kind of irony. All of the quirks of his presidential bid make more sense. Why did he give the same dense, 40-minute speech at every stop? Why didn't he get into the muck with the rest of the GOP candidates, even when he started to out-fundraise them? Hey, he was trying to tell you people: He wasn't running for president; he was spreading a message.

It is impossible to imagine his new book, The Revolution: A Manifesto, selling in droves, or even being published at all, if Paul had not run his quixotic presidential race. We have proof. Sharing the shelves with Paul's book is another political tome that, if you based your judgments on the elite-media love machine, you'd assume would be racing up the charts. Republican Nebraska Sen. Chuck Hagel's policy sheaf-cum-memoir, America: Our Next Chapter, (with the additional and aggrandizing subtitle Tough Questions, Straight Answers) comes after three fat years of Sunday show bookings, warm profiles in magazines such as GQ, and unkillable rumors that he was about to announce a presidential bid. Released two months ago, the book is already forgotten.

Hagel was supposed to be the Republicans' anti-war presidential candidate. Failing that, he was supposed to be the natural vice-presidential candidate of a third party "unity" candidacy. The praise and hopes cascaded because Hagel, who voted for the 2002 Iraq resolution, was nonetheless the highest-profile and most-credible (by dint of his service in Vietnam) Republican critic of the war in Iraq.

High-profile does not necessarily mean high-minded. In an early, critical profile of Hagel, National Review's John J. Miller bitingly labeled the senator's attacks on Bush policy as "Hagelian dialect" and "declamations that may sound weighty when spoken but become insubstantial on the printed page." God only knows why Hagel decided to prove this by putting words on a page. There are two recurring motifs in America: Our Next Chapter, and both are devastating to Hagel's image as a deep political thinker.

The first is simple banality. There is enough corn in these pages to solve the world food crisis and forge ethanol with the leftovers. "I remember the first time that I had a real sense of the stakes in global power politics," Hagel writes. "I was in Mr. Sheridan's history class at St. Bonaventure High School, in Columbus, Nebraska." How does he view the Senate? "The floor...is a more majestic setting than a crab bucket, but the behavior of the inhabitants is quite similar."

The second Hagelian device is what I'd call the "outsight"—the opposite of an insight, already quite obvious to readers but thuddingly profound for him. Yes, Hagel was right about Iraq, but the way he writes about foreign policy starts you wondering if he just lucked out this time. "Like its rival India," he writes, "Pakistan is an enormous, sprawling, chaotic land." Albeit one-quarter the size of India and the victim of four successful military coups to India's none. When Hagel isn't thumbing a world almanac, he's recounting the meetings he's held with world leaders, diplomats—people who, in their wisdom, agree with him about most things.

Hagel writes like this because his ideas are not powerful enough to inspire much more. He is not a non-interventionist; his big insight about America's proper place in the world is that the world is changing. "Of course I want our country to ‘win,'" Hagel writes, "but we must ask precisely what does ‘winning' mean and we need to ask that question before the first shot is fired." But this is the only problem Hagel sees with intervention. He has nothing to say about the interventions of the 1990s, even though he voted against them after entering the Senate in 1997. Hagel is a big believer in soft power. But if pushed, he says, "We would mount preemptive strikes against our enemy." The problem with the Iraqi preemptive strike was that the enemy we should have been preempting was stateless. This isn't much of an ideology. It's John Kerry's 2004 platform.

By contrast, Ron Paul's The Revolution could have been written if the congressman had passed on 2008. Paul's arguments about the money supply, foreign policy, and the Constitution have been honed for decades. The only new thing between these covers is confidence. "I have never seen such a diverse coalition rallying to a single banner," Paul writes of his campaign. "Republicans, Democrats, independents, Greens, constitutionalists, whites, blacks, Hispanics, Asian-Americans, antiwar activists, homeschoolers, religious conservatives, freethinkers...these folks typically found, to their surprise, that they rather liked each other."

