Good as Gold

David Weigel | November 7, 2007

Kevin Drum calls Ron Paul a "fruitcake" and demands that you--yes, you!--stop taking him so damn seriously.

In the last Republican debate I saw, this noted truth-teller gave a strange and convoluted answer about his economic policies that the audience plainly didn't understand. Next time I expect to see some straight talk about how we should return to the gold standard and get rid of the Fed. This should be followed by a question about whether he supports the free coinage of silver at 16:1. Then some questions about the tin trust.

Dean Barnett trods some of the same territory, arguing that Paul is a crazy candidate for crazy people who won't run on sensible ideas like doubling Gitmo and moving "In God We Trust" to the front of dollar coins. I guess I've got to break the news: If Paul's anachronistic gold-and-silder obsession is enough to call him "crazy," conservatives had better be ready to ditch one of their heroes. From page 421 of Robert Novak's autobiography The Prince of Darkness:

I asked Reagan: "What ever happened to the gold standard? I thought you supported it."

"Well," the president began and then paused (a ploy he frequently used to collect his thoughts), "I still do support the gold standard, but--"

At that point, Reagan was interrupted by his chief of staff. "Now, Mr. President," said Don Regan, "we don't want to get bogged down talking about the gold standard."

"You see?" the president said to me, with palms uplifted in mock futility. "They just won't let me have my way."

Reason's 1975 interview with Reagan is here. A theory for why the GOP base doesn't think Paul's economics are so odd is here.

Comments

|11.7.07 @ 3:13PM|#

Cue Eddie and Dondi in 5, 4, 3, 2....

The Wine Commonsewer|11.7.07 @ 3:19PM|#

You know, I am not a nutcase gold standard guy but I have to point something out.

In 1913 it cost $.57 cents to buy what cost $1.00 in 1800.

In 2006 it costs $20.15 to buy what cost $1.00 in 1913.

I'm sure I don't have to point out what happened in 1913. But I will. It's called the Federal Reserve System and the end of gold backed money. More or less.

Fluffy|11.7.07 @ 3:19PM|#

Then there's Huckabee, who holds the sensible and sound opinion that the Earth is 6000 years old.

So doubling Gitmo = normal.

6000 year old Earth = normal.

Marry your cousin = normal.

Obsessively hate ferrets = normal.

Want to nuke Mecca and Medina = normal.

Subscribe to the currency theory prevailing throughout most of mankind's economic history = bonkers.

|11.7.07 @ 3:19PM|#

TWC, I thought we went off the gold standard in the early 70s?

Jozef|11.7.07 @ 3:23PM|#

Paul's extreme, uncompromising positions really don't mean a thing

I've had the impression that Drum liked uncompromising positions held by Presidential candidates...

robc|11.7.07 @ 3:23PM|#

Cesar,

Nope. We want off our replacement pseudo-gold-like standard in the 70s.

squarooticus|11.7.07 @ 3:24PM|#

Cesar: we went off the gold standard in stages, the first of which was in 1913, when dollars were no longer exchangeable for gold by individuals.

|11.7.07 @ 3:25PM|#

What did the psuedo-replacement involve?

I'm not savy enough on financial and banking matters to even comment on whether the gold standard is "nutty" or not. All I know is, generally, printing lots and lots of paper money is not good.

|11.7.07 @ 3:26PM|#

A pox on both their houses, but I don't see how supply-siders get to call gold bugs crazy.

And I don't see how people who thought Saddam Hussein would give al Qaeda a nuclear weapon get to call NATO-bashers crazy.

It's like watching a homeless guy with a dead racoon on his head diss another homeless guy because his racoon is backwards.

|11.7.07 @ 3:27PM|#

Obligatory Ron Paul Spambot response here- that is okay, we're used to being mocked and called crazy. Why, Lord knows I live in the woods in a small cabin reading my John Birch literature- oh wait, that's right- I defy the stereotype with my 2 post-doctorate degrees, big city living and primary sector job.Next week we'll raise another 4 million and listen to another round of pundits telling us our candidate isn't serious, doesn't stand a chance and will lose. Then he'll win New Hamshire and we'll be told, "That's just New Hampshire, all the crazies live up there." Then we'll win S. Carolina and Nevada and they'll talk about how crazy they are in the South or the free-wheeling Vegas folks...what will they say when he wins California? Then when he wins the nomination they'll talk about how tough Hillary is- what will they say when the Democratic base abandons the pro-Iraq & Iran war, pro-government surveillance candidate?

robc|11.7.07 @ 3:28PM|#

cesar,

google Bretton Woods. If you understand it, explain it to me.

Guy Montag|11.7.07 @ 3:29PM|#

In 2006 it costs $20.15 to buy what cost $1.00 in 1913.

Um, you could not buy a Hemi at any price then.

A long distance phone call was much more expensive then than now and a majority of the country could not get a phone anyway.

A mobile phone, nor comparable service, was available at any price.

People in Peoria did not have a reliable source of coconuts.

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?

gan|11.7.07 @ 3:30PM|#

I'm still not sure what to think about this issue, i.e. abolish the Fed and switch back to a gold standard. Can any of you post links to notable economists discussing this issue?

Sean|11.7.07 @ 3:30PM|#

To explain it here takes too long. but a great book that does it better than any one else is "the Creature From Jeckyl island: a Second Look at the federal reserve" GW Griffin.

www.realityzone.com

|11.7.07 @ 3:31PM|#

To Rudy, Mike H. & Mitt, et al...listen up..first, we're going to take our party back, then we're going to take out country back. Don't worry, we'll raise another 4 million next week to pay for Rudy's third divorce and psychoanalysis, Mitt's 40 wives and have enough left over to get Huckabee a Big Mac after he starts binge eating again.

|11.7.07 @ 3:31PM|#

OK, so what is the real deal with the gold standard issue anyway? I understand Paul's argument - that indexing the number of dollars in circulation to the amount of gold on hand (or even using gold coins, which have intrinsic value) keeps the currency stable and prevents inflation. (Replace gold with the metal of your choice.) That actually makes a great deal of sense to me.

But, many on H&R and other libertarian blogs have been very flippant and dismissive of this position, without explaining why. Can someone please explain this to me in layman's terms? Are "hard currency" buffs such as Paul wrong? If so, why?

Seitz|11.7.07 @ 3:33PM|#

Then there's Huckabee, who holds the sensible and sound opinion that the Earth is 6000 years old.

I'm not sure I understand that argument that says 'if Drum thinks the gold standard is crazy, he must think a young earth and Gitmo doubling isn't crazy'.

I think those ideas are crazy, too, but the difference is there are large numbers of people who are also crazy in the same ways, and presumably, they'll vote for the guy who is (or acts) as crazy as they are. I'm not sure what large constituency Paul appeals to with he gold standard position.

Note that I don't think Paul is pandering or trying to appeal to anyone with that position, and I applaud him for that. But I think the point is that what seem like crazy or unserious positions taken by the other candidates seem to be done in order to appeal to a big swath of voters. Playing up an idea that a lot of people think is crazy (the gold standard) which DOESN'T have a particular appeal to a large number of voters (both because of the general apathy toward those types of policy issues and because people don't understand it) doesn't make a lot of sense. Again, I think Paul should be applauded to being honest in his positions, but playing up this particular position doesn't seem to have much a campaign upside.

And I think that David's point here is pretty apt. If Reagan couldn't even get us back on the gold standard, why on earth should anyone believe that, if elected, Paul would be able to?

To sum up, this is an area of Paul's platform that a lot of people think either don't care about, don't understand, or think is crazy. In addition, it has virtually no chance of ever becoming reality. So making it a key issue doesn't seem to make a lot of sense.

Nigel Watt|11.7.07 @ 3:35PM|#

Jesus, people, Ron Paul does not support the gold standard. He supports making gold and silver legal tender. There is a difference.

The Wine Commonsewer|11.7.07 @ 3:35PM|#

Cesar, that's why I said more or less. Mostly more. I probably could have simply left it at the Federal Reserve Act of 1913

And you are correct, of course, printing money isn't a good idea. RP is fond of pointing out that under the Fed US currency has lost around 95% of its value since the magic year of 1913.

I'm not sure what the answer is but it is clear that from an inflation standpoint a gold standard is preferable to what we have now.

As they say, the fifty dollar bill is the new twenty. I used to feel about the twenty like I do about the hundred dollar bill. Don't break it, because once you do, it's gone in a heartbeat.

My kids look at quarters like we used to look at pennies. They're hardly worth picking up off the sidewalk. Makes me feel pretty fargin' old.

And you used to get a Coke out of a vending machine for a dime.

That's what inflation does.

|11.7.07 @ 3:37PM|#

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?

Apples. Chicken. Flour.

mrk|11.7.07 @ 3:40PM|#

Any one who makes the argument: "Can we all please grow up?", as Kevin Drum does, needs to check his/her diapers. Riposte!

Jozef|11.7.07 @ 3:42PM|#

Apples. Chicken. Flour.

And they didn't taste like cardboard back then either...

robc|11.7.07 @ 3:44PM|#

How much does a Coca-Cola made with cane sugar instead of HFCS cost now? Isnt it sort of the reverse of the hemi?

carrick|11.7.07 @ 3:44PM|#

Cesar: we went off the gold standard in stages, the first of which was in 1913, when dollars were no longer exchangeable for gold by individuals.

I'm not old enough to remember 1913, but I do remember when coins were silver and dollar bills were "silver certificates".

Seitz|11.7.07 @ 3:45PM|#

My kids look at quarters like we used to look at pennies. They're hardly worth picking up off the sidewalk.

That has more to do with the ubiquity of arcade quality video games at home, and actual video games costing like a buck. :)

You should teach your kids to do their own laundry and get coin operated machines. I'm in my early thirties and I rent. Quarters are very valuable to me.

|11.7.07 @ 3:46PM|#

As they say, the fifty dollar bill is the new twenty. I used to feel about the twenty like I do about the hundred dollar bill. Don't break it, because once you do, it's gone in a heartbeat.

My kids look at quarters like we used to look at pennies. They're hardly worth picking up off the sidewalk. Makes me feel pretty fargin' old.

