Hillary Clinton

Republican Debate VI: The Donnybrook in Dearborn

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The Republicans are debating economic policy at 4 p.m. ET on CNBC… and 9 p.m. ET on MSNBC. I don't know why they're filming so early, as my Thompson campaign sources assure me he already took his nap today, but it would be a lie to start "liveblogging" the rerun of this thing. So I'll be covering the first run here.

Alex Massie previews the debate with some worries about Ron Paul. How is a gold bug going to fare with the microscope on economics? Will everyone be too busy poking Thompson to notice Paul?

UPDATE: Actually, I'll only be able to liveblog until 5 or 5:30. I'll get the rest of the debate at the rerun.

4:01: The producers deserve an Emmy already: Matthews stood next to Maria Bartiromo and didn't say one untoward, offensive thing.

4:02: Fred Thompson meets expectations, which, we'll remember, were incredibly low.

4:03: Thompson makes a blatant grab for Larry Kudlow's approval, quoting his line (which no one else has really picked up) that our economic growth is "the greatest story never told."

4:05: How would the governor "put a tax on the debate"? Was that even a joke?

4:06: Chris Matthews, paraphrased: "What is money?"

4:07: Giuliani pushes away the question and spins the Wheel o' Talking Points. It lands on: Tort reform.

4:08: Paul gives one of his best-ever debate answers, which makes sense since he's been training for a prime time (well, prime afternoon TV time) speech on the Fed and monetary policy since roughly 1960. It's… not quite true, but it's well put together and the audience, sort of surprised, applauds it.

4:09: Thanks, John McCain. I'm sure Paul hasn't read any Adam Smith.

4:11: McCain on S-Chip funding: "We want to tax children's health, and we want everybody to smoke?" That does seem to be a problem with sin taxes in generally and cigarette taxes in particular.

4:13: A question for the room: Why are Fair Tax advocates treated seriously and Paul treated like a kook.

4:14: Hunter and Paul have basically the same economic position with one, uh, key difference: Hunter thinks we can uplift the working class via endless war.

4:15: You know when I'll stop snarking at Fred Thompson? When, uh, he (voice quavers) can answer a question (rubs hands) without disappointing everyone.

4:16: Bartiromo asks the audience to tamp down its applause. She then calls on Sam Brownback. Really, either one of those decisions would have done the trick.

4:18: Tom Tancredo awakes his inner libertarian for a couple minutes and talks about… entitlements! A bigger worry, even, than the Mexican hordes who want to do menial labor in the Southwest.

4:20: It's all over, already: Giuliani and Romney are going to win this debate. They're the only wonks on stage and the only guys who know what they want to do, specifically, with the budget.

4:22: Romney and Rudy scrap over their economic records and I really don't know how Romney expects to win these fights. Rudy cut spending in New York but… he thinks the line item veto is unconstitutional? That's a dealbreaker. Rudy's "a supply-sider," which is all he needs to keep saying for a certain chunk of the electorate.

4:26: This is what happens when you shimmy onto the China-bashing bandwagon: You start getting one-upped by tree slugs like Duncan Hunter.

4:29: McCain attacks "the waste in defense spending." He doesn't have the expertise of the big two (I'm leaving out Thompson) but on this and torture he's pretty untouchable.

4:33: Rudy supports the Dubai Company being able to buy 20 percent of Nasdaq. This seems like a "gotcha" question that no one is getting got on.

4:34: Paul and Giuliani agree on Dubai. This is far more pleasant than those "I'm-a-lookin' for Jack Bauer" national security debates.

4:35: McCain, again, adapts to his lack of comparative knowledge on this stuff by sneering and looking angry: "I'm a student of history," don't "listen to this siren song" coming from Duncan Hunter.

4:37: This is increasingly loopy: No one opposes free trade on this stage except for Duncan "0.0 percent" Hunter. He's a particularly stiff, bag-eyed straw man.

[UPDATE: Here there was a five-hour work-related interruption.]

9:38: Tancredo: "If Dubai wanted to buy Wal-Mart, I'd think about it." Nasdaq is a bigger national security interest than Wal-Mart? Either of them is a national security interest?

9:40: Thompson on the AMT: "Generally speaking, lower tax rates grow the economy." He really sounds like he's running against a Democrat for Senate, not for president.

9:45: Thompson fetishizes the military again: Troops know more about national security than politicians who've been in Washington for 20 years.

9:46: McCain regrets that President Bush didn't nag Americans to enlist in the army after 9/11 and says he criticized the Iraq War's prosectution from the beginning… true, if you forgive him for voting for the war with no strings, campaigning to re-elect Bush, and defending the war's progress in the media.

9:48: Paul gets another question, an attempt to get him to rant about Iraq: Instead, he gets onto the gold standard. "Our biggest export is paper money."

9:49: It must be frustrating when Matthews denies Rudy McRomneypson a chance to beat up Paul and goes to Brownback. Was Iraq a war for oil? "What I voted for was a war on terrorism!" Sam Brownback won't be president, so don't worry.

9:50: Thompson says he was worried about Iraq because Saddam "used weapons on the Kurds." Yes, in 1988.

9:52: Mitt Romney doesn't know if he could launch an Iran War without Congressional approval: "You'd have to sit down with your lawyers." Hooray, White House Counsel-and-then-Associate Justice John Yoo!

9:53: Duncan Hunter will attack a "fleeting threat." He does this a lot, throwing military jargon into a debate to dodge the question. Just put up with it for another month or so.

9:55: They tried to light a fire under Paul… and succeeded. "Why don't we just open up the Constitution and read it?"

9:56: President Huckabee would bomb Iran "in a heartbeat" even if the threat consists of some Iranians handing a briefcase to terrorists.

9:57: McCain: "I would consult with Congress because there will come a time when you may have to get approval from Congress." May come, yes.

9:58: Not a bad answer from Thompson, all told.

9:59: Giuliani takes a whack at Paul for saying we'd never faced an "imminent attack" from a terror state: Remember 9/11. "That was no state!" Paul says. "That was 19 thugs!" Giuliani: "I think it was planned in Afghanistan and Pakistan." In other words, not a state.

10:01: Giuliani on Iran: "We should have, and would have gone to war against Saddam. But maybe not."

10:03: "We've got to get more electricity involved in our car fleet," says Sam Brownback. Years from now he'll regret not just dropping out and endorsing Huckabee.