The Revolution is filled with long quotes from Paul's favored philosophers and economists. It is one giant annotation to his campaign speeches. It's also a correction to some parts of his campaign. The people who thought Paul's aggressive Tom Tancredo-esque push against illegal immigration was a mistake are proven right: There is almost nothing about immigration here. There is nothing you could call right-wing populism, and while this will probably become the most popular work of Murray Rothbard-inspired libertarianism, it rejects Rothbard's late-life strategizing about the benefits of resentment politics. The Revolution is as colorblind and class-blind as any Sesame Street script. The only people readers are told to resent are the politicians and the media bosses—whom Paul compares to Pravda editors—who tell Americans there is no alternative to fiat currency and American empire.

Hagel and Paul both confront readers who, like the rest of the country, have absolutely no confidence in their leaders and no trust in what they say. Hagel tells them to buck up: "The urgency of our unsettled times demands that America acts wisely, with resolve and a common purpose." Paul tells them that they're being lied to, and he's here to tell the truth. "Few Americans realize just how costly our foreign policy is," Paul writes, referring to human lives as well as trillions of dollars. "The terrorists have played us like a fiddle." Americans are also misinformed about how our current health care system evolved, or why their dollar is worth less. They're being lied to about trade: "True free trade occurs in the absence of government intervention in the free flow of goods across borders." Paul attacks the World Trade Organization because it "makes trade relations worse by providing our foreign competitors with a collective means to attack U.S. trade interests." In each case, a foreign or elite power is hoodwinking Americans into trading the system of the Founders for a system making them less free.

Paul never sounds as certain as when he gets to link this all to monetary policy. He's rarely less convincing. Paul sees a direct link between central banking, fiat currency, and the economic crises that he argues wreck the average American's prosperity and empower thugs. A financial collapse, he prophesies, "becomes more likely every day." He proposes legalizing precious metals as currency and killing sales and capital gains taxes on metals to stave off the crisis. It's all packaged as a monetary twist on Pascal's wager: "If we're wrong, then all we've done is eliminate some taxes on gold and silver. No harm done." This is awfully optimistic. The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era. They provided much steadier footing for radical movements. Paul's overheated worry about a Weimar Republic-style collapse kicks the legs out from underneath the argument.

That's what doesn't work. Paul's narrow-eyed certainty about the elites' concealment of the truth can be irritating, especially when he marshalls so many libertarian thinkers—Nozick, Hayek, Mises—to undergird an occasionally specious ideology. But it is an ideology. Paul has a grand unified theory to offer readers, knowing full well that he's opening minds, not programming them. Hagel offers his readers safe ideas and easy paeans to "leadership." Paul offers readers, first and foremost, the lesson that "leaders" and universally accepted concepts shouldn't be trusted. It is worried and informed neostructuralists who can change things, not historical "great men." If Ron Paul doesn't provide perfect solutions, he certainly provides a blueprint.

David Weigel is an associate editor of reason.

Comments

|5.14.08 @ 12:34PM|#

Much as I am on board with Paul's message, I don't see his book staying high on the charts for long. He has a niche following. When Tool comes out with a new album, they're number one - for a week or two. Same kinda deal.

bob|5.14.08 @ 12:37PM|#

reason sucks

TallDave|5.14.08 @ 12:38PM|#

Chuck who?

Fluffy|5.14.08 @ 12:42PM|#

The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era.

The fiat money era, or the Federal Reserve era?

Because if we're talking the Federal Reserve era, the Great Depression is on the list.

Elemenope|5.14.08 @ 12:43PM|#

Nietzsche only peaked after he died. When he was alive he could barely get a publisher for Zarathustra and the printing runs were miserably small. By WWI, Zarathustra was probably the most widely read text written in German.

Somewhat similarly, a book full of radical "kooky" ideas may just make a momentary blip on the charts and then fade, but it does not necessarily follow that the impact of the work will fade with it. It all depends upon whether subsequent events make RP's message more or less salient. If we do have a Weimar-style collapse in a decade, expect him to be "rediscovered" and quoted ad nauseam.

|5.14.08 @ 12:51PM|#

The Revolution is as colorblind and class-blind as any Sesame Street script.