And you used to get a Coke out of a vending machine for a dime.

At this rate I'm going to be paying for a McDonalds Hamburger with a $20 bill when I'm 50.

Electronic and technology stuff seems to be somewhat(?) immunes to this though. A PC cost a small fortune in 1988, now you can get one for $700.

|11.7.07 @ 3:47PM|#

Another economist you may have heard of defended the gold standard in Ayn Rand's essay collection Capitalism: The Unknown Ideal.
His name, Alan Greenspan.

http://www.amazon.com/exec/obidos/ASIN/0451147952/reasonmagazineA/

Fluffy|11.7.07 @ 3:48PM|#

No way, Seitz. Uh-uh. Drum is no how, no way saying "Paul advocates positions without a constituency". Drum is saying, "Paul is personally insane because he thinks 'X'." The fact that he singles him out in this respect constitutes pretty good evidence that he does not think something similar about the other Republican candidates.

Wear magic long underwear to scare off the Devil = normal and not noteworthy.

And Paul has been on CNBC and the Fox Business Channel and has talked about his currency views, so it's not like he's hiding from them. And honestly, although I don't agree with him on the issue, if it was brought up during the debates it would probably work to his advantage, because he makes it sound eminently reasonable in a way that would probably appeal to an audience that has been watching the dollar collapse for months.

Franklin Harris|11.7.07 @ 3:48PM|#

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?

Apples. Chicken. Flour.

And it's worse than that because all of those things should be going down in price because we're so much more efficient at producing them now. So, some of the price inflation is actually hidden.

The Wine Commonsewer|11.7.07 @ 3:52PM|#

Guy, the stats are from the CPI and the Historical Abstract of the US.

And while your point is well taken, about hemis and DVD players and the like, the overall cost of stuff is 20 times what it was in 1913. I would bet that the cost of a 426 hemi in 1966 was significantly less than today.

I would agree that productivity and plenitude has saved as from a death worse than fate just as it has saved us from the other bungling idiocies brought to you by the government-de-jour.

I am firmly in agreement that we can stay ahead of the government because it is clumsy and ham-handed while the private sector and the rest of us tend to be more innovative.

Bhh|11.7.07 @ 3:53PM|#

Coincidentally the US Peso hits a record low every day. I wonder if Taco Bell would pay me in Euros?

|11.7.07 @ 3:53PM|#

Any one who makes the argument: "Can we all please grow up?", as Kevin Drum does ...

I, too, was heartened to see him return to his smarmy "Put the adults (democrats) back in charge" attitude that did so well in the 2004 election. It just goes to show you, he's super serial. For real.

|11.7.07 @ 3:54PM|#

Guy: Are you saying that technology would not have progressed if the gold standard had been retained? If not, I don't understand your Hemi statement.

|11.7.07 @ 3:55PM|#

I have to admit, despite there not being Ipods in 1913 it would be really cool if an Ipod cost only $30.

The Wine Commonsewer|11.7.07 @ 3:57PM|#

Electronic and technology stuff seems to be somewhat(?) immunes to this though. A PC cost a small fortune in 1988, now you can get one for $700.

Oh, no doubt. I had a killer Kenwood 4 channel receiver once upon a time. It cost a thousand bucks. Today you can pick something similar up at Costco for a couple hundred bucks.

There is plenty that is cheaper than it once was but that is A FUNCTION OF EFFICIENCY. Imagine how cheap computers would be without inflation of 2-3 percent a year. You'd be buying a that 700.00 laptop for 350.00.

|11.7.07 @ 3:58PM|#

Who wouldn't want to peg the dollar to gold, or ANYTHING more stable than the nothing it's pegged to now?
Has this Drum dude been reading financial news lately? By lately, I mean, in the last two years or so?

|11.7.07 @ 4:01PM|#

For some reason I can't seem to find the price of a 1913 iVictrola.

The Wine Commonsewer|11.7.07 @ 4:01PM|#

Anybody remember that phrase:

Sound As A Dollar?

And when was the last time you heard it?

|11.7.07 @ 4:02PM|#

OH, I get it. Things we don't need get cheaper.

Seitz|11.7.07 @ 4:02PM|#

The fact that he singles him out in this respect constitutes pretty good evidence that he does not think something similar about the other Republican candidates.

I'm pretty sure he singled him out not for that issue, but because Paul just raised a gajillion dollars in one day. I don't know if you read Kevin's site, but the other stuff has pretty much been covered at one time.


Wear magic long underwear to scare off the Devil = normal and not noteworthy.

I'm pretty positive that if you go through his archives, Romney's religious beliefs have almost assuredly been discussed. Unless you think it's necessary to dissect every position of every candidate in every post, the fact that he didn't mention it in this post does not necessarily mean it's not noteworthy. It simply means that in this one instance, it wasn't noted. And quite frankly, it probably wasn't noted because it's pretty well established among the commentariate at that site that doubling gitmo and ignoring evolution are pretty crazy. It doesn't need to be repeated.

In fact, I'd say that Paul's appeal to a lot of people is that he doesn't hold the same crazy positions as the other Republican candidates, but that doesn't mean he doesn't hold ANY crazy positions*. I read Kevin's post as saying "why do people take this guy seriously when he's got this crazy position". That doesn't necessarily mean that he's the only candidate with a crazy position who shouldn't be taken seriously.

*Note that I reserve judgment on whether this is a crazy position. I'm just using that term because it seems to be the gist of others' opinions of Paul. What I think about his position is neither interesting, nor relevant.

|11.7.07 @ 4:02PM|#

David Frum on why the gold standard is dead:

The gold standard was ultimately sustained by a near universal belief that gold was money - and that nothing else was. There's a story told about the socialist minister in the British Labour government of 1929-31, who was stunned when his more conservative successors took Britain off gold in 1931. "They never told us we could do that!"

Well, now we all know that "they can do that."

Suppose that the US were on the gold standard right now. Suppose the country headed to recession. We would all know that the president and Congress of the moment could mitigate the recession by going off gold. We, each of us, would have to anticipate that possibility in our financial planning. So what would we do? We'd trade our "gold" dollars for commodity gold, and we'd hoard that - thus transforming a looming recession into an instant financial panic.

And since the government of the moment would have to anticipate that reaction, it would have to move even faster, dumping gold at the first tremor of bad news.

So you and I would have to act even faster still, never accepting "gold" dollars in the first place ....

Which is why the whole thing is so irrecoverably dead.

The Wine Commonsewer|11.7.07 @ 4:03PM|#

Sound as a Dollar went the way of using the term Cadillac to describe anything of quality.

Jozef|11.7.07 @ 4:05PM|#

I have to admit, despite there not being Ipods in 1913 it would be really cool if an Ipod cost only $30.

Not all that cool, if you take into consideration that income was also much lower back then than now:

Average Income $1,296.00
Loaf of Bread $.06
Gallon of Gas $.12
Gallon of milk $.36
New Car $490.00
New House $3,395.00
Dow Jones Index 78

Seitz|11.7.07 @ 4:06PM|#

And Paul has been on CNBC and the Fox Business Channel and has talked about his currency views, so it's not like he's hiding from them.

Was he accused of hiding from them? The closest I saw was Kevin accusing debate moderators from not asking about them.

And honestly, although I don't agree with him on the issue, if it was brought up during the debates

See previous comment about most people probably thinking the idea is crazy (a few), not understanding it (a lot more), or flat out not caring (probably most).

|11.7.07 @ 4:07PM|#

I'm really a rookie at understanding this so forgive me...but what we do right now is print money with nothing to back it up but the "reputation of the US," right? And when the Fed increases the money supply, since there's more of it out there, it's worth less, right?

I'm 33. I have roughly $100k saved for retirement. By the time I'm ready to retire, can I expect that $100k to last about a month?

The Wine Commonsewer|11.7.07 @ 4:08PM|#

How much does a Coca-Cola made with cane sugar instead of HFCS cost now?

costs less in Mexico, more here.

TWC on Mexican Coke.

|11.7.07 @ 4:08PM|#

Gan, Try reading What Has Government Done to Our Money? by Murray N. Rothbard, an Economist, to get a sense of what going to the Fed has done. It is a bit of a read, but if you want to know how bad the Fed really is, it is an eye opener.

I can't readily pull up what I found a while back, but Rome fell partly due to the debasement of their currency. Athens fell as their coins became less and less pure. The US colonies played with paper money and that caused some serious problems too. For recent history comparisons, check out Post WWI Weimar Germany. For Modern examples, check Brazil, Argintina, and Zimbabwe.
IMarv

|11.7.07 @ 4:09PM|#

Wait a minute. Whose annual income is still what it was in 1913? Has productivity outpaced the cpi or not? My 1902 Sears catalog shows off the rack ordinary men's suits for $10. Times 20 inflation index equals $200 today. The local Sears is advertising "all wool mens suits" today for $169.99. Inflation is a killer for those on a fixed income, but most wage earners keep up.

The Wine Commonsewer|11.7.07 @ 4:11PM|#

Jozef and Cesar, I used to think how cool it was that my dad could buy a Pepsi for five cents until he pointed out that his dad made $45.00 per week.

|11.7.07 @ 4:11PM|#

sage,

Why do you think it says "In God We Trust" on the front?

|11.7.07 @ 4:13PM|#

sage,
To answer your questions, I'll just say I wish Milton Friedman were still alive.
My hunch is that Allan Greenspan lulled all of us into a false sense that fiat money is stable. It's his chickens coming home to roost right now.

robc|11.7.07 @ 4:15PM|#

Dang it TWC, I forgot about the rest of the world. I was trying to name a non-existent product and you go and screw it up with reality.

Just for that, I have to critique one line of your link:

drinking Coke out of a bottle is better (just like beer)

WRONG!

Beer should never be drunk from a bottle. Babies drink from bottles. A wine person should realize that you cant appreciate aroma drinking from a bottle, you must pour into a glass first (preferrably the proper glassware for the type of beer, which, interestingly enough, is never a shaker "pint").