10:05: McCain: "I wouldn't drill in the Grand Canyon unless the people of Arizona wanted to."

10:07: Kudos for Huckabee using a NASCAR metaphor to talk about energy independence. How much energy could we save if NASCAR fans learned how to read? (I exclude Clarence Thomas from this piece of angry sarcasm, as I think he is a NASCAR fan, too.)

10:09: More Thompson, more filler.

10:10: Is our food supply really in Jeopardy or is Romney's Iowa pandering software just functioning smoothly?

10:11: How will the GOP regain the advantage on economic issues. Paul sounds… pessimistic about it.

10:12: President Huckabee will restore our resiliency and optimism by, basically, running on the Fair Tax. The Republicans are in bad shape at the moment.

10:13: McCain wheezes about how much Republicans have sucked of late, Romney says he'll win by being "optimistic" and not so "doom and gloom."

10:15: Giuliani's developing a bit of a tic: He starts with something weird (We can "sell" our health care solutions to China? If I'm Chinese, I think my health care's the only thing I'm satisfied with) and segues rather jaggedly to Hillary-bashing.

10:17: Brownback on America: "I mean, this place rocks!"

10:18: Tancredo knows how to win back the GOP brand. "Stop illegal immigration!" And after that: "Stop pandering." Irony bounces off his head like a paper kite.

10:23: Bartiromo claims Thompson, alone among the candidates, has given specifics about Social Security. I wasn't aware of this. My skeptism is rewarded with a fairly rote Republican answer on post-2005 debacle Social Security reform, with a non sequitor about how "our national parks have got to be taken care of."

10:26: Romney answers a health care question with around three attacks on Hillary Clinton and no references to his own, actual, Massachusetts health care plan.

10:28: Paul concisely defends the right to organize "without special rights." Huckabee fantasizes about unions "coming back in roaring form."

10:30: McCain sternly (he's doing everything sternly) calls for Michigan to become a right-to-work state, which has to please Republicans there… doesn't it? Am I misinformed about battered Michigan Republicans?

10:33: Yes, Brownback and Tancredo just had a fight about Brownback's mom. "My mother is not an illegal immigrant!"

10:36: Man, how many times is McCain going to uncork that joke about "having a glass of ethanol every morning"? He says this a lot.

10:37: Giuliani wants to police the internet bt "I don't want to create a new agency." Giuliani has proposed creating a few new agencies, especially when it comes to nation-building, but I guess he didn't create a new police department in NYC…

10:45: Oh, how Paul wishes he got the strong dollar question. Perhaps better for him that Thompson got to muddle through it.

10:46: Giuliani thinks we can strengthen the dollar if we "sell energy independence, sell health care." I… don't know what that means.


10:48: Paul is asked, sort of, if he'll reject the party's nominee and run third party. He parries with an answer about how much he disagrees with the other candidates, as does Tancredo (who's endorsed third party candidates for Congress).

10:50: "Getcha head up!" vies with "This place rocks!" as the line of the night.

10:54: McCain will catch bin Laden with "something like the OSS"… which still exists, and now is called the CIA.

10:56: Another debate, another canned Romney joke. Fred's response is surprisingly pointed.

11:04: The debate is over, and the MSNBC pundits are in agreement. Romney blundered by saying he'd "consult lawyers" if he was going to bomb Iran. Not because he wasn't going to ask Congress, but because, as Howard Fineman says, "voters want to hear something from the gut."

America's doomed. Feel free to discuss the debate in the comments.

NEXT: Reason's Radley on the Radio

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  1. I do hope Dr. Paul leaves the gold standard stuff alone as much as possible.

    Yes, he is right, IMO, but it is too wonkish for campaign speeches.

    Just say he believes in it but the Congress and the people need to be conviced before any change can be made. That takes the wind out of the sails of the idiots that think a president is the same as a monarch or dictator who can just change the law unilaterally when elected.

  2. Couldn’t pick a better spot for an economic debate. Michigan is the biggest economic failure in the country. Any candidate who can go there and not pander to big labor, has presidential stones.

  3. What the hell is CNBS ?

  4. Good catch CT, you win a cookie.

  5. “I don’t know why they’re filming so early, as my Thompson campaign sources assure me he already took his nap today”

    And being an immature asshole advances the story how?

  6. Ron Paul will hit the economics out of the park. That’s his reason for entering politics in the first place.

  7. Can CNBC please for once remove that distracting ticker?

  8. I agree… I hope he focuses on things other than the gold standard.

  9. John,
    No, they can’t. But you can run duck tape across the bottom of your screen. Is there nothing it can’t fix?

  10. An unusually small Paul contingency today.

  11. Ron is speaking now, about how ‘debasing’ the currency is the reason for multi-billionaires. But there are lots of millionaires these days, because in general the economy is doing quite well (except here in Michigan, but that’s another story) and the Fed hasn’t ‘debased’ the currency more recently than at other times. He’s whistling in the wind right now.

  12. McCain asking Paul to read Adam Smith?

  13. Chris Matthews, paraphrased: “What is money?”

    It’s a gas.

    See also: store of value, unit of account, and medium of exchange.

  14. Anyone know where this video is streaming? The link on the msnbc website isn’t working.

  15. huckabee (paraphrased): nothing will discourage americans from spending.

    is he joking?

  16. @Carter
    Try one of those p2p programs.

  17. Few people understand that economics is what prompted Paul to run for office.

    From Mises and Austrian Economics: A Personal View

    I decided to run for Congress because of the disaster of wage and price controls imposed by the Nixon administration in 1971. When the stock market responded euphorically to the imposition of these controls and the closing of the gold window, and the U.S. Chamber of Commerce and many other big business groups gave enthusiastic support, I decided that someone in politics had to condemn the controls, and offer the alternative that could explain the past and give hope for the future: the Austrian economists’ defense of the free market. At the time I was convinced, like Ludwig von Mises, that no one could succeed in politics without serving the special interests of some politically powerful pressure group.

    Although I was eventually elected, in terms of a conventional political career with real Washington impact, he was absolutely right. I have not developed legislative influence with the leadership of the Congress or the administration. Monies are deliberately deleted from routine water works bills for my district because I do not condone the system, nor vote for any of the appropriations.