Nice Dave. Best turn of phrase I've read this year!

♪|5.14.08 @ 1:13PM|#

The 19th century had fractional reserve banking and various government bailouts and protections as moral hazards.

ChanceH|5.14.08 @ 1:13PM|#

The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era. They provided much steadier footing for radical movements.

Which one of the 19th century panics was worse than the Great Depression?

TallDave|5.14.08 @ 1:25PM|#

Which one of the 19th century panics was worse than the Great Depression?

Depends how you look at it. In absolute terms of equity loss, none of them -- but in absolute terms the 1987 stock market crash was the worst panic of all time. In terms of people's living standards, the 19th century failures were all worse, because people were poorer in the 19th century and a smaller relative drop meant disproportionally more misery, perhaps even starvation.

By the 1920s, we were starting to realize the benefits of a liberalized world trade system. The collapse of that system took us back a bit, but most people lived better than pre-1900.

robc|5.14.08 @ 1:33PM|#

So we end up with factors unrelated to fiat money (globalization and generally higher standard of living) that prevent crashes from hurting us as bad as they did in the 19th century.

Makes sense to me. Fact is, crashed pre 1900 were less bad, they just hurt worse for other reasons.

|5.14.08 @ 1:38PM|#

In terms of people's living standards, the 19th century failures were all worse, because people were poorer in the 19th century and a smaller relative drop meant disproportionally more misery, perhaps even starvation.

Perhaps, but there was no 19th century deliberate reformation of the federal government into an organized crime syndicate like the New Deal.

|5.14.08 @ 1:47PM|#

TallDave:

Chuck who?

Cmon. Sen Hagel R-Neb, a fiscal conservative, was one of the first senators to challenge the claims of necessity and wisdom of attacking Iraq. And his predictions of the problems that would accompany the tragedy have come to fruition in abundance.

jj|5.14.08 @ 1:49PM|#

If Weigel does not believe in the liberalization of personal economic choice and currencies, what does he believe in? I can't see much of a libertarian alternative in his criticisms.

Over all a favorable piece.

Mad Max|5.14.08 @ 1:59PM|#

"Nietzsche only peaked after he died."

Which inspires me to share this minor contribution to the fine arts:

"Freddie Nietzsche is Dead"
(to the tune of "Freddie's Dead," by Fishbone)

Say Freddie's dead,
That's what I said

Whatever may be the case with God
Freddie Nietzsche lies beneath the sod

It's hard to understand
The stuff that was written by this man
But I'm sure all would agree
He has great posthumous popularity

Freddie's dead,
That's what I said

Everybody's misused him
Ripped him off and abused him
Doing the best he can
Looking for the Overman
That really blows, but that's how it goes

Freddie's in the boneyard now
And if you want to be a famous writer
Just remember
Write like Fred.

Trashy novels and cookbooks may sell the best
But sometimes I must confess
For books with bigger topics I dream
Topics like - Reality, What Does it Mean?

Now Freddie's back
That's what I sprach

You can keep your high-tech gadgetry
Just give me The Birth of Tragedy
Let me read Human, All Too Human
Not Peggy Noonan
(Where's your whip when you really need it?)

You can pick flowers, give *me* the Will to Power
He died delirious, and it make furious

Freddie's dead
Don't be misled, just think of Fred
Don't be misled, just think of Fred

|5.14.08 @ 2:07PM|#

There was ONE AND ONLY ONE TIME THERE WAS A REAL GOLD STANDARD.

This was 1870-1913.


This was the ONE and ONLY time a free, classical gold standard was allowed for America.

This was also known as the "guilded age", the greatest economic expansion in American history where we rocketed past Old Europe and became the dominant industrial power.

This time also saw deflation, yes, believe it, the economy expanded and things got cheaper at the same time!

Really, this is why Reason sucks sometimes. You guys are pussy libertarians. You stand hard on the easy stuff like drugs and taxes, but you puss out over hardcore stuff like monetary policy.