Just the thought of drinking Bell's 2-hearted or Chimay Grande Reserve from the bottle is wrong. [okay, I admit it, Ive actually done the latter - and it will never happen again]

The Wine Commonsewer|11.7.07 @ 4:16PM|#

Creech, yes some people keep up and some keep up better than others. The distortion is partially covered up by productivity gains. We shouldn't have to keep up, keeping up shouldn't be a line item on long-term contracts. It shouldn't be a consideration in investment planning. It shouldn't have to be taken into consideration when deciding on retirement plans. And, when it gets out of hand, like it did in the 1970's, everybody gets burned.

|11.7.07 @ 4:17PM|#

joe, I'm reminded of a line from Married with Children: "Cash only, Bundy. And I still want two forms of I.D."

Leland Thomas Faegre|11.7.07 @ 4:18PM|#

Isn't he from Red State? That CBS gives Drum sanctuary and legitimacy is frightening...

The Wine Commonsewer|11.7.07 @ 4:20PM|#

ROBC, you are correct. [grins] Beer belongs in the correct glass same as wine. Except it is quite okay to drink straw-bottle chianti out of a short tumbler with pasta.

What I really meant was that bottled beer tastes better than canned beer.

And, in that vein, aluminum cans are better than the old steel cans that sometimes tasted more like can than beer. Thank God for technology.

|11.7.07 @ 4:21PM|#

>>> "Well," the president began and then paused (a ploy he frequently used to collect his thoughts), "I still do support the gold standard, but--"

OK, why do so many people -- even professional writers such as Robert Novak -- have so much difficulty with emphasis? It seems clear the italics should be applied to the "do," not the "still."

Or it's a Weigel transcription slip-up, I suppose.

Wild speculation|11.7.07 @ 4:21PM|#

But, many on H&R and other libertarian blogs have been very flippant and dismissive of this position, without explaining why. Can someone please explain this to me in layman's terms?

Maybe they own a lot of Federal Reserve Notes?

The Wine Commonsewer|11.7.07 @ 4:21PM|#

Sage wins.

LarryA|11.7.07 @ 4:21PM|#

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?

A new Colt Model 1911 .45 ACP handgun.

New Car $490.00

Of course a 1913 auto didn't travel 300 miles at 75 MPH on a tank of gas, last 100,000 miles, include a warranty for that long, keep the inside temperature comfortable, tell emergency responders where it is, and protect its passengers in accidents like modern ones do.

But, many on H&R and other libertarian blogs have been very flippant and dismissive of this position, without explaining why. Can someone please explain this to me in layman's terms? Are "hard currency" buffs such as Paul wrong? If so, why?

The advantage of a gold standard is that the government can't expand the number of dollars in circulation and cause inflation, as more dollars chase the same amount of goods. The disadvantage is that the government can't expand the number of dollars in circulation when the production of goods increases, thus causing deflation as the set amount of dollars chase the expanding amount of goods.

Plus, most governments can find ways to get around the restriction more or less legally.

Next, the physical properties of gold make it valuable in a number of manufacturing processes, not to speak of its bribery value in the form of women's jewelry, so locking all of it up just to serve as currency is wasteful.

Finally, on the gold standard the gold is valuable because it's scarce. A large gold find can deflate a country's currency.

|11.7.07 @ 4:23PM|#

For some reason I can't seem to find the price of a 1913 iVictrola.

A top of line gold-trimmed Victor VI with a 3-spring motor and a mahogany horn would have cost $100.

If you can find one today for under $6000, consider yourself lucky.

robc|11.7.07 @ 4:24PM|#

What I really meant was that bottled beer tastes better than canned beer.

Do you really think, poured into a proper glass, you can tell the difference? In a double blind taste test?

Of course, Im trying to think of any beers that are both bottled and canned (the same product- not Guinness, which isnt even trying to be the same). BMC products excluded, just on general principle.

The Wine Commonsewer|11.7.07 @ 4:27PM|#

Well, I am old, and I will say that the technology is better, but there was a time when bottled beer was definitely better and I believe that I could have told the diff in a blind test. But, as you point out, we're talking about Bud, Coors, maybe Heineken, maybe Mooshead, and NOT good beer because good beer is either on draft or in a bottle.

iih|11.7.07 @ 4:28PM|#

As a non-economist, the best, easiest, and smoothest explanation of the gold standard (and the whole concept of money) I came across is Rothbard's What has Government Done to Our Money?. The first chapter (I recommend the audio format --reading that stuff could put you to sleep) is all what one needs. Towards the end, Rothbard concurs that, regardless of the monetary/economic side of things, a gold standard is inherently a question of liberty. No gold standard, less liberty!

You can download the audio version here.

Jay D|11.7.07 @ 4:29PM|#

Frum:

Suppose that the US were on the gold standard right now. Suppose the country headed to recession. We would all know that the president and Congress of the moment could mitigate the recession by going off gold.

Please see Greenspan on the Daily Show. A couple of eye openers:

Greenspan: We didn't need a central bank when we were on the Gold Standard . . . people would buy and sell gold and the markets would do what the Fed does now. . . but by the 1930s most everybody in the world decided that the Gold Standard was strangling the economy and universally the Gold Standard was abandoned...you need somebody out there or some mechanism to determine how much money is out there because the amount of money in an economy relates to the amount of inflation...


Greenspan: I was telling my colleagues the other day...I'd been dealing with these big mathematical models for forecasting the economy, and I'm looking at what's going on the last few weeks and I say, "Y'know, if I could figure out a way to determine whether or not people are more fearful, or changing to euphoric... I don't need any of this other stuff. I could forecast the economy better than any way I know. The trouble is, we can't figure that out. I've been in the forecasting business for 50 years, and I'm no better than I ever was, and nobody else is either."

Mith|11.7.07 @ 4:30PM|#

Listen, I admit I don't have a really good grasp on how it works, but to my knowledge the overview is this:

If the fed increases the money supply, it's value drops, you get inflation. If they shrink the money supply, it's value increases, you get deflation.

Both are actually bad, but for different people. Inflation is bad for people with fixed incomes and for you monetary saving (the dollars you have are worth less). Deflation is bad for property owners (land, equipment, etc.) because as the dollar strengthens, the value of the items you own drops.

There are problems with actually going to a true gold standard, some are mentioned above. My understading is that the better idea is to go to a system where the Fed has to keep the dollar's value within a certain percentage of the price of gold (or Uranium, or whatever). That prevents them from making massive changes to the money supply, but there's never a run on gold, as they're not really attached. They can play with the value on the fringe to adjust for changes in the economy, but they can't keep going and going.

Like I said, I've heard the general plan, I just don't know enough to understand if it works or not.

robc|11.7.07 @ 4:31PM|#

good beer is either on draft or in a bottle

Thats not true any more. More and more craft brewers are canning, its just those that can arent bottling too.

For example, I have heard good things about Oskar Blues entire line, but havent had a chance to try any myself yet.

The Wine Commonsewer|11.7.07 @ 4:31PM|#

the physical properties of gold make it valuable in a number of manufacturing processes

Harry Browne (RIP) used to argue that silver was the ultimate value because it was so valuable in so many mfg process, specifically color film. He pointed out that there simply was no substitute for silver and color photography was impossible without it.

Neither he nor anyone else foresaw digital photography, nor could they conceive that the market would change.

I love this kind of stuff.

stewie|11.7.07 @ 4:33PM|#

Rusty John

You forgot "YEEEEEEEEAAAAAAAAAAHHHHHHHH" at the end of your post.

Li\'l Urkobold™|11.7.07 @ 4:34PM|#

LI'L URK™ IS ON THE POOPY STANDARD!

The Wine Commonsewer|11.7.07 @ 4:34PM|#

Good beer in cans? OMIGOD! What is the world coming to?

iih|11.7.07 @ 4:36PM|#

Mith:

I really recommend Rothbard's book mentioned above in my comment @ 4:28.

BIG E|11.7.07 @ 4:38PM|#

I tell my friends when I was growing up, during the 60's, gas prices were anywhere from sixteen cents to thirty cents per gallon. Our Constitutional money was backed by silver and gold at that time until 1964. Most of my friends look at me as if I am nuts, when I tell them that gas, today, is still around a quarter a gallon.

Here are todays, closing prices of silver U.S. coinage, not collectible coins, just silver change that was used in everyday circulation. This if from the website www.coinflation.com/ Today, if our money was still Constitutional, 90% silver, gas would be around .30 cents a gallon. Approx the same as in the 60's. The reason it isn't, is the Federal Reserve Note.

NotAsSmartAsIThinkIAm|11.7.07 @ 4:39PM|#

Sage- if that money is invested in a reasonable way the value should increase faster than inflation.(Generally speaking).

Anyway-
1. Seems to me (I work in the financial business) that yes, the Fed Reserve is a horribly unconstitutional creation... it's also worked really, really well for a long time. What to do? I dunno.

2. Does anyone know of a good article on how we would actually get ourselves on the gold standard? Does Mr. Paul have a plan to put it into action? It would be complicated. there are lots of little ends, i.e. would individuals be allowed to own gold?

3. Seems to me I remember Reason smugly dismissing all those who fretted over the trade deficit for years. So everybody's been selling dollars for decades and..... Surprise! Now the dollar ain't worth very much. Erm, duh.

4. I'm still voting for Ron Paul.

robc|11.7.07 @ 4:39PM|#

TWC,

There you go. On the first page, only 1 of the reviewers actually drank it from the can.

http://beeradvocate.com/beer/profile/2681/6518

Alexander|11.7.07 @ 4:39PM|#

Enough of this nonsense. Seeing as how you all missed or ignored Nigel Watt's comment above, I'll make it more interesting.

I will give $1000 to the first respondant who can find an official citation from Ron Paul or his campaign that part of his '08 presidential platform is to return the US Dollar to the gold standard.

It's sad how easily you guys swallow the MSM bullshit.

|11.7.07 @ 4:39PM|#

You can put good beer into a can, but you can't get good beer out of a can.

|11.7.07 @ 4:43PM|#

For example, I have heard good things about Oskar Blues entire line, but havent had a chance to try any myself yet.