    My influence, such as it is, comes only by educating others about the rightness of the free market. The majority of the voters in my district have approved, as have those familiar with free-market economics. And voters in other districts, encouraged by my speaking out for freedom and sound money, influence their representatives in the direction of a free market. My influence comes through education, not the usual techniques of a politician. But the more usual politicians in Congress will hardly solve our problems. Americans need a better understanding of Austrian economics. Only then will politicians become more statesmanlike.

    Returning to the gold standard, abolishing the Fed are the goals of his entry into politics. He is no more going to shy away from it than Elli Wiesel would shy away from denouncing Naziism in a debate for the leadership of “The Eagles of Riga” (a club for Lithuanians who had supported the Nazis).

  18. The gold standard stuff won’t hurt Paul. It will turn off a few dozen mainline economists, and it will reassure a few thousand left-leaning Americans who don’t have any opinions about monetary policy but who enjoy hearing Paul on the subject because it allows him to sound like a populist.

  19. Actually, I hope the economic focus IS on the gold standard simply because that is exactly what is at the epicenter of all of the economic woes facing our once great economy. Until people understand that simple fact, nothing else can move forward (or backward to a Constitutionalist). It’s like trying to mop a wet floor without fixing the leaky roof… an exercise in futility! With that said, people must also understand that it’s taken 94 years for us to find ourselves in this awful situation, so it’s going to take some time to straighten this mess out. Heaven forbid we pull the rug out from beneath all of those parasites sucking the life force out of the productive people in the country. It is said, however, that the journey of 1,000 miles starts with a first step.

  20. Maybe Michigan needs protective tariffs to protect them from other US states, mr. Duncan Hunter?

  21. “It’s a gas.”

    Funny; I heard that it’s a crime.

    … mmm, pie.

  22. “Wheel o’ Talking Points”? Neat-o!
    Every candidate could use one of those…

  23. ugh I’m thoroughly disappointed in MSNBC for not actually streaming the video of their own debate. jerks.

  24. Tancredo is making a good point about entitlements, but he’s doing a horrible job articulating it.

  25. They are streaming it. I’m watching it now. A few glitches, but that’s life.

  26. Link please, Richard? Out of the country, so it’s not on TV and I’m having trouble finding it

  27. 4:09: Thanks, John McCain. I’m sure Paul hasn’t read any Adam Smith.

    BWAAA HAA HA! Oh no he dinn’t

  28. could you put a link to it? maybe I’m on the wrong part of the site

  29. Sadly economically clueless Americans will probably think McCain “got” Paul on that one.

  30. Duct tape.

    It was invented to seal galvanized air conditioning ducts (hence the silver color) not to ensnare our feathered friends.

    Sorry. It’s been that kind of day.

  31. http://www.msnbc.msn.com/, and click on “watch live”

  32. Sorry LarryA but it’s DUCK (as in quack quack) tape. It’s named for the sound it makes when you pull a foot from the roll.

  33. It’s both. Duct tape was created for air ducts, and duck tape is a slight variant developed for the military in cases where they will be going both on land and in water (so it doesnt fall off), hence the “duck.”

  34. Did Rudy Guliani just say he was a strict constructionist.

    ….i peed a little

  35. I must be blind. where is the “watch live” link on the page? way too much stuff going on over there at msnbc.msn.com…

  36. 32 minutes in, and Ron Paul as only been asked one question…

  37. If Ron Paul would come in off the ledge on the gold standard, he would do a lot better. “It will turn off a few dozen mainline economists,”? It does a lot more than that. It makes him sound like the crazy old lady at the laundry mat.

  38. Isn’t the worst thing we can do in regards to the Middle East is tell them their business isn’t welcome in America?

  39. The CNBC stream is working for me.

  40. link? The MSNBC one keeps saying “sorry, this video is unavailable”

  41. brian, on the home page I’m looking at, there’s a picture captioned “Money Talk”, and underneath that there’s a link that says “watch live.” If you’re out of the country, maybe it’s different. Also, on the msn.com homepage, there’s another link on the right side of the page, under “Republicans Kick off Debate.”

  42. It will turn off a few dozen mainline economists

    wow. Jesse has is biatch on today.

  43. I missed the first several minutes of the debate so I’m glad to see that Ron Paul has got to speak. I’m afraid he isn’t going to get much time.

  44. “It will turn off a few dozen mainline economists” and do more damage to the US economy than any event since the great depression, but hey what is the big deal right?

  45. McCain was asked what kind of “sacrifice” he thinks Bush should have asked for. He included joining a “neighborhood watch” in with the military or the Peace Corps. Seriously.

  46. A very good answer by Paul.

  47. Paul does not support a gold standard. He simply supports the right for gold to compete, by making gold and silver legal tender. Hopefully Paul will dispell the rumour that he’s for a gold standard.

  48. “Paul does not support a gold standard. He simply supports the right for gold to compete, by making gold and silver legal tender. Hopefully Paul will dispell the rumour that he’s for a gold standard.”

    If he doesn’t support the gold standard, that is a good thing. But, what does he mean by making gold and silver legal tender but not supporting the gold standard? That doesn’t make any sense to me.

  49. At least with Ron Paul as president the new Amero might be backed by something. The dollar ain’t gonna last forever folks. Currency comes and currency goes.

  50. Paul’s looking for applause for his Iran answer and seemed a little baffled that he didn’t get it until the end.

  51. Since Romney brought up Ahmadinejad, I’m sure the Republicans aren’t happy to see Iranians to stand up against Ahmadinejad themselves, as they would blow the image of Iran united against the USA.
    http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/10/09/wiran109.xml

  52. John, He wants private money to be able to compete with Fed fiat money. He wants the eventual elimination of the Fed. Therefore, all paper currency will be privately issued with the supply being self-regulating. He wants the market to create money.

  53. Ron Paul supports the free market right of Iran to develop and sell nukes to al qaeda.

  54. Are you f’n kidding me. Do non but Paul have the even the slightest respect for the constitution. Its not only there for when it is expediant. Wow. Did Rudy suggest we attack Pakistan?

  55. Rudy takes the easy shot on Ron Paul for forgetting 9/11. Is the Doctor senile?

  56. Giuliani got in his obligatory, “I don’t know where Congressman Paul was on September 11th” line.

    9/11!!!!