I mean, omg, even Cato came out in support of the gold standard, you can't be more pussy than Cato?

|5.14.08 @ 2:11PM|#

http://www.cato.org/pub_display.php?pub_id=9181

Here is said article about pussyness of reason writers...

|5.14.08 @ 2:24PM|#

The 19th century had fractional reserve banking

Anytime you have fractional reserve banking, you have "fiat money," because you have more money than can be redeemed for metal.

Even a gold standard has 'fiat money' in circulation if it also has fractional reserve banking.

Elemenope|5.14.08 @ 2:28PM|#

Mad Max -

That was fucking fantastic. Truly excellent.

Sam Grove|5.14.08 @ 2:37PM|#

The existence of a god standard need not preclude currency inflation, particularly if there is 'official' currency. After all, the Continental was badly devalued. Of course, the pro tem government had little collateral to back up its currency. You might say the colonists were 'tricked' into financing the revolutionary army.

Sam Grove|5.14.08 @ 2:45PM|#

Even Friedman eventually gave up on responsible management of the money by policrats.

"Most of my own work dealing with public policy has had the same character of proceeding as if I were addressing governmental officials selflessly dedicated to the public interest. I have attempted to persuade the Federal Reserve System that it was doing the wrong thing and it ought to adopt a different policy. This time was ill-spent because the public-interest characterization of government is basically flawed.... We do not regard a businessman as selflessly devoted to the public interest. We think of a businessman as in business to improve his own welfare, to serve his own interest.... Why should we regard government officials differently? They too aim to serve their own interest, and in government as in business we must try to set up institutions under which individuals who intend only their own gain are led by an invisible hand to serve the public interest. The Federal Reserve System puts a great deal of power in the hands of a few people and it is so constructed that it has been in their self-interest to pursue a policy which, I believe, has been very harmful for the public rather than helpful.... Clearly, it was not in the self-interest of the Federal Reserve hierarchy to follow the hypothetical policy [of a monetary rule]. It was therefore a waste of time to try to persuade them to do so."

Whole article.

Pax Hammericana|5.14.08 @ 2:46PM|#

Sesame Street was neither color- nor class-blind. The early episodes were designed for the ghettos and would be racially offensive by today's general standards.

Nice article, though.

ChanceH|5.14.08 @ 3:14PM|#

Mr Weigel,

Overall, a nice article. But:

As a libertarian, why do you believe that an appointed, unaccountable
board of benevolent experts should determine the short-term rental
rate for money, instead of the free market, via the price mechanism?

Until you can answer that question, I don't really expect you are
going to put forth a very convincing critique of Mr Paul's proposals
in this arena.

|5.14.08 @ 3:15PM|#

Mick,

The only reason I come to reason.com anymore is to read comments like yours that get to the heart of the matter and expose these charlatans as the unprincipled dope-smokers they are. Bravo.

CosmotarianUnderlord|5.14.08 @ 3:22PM|#

You might say the colonists were 'tricked' into financing the revolutionary army.

You are obviously a communist. There is no connection at all between monetary policy and fighting wars. They have NOTHING to do with each other at all. It is perfectly logical to be against the war (although that would make you racist traitor all by itself), and for fiat money.

Anybody who disagrees is either a racist like Ron Paul and Lew Rockwell, or communist. I haven't seen you use any racial slurs, so you must be a communist.

Spencer|5.14.08 @ 3:31PM|#

Reason's benefactor, billionaire David Koch, HATES the idea of sound money, so the review was fairly good considering the editorial control being exerted by Reason's sugar daddy (who pimps for Dick Cheney -- http://www.lewrockwell.com/blog/lewrw/archives/020581.html).

|5.14.08 @ 3:36PM|#

Kochtopussytarians?

Brandybuck|5.14.08 @ 3:42PM|#

This was 1870-1913.