The Scottish Ale, Old Chub, is one of my three favorite domestic beers. It's heavenly. And Mr. Wine Commonsewer may also be interested to know that the brewery BeerAdvocate recently picked as best in America (Surly Brewing Co. out of the Twin Cities) only sells their beer in cans.

|11.7.07 @ 4:44PM|#

Mmmm Dale's Pale Ale. Be sure to check out "Old Chub" from the same brewery. Who knew a beer from a can could be 8.2%?

Mith|11.7.07 @ 4:44PM|#

iih,
I really recommend Rothbard's book mentioned above in my comment @ 4:28.

For the audiobook you linked to - Chapter I (the introduction) or Chapter II (the actual first chapter)?

I'm guessing II.

|11.7.07 @ 4:45PM|#

When Dogfish Head starts putting their stuff in cans, it will truly be a sign of the apocalypse.

robc|11.7.07 @ 4:45PM|#

ClubMedSux,

With the coming shortage of hops, Old Chub may be getting some competition in the American made Scottish Ale category.

|11.7.07 @ 4:47PM|#

www(dot)gold-eagle(dot)com/editorials_99/hannigan092099(.html) A good link for an allegorical explanation.

|11.7.07 @ 4:49PM|#

"Of course, Im trying to think of any beers that are both bottled and canned (the same product- not Guinness, which isnt even trying to be the same). BMC products excluded, just on general principle."

Wittekerke Belgian witbier. They have 6-packs of cans at Trader Joe's and it tastes as good as it does from the bottle.

|11.7.07 @ 4:50PM|#

Joe:

"It's like watching a homeless guy with a dead racoon on his head diss another homeless guy because his racoon is backwards."

I needed a good laugh today; thanks.

iih|11.7.07 @ 4:52PM|#

Mith:

I and II. I is only 4 minutes long.

iih|11.7.07 @ 4:53PM|#

Mitt Romney -- Very funny!

|11.7.07 @ 4:53PM|#

robc,
The trend in recent years seems to be to overwhelm the palate with hops and alcohol. I can see how such a tongue numbing brew wouldn't matter if it came from a can. My palate is a bit more delicate and, I submit, refined.

What do you have against pint glasses? I might take a frosty mug ahead of one, but they're definitely my preference.

|11.7.07 @ 4:55PM|#

This is what Ron Paul is talking about. How Gold was Money How Gold could be Money Again. Forward it to that idiot Kevin Drum or Dean Barnett

Alexander|11.7.07 @ 4:55PM|#

FREE MONEY!!!


I will give $1000 (yes, really) to the first respondant who can find an official citation from Ron Paul or his campaign that part of his '08 presidential platform is to return the US Dollar to the gold standard.


BUT YOU WON'T BE ABLE TO.

Fluffy|11.7.07 @ 4:55PM|#

"That doesn't necessarily mean that he's the only candidate with a crazy position who shouldn't be taken seriously."

OK, then it should be easy for someone to produce a link for me where he describes each of the other Republican candidates as a fruitcake, and demands that everyone grow up and stop taking that candidate seriously.

Nephilium|11.7.07 @ 4:57PM|#

The Wine Commonsewer:

Actually, with the current canning techniques for beer, canned beer is actually better then bottles. You have less light hitting the beer (skunked beer is actually lightstruck beer, UV rays do bad things to certain chemical compounds of hops), less cost to transport, easier transportation (you can stack cans), and easier cooling. You can also take them into places that ban glass.

There are a couple of craft brewers that are canning their beers, and they are damned tasty. It took a hefeweisen from Sly Fox brewery (named Royal Weise) to truly convince me. If you see a craft beer in a can, give it a chance, it'll probably surprise you.

Nephilium... beer geek.

Syloson of Samos|11.7.07 @ 4:57PM|#

During the Civil War the Confederacy financed itself primarily by fiat money; it lead to massive inflation by the end of the conflict.

robc|11.7.07 @ 5:03PM|#

Warren,

What do you have against pint glasses? I might take a frosty mug ahead of one, but they're definitely my preference.

Speaking of numbing the palate, nothing will do that quite like a frosted mug. What decent beer needs to be served that cold anyway? Cold kills taste.

Oh, problems with pint glasses:

1. The typical shaker pint glass is 14 oz. Stop committing fraud!

2. Nothing much else, they are perfectly fine for nearly any beer style, they just arent the best for any style.

2a. Most english beers seem to go better in a nonic glass, although there probably isnt any real difference there.

2b. Belgians (and IPAs) in chalices.

etc etc.

|11.7.07 @ 5:04PM|#

I don't care what a beer comes in as long as its not a clear or green bottle.

robc|11.7.07 @ 5:06PM|#

Warren,

Oh, not a big fan of the uber-hopped, big ABV beers myself. I like some, but prefer tasteful and simple myself.

MattXIV|11.7.07 @ 5:11PM|#

What I really meant was that bottled beer tastes better than canned beer.

Do you really think, poured into a proper glass, you can tell the difference? In a double blind taste test?

It's not implausible that one can. The taste of beer is changed by exposure to metals; I was at Capital Brewery recently and they explained that when they got new stainless steel equipment while expanding, they had to add a copper bar to it to get the same taste on one of their beers. Beer tends to be in the 3.7-4.1 pH range so it's quite plausible that it oxidizes the metal slightly. Al has a somewhat uncommon aqueous solution chemistry as it forms different coordination complexes with OH- depending on the solution pH, moving from Al3+ -> AlOH 2+ -> Al(OH)2 1+ -> Al(OH)3 (solid) -> Al(OH)4 1- so it probably is a little different from other can metals too (the only other metals that do the same thing are the ones below Al on the periodic table; and Zn and the ones below it have similar hydroxide forms).

And dissolved metal complexes can have a substantial impact on taste - lead acetate solutions, for example, have a sweet taste, which was part of why the Romans used cookware made from it instead of copper for preparing certain foods. It continued to find usage in applications like sweeting port wine until relatively recent history when people realized the rather nasty things that ingesting soluble lead ions does to you.

robc|11.7.07 @ 5:13PM|#

MattXIV,

Modern beer cans are lined to prevent contact with metal.

|11.7.07 @ 5:14PM|#

Oh, not a big fan of the uber-hopped, big ABV beers myself. I like some, but prefer tasteful and simple myself.

Between the hop shortage and the increased price of malt (both of which are at least partly tied to the government's subsidizing of corn, I might add), it's a good time to be a fan of the understated session beer.

Seitz|11.7.07 @ 5:14PM|#

2b. Belgians (and IPAs) in chalices.

What's the point, other than appearance, of the gold rims on Chimay glasses. I have a couple, and really enjoy the trappist ales, but I'm curious what function, if any, this provides.

robc|11.7.07 @ 5:16PM|#

ClubMedSux,

Im not sure if I have enough grain on hand to make it thru the malt price increase. I do have a bunch of Maris Otter, looks like milds and esbs in my future.

The Democratic Republican|11.7.07 @ 5:16PM|#

The historical price comparisons don't mean much in a vacuum. The purpose of "hard" or "sound" money is to limit inflation. The dangers of these historical comparisons is that they obscure the extent to which real growth (such as in the stock market) has occurred and how much is just the result of inflation.

Big E's example is perfect: everyone bitches and moans about the price of gas, but only VERY recently, over about $3 a gallon, does it represent a REAL increase. The danger of inflation is that when the average person hears the story "Back in my day a hamburger cost a nickel," they think that things have just gotten more expensive, whereas it's really just inflation whittling away our wealth.

robc|11.7.07 @ 5:16PM|#

seitz,

Im pretty sure the gold rims are to look pretty. The etchings in the bottom are nucleation sites to cause bubbles.

robc|11.7.07 @ 5:17PM|#

okay Im out, all this talk made me realize I have a Delerium Tremens clone at home that needs attention.

iih|11.7.07 @ 5:18PM|#

I just read on Ron Paul's youtube website that FOR HAS DECIDED TO EXCLUDE RON PAUL FROM THE NOV 4 DEBATE. CAN SOMEONE VERIFY?

iih|11.7.07 @ 5:21PM|#

I clearly got the date wrong, but is it true that Fox has already excluded RP from the debates?

|11.7.07 @ 5:21PM|#

Was there a debate three days ago? Or do you mean 2008?

duster|11.7.07 @ 5:21PM|#

MattXIV,

Impressive. I heard somewhere that aluminum cans are coated with a small film of plastic to prevent corrosion. If that's true, then your cool analysis is for naught.

Plastic could still alter the taste of the beer, though.

Oh yeah, the gold standard.....um, what can I say that hasn't been said already.

Cheap beer tastes better out of a tallboy or 40, that I know!

|11.7.07 @ 5:21PM|#

Oops, iih. Do you mean the youtube debate?

|11.7.07 @ 5:24PM|#

Who wants to put Ps 91:2 on the front of coins? IT SHOULDN'T BE ON THERE AT ALL!

iih|11.7.07 @ 5:26PM|#

sage: I don't know.

I went to the campaign's youtube page:

http://www.youtube.com/watch?v=bYk8UFSBPew

See the comments. If that guy (DillonX --first comment) is not fooling around, then he must have the date wrong. But he might be just fooling around. I don't know.

|11.7.07 @ 5:26PM|#

At this rate I'm going to be paying for a McDonalds Hamburger with a $20 bill when I'm 50.

When I was in elementary school in the early 60s, McDonalds's ads included a jingle about how "only forty-seven cents gets a three-course meal [i.e., hamburger, fries, and shake] at McDonald's, the drive-in with the golden arches."

|11.7.07 @ 5:27PM|#

Since CNN is putting up the youtube debate, I doubt Fox has a say in it. I don't know if there are more debates scheduled on Fox, but they'd be crazy to exclude Paul after two days ago.

rho|11.7.07 @ 5:27PM|#

There are a lot of people here who don't seem to know what money is.

|11.7.07 @ 5:29PM|#

Gold? Why not base our currency on something else we can pull out of the ground? I, for one, like potatoes.

iih|11.7.07 @ 5:29PM|#

sage, I think you are right. I might have been fooled by that guy DillonX. To tell you the truth, I would not find it strange if Fox would exclude him despite two days ago.

|11.7.07 @ 5:29PM|#

Yeah, I know what you mean.

iih|11.7.07 @ 5:33PM|#

lawnsheep:

Evolution gave us gold and silver. In the old old days (like 100s/1000s years ago) it was wheat. But that was seasonal, so they went for cattle and other stuff. Eventually it was silver and gold. But it was not arbitrary.