  57. Drena: Which is a much less stupid idea than the gold standard, but those currencies will be subject to the same problems of current fiat currency AND you’ll still have that pro-cyclical money supply problem you get with gold. Unless you think the business cycle is entirely a creation of government a pro-cyclical money supply has a few major draw backs.

  58. God, by the next debate it’s just gonna be a no-holds barred cage match with Ron Paul in one corner and Rudy Guiliani in the other; They were really going at it. And Ron got fucking PISSED about attacking Iran.

  59. oh oops! I don’t agree with your policy prescriptions! I must have forgotten 9/11!

    But seriously, I’m not surprised they’re not asking Paul too many questions – how exciting can the answers be if they’re from a serious free marketeer? People want grand plans, not an exhortation to figure things out themselves.

  60. rudy: putting a man on the moon was vital for national security.

  61. Ron didn’t come off too good on that one.. now I’m getting worried about him. danggggg

  62. Of course Paul supports moving back to the gold standard and this fact is quite well documented. Being a Constitutionalist, he simply consults Article I, sections 8 & 10 (specifically 10), “… make any Thing but gold and silver Coin a Tender in Payment of Debts:…”

  63. I agree with Paul’s distrust of currency by Fiat. Has anyone here actually owned one of those things? Not dependable at all.

  64. No, Paul does not support a gold standard. He’s said in interviews a few times that gold standard’s are a problem. He simply wants to “legalize the constitution” by making gold and silver legal tender. That’s not the same thing as putting a gold standard on the dollar. It’s simply allowing gold and silver, and private currencies backed by them, the ability to compete with fiat money.

  65. “That’s not the same thing as putting a gold standard on the dollar.” I’m not sure I understand what you’re tring to say. Having our paper backed by gold & silver is the gold standard.

  66. Hey! Maria Bartiromo is naked.I guess they’ll change that for the 9:00PM debate. Whoops! My mistake….she is actually wearing some kind of transparent latex lingerie.

  67. Okay. 9/11 check. islamofascism check. What’s next…

  68. Bill,

    Making gold “legal tender” is not the same thing as making the dollar gold backed. Those are two seperate issues. Paul wants the eventual elimination of the Fed itself. The Fed is who prints money.

  69. Romney is all for more and bigger ag subsidies and ethanol supports.He really needs Iowa.

  70. Fiat money is paper that is not backed by anything tangible… which is fundamental to what’s caused our economic problems since 1913. Paul just said, “we need sound money”, i.e.; the gold standard.

  71. Thompson has revealed that he’s a fraud. On the one hand he says he’s for a “free market,” and on the other he says he supports ethanol subsidies.

  72. “That’s not the same thing as putting a gold standard on the dollar.” I’m not sure I understand what you’re tring to say. Having our paper backed by gold & silver is the gold standard.

    I guess he wants to force everyone to accept gold and silver (by weight, I guess?) as payment for services, just like they accept government-issued currency.

    I hope I’m wrong, because that sounds remarkably stupid. I mean, starting with vending machines and moving into easy of forgery — we going to make clerks learn to assay gold? Make sure it’s not lead with a coating? Or some sort of private coinage deal? What about clipping, milling, and all the fun ways to play with currency?

    Jesus, gold sucks as currency. People moved to paper for a reason.

    Gold’s for people who can see that fiat currency’s worth lies in the agreement of buyer and seller, but who can’t see that gold is the exact same way.

  73. If there is no Fed then were does the sound money come from? It comes from the free market. Paul is for private competing paper currencies, including private currencies backed by gold. He doesn’t want the government to be involved in paper money at all.

  74. Drena,

    The Fed is who prints money.

    No……We Do

  75. I’m not saying we need to wander around with gold in our pockets, just paper backed by gold, which, I believe, is what Paul, agrees with. Getting rid of the private FED has to happen in order for that to occur. I think we’re on the same page here, just expressing it differently.

  76. “Sound money” can only come from the market.

  77. You know, the reason libertarians never get anywhere in the real world is that they want to re-fight battles that were lost in the 19th Century:
    http://en.wikipedia.org/wiki/Legal_tender_cases

    There is going to be no gold standard. Neither are private companies going to be getting into the business of minting gold and silver coins that people are going to use to buy their groceries. The Federal Reserve isn’t going anywhere. Move on.

  78. Bill,

    But, Paul does not support tying the U.S. Dollar to gold. He supports free market money. For example, you can start a company that issue money which you choose to back by gold, if you want. The market would decide what money we would use. Right now, it’s difficult for private gold-backed money to compete (e.g. e-gold) because gold is not legal tender and there is a sales tax on it.

  79. I love the gold standard.

    Buy liberty dollars in the meantime.

  80. The FED loans our own money to us, at interest. It’s like me loaning you $100 at 4% annual interest (just an example). At the end of that year, I’m standing there with my hand out wanting $104 from you. But I only order $100 to be printed, so where are you going to get the other $4? You are force into taking another “loan” from me to pay that interest.

  81. Gold is the only legal tender according to our Constitution. That’s why our old paper used to say, “This note is legal tender for all debts, public and private, AND is redeemable in LAWFUL MONEY at the United States Treasury or any Federal Reserve Bank”. Now it just says “this note is legal tender for all debts, public and private”.

  82. McCain just plugged right-to-work states. In Michigan. Takes some stones.

  83. But, Paul does not support tying the U.S. Dollar to gold. He supports free market money. For example, you can start a company that issue money which you choose to back by gold, if you want. The market would decide what money we would use. Right now, it’s difficult for private gold-backed money to compete (e.g. e-gold) because gold is not legal tender and there is a sales tax on it.

    And who the hell wants that?

    Seriously. Who wants that? Where is the giant demand for “not government backed currency”?

    It’s certainly not businesses, who prefer to do their banking in the official currency of the country. It’s not 99.9% of the population, who like only having the ONE currency to keep track of. It’s not the cash businesses that really don’t want to have to deal with god knows how many types of currency whose relative worth they’d constantly be having to figure out.

    Why even bother with the middleman? Go invest in gold, and then your money is happily gold backed. Well, effectively.

    Where on earth do people even come up with this idiocy? “Multiple competing private currencies”? Do you just hate yourself that much? Do you want to punish yourself for your past sins, or what?