Bullhockey. That was the era of the centralized fractional reserve gold standard. We had a different gold standard before 1860, it just wasn't centralized, and had a few more controls against fractional lending. The era of 1787-1860 was not characterized by booms and busts like the later era.

|5.14.08 @ 3:49PM|#

Paul:"If we're wrong, then all we've done is eliminate some taxes on gold and silver. No harm done."

Weigel: This is awfully optimistic.

Cosmotarian Overlord: You tell him Weigel, getting rid of taxes could be deadly. All cosmotarians know that unimaginable evils could occur if we get rid of some taxes. Elaborate on this and maybe we can get you a gig as a college economics professor.

RSDavis|5.14.08 @ 3:52PM|#

I'm just mad that I didn't think of the title, "Children of the rEVOLution." Damned clever, and I love T-Rex...

KingHarvest|5.14.08 @ 3:52PM|#

Anyone catch Ron Paul on NPR's Talk of the Nation today?

He spoke well, except for ranting on and on about an irrefutable connection between pro-liberty and pro-life in response to a caller's abortion question...

|5.14.08 @ 5:20PM|#

Come on Dave. You can't be so anti-Rothbard that you haven't read What Has Government Done to Our Money?. If you read this, you would know the booms and busts were due to fractional reserve banking. "You fool! You fell victim to one of the classic blunders! The most famous is never to get involved in a land war in Asia. And only slightly less well known is this: never go in against a Sicilian when death is on the line!" Other than that, I found the article to be pretty fair in regards to Dr. Paul.

Mad Max|5.14.08 @ 6:17PM|#

"He spoke well, except for ranting on and on about an irrefutable connection between pro-liberty and pro-life in response to a caller's abortion question..."

Yeah, what's with this so-called link between life and liberty? The authors of the Declaration of Indepenence had a similar obsession ("life, liberty and the pursuit of happiness"), as did the authors of the Constitution (the Fifth and Fourteenth amendments refer to "life, liberty and property"). Then there's Thomas Jefferson's comment that "The god who gave us life, gave us liberty at the same time: the hand of force may destroy, but cannot disjoin them."

I mean, blah blah blah, what a bunch of weirdos!

And did you notice how the Declaration of Independence says people are "*created* equal" with inalianable rights, not "born equal," when everyone knows that you're not fully human until you've come through the birth canal?

But what do you expect from religious fundamentalists like Thomas Jefferson, with his belief in our rights coming from a so-called "God."

Joel|5.14.08 @ 6:56PM|#

What's this? Reason writes an article about Ron Paul and not only gives the newsletters no more than passing mention, but is actually complimentary?

My universe is in chaos! Must re-read article and find my error!

Paul never sounds as certain as when he gets to link this all to monetary policy. He's rarely less convincing. ... This is awfully optimistic.

Oh. That's okay, then.

Travis|5.14.08 @ 7:08PM|#

Mad Max,
Good job on the Freddie's Dead lyrics, but it was a Curtis Mayfield song on the Super Fly soundtrack( one the best albums ever), Fishbone just covered it.

|5.14.08 @ 7:13PM|#

The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era.


Mr. Weigel does not know much about economic history, does he? Nor does he understand money, fractional reserve banking, central banking, interest rate manipulation, money supply rate... all things that affect a boom-bust cycle. The "fiat money" era has seen more devastating effects of the boom-bust cycle, including a couple of very terrible wars.

Travis|5.14.08 @ 7:17PM|#

"You fool! You fell victim to one of the classic blunders! The most famous is never to get involved in a land war in Asia. And only slightly less well known is this: never go in against a Sicilian when death is on the line!"

Nice, I haven't seen that movie in years. I going to put it on my Netflix queue.

Travis|5.14.08 @ 7:21PM|#

'Even Friedman eventually gave up on responsible management of the money by policrats."

I am for the gold standard, but Friedman's idea of abolishing the Federal Reserve & setting a yearly steady rate of inflation with fiat money makes sense also.

|5.14.08 @ 7:41PM|#

I am for the gold standard, but Friedman's idea of abolishing the Federal Reserve & setting a yearly steady rate of inflation with fiat money makes sense also.