For the history, see my comment at 4:28 (Rothbard does provide a nice history).

|11.7.07 @ 5:34PM|#

Gold? Why not base our currency on something else we can pull out of the ground? I, for one, like potatoes.

Gold became the world's currency because it served the functions of money the best -- it was durable, universally valued, and hard to create more out of thin air (despite the best efforts of the alchemists.)

Potatoes fail the last test: someone could plant thousands of acres of new potatoes, and inflate your potato currency, just like the Federal Reserve is inflating the paper money now.

|11.7.07 @ 5:36PM|#

If Kevin Drum (or others) think that criticizing Ron Paul for advocating sound money is going to hurt him in the primaries, I think they should take a look at what is happening to the dollar these days.

Ron Paul sounds smarter and more appealing every day.

GinSlinger|11.7.07 @ 5:46PM|#

SoS,

So did the Union, you have heard of "greenbacks," right?

iih|11.7.07 @ 5:46PM|#

Craig: Exactly. Let me know if you agree with this simplified history:

1. People traded stuff (cattle, wheat, pots, tables,...).

2. As Walter Block said it once: It was hard for a chicken-owner, pickle-wanter to find a pickle-owner, chicken-wanter" to trade with. So people had to find a common product.

3. They started with common stuff, like chicken, wheat, etc. These were unstable as common trading commodities, and with time and evolution, they converged to gold and silver.

4. Gold and silver are sometimes cumbersome to carry (especially in big numbers). So people deposited them in warehouses and got a receipt instead. These warehouses are today called banks.

5. The receipts became "bank moneys". There were as many moneys as there were banks.

6. Sometimes banks gave more receipts than they have gold (seeking more customers at the cost of risk). I.e., they inflated their bank notes.

7. With time, these bans inflated their "receipts" so much that whenever there is a crisis, bank runs would follow and the banks go bust and their customers end up empty handed.

8. Hence, the federal reserve. And the rest is, well, history.

|11.7.07 @ 5:49PM|#

I'm a long-time gold bug and can clear a few things up. Here's the scoop:


Here's Alan Greenspan supporting gold in 1966. He said it restrains government spending and makes the welfare state impossible:

http://www.321gold.com/fed/greenspan/1966.html

The founders understood the evils of inflation: "not worth a Continental," so they made gold and silver the only legal money under the Constitution:

Article 1, Section 10:
"No state shall... make anything but gold and silver coin a tender in payment of debts"

The Fed was established in 1913 by JP Morgan, Schiff and other bigtime bankers in a secret cabal (really--look it up: Google: "Jekyll Island") as a monopoly over the issuance of currency. Any bank could issue notes redeemable in gold before this. The Fed was and remains a PRIVATE BANK with a government-enforced monopoly.

Federal Reserve Notes were redeemable in gold until 1933 when Roosevelt confiscated private gold).

Under Breton Woods, foreign governments could exchange our bonds for gold, which they did in droves in the 1960s when we were spending too much for the war and the Great Society programs. De Gaul of France in particular knew we were bankrupt and opted for gold instead of paper.

Nixon put an end to this in 1971 by essentially defaulting on our loans. He "closed the gold window" and refused to redeem bonds for gold. Rampant inflation ensued in the 1970s.

Volcker stopped this rampant printing of money in the early 1980s. Price inflation dropped. Calm ensued.

Greenspan resumed printing heavily when he took over. This caused the dot-com and housing bubbles (bubbles are mal-investment manias and terribly wasteful--printing too much money to lower interest rates artificially sends the wrong signal to investors, who borrow cheaply and do stupid things with the money--why does the Fed encourage this? hint: bankers get their fees).

Bernanke is not printing much now but will soon in order to buy our bonds and prop up rates as our deficit spending makes bonds increasingly unpalatable for foreigners. We will issue more and more bonds for war and entitlements. The Fed will print. Inflation will ensue, rates will go up, the Fed will print.... (Everyone needs to own some gold now).

Roberto Leibman|11.7.07 @ 5:52PM|#

I think that even better than a gold standard, we should get on a Golem standard (hats off to T. Prachett)

iih|11.7.07 @ 5:53PM|#

Pro-Fed people say because of 7, we have to have a government control money system.

Free marketers say, well, no! It was a lesson learned the hard way. Just as any private business today cares abut the customer and applies all sorts of quality control stuff to keep the customer happy (and himself in business), why not trust that modern day banks will do the same. Banks do not want to get out of business because of a bank run, do they? With modern marketing, quality control and business management knowledge and skills that we've built to date will result in a Fed-free stable system, where banks, just like other businesses, will keep very tight controls on their issued "receipts/moneys" such that good old bank runs are no longer possible.

R C Dean|11.7.07 @ 5:53PM|#

it should be easy for someone to produce a link for me where he describes each of the other Republican candidates as a fruitcake, and demands that everyone grow up and stop taking that candidate seriously.

You could probably do that within even leaving the Reason website.

|11.7.07 @ 5:55PM|#

GoldIsMoney-

Thanks for clearing that stuff up. I guess we have to give our "thanks" once again to Woodrow Wilson and FDR.

Flix|11.7.07 @ 5:58PM|#

4. Gold and silver are sometimes cumbersome to carry (especially in big numbers). So people deposited them in warehouses and got a receipt instead. These warehouses are today called banks.

5. The receipts became "bank moneys". There were as many moneys as there were banks.

6. Sometimes banks gave more receipts than they have gold (seeking more customers at the cost of risk). I.e., they inflated their bank notes.

7. With time, these bans inflated their "receipts" so much that whenever there is a crisis, bank runs would follow and the banks go bust and their customers end up empty handed.

8. Hence, the federal reserve. And the rest is, well, history.

9.The Fed then realized that just changing a few numbers on a computer could make a lot of bankers rich at the expense of some undefined "general public"

10. Solution: Competing currencies reacting to supply and demand

11. Currencies with better backing are most popular

12. E-gold, e-palladium... DGCs and 100% reserved backed online digital warehousing receipts become the new standard.

Flix|11.7.07 @ 6:01PM|#

yeah, hats off to T. Prattchett, fun novel. The Golem standard equivalent would be a Dow-Jones index-backed currency... not very stable, depends too much on what the Golems are doing.

|11.7.07 @ 6:04PM|#

7. With time, these bans inflated their "receipts" so much that whenever there is a crisis, bank runs would follow and the banks go bust and their customers end up empty handed.
.....................
Actually bank runs are good. Only fraudulent banks, not worthy of the confidence deposited in them go out of business. The real problem comes when government "rescues" bankers and screws their customers by allowing them not to honour their contracts.

100% reserve banks would never suffer a bank run.

Thomas Paine\'s Goiter|11.7.07 @ 6:05PM|#

Oh, not a big fan of the uber-hopped, big ABV beers myself. I like some, but prefer tasteful and simple myself.

Me three. The essence of life in a bottle continues to be Sam Smith's Nut Brown Ale.

iih|11.7.07 @ 6:06PM|#

Flix:

You agree with my "timeline" then? If yes, I am glad I got it right because I learned all of that in a couple of days only (explanation: lots of commute time)! I feel so satisfied that I finally figured the basics out.

Thomas Paine\'s Goiter|11.7.07 @ 6:07PM|#

Im not sure if I have enough grain on hand to make it thru the malt price increase. I do have a bunch of Maris Otter, looks like milds and esbs in my future.

robc, I have about 40 acres of grain planted. What quantity do you need?

iih|11.7.07 @ 6:08PM|#

Actually bank runs are good. Only fraudulent banks, not worthy of the confidence deposited in them go out of business. The real problem comes when government "rescues" bankers and screws their customers by allowing them not to honour their contracts.

Agree.

100% reserve banks would never suffer a bank run.

But their only source of money-making would be the price of storing gold for people.

|11.7.07 @ 6:10PM|#

http://digg.com/world_news/Are_you_in_a_Ron_Paul_meetup_The_check_out_this

|11.7.07 @ 6:10PM|#

To clarify Ron Paul's position, it is to make gold and silver legal tender again, basically to remove all restrictions on their use as money.

This is very difficult today because they are taxed like investments. Say I exchanged $400 for 1 ounce of gold in 1990 and now want to offer this gold to a friend in exchange for his touring bike.

Since the Fed has since printed so many new dollars, each dollar is worth less now and it takes 800 of them to buy an ounce.

When I give the ounce to my friend for his bike, I technically owe tax on the $400 "gain," even though $400 in 1990 was like $800 today.

Just by printing money, the Fed has created a tax liability out of thin air and discouraged people from saving their earnings in gold to preserve purchasing power.

By getting rid of that tax, gold and silver would naturally find use as money again, as they always have in history. We would see real coinage circulate again, and electronic gold payment systems would gain popularity.

Gold and silver will eventually be used as money again--they always are, because all paper money fails--but it may not be by us, and it may get ugly first. We are quite possibly entering the later stages of this 36-year worldwide experiment with paper money. All countries are experiencing inflation, most even worse then the US. Sooner or later, some responsible government will back its paper with metal.

iih|11.7.07 @ 6:11PM|#

Flix:

The best part of the story is Block's "chicken-owner, pickle-wanter seeking the pickle-owner, chicken-wanter".

|11.7.07 @ 6:11PM|#

00% reserve banks would never suffer a bank run.

But their only source of money-making would be the price of storing gold for people.