  84. Federal Reserve Note…… three lies in a row.
    1. There is nothing Federal about the Federal Reserve.
    2. There is no longer any “reserve”.
    3. The word “note” is an IOU (Blacks law dictionary) and I can no longer take that “note” and redeem it for what is supposed to be backing it. We, as a nation, have been very well “paper trained” to accept these pieces of paper as “money”. It’s like saying that a quart container IS the milk that it contains.

  85. Unless you think the business cycle is entirely a creation of government

    Since the business cycle is created by inflation of the money supply, and the money supply is 100% controlled by the government, commodity backed money is a better solution. Yes, there’s the problem of people mining more gold, but that’s trivial compared to the printing more bits of paper.

  86. Here here, Morat!

  87. For those who’ve never read it:

    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.

    Alan Greenspan
    [written in 1966]

  88. Heh. Maria just said they’re coming back for the lightning round.

  89. Ron Paul has said many times that he wants to repeal legal tender laws. This would create a situation where you have a free market in money.

    He does not want to abolish the federal Reserve outright. Rather he correctly concludes that in a free market for money, especially one where taxes are low, the Federal Reserve Note would be toast.

    Remember, a commodity that is used as money has two inputs into its value:

    1) Its value as a consumption good.
    2) The perceived value of other goods it can be exchanged for.

    In a free market, the commodities that are in greatest demand yet are durable and easily divisible become money. It can be ax-heads. It can be cigarettes (as frequently happens in prison camps). All of these goods will have some use in consumption or production. This usage will provide the basis for ites value as an exchange good.

    The modern dollar has no value as a consumption good. Oh, I suppose you could burn them to keep warm or something. But it competes in that usage with very inexpensive materials like news-paper.

    The entire value of the dollar is predicated upon its use as a medium of exchange. However this is not tenable; In the end the value of the money tracks its worth as a consumption good.

    I am of the opinion that the U.S. dollar has had its crash slowed by two factors: the modern Delian League of monetary agreements where other central banks pile their reserves on FRN’s and the fact that the vast majority of oil producers have, until recently, only accepted FRN’s for oil.

    This is, of course, an untenable situation. It is, in fact, what doomed the pre-constitutional United States. Remember the phrase “not worth a Continental”?

    Guess what the Continental was? Effectively unbacked bank notes. The parallels with the modern FRN are quite striking. It was the depression and rebellions that the Continental Congress’ attempts to fund itself via inflation that caused Madison to write in such strong strictures concerning monetary policy into the U.S. Constitution.

  90. Tarran…. right on the “money”! This is an old lesson in history that seems to repeat itself, al la the Roman Empire.

  91. The same technology that separates the official from the unofficial slugs could handle gold and silver in vending machines. A similar technology could be used at point of purchase.
    BTW in previous centuries commerce was able to compensate for the differing purities of gold and silver coins. As the man said Eureka!

  92. Richard | October 9, 2007, 5:31pm | #
    McCain just plugged right-to-work states. In Michigan. Takes some stones.

    Eh, not really. Remember, this is just for the Repub primaries. Now, if this were a true debate between Hillary (like anyone else is getting the Dem nomination) and the Repub winner I would be floored if the same quote popped out of his mouth.

  93. Chris Matthews asks all the “second tier” candidates if they’d support the winner just make sure we all know who the second tier candidates are. Notice he only asked Paul, Brownback, Tancredo, and Hunter. So obnoxious.

  94. Fair point, kwix. Glad somebody wants to talk about the debate in this tread.

  95. Another simple example:

    1971 Gold = $35 oz.
    1971 Corvette = $5,200.00 FRNs = 148 oz. gold

    2007 Gold = $738.80 oz.
    2007 Corvette = $50,000.00 FRNs = 67 oz. gold

    I can purchase two ‘vettes today with the same amount of gold that I could in ’71… and have change left over for gas & insurance!

  96. McCain wants to recreate the OSS? The CIA is just completely worthless, huh?

  97. I’m dying over Giuliani’s answer about third parties. He said the two party system has served us well.

  98. Giuliani just came out for school choice?

  99. It’s amazing to me that these candidates talk about how wonderful everything is in this country (economy, schools, healthcare etc.), when the vast majority of the “working stiffs” I speak to are far worse off than they were just a decade or so ago, on all counts. It just seems to me that this is another example of how out of touch they (most) are with the plight of the working people everywhere.

  100. What good is a 30 sec. timer when they let some candidates go on and on, and others (like Dr. Paul) they cut off at 28?

  101. I am not watching the stream… Is Huckabee there? If so, is he a “second tier” candidate? If not, why not?

    More to the point, what is with the Huckabee love exhibited on FOX News polls and writeups?

  102. For the love of God, people…

    1) Pay attention to those here who are explaining the nuances of Paul’s “gold standard” position. There are MANY ways to have a gold standard.

    2) Will people PLEASE stop quoting the Constitution about only gold and silver being legal tender. If you READ that section, it CLEARLY applies to the STATES, and it is given to them as an exception to the otherwise absolute power of the federal government to do whatever the hell it wants with the currency.

  103. Bill,
    Not to say that politicians are not out of touch with the “common man” but in what ways are your “working stiffs” worse off now than a decade ago? Unemployment is at a low point, inflation adjusted wages are about the same and interest is less.

  104. 1) Pay attention to those here who are explaining the nuances of Paul’s “gold standard” position. There are MANY ways to have a gold standard.

    And all equally pointless, although some are more retarded than others.

    Gold standards are for people who see the illusion behind fiat currency, but can’t see it behind gold.

    It’s still there, which makes moving back to the Gold Standard just replacing the trick you half-understand with the one you don’t. It doesn’t buy you anything.

  105. I could also do without the class-based “working stiffs” vs. “fat cats” talk. If you’ve got a job, plumber or hedge fund manager, you’re “working.” Personally, I’m doing a lot better now than I was a decade ago, and I’m in Michigan, with one of the worst economies in the nation. This is an example of what Caplan called the “Pessimistic Bias.” Things are not, always and everywhere, getting worse.
    https://www.reason.com/news/show/122019.html

  106. Huckabee came out for dictatorial powers. He said he would bomb Iran if he felt it necessary, even if Congress said “no”.

  107. The federal government is not working for you & I anymore. It is comprised, for the most part, of people who seem to be interested in nothing but lining their own pockets at the expense of the rest of us. The “machine” is broken, and needs to be fixed before it’s too late (if it isn’t already). I feel that Ron Paul is the only one that is bringing that to the table and a return to the Constitution is the foundation upon which he’s running, gold and all.