Ok, which rate? Who sets it, and why?

|5.14.08 @ 8:11PM|#

Friedman's argument in favor of setting a steady rate of increase in the money supply makes more sense than the herky jerky machinations of the Fed. The idea is to approximate the rate of growth in producitivy/economic growth with the growth of the money supply.

While it would be better for many reasons, one of them being the ability for people and businesses to do economic planning with some certainty, it is still not as good as getting rid of the Fed.

Ron Paul's idea of having gold and silver as competing currency is a very good step toward making the Fed irrelevant. Inflate, and contracts will all be negotiated in metal. Keep the money supply reasonable, and the dollar will stay the currency of choice. But it would certainly give us a hammer to pound the Fed with should they get out of control. And fractional reserve banking would certainly have to be brought under control somehow. Maybe removing government guarantees to account holders would force a little discipline on the banking class. That and education would go a long way toward bringing about economic liberty.

And Dave's alternative is to keep the Fed? Sounds like a really bad and unlibertarian idea. Maybe Bob Barr can get behind it.

|5.14.08 @ 8:23PM|#

Ugh, Couldn't Weigel stop pretending to be a libertarian ? Can't he get a job at New Republic, or maybe Mother Jones ?

economic upheaval caused by the gold standard ? Well, shouldn't a Libertarian want economic upheaval, for all the Feds stabilization, the economic mobility of people has decreased. The Rich stay Rich. Economic Upheaval is a great equalizer, and you shouldn't fear it so much, particularly if you are a libertarian.

♪|5.14.08 @ 11:40PM|#

And fractional reserve banking would certainly have to be brought under control somehow. Maybe removing government guarantees to account holders would force a little discipline on the banking class.

That's all it would take. Let banks with bad business practices fail. However, it is hard to resist the political pressure for bailout.

|5.15.08 @ 4:16AM|#

"The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era. They provided much steadier footing for radical movements."

Were they really worse than the world-wide great depression, that ushered in the Nazis, not to mention completely altered the size and scope of the U.S. fed. gov't and changed the national economy with all those New Deal programs that are still reallocating wealth in the opposite direction that they claimed they would? Maybe. But, I would think not.

It seems to me that all that was done with the passing of the Fed Reserve Act was to turn smaller, more isolated banking crises into national, global catastrophes. The Act didn't do anything to address the reasons for bank runs: insufficient deposits as a result of fractional banking; it just moved the operation up a few notches/ So now the depressions are more severe and the effects more wide spread. The three most severe contractions in U.S. history took place in the 20th centruty, not the 19th. And, as far as I can tell, the 20th century provided more extreme, authoritarian, genocidal, aggressive regimes than the 19th.

Not to say that the 1800s weren't full of crises and corruption, of course they were. Obviously, I am not a historian, but the above passage just struck me as questionable when contrasted with the little I do know.

jmr|5.15.08 @ 8:41AM|#

If Ron Paul's wrong about fiat money, please explain these graphs:

http://research.stlouisfed.org/fred2/series/borrow

http://research.stlouisfed.org/fred2/series/BOGNONBR

(note "conspiratorial" source I'm using, too.) Why must libertarians ignore the obvious history of fiat "money"?? What's different about these graphs from Weimar Germany, anyway??? And the REAL problem is, once this hits the fan and I say "I told you so," the same idiots who denied any problem with fiat "money" are guaranteed (mark my words...) to blame hard money types like ME!! Dimwits.
JMR

|5.15.08 @ 9:51AM|#

I think Ron Paul envisions not a gold standard, but a return to the Jacksonian/Van Buren idea of free banking. He doesn't want the government to guarantee the price of gold, but to allow the market to recognize gold contracts.

Ron Paul's Minority Report to the Gold Commission
(co written with Murray Rothbard) should be required reading for anyone who wants to understand how the monetary issue affected American history.