Sure, that's how the Bank of Amsterdam worked for 150 years, becoming one of the richest in the world.

|11.7.07 @ 6:13PM|#

Cesar--

I agree--FDR, Wilson and JP Morgan were all-around wonderful human beings.

|11.7.07 @ 6:13PM|#

People have different ideas of what crazy is. I think people who suggest we Nuke the Mid-East and turn it into a parking lot aren't just crazy..they're dangerous. Therefore, I think candidates and their supporters who want to bomb the Mid East into submission are equally dangerous. I think candidates and their supporters that walk around all day crying "9/11 changed everything" need medical attention, shouldn't leave their homes and use that leftover duct tape and plastic and wrap it around their necks and heads.

|11.7.07 @ 6:13PM|#

Would you prefer to pay a 0,5% annual deposit fee in an appreciating currency or receive 2% interest in a (rapidly) depreciating currency?

iih|11.7.07 @ 6:14PM|#

goldismoney:

I am sure that 50 years from today people will debating like we are now regarding who deserves the credit for bringing back the gold standard. People, in the mainstream, will be looking back and will say "what were they thinking when they allowed the Fed to continue to exist for 100 years or so". At least, one would hope!

iih|11.7.07 @ 6:15PM|#

flix:

iih|11.7.07 @ 6:15PM|#

one more time...

flix:

Sure, that's how the Bank of Amsterdam worked for 150 years, becoming one of the richest in the world.

Yeah, and I agree.

|11.7.07 @ 6:17PM|#

I think anyone around 40 years old should cash in their IRA and 401k and party like a rock star. If you have 20k-30k in it now, sure..it may be up to 50k by the time you retire. But in 25 years, 50k will get you buy for about 3-4 months.. if you're lucky.

|11.7.07 @ 6:28PM|#

OOOOOH! New T-shirt girl. I wonder if the shirt said anything.

SIV|11.7.07 @ 6:36PM|#

How much does a Coca-Cola made with cane sugar instead of HFCS cost now? Isnt it sort of the reverse of the hemi?

$1.29-1.50 for a 500ml cane sugar Coke in a glass bottle. You can buy them anywhere catering to IllegalMexicans. Come the North American Union the price will probably be pegged to the Amero.

|11.7.07 @ 6:40PM|#

9.The Fed then realized that just changing a few numbers on a computer could make a lot of bankers rich at the expense of some undefined "general public"

10. Solution: Competing currencies reacting to supply and demand

11. Currencies with better backing are most popular

12. E-gold, e-palladium... DGCs and 100% reserved backed online digital warehousing receipts become the new standard.

..................................
Or the other option, the politician's solution which is that we have a world central bank, a world currency and eternal inflation masked by the fact that we can no longer compare between currencies...
The IMF tried something like that with their SDRs

MattXIV|11.7.07 @ 6:55PM|#

I like LarryA's explaination, but I have a couple additions/nitpicks.

The advantage of a gold standard is that the government can't expand the number of dollars in circulation and cause inflation, as more dollars chase the same amount of goods.

Not strictly true. The money supply of a gold backed currency can be altered by changing the required reserves to currency ratio, which allows the bank to print more currency or forces it to withdraw currency without altering the redemption rate. The downside of this is that reducing the reserves too drastically can trigger a run as people try to get gold out to shelter their money against the inflation. The other option is devaluation, which pretty much guarantees problems, but that hasn't stopped various central banks with commodity-backed currencies from doing it in the past.

OTOH, you can screw up a fiat currency pretty good too by printing too much of it.

One other argument for having an easily inflatable currency is price and wage stickiness. During a recession, prices and wages generally need to be cut, but they're often restricted from doing so for a variety of reasons (nobody agrees what the actual reasons are), slowing the clearing of the individual markets. The theory (as I understand it) is that during a recesssion the currency should be inflated to apply a silent cut to "sticky" wages and prices to allow a quicker recovery.

I don't really have a strong preference for fiat vs commodity-backed currencies, since they both work when implemented well and both can create disasters when the policy is short-sighted.

I find it funny that people pretend that there's some concensus on monetary policy - if there's one issue where the old saw about if you laid every economist end-to-end they still couldn't reach a conclusion holds, it's this one.

|11.7.07 @ 7:01PM|#

SIV, you NaieveOptimist. Our GlobalistMasters who will rule the NorthAmericanUnion will surely make us use HighFuctroseCornSyrup harvested with IllegalMexicanLabor.

|11.7.07 @ 7:01PM|#

MattXIV:
"The money supply of a gold backed currency can be altered by changing the required reserves to currency ratio"

True, but you are talking of a government enforced gold standard in a cartelized banking system. Not free market currencies (gold or whatever).
When people link the gold standard to freedom they mean that the government WILL NOT BE IN CONTROL of the monetary base.

|11.7.07 @ 7:03PM|#

Too bad we can't clone Andrew Jackson. He'd solve our banking problem!

|11.7.07 @ 7:03PM|#

... mean that the government WILL NOT BE IN CONTROL of the monetary base.

As in, they define the unit (like weights and measures), but do not ISSUE currency. Private individuals would mint/print.

Max|11.7.07 @ 7:06PM|#

For an explanation of the gold standard read Murray Rothbard's, The Case for a Genuine Gold Dollar.

Thank you Mises Institute for helping me understand the Austrian Perspective!

MattXIV|11.7.07 @ 7:31PM|#

And in terms of wackiness on economic issues, I'd say that the bizzaire insistance that we are always past the revenue maximum on the Laffer curve for income and cap gains despite the empirical evidence we're not (I think the best estimates at current rates we'd get back ~30% of a marginal cut on income and ~50% on cap gains, but there may be newer ones out there), especially when the cuts aren't paired with spending cuts so you get Ricardian effects, is a lot crazier than commodity-backed currency.

Not that the case for tax cuts isn't still strong - at 50% marginal on cap gains and a 15% rate, cutting spending/taxes by $0.15 grows cap gains income by $0.50 while only shrinking revenues by $0.075 - that's hardly a bad deal.

As for the Democrats, the idea that you can massively increase coverage, allow people the same level of choice, and cut health care expenditures at the same time can only be the product of doing one too many lines of socialist pixie dust. It's one thing to prefer the tradeoffs of a single-payer system to the current system, another to pretend that in single payer they don't exists.

That some of Paul's ideas fall outside of the mainstream political discourse on economics is relatively untroubling when the mainstream political discourse on economics is 90% bullshit anyway.

|11.7.07 @ 7:32PM|#

Monetary Policy, how Byzantine.

|11.7.07 @ 7:33PM|#

Too bad we can't clone Andrew Jackson. He'd solve our banking problem!

Ah yes, the good ol' days. Back when an insane man could not only get elected, but end up on the currency.

|11.7.07 @ 7:48PM|#

Ah yes, the good ol' days. Back when an insane man could not only get elected, but end up on the currency.

I still don't know why hes on the $20. The guy was a jackass.

|11.7.07 @ 7:50PM|#

Question to the crowd:

Would you support the North American Union if the "Amero" was backed by gold? Discuss.

James K Polk|11.7.07 @ 7:54PM|#

Old Hickory insane?
WTF?

He was the second best President from Tennessee!

<i>REASON</I>|11.7.07 @ 7:57PM|#

Would you support the North American Union if the "Amero" was backed by gold? Discuss.

We'd support it if it was backed with maple syrup or counterfeit vanilla extract.

MattXIV|11.7.07 @ 8:17PM|#

flix,

That's true, but it hasn't been how gold standards have been implemented historically. I agree with allowing privately minted currencies of whatever backing to see how it would work out, but you can never get the government entirely out of the business of regulating currency since it choses what currency it will accept taxes in. This is a huge deal since it more or less allow the government to make or break private currencies by valuing them differently for tax purposes. The government sets effective if not explicit requirements on reserve fractions and commodity backings by determining what currencies it will accept as payment. I disagree with various aspects of Rothbard's overall position (I'm closer to the one he attributes to Hayek), but his essay posted above does a good job of explaining why it's impossible to get the government out of currency entirely in his justification for advocating fixing the dollar as 100% reserve gold at a certain weight.

|11.7.07 @ 8:20PM|#

would you support the North American Union if Ron Paul was the Dictator?

|11.7.07 @ 8:42PM|#

This is a great thread. I'm also arguing for other types of "hard currency" here.

iih|11.7.07 @ 9:06PM|#

Also, remember that the Fed violates anti-trust laws, which are themselves a violation of the freedom of association.

Mark Bahner|11.7.07 @ 9:33PM|#

I think anyone around 40 years old should cash in their IRA and 401k and party like a rock star. If you have 20k-30k in it now, sure..it may be up to 50k by the time you retire. But in 25 years, 50k will get you buy for about 3-4 months.. if you're lucky.

Knock on wood, but my 403b plan is doing spectacularly. I'm heavily invested outside the U.S.

This is an option that has historically not been available to small-time investors like me. One can simply invest in a broadly indexed stock fund of a foreign country or region of the world. That way, one is protected against depreciating U.S. currency.

SIV|11.7.07 @ 10:00PM|#

In 2006 it costs $20.15 to buy what cost $1.00 in 1913.

Um, you could not buy a Hemi at any price then.

Relatively speaking you could do a lot better than any hemi-powered car. Walter P Chrysler and the Dodge Brothers couldn't touch this.

|11.7.07 @ 10:05PM|#

Also, remember that the Fed violates anti-trust laws, which are themselves a violation of the freedom of association.

So, if the law that the Fed violates is unconstitutional, doesn't that mean that the Fed is constitutional?

;-)

SIV|11.7.07 @ 10:07PM|#

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?


Heroin for one. Legal and pharmaceutically pure
thanks to the Bayer company that had it under patent along with their weaker aspirin product.

|11.7.07 @ 10:11PM|#

As I understand it, if the Ron Paul plan did go through, and hard money was popular then hard money use would spread and fiat money would devalue and fade away. But wouldn't this lead to a huge redistribution of wealth at the change over? As the transfer went through fiat money would lose any value. People holding real assets like real estate or stocks would retain their value but someone who kept their savings in fiat currency, in cash or bonds for example, would just see all this value wiped out.

Is there a way to make the change over more fair?

iih|11.7.07 @ 10:20PM|#

So, if the law that the Fed violates is unconstitutional, doesn't that mean that the Fed is constitutional?

Indeed!

wellbasically|11.7.07 @ 10:33PM|#

"As I understand it, if the Ron Paul plan did go through, and hard money was popular then hard money use would spread and fiat money would devalue and fade away."

Is that actually his plan? I know there are certain gold-coinage people, and then there are free banking people who just want to tie the dollar's value to gold.