  108. The reason a commodity standard is beneficial to the people is because the money cannot be devalued by printing money. Period. End of Story.

    Maybe Gold is impractical, but it’s at least fixed and only devalues maybe 2% a year because as more enters the market. Far better than increasing the paper supply however the FED sees fit.

    Also, if the govt can’t print up money they can’t recklessly spend either.

  109. Jacob | October 9, 2007, 6:13pm | #
    Huckabee came out for dictatorial powers. He said he would bomb Iran if he felt it necessary, even if Congress said “no”.

    Nevermind, I guess this answered my question.

  110. Half understand?? It’s amazing that, based on the limited amount of information that you have at your disposal, you can make such a statement. Gold & silver savings have served me quite well over the years, thank you. My real concern is for the welfare of my children & grandchildren’s generations. If “inflation” continues at this pace, it’s not going to be a pretty picture. Richard, I’m glad you’re doing better than a decade ago but that’s not the case for most out there. Let’s face it; We’re all posting here because we all recognize that there are problems with the direction this nation is headed (if not, I guess we can all go out and vote for Hilary). How we make those corrections will take time & debate, but I think we all agree that changes are due.

  111. gold as legal tender means if you bought an ounce at $730 and it went to $1000, you wouldn’t have to pay tax on the appreciation. Imagine living in a tiny country where the entire currency is $3000, and 3 people own 3 different stocks for $1000 each. The government then doubles teh money supply and the stocks go up to $2000 each. They sell their stock to each other, and now each of them has to pay tax on a $1000 gain. The economy has not improved one iota, but the govt is richer and you are poorer. That’s what’s happening now.

  112. I don’t know why people can’t understand the distinction between backing the USD w/ a metal and simply allowing competing money.

    If it were legal to issue money, backed by something or nothing at all, the dollar would likely be driven out of circulation if a bank anywhere issued money, fiat or otherwise, that could not be easily counterfeited and that was matched with a consistent level of liquid reserves. Most people would want gold and/or silver to back it because those commodities are liquid anywhere in the world.

    USDs would either trade at a substantial discount or the Fed would have to keep the money supply stable.

    People act like there never was free banking in the US or competing currencies. But there were, even in the early 19th century. I don’t see why Bank of America, Citybank, or any other private bank couldn’t run a fabulous seigniorage business by printing stable money.

    I think Paul advocates repeal of the legal monopoly on legal tender that the US central bank possesses — and please correct me if I am wrong.

  113. I guess I don’t understand why it’s so important to back up money with some rocks that people think look pretty. If the main reason is to ensure there isn’t inflation why don’t we just ensure there isn’t inflation? Isn’t that what the last 40 years was about?

  114. Don’t credit cards basically serve as the competing tender you are discussing also?

  115. A lot of other candidates picked up on the sound money thing.

  116. While on the subject of money, could someone tell me, what is the forecast for the US dollar vs. the Canadian dollar? Is the US dollar going to regain its “strength”? Otherwise I am screwed. Last time I checked, it was still going down.

  117. The US$ is only valuable because people value it. The only reason gold is valuable is because people value it (also it’s shiny and makes pretty jewelry). The montary base of the US is Fed credit (used to be gold). The Fed can create more credit by tickling their keyboards, they cannot create gold. Right now total fed credit is ca. $860 Billion and the US population is about 300 million. Simply tie Fed creidt by law to the population and you have a defacto gold standard without the hard labor of digging up gold. The fed then can play with the yield curve by buying short notes and selling long bonds (or vice versa) As long as total credit is capped a their ability to steal by inflation is limited.

  118. iih, anyone who managed to accurately predict the direction of the USD/CAD exchange rate could make a HELL of a lot of money. However, given trends in commodity prices and the Fed’s belief that it has inflation under control and should therefore print money with reckless abandon, I would bet that the loonie will continue to appreciate against the dollar.

    There are ways to hedge yourself if you are seriously exposed to a continued decline in the dollar vs. the loonie. Forex trading is some of the cheapest trading you can do, and you can adjust your degree of leverage in order to provide the appropriate amount of hedging.

  119. iih: No, however with patience the future will be revealed.

  120. “Don’t credit cards basically serve as the competing tender you are discussing also?”

    Only if they are not dollar-denominated

  121. Graphite:

    Thanks. I am not quite an economist, but I now the loonie’s rise is hurting my pocket (I spend money there). Will check Forex.

    Paco: That was my plan B 😉

  122. Thank god some ppl here actually explain RP’s nuanced position on Gold. He is not for a compulsary gold backing, just against the FRN’s monopoly.
    Allow currencies to compete (as they already do to some extent near the border) and the govt can no longer print to oblivion without suffering the consequences.
    Competition provides a healthy discipline.

  123. “gold as legal tender means if you bought an ounce at $730 and it went to $1000, you wouldn’t have to pay tax on the appreciation.”

    Spot on!

  124. The reason the goldbugs are concerned with gold, isn’t because their aurophiles (i.e. that they have a gold fetish). They focus on gold because that is what the market chose. The free market in money, unimpeded by the actions of governments, chose gold to be the medium of exchange.

    It was the actions of the governments in the early 20th century that destroyed the gold standard, not the decisions of the free market. If the government ended the meddling gold would likely be chosen once again. It is not the case that government paper and gold are simply equal and are both faith based money, government paper is simply force. Eliminate their shenanigans, and let us see what the market chooses.

  125. “It was the actions of the governments in the early 20th century that destroyed the gold standard, not the decisions of the free market.”

    With the use of quite a lot of violence, I might add.

  126. There is a big difference between gold-backed government-issued money and free market gold (or silver, or bread or land..whatever!) hard money.

  127. I can’t believe how complacent people in this thread are about inflation. It wasn’t that long ago that the U.S. was suffering from nasty, high, and unpredictable inflation. It will happen again. Count on it.

  128. I live in Denmark, travel to switzerland, england and lots of EU countries. Competing currencies are definitely the way to go, specially for your savings.

    I don’t see what difference it makes if they are issued by governments or by private banks.

  129. This is the most intelligent discussion on the fed I have ever seen on the internet

  130. This place seems full of ppl who deride the gold standard. I’m no economist, but I heard that Alan Greenspan was, and still is quite keen on gold.