By the way, the US never really had a "gold standard". It was always a bimetalic standard. The government fixed ration between gold and silver was one of the weaknesses of the system, as the Congress could not keep up with the real monetary ratio.

|5.15.08 @ 9:52AM|#

"ration" should be "ratio". sorry

Mad Max|5.15.08 @ 10:28AM|#

Travis,

Thank you for the correction, and I'm sorry for dissing Curtis Mayfield.

DpC|5.15.08 @ 10:29AM|#

Seriously, Weigel. . .just let it go, man.

jmr|5.15.08 @ 10:33AM|#

Note what Greenspan said here:

http://www.usagold.com/gildedopinion/greenspan.html

"A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World Was I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion."


Somehow, I believe Alan's grasp of US monetary history exceeds that of the average cosmotarian writer for Reason, great as I'm sure they are...
JMR

|5.15.08 @ 10:47AM|#

I've never heard the big enemies of free-markets for currencies argue that the Fed doesn't make it easier for the Federal Governments to borrow excessively and thus unfairly bind future generations with the chains of debt they never asked for.

They frequently say that booms and bust were worse before the Fed, yet real economic growth was higher before the Fed. Inflation was lower before the fed and the wealth was less concentrated in the top 1% than it has been afterwards. In spite of this, the anti- freedom advocates constantly bring up the problem of increasing wealth disparity and try to lay blame on free-markets. The media and others on the left eat this up and more creeping socialism always ensues.(to the point that now we have see real incomes for individuals fall over the last 20 years for the first time in US history)!

When a fed was created, an enormous amount of power was put into the hands of a very small group of people. Nevermind Rothbard and Mises, even a decent reading of Hayek or Thomas Jefferson should make one think twice before taking this kind of power away from the free market and handing it over to a few "experts".

This concentration of power can be used to accumulate greater wealth for those who hold influence over the power. Dupes, naives and useful idiots seem to lack the financial expertise or knowledge of human nature to comprehend the MANY ways that this power can be used to help those with the power at the expense of those without the power. Weigel please think a little more about this.

|5.15.08 @ 11:09AM|#

"The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era. They provided much steadier footing for radical movements."

Amber,
It seems that David Weigel thinks the Bolsheviks(USSR), Fabians(Britain and USA) and Nationalist Socialist(Germany) were nothing compared to the radical whiskey rebellion or the radical abolitionist in favor of ending Slavery. The radicals of the 18th and 19th century were trying to get out from under oppressive mercantilist taxes of the British empire or fighting against the conscriptionist, mercantilist empire based in the money centers of the North. Radicals in the 19th century were trying to get such crazy things as universal male suffrage and ending taxes on food. Once you see the sort of radical ideas being pushed before the Fed and afterwards....you get an idea of who Weigel is spewing propaganda for(people in favor of mercantilist/facists/crony capitalist empires...at the expense of free competition, challenges to the ruling elite, property rights etc. Seriously, where does this line of argument come from Weigel? who is it that thinks the radicalism in the 18th and 19th century was worse than that of the 20th and 21st century? It is one of the most absurd notions you have pushed here.

Egosumabbas|5.15.08 @ 11:51AM|#

Here's some more fuel to add to the fire. Did you know that a central bank with fiat currency is one of the ten planks of the Communist Manifesto?

♪|5.15.08 @ 1:06PM|#

By the way, the US never really had a "gold standard". It was always a bimetalic standard. The government fixed ration between gold and silver was one of the weaknesses of the system, as the Congress could not keep up with the real monetary ratio.

Free banking would also allow silver contracts, or industrial silicon contracts or whatever, without any ratios fixed by congress.

I could imagine that when the dust settled on such a system, most things might have two prices. Prices in ounces of gold and ounces of silver, with the ratio constantly changing.

|5.15.08 @ 1:08PM|#

Did you know that it is also one of the planks of the Federal Council of Churches(later to become National Council of Churches) put together by John Foster Dulles and the Rockefellers?


http://www.time.com/time/magazine/article/0,9171,801396,00.html

Egosumabbas|5.15.08 @ 2:08PM|#

@Cosmotarian Overload (mispelling intended)

Wow, so I guess the Religious Right really is neither.

mike|5.15.08 @ 2:30PM|#

David Weigel wrote, "The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era."