For what it's worth, Paul's position is the only one addressing $100 oil, and relating that to $800 gold and the weak dollar. Democrats and Republicans are still tied into the Fed Chairman being a grand wizard of the economy and so have no answer to $100 oil.

|11.7.07 @ 10:45PM|#

"Is that actually his plan? "
Maybe not. I'm not 100% clear on the plan. That was just what I was imagining from what people had said about allowing gold as a currency and abolishing the Federal Reserve.

iih|11.7.07 @ 10:50PM|#

I think Paul is now in a strategy of "shock and awe". I hope/think that as his campaign gets more attention (e.g., as in 11/5 and hopefully 11/11), he will then tell people how proposes to effect changes, so that he won't be ridiculed as much as he was in the past few months.

OTOH, he has been explaining his plan of execution as in the PBS interview. Whenever given the chance, he always explains that no change will occur overnight (jokingly, he adds, in 3 days or so), except that he will pull the troops out of Iraq as soon as he's in office.

|11.7.07 @ 11:03PM|#

For what it's worth, Paul's position is the only one addressing $100 oil, and relating that to $800 gold and the weak dollar. Democrats and Republicans are still tied into the Fed Chairman being a grand wizard of the economy and so have no answer to $100 oil.

All fine and good, but he does not always explain his plan in terms which the average person can understand. He jumps straight into ranting about inflation. It would really help if he added a sentence or two explaining the basics of how printing money causes inflation, so that even reporters can understand.

|11.7.07 @ 11:32PM|#

Pint glasses? BAH!

Make mine a BOOT..
http://www.facebook.com/photo.php?pid=130393&l=615f0&id=548512971

M. Simon|11.7.07 @ 11:57PM|#

Suppose - day after tomorrow - some one invents a way to extract gold from sea water for $1 an oz.

Gold is not immune to inflation. Just ask Spain.

|11.8.07 @ 12:28AM|#

Derrick,

Re-read what you wrote: How on earth would one even begin to attempt to explain, to the "average" 100IQ having american ho printing money causes inflation?

To prove my point, look at the aghast reaction when Paul says he wants to abolish the Federal Reserve. Many, many bloggers and reporters immediately say "You can't just get rid of government institutions!!??"

But, the Fed is not a government institution. Now, if people can call Paul "crazy" for this, when THIS isn't even understood, and not cared to be known by the common couch dweller, how do you go about, in 45 seconds, explaining the mathematical and economic ramifications to printing debt-backed, interest paid by the taxes on the US workers money?

Also note, the IRS, conveniently, was established just prior to passage of the Federal Reserve (not federal) Act of 1913.

Thanks Aldrich, Schiff, Warburg, Rockefeller, et al ;-)

The Wine Commonsewer|11.8.07 @ 12:58AM|#

Two & a quarter inch valves? In 1913?

Jesus Chrysler.

Cory|11.8.07 @ 1:02AM|#

A good article/write up on the "how" and "why" behind fiat monetary systems.

http://globaleconomicanalysis.blogspot.com/2007/06/why-does-fiat-money-seemingly-work.html

|11.8.07 @ 1:10AM|#

Crazy, huh? Steve Forbes, who is an extremely astute businessman advocates returning to the gold standard and that the Fed should use it the same way a canary was used in a coal mine. Bad air in the mine, the canary dies. Gold above/below a certain trading range and the Fed acts to add money or remove money from the system.

|11.8.07 @ 2:03AM|#

Gold? Why not base our currency on something else we can pull out of the ground? I, for one, like potatoes.

No no. I read this thread, and it's clear that libertarians are going onto The Beer Standard.

And a million years from now, they will still be arguing about which beer should be the standard.

|11.8.07 @ 2:06AM|#

goldismoney,

I agree with much of what you say. But this is over reaching your argument.

Greenspan resumed printing heavily when he took over. This caused the dot-com and housing bubbles

It's true that Fed action can mess with signals in the economy. But there were lots of bubbles that happened, even here in the US, before the Federal Reserve came along.

The Fed isn't the root cause of bubbles, it just tries to manipulate them.

|11.8.07 @ 2:14AM|#

MattXIV,

I don't really have a strong preference for fiat vs commodity-backed currencies, since they both work when implemented well and both can create disasters when the policy is short-sighted.

In the end, I have to agree with you on this whole issue of "gold standard or not". It's like the constitution -- you can write any laws you want, but a generation from now, how good or bad things are will depend entirely on the intentions and integrity of the people who are actually running the show.

I have no love for people like JP Morgan and the rest of the super-financeer types. These people didn't want a true free market, because it's too hard to predict your profits on a regular basis. Morgan would sooner take a smaller net margin, if only it was garunteed to come in every single quarter.

Nonetheless, if a free market succeeds then the finaceers are inevitable. And in that environment, I'm not so sure that playing with the money supply a little from time to time doesn't make a perverse sort of sense.

Like, for example, "silently" depressing people's wages, at just the moment it's needed.

OTOH, I do not trust government to resist the temptation to inflate the currency.


Anyway, I'm voting for Ron Paul. Unless he doesn't get the nomination, in which case I'm (first going to drink a standard beer and then) voting for VM's blow up Noam Chomsky doll for president.

|11.8.07 @ 2:16AM|#

Guy Montag-

Now, I am actually curious, what one item or collection of items, was/were being purchased in 1913 "America" for $1 that now cost over 20x more?

See "1 oz gold"...

1913- $20.67

1933- $35.00 (FDR closes the banks, 'devalues' the dollar by 40% in one day, and makes private ownership of gold illegal for US citizens)

2007- $800+

|11.8.07 @ 2:17AM|#

No worries mates, the dollar is crashing versus the other crap fiat currencies. The other currencies are at least as fundamentally worthless as the dollar. We ARE returning to the gold standard as we speak.

|11.8.07 @ 2:21AM|#

I'm no economist by training, but I always thought that a fixed supply of gold would lead to an insufferable problem in a free market.

If the market works, then your labor buys more goods as time goes on. In a strictly "static currency" scenerio, this must mean that items -- say a loaf of bread -- will get cheaper every year.

So if I start with bread at a dollar a load (and I can remember when my parents thought that was an outrageous price), my grandchildren can buy it for a quarter a loaf. Their grandchildren can buy it for a penny a loaf......

After a while, the price of a loaf of bread drops to several hundred atoms of gold. And everybody needs a degree in quantum physics before they can buy anything at the store.

Now, this might be one way to weed the dummies out of the gene pool. But unless that's what you really want to do, then it seems like we've got a problem here.

I'm sure that somehow I'm wrong about all this.

|11.8.07 @ 2:36AM|#

Gold? Why not base our currency on something else we can pull out of the ground? I, for one, like potatoes.


Good idea. Go ahead and invest all of your savings in potatos. That should serve you well five years from now.

|11.8.07 @ 3:31AM|#

You want to know about the evils of the Fed and the benefits of private/commodity-backed currency? See this 42-minute clip and you're done:

http://www.youtube.com/watch?v=iYZM58dulPE

|11.8.07 @ 3:47AM|#

Unfortunately, I am unable to connect to the internet at a data rate anything remotely fast enough to watch a 42 minute video.

|11.8.07 @ 3:50AM|#

Ebeneezer,

You are right. According to the economists I have read (and believe), a slow deflation in the price of stuff IS the natural order of things under a gold standard.

As to the notion of trading atoms of gold, I doubt it, but I am willing to give it a go if we get to that point.

|11.8.07 @ 5:53AM|#

It's our great grand kids 97 times removed that will have to worry about that little problem.

And it's all going to be because we voted Ron Paul into office. Which led to a gold standard currency, which then led to perpetually falling prices for common commodity items, which ultimately led to trading atoms of gold.

Which then led to a mass die-off of anyone not smart enough to understand quantum physics.

Which in effect is a cleansing of the gene pool. Which is really all that Hitler ever wanted to do.

Which proves that Ron Paul is a neo-nazi fascist dictator-snob.

That's it. I'm voting for the doll or nobody.

|11.8.07 @ 6:04AM|#

ES,

Avogadro will be proud to be inducted into the Austrian school of economics.

robc|11.8.07 @ 9:28AM|#

Avogadro will be proud to be inducted into the Austrian school of economics.

We can store our atoms of gold in barns.

Sorry about that. I dont get to use my NukE degree often.

Jay D|11.8.07 @ 9:58AM|#

As I understand it, if the Ron Paul plan did go through, and hard money was popular then hard money use would spread and fiat money would devalue and fade away. But wouldn't this lead to a huge redistribution of wealth at the change over? As the transfer went through fiat money would lose any value. People holding real assets like real estate or stocks would retain their value but someone who kept their savings in fiat currency, in cash or bonds for example, would just see all this value wiped out.

Is there a way to make the change over more fair?

The scenerio you describe is the only fair way to go. It is free market fairness. The free market sorts itself out. Any other system would be unfair manipulation of the market.

But let me ask you this. If precious metals were freed up to be used as an optional legal tender by free individuals deciding amongst themselves how to transact business, what makes you think Federal Reserve Note money would wither and die?

If you think about this, you should understand why freeing up precious metals is the only fair, free market, libertarian solution.

Jay D|11.8.07 @ 10:02AM|#

Long before we were trading gold atoms, the free market would come up with a practical alternative, like platinum or adamantium or gold-pressed latinum.

Jay D|11.8.07 @ 10:08AM|#

Now that I think about it, it wouldn't make sense to have gold-pressed latinum, but you get the idea.

Allen|11.8.07 @ 11:03AM|#

No one has mentioned the reason we left the gold standard. The true reason we left the gold standard was because of inflation. Not especially Federal Reserve inflation, but BANK inflation. Before the Federal Reserve monopolized it, banks inflated money all the time. REAL results would be for the lawmakers to remove FRACTIONAL RESERVE FRAUD from banker hands. As is, all the money we have in supply is based on debt. That means that if the money supply stopped growing, all the money would disappear. The gold standard as a competeing currency would be swallowed up because this problem is HUGE. We need a currency that

1- can be inflated(only to absorb the loss of debt based money),

2- is non-debt based, and

3- represents real value

The thing I love about Ron Paul is these issues are being discussed, hopefully we can solve this issue, maybe we can't, but at least more people are becoming informed!
VOTE RON PAUL!