    Can someone explain why the onus probandum is not on the fiat pushers?

    Remember, the CHF was on the gold standard until 1998.

  131. The onus is not on the fiat pushers because we have been on partial fiat since 1913 and total fiat since 1971. It’s considered a “closed issue” by most, like a return to barbarism.

    Pity.

  132. So is what’s on MSNBC now a replay?

  133. What good is a 30 sec. timer when they let some candidates go on and on, and others (like Dr. Paul) they cut off at 28?

    Time is money.

  134. The onus is not on the fiat pushers because we have been on partial fiat since 1913 and total fiat since 1971. It’s considered a “closed issue” by most, like a return to barbarism.

    We’ve had massive inflation during that time, too. Because of fiat money. We’ve had good economic times, too. It’s hard not to with an inflating currency. The good times will roll all the way up until it suddenly stops. The world has seen it many times before.

  135. Seriously. Who wants that? Where is the giant demand for “not government backed currency”?

    If no one wants it, no one wants it. Let the market decide.

  136. Inflation isn’t so bad for the average working stiff. Inflation is bad for old people and banks. Someone who works salary is tied to their productivity not the price. As prices rise, so do wages. It is a vicous circle. Inflation kills people on fixed incomes. As prices rise, their income stays the same and is worth less and less. Inflation however is good for debters. Assuming your interest rate is fixed, as prices and wages rise, the real value of your debt goes down. This is why central bankers are so obsessed with inflation. It totally screws banks.

    The idea that their is anything populist about a return to the gold standard is just fucking laughable. I am amazed at the historical and economic ignorance of some people. The original populists, the Grangers and William Jennings Bryant and the like started as a movement to end the gold standard. That was the famous cross of gold speech. The gold standard caused deflation throughout the late 19th century. It screwed small land holders by making their land and commodities they produced worth less and less while their mortgages stayed the same.

    One other point about the gold standard. Since it fixes the amount of currency in circulation, it means that a country cannot borrow to pay for imports. If a country is importing more than it is exporting, it either has to find new gold reserves quickly or there is a huge outflowing of wealth and currency to make up for the imbalance. As a net debter nation, a return to the gold standard would put the economy into a tailspin not seen since the great depression. There used to be crashes like that pretty regular. One in the 1890s and a really vicous one in the 1830s caused by Jackson closing the bank of the united states. Both of those were as severe as anything in the great depression. That is what you would get if you went on the gold standard.

  137. Gold standards are for people who see the illusion behind fiat currency, but can’t see it behind gold.

    It’s still there, which makes moving back to the Gold Standard just replacing the trick you half-understand with the one you don’t. It doesn’t buy you anything.

    Gold has the advantage of being historically demonstrated to be more sound than paper. Gold is valuable. It was valuable in the past and it is valuable today. The same cannot be said of various fiat currencies in the dustbin of history.

  138. John:

    I am (really) no economist, but if the gold standard is brought back, won’t this motivate banks, investors, etc., to self-regulate (otherwise they are the first and biggest losers)? If instead of abandoning the gold standard, couldn’t the great depression have been a great lesson to banks and investors to self-regulate? I hope I don’t sound “laughable”!

  139. “Gold has the advantage of being historically demonstrated to be more sound than paper. Gold is valuable. It was valuable in the past and it is valuable today. The same cannot be said of various fiat currencies in the dustbin of history.”

    So buy gold then as a hedge against inflation or land. Big deal. Those fiat currencies went away because the countries that backed them went away, not the other way around. If your country goes to hell, you are screwed and the gold standard is not going to save you.

  140. So let’s see, John –

    A metals-based currency favors savers over debtors, and punishes state attempts at maintaining indefinite fiscal and trade deficits.

    Those sound like upsides to me.

  141. Since it fixes the amount of currency in circulation, it means that a country cannot borrow to pay for imports. If a country is importing more than it is exporting, it either has to find new gold reserves quickly or there is a huge outflowing of wealth and currency to make up for the imbalance.

    Damn John, I thought Adam Smith had demolished that bit of mercantilist superstition in The Wealth of Nations.

    If gold is flowing out of a country, and gold is used as money, imports become more and more expensive resulting in fewer imports resulting in the gold flow tending towards 0. Imports do not impoverish a nation.

    All those crashes you point out where the inevitable result of the inflation that preceeded them, and not caused by returning to a gold standard. When you debase the currency, and don’t allow people to abandon it of their own free will, you get economic collapse. It may take a century, or it may take only a few years. But throughout written history, it has always held true.

    The crazy idea that the solution to the problems caused by inflation of a fiat money is more inflation is fucking homeopathic economics.

  142. “A metals-based currency favors savers over debtors, and punishes state attempts at maintaining indefinite fiscal and trade deficits.

    Those sound like upsides to me.”

    Until you see the incredible transition cost back to a metal based economy. You could make the arguement that we should have never left the gold standard and you might be right. The problem is that the horse is out of the barn so to speak. Its too late to go back. The floating currency system has served us quite well once we had a fed that was committed to keeping prices stable. Whatever the advantages were to the old standard are not that great. The economy has averaged over 3% growth since 1983 with only two very small recessions and near price stability. Jesus how much growth do you want? Go back to the gold standard and we get a recession the likes of which hasn’t been seen since the 1930s. Sure things will shake out and the economy will adjust, eventually, but the price will be enormous for very little gain.

  143. There used to be crashes like that pretty regular. One in the 1890s and a really vicous one in the 1830s caused by Jackson closing the bank of the united states

    The crashes came from fractional reserve banking. Banks were basically allowed to go off the gold standard. They issued more notes than they had gold reserves, so the currency was partially paper. Government propped up these banks instead of letting them fail in a free market. They did things like continue to accept the notes as payment in taxes and whatnot.

  144. “When you debase the currency, and don’t allow people to abandon it of their own free will, you get economic collapse. It may take a century, or it may take only a few years. But throughout written history, it has always held true.”

    How is the currency debased? We have had near price stability for over 25 years. If there is an economic collapse coming, it will be for reasons completly independent of the currency, namely a return to protectionism and increased taxes and regulations on the economy.