The fact, admitted by Ben Bernanke of the federal reserve on their web site, is the federal reserve caused the Great Depression.

What's so bad with allowing another currency to compete? Why do so many people think competition and a free market are bad?
Let people choose their currency - if you don't like a currency backed by something real, then you can continue to use the Federal Reserve Note (backed by nothing).

|5.16.08 @ 3:27PM|#

Enough debate about the gold-standard, let's watch Marc Bolan do the title-song of this article (with Ringo and Elton backing him up):
http://www.youtube.com/watch?v=8xJ_agcMy5c

|5.16.08 @ 4:18PM|#

Any libertarian worth his salt knows that governments derive their just powers from the consent of the governed and as such they are instituted solely to the purpose of
-protection of life, liberty and property against foreign threaths
-protection of life, liberty and property against domestic criminals
-enforcement of contracts
-establishment of the proper money supply and interest rates.

|5.17.08 @ 7:38AM|#

written in a voice curiously wittier than his own.

Weigel, you're turning into Maureen Dowd.

It is impossible to imagine his new book, The Revolution: A Manifesto, [...] being published at all,

Hey, have you heard of this thing called the Mises Institute? Look into that.

Paul sees a direct link between central banking, fiat currency, and the economic crises

Hey, Weigel, have you heard of this thing called the Mises Institute? Look into that.

universally accepted concepts shouldn't be trusted.

Yes, I'll just call you 'Dowd' from now on.

DS|5.18.08 @ 9:53AM|#

"David Weigel wrote, "The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era."

If this wasn't the standard statist argument repeated billions of times over for more goverment, I'd say that it was one of the dumbest things I've ever read.

Recessions (contracting GDP) on average every 5 years, a huge asset bubble in the 1920's leading to the worst economic disaster ever in American history, rampant, out of control inflation in the 1970's, 2 massive financial bubbles and their aftermath, and the loss of 95% of the purchasing power of the dollar. With the brief exception of the Volker era the federal reserve has been nothing more than a dollar printing press. Pumping them out at an ever-increasing rate.

That is the record of central banking in America.

The 19th century, especially the pre-Civil War gold stanadard era in contrast was time of tremendous growth and freedom. Most of the financial panics were just that: brief financial events that had no real, lasting effect on the general economy, jobs and businesses. Most of the financial turmoil was caused by two episodes of going off the gold standard - the War of 1812 and the Civil War - and then the pain of soaking up the excess fiat currency required to return to the currency being anchored to gold. Most the financial panics of the 19th century can be traced to the aftermath of those episodes when the federal government simply printed paper, fiat money to pay for War, with the predictable result - massive inflation. 1819 and 1873 were prime examples.

The 19th century was a time of almost uninterupted economic growth and properity, although hardly a laissez-faire paradise, especially after the Civil War - with federal subsiides and regulation, teh national banking system and a high protective tariff.

|5.19.08 @ 8:58PM|#

The 19th century's booms and busts were far more damaging to livelihoods and to economic systems than anything in the fiat money era.

Yeah, that Depression thing was just a bump in the road....

Paul's overheated worry about a Weimar Republic-style collapse kicks the legs out from underneath the argument.

But if the economy actually is headed toward a Weimar Republic-style collapse, it's hard to call any worry "overheated".

jmr|5.20.08 @ 3:44PM|#

Weigel has been completely refuted by the comments to his own article. Must be humbling, dude... Anyway, email me at jray AT martincam.com if anyone -- especially Weigel -- tries to refute the various people who refuted him. Looks pretty sparse for now, so "we" win in a smackdown.
JMR

brittany Coo|5.23.08 @ 1:26PM|#

The SNL skit that sums up this whole primary season
Get These Latest Designs
Bill wants Hill as Veep
This and more on...

http://sensico.wordpress.com/