Derek Scruggs|11.8.07 @ 11:11AM|#

ISTR that Jack Kemp has always supported a return to the gold standard and no one beat him up over it - not in the '88 primaries nor in the '96 general election. It was a non-issue.

Allen|11.8.07 @ 11:30AM|#

I have a great idea that would solve all three problems. That is for the government to raise reserve requirements for banks from the fraudulent 8-16% to 100% within 10 years, re-monitize gold and silver, and then let congress issue money based on the storage of other things besides paper(hot air).

I mean let the energy department buy oil, coal, etc at 75% of market value with a gold based currency and store it until inflation rises, then sell it back to the producers they bought it from for the same price. The same could work for other departments as well. Say, real estate, farm products, etc.
Then remove the Feds ability to inflate based on government debt, but give the treasury ability to inflate based on BANKER debt, instead of Treasury Securities becoming the backing of the (hot air)dollar, BANK securities would. Viola! National debt goes bye bye! Income tax goes bye bye! Inflation goes bye bye!

Can you say, who needs a portfolio when you have a savings account?

Neu Mejican|11.8.07 @ 11:34AM|#

The American Economy has been such a disaster under the Fed system, I can see the source of everyone's concern.

A quote of note:

"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country"

http://www.kwaves.com/fiat.htm

Another "Money doesn't matter,"

(i.e., control of the money supply beyond certain limits will be adjusted for in the marketplace)

http://en.wikipedia.org/wiki/IS/LM_model

veil of money|11.8.07 @ 11:38AM|#

Has the concept of nominal versus real value come into this discussion yet?

DJ|11.8.07 @ 11:43AM|#

"People in Peoria did not have a reliable source of coconuts [in 1913]."

I fail to see coconuts or lack thereof as a viable indicator of economic progress or quality of life. I've never bought a coconut in my life.

My macroeconomics professor in college hammered this into us: "Inflation is always and everywhere a monetary phenomenon." When you print money that isn't backed by anything, it devalues the value of existing money and raises prices. That's pretty hard to argue with. Of course, devaluing the currncy has an upside for politicians: it makes it easier to pay back the debt, since the dollars you're repaying with are worth much less than the dollars you borrowed.

I also agree that just because Paul supports the gold standard doesn't mean he'll have any opportunity to implement it. Nor will Huckabee get to change our history and science textbooks to reflect his beliefs. There are built-in limitations on the chief executive.

Unfortunately, we've elected some lately whose wackiness falls within their responsibilities: sending troops on foolish errands to to faraway places, governing law enforcement, printing (and borrowing) money, and redefining their relationship with Congress. I'm a lot less afraid of Paul or Huckabee or Obama than of Giuliani or Clinton, who will likely continue (successfully) the attack on democracy.

Jay D|11.8.07 @ 11:50AM|#

Allen,

We do not need a new currency that can be inflated to absorb the loss of debt based money.

I think I know what you mean by gold being swallowed up. You imagine running out of enough gold to make transactions. This isn't really a problem. People will still make transactions, just in smaller fractions of gold. You could have a plastic coin encasing a grain of gold. Also, Ron Paul, I believe, would open all commodities up to be used as currency. Silver could be used in everyday transactions, or whatever else the market dreams up.

We would have competing currencies. Gold, silver, Federal Reserve Notes, industrial grade silicon, whatever.

Jay D|11.8.07 @ 11:55AM|#

Allen,

There shouldn't be any reserve requirements at all. Banks would have whatever reserves they want.

Of course, there also shouldn't be government guarantees against bank failures. If a bank has a certain unwise reserve, it will fail. Problem takes care of itself.

Free. Market.

|11.8.07 @ 11:59AM|#

I understand that Jim Cramer was on Morning Joe today, arguing in favor of bailing out Wall Street with another round of inflation at the expense of the American people, and Scarborough was all, "Uh huh uh huh yup yup."

Strongest argument yet for the gold standard.

|11.8.07 @ 12:02PM|#

"This is an option that has historically not been available to small-time investors like me. One can simply invest in a broadly indexed stock fund of a foreign country or region of the world. That way, one is protected against depreciating U.S. currency."

Welcome to the class war. Guess who can't do what you are doing? I'll give you a couple of hints, they are old and/or poor.

And from my understanding the Feds wouldn't be minting anything, just dealing with weights and measures.

|11.8.07 @ 12:05PM|#

"Jozef and Cesar, I used to think how cool it was that my dad could buy a Pepsi for five cents until he pointed out that his dad made $45.00 per week."

That was .1% of his weekly salary.

I make approximately $515 per week after taxes. Assuming a Pepsi now costs $1, that's... wait for it... .1% of my weekly salary.

Jay D|11.8.07 @ 12:10PM|#

Eric,

What if you lived to be 200 years old and put a nickel away because you don't want a Pepsi right now, but you might in 80 years.

Why is it fair you can't do that?

wellbasically|11.8.07 @ 12:29PM|#

Ron Paul doesn't need to get this complicated. All he needs to do is address $800 gold, $100 oil and the weak dollar.

All the gold standard ever really did was say that a certain number of dollars bought a certain amount of gold. Nobody carried all the gold around.

All Ron Paul has to do is insist on finding an stable measure for the currency, be it gold or whatever works (hint: gold is the only thing that works). In that he will be opposed to the present Fed system.

In using gold you are relying on a market system and not a "big man" system such as the Fed chairman. That is why I see gold as a natural fit for Ron Paul's other positions -- specifically reducing America's international role from "big man" to a more cooperative stance.

MattXIV|11.8.07 @ 4:45PM|#

Neu Meijican,

"Money doesn't matter" in IS-LM models because they assume away the distinction between real and nominal interest rates and the difference between real and nominal interest rates is by definition inflation. Your basic IS-LM model is only a rough approximation of the macroeconomy and can miss a lot of important phenomena.

|11.8.07 @ 7:42PM|#

Long before we were trading gold atoms, the free market would come up with a practical alternative

Then how the hell do you expect us to clear out the gene pool? Geez.

Allen|11.9.07 @ 2:21AM|#

Jay D. IF the bank reserve requirement is less than 100% A bank WILL inflate, and if a bank inflates its loans on money it doesn't have and noone knows about it, they could buy all the gold with thier inflated money, and then let their bank fail.

It happened an awful lot. Who loses when a bank fails? EVERYONE.

Right now our system is such that inflation does not hurt banks, and deflation does not hurt banks, but BOTH hurt the middle class. Actually the "so called" business cycle benifits banking most. Up go the loans and inflation, down go the loans and money is worth more. Win-win for banks. Lose-lose for consumers.

Allen|11.9.07 @ 3:00AM|#

There is more than twenty times more debt than money in our system today. If the money supply does not grow to pay off this debt then there would be no money left. If you stop money supply growth in every area except gold and silver, practically all of the gold and silver will go to paying off existing debt. Less than 100% reserve requirement IS inflation. If fractional reserve was eliminated inflation would be eliminated, they are really the same thing.

Jim Peterson|11.9.07 @ 8:56AM|#

Ron Paul has now jumped to 5% in national polling with 60% of Republicans undecided on whom to vote for in the primaries, despite currently having a nominal feeling of support for guys like Giuliani and Thompson.

I predict the 5% will jump to 10% in the polls by January but those who actually vote will give Ron Paul a 3rd place finish in each primary. These will include those of us with cell phones and no landlines for pollsters to call.

My question is: Will Ron Paul get many delegates if he finishes 3rd in each primary?

Another question: If 10% of Republicans are for Ron Paul as a 3rd party candidate after he loses the nomination next September, what will the frontrunner do to stave off a loss to Hitlery?

I, for one, will not allow a Republican to win next November if he agrees with any kind of Internet regulation at all (COPA, IMBRA, etc)

Allen|11.9.07 @ 11:59AM|#

After watching this incredible growth of Ron Paul despite all of their efforts, EVERY other candidate will try to regulate the internet.

|11.12.07 @ 6:59PM|#

DAWN OF THE AMERICAN REFORMATION, AND END OF THE ERA OF THE UGLY AMERICAN
This Ron Paul constitutional rebellion is an escalation and re-orientation of the American Cultural War, by the American People, against the rising governmental tyranny by Neoconservative Republicans and Leftist Democrats. It is sweeping across America like a wildfire - ignited by the illegal and unnecessary invasion of Iraq.
It raises many crucial questions; such as, where does the American Constitution give my government the right to sacrifice precious American wealth and blood, in interests of domestic and foreign lobbies?
And, where does the American Constitution give my government the right to allow my nation to be invaded and permanently occupied by illegal aliens?
And, where does the American Constitution give my government the right to support the sacrificial killing of children, by their own mothers?
And, where does the American Constitution give my government the right to discriminate against traditional religious practices in public schools, universities, marriage institutions, armed forces, and governmental offices?
This creeping governmental tyranny, driven by perverse special interests, has now been going on for so many decades, like the illegal invasion, that the impending American Reformation is regarded with fear and loathing, by those who are to lose their illicit gains.
Like Gandhi, Ron Paul is drawing his intrepid volunteers from the full spectrum of humanity; and World is cheering him on to victory.

|11.13.07 @ 11:45PM|#

Alan Greenspan:

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

Jay D|11.20.07 @ 10:13PM|#

Jay D. IF the bank reserve requirement is less than 100% A bank WILL inflate, and if a bank inflates its loans on money it doesn't have and noone knows about it, they could buy all the gold with thier inflated money, and then let their bank fail.

It happened an awful lot. Who loses when a bank fails? EVERYONE.

A bank will inflate at its own risk. And if it does it will fail. That is the free market. A business fails because of poor business practice. When there is a bank failure, it should be an isolated incident.

The problem came in the past when government came in and tried to stop the failures with methods of varying degrees of effectiveness. Things like accepting taxes with bills at face value when they know good and well the bills aren't good for the amount of gold on them.

This creates a banking atmosphere of risk, as banks are willing to take on more risk than prudent because the government will swoop down and protect them.