  145. “Until you see the incredible transition cost back to a metal based economy. You could make the arguement that we should have never left the gold standard and you might be right. The problem is that the horse is out of the barn so to speak. Its too late to go back. The floating currency system has served us quite well once we had a fed that was committed to keeping prices stable. Whatever the advantages were to the old standard are not that great. The economy has averaged over 3% growth since 1983 with only two very small recessions and near price stability. Jesus how much growth do you want? Go back to the gold standard and we get a recession the likes of which hasn’t been seen since the 1930s. Sure things will shake out and the economy will adjust, eventually, but the price will be enormous for very little gain.”

    There would be a couple of political gains:

    First, it would effectively destroy the ability of the state to deficit spend at its current level, at least for prolonged periods of time.

    Second, it would eliminate the possibility of a Carter-era Fed ever coming back into play. We have had a fairly responsible Fed of late, massively assisted in its job by worldwide deflationary pressures [the prolonged stagnation in Japan, energy prices decreasing in real terms for two decades, the addition of the former East Bloc nations to the world economic system, the addition of the labor pools of China and India to the world economic system]. We might not always have such a responsible or such a lucky Fed. And you only need ONE hyper or near-hyper inflation to wipe out all of the economic gains a couple of decades of “good Czar” Feds give you.

  146. Switching gears for a moment to talk about the debate –

    Apparently after the debate Paul went outside to address a crowd of 2000 screaming college kids on the Michigan campus. Strangely, I find exactly NO coverage of this fact in the media.

    If Fred Thompson had strolled out of the debate to 2000 Fredheads, who thinks that we would hear about it on one of the cable networks?

  147. RE: Tancredo Wal-Mart/Nasdaq/Dubai comment.

    He’d think about it? Why? When was it the government’s business to regulate who owns private companies?

  148. Price stability? What color is the sky in your world John?

    Food is more expensive. Fuel is more expensive. Medical care is more expensive. School is more expensive, Shelter is more expensive. About the only things that aren’t more expensive are the products that have benefited from technological innovation.

    The only guys who are benefitting from the current scheme are guys who work for the government, supply it, or are subsidized by it.

  149. If RudyMcRomney vs. HRC is what most Americans are rooting for, then they do not deserve a great man like RP! Populism for the populists.

  150. Jesus Christ, I’m beginning to wonder if the republic and survive any of these dillholes. Ron Paul isn’t just the Hope for America. He’s America’s ONLY Hope.

    The RON PAUL revolution.
    be part of it

  151. Huckabee is using Nascar to make the voter understand foreign dependence on oil! How stupid does he think the voter is? (Or how stupid am I to believe in the “voter”?)

  152. American dream? It is a dream for goodness sake! How about the American reality?

  153. ok, I’ve had it with this bunch of worthless, power-grabbing fascists. Only 2 out of 9 (!) said they need to go to congress to carry out military actions! 2 out of 9! It’s in the fucking Constitution, assholes!

    It’s become clear that politics have nothing to do with the founding document of our nation, and we might as well scrap it if any of these fuckers but Paul wins.

  154. we might as well scrap it

    Is it good for making more paper money?

  155. yeah, you could probably make an nice sheet of hundreds out of the pulp.

  156. John D:
    Inflation isn’t so bad for the average working stiff.

    This is simply not true. Inflation makes simple saving worse than useless. A savings culture will raise the fortunes of all people, not just the financially adept. Of course the schlub can put his savings in a mutual fund or something, but that is not the same thing. Especially since your investment earnings are taxed.

    The problem is that the horse is out of the barn so to speak. Its too late to go back.

    This is not a valid argument. It can be used to dismiss nearly anything. If you really believed that you’d stop coming around here, ’cause if there’s a horse-gone, barn-closed posterchild it’s libertarianism.

  157. How much energy could we save if NASCAR fans learned how to read?

    HA!
    good one

  158. How can this discussion have gone on this long without a reference to Gresham’s Law?

    Im not sure which side to apply it to (both, actually), but it definately applies.

    Some of said that fiat money is the ultimate unavoidable result of Gresham’s Law.

  159. tarran,

    Those things have become more expensive for reasons unrelated to inflation: fuel due to increased industrial demand in Asia, school due to burgeoning federal and state financial aid programs increasing demand, food due to increases in farm subsidies (and increased fuel costs), and medical care due to more expensive treatments being discovered and demanded.

  160. The horse is out of the barn on this drug war thing. Our only choice is to escalate it(think of easing up on the drug war as deflation).Returning to a “legal” drug market would be too disruptive.

    Agricultural subsidies? That milk cow is out of the barn.Ending subsidies would be disruptive to our economy- like ending perpetual inflation of fiat money.

    Iraq War? Camel is out of the barn I’m afraid we are in Iraq for the long haul. Leaving would be disruptive to our geopolitical stability.

  161. If RudyMcRomney vs. HRC is what most Americans are rooting for, then they do not deserve a great man like RP!

    Unfortunately, those of us who deserve better are going to get the same thing most Americans do…

  162. Too bad Looks like they reshot Maria’s questions with her wearing clothes for the rebroadcast.

  163. Environmental Regulation? That hippie is out of the commune. The only thing left to do now is adopt the Kyoto protocols and impose massive taxes on everything that pollutes, like people.

  164. Huckabee is against anybody making more money than anybody else. He is worse than FDR and I never thought that possible from his party in the modern era.

  165. He is worse than FDR and I never thought that possible from his party in the modern era.

    Where you been the past ten years Guy?

  166. Well at least Huckabee is a top tier candidate.
    He isn’t some loser also-ran like Hunter, Brownback or Paul. Time to winnow the debate field so we can get serious here.

  167. Where you been the past ten years Guy?

    In the real part of the USA, where Fred is from.

    I hear that from other parties all of the time, but not from the noBS Republicans (McCain excluded and I never heard him say that but I can imagine it).

  168. McCain is attempting to sound like he prefers free markets.

  169. FRED RULES!

    Chick who reminds me of the chick who cried about the Yankees losing: “Should the government step in to the Chrysler (MOPAR, stupid girl) negotiations?”

    Fred: “NO!”

    BRAVO Senator Fred!

  170. McCain supports non-profit child pornography?

  171. What makes Huckabee a top tier candidate? Is it his massive name recognition? Or his 0-1% domination over Ron Paul in national polls? Or is it his wonderful performance in straw polls (beating Paul in an astonishing 4 out of 31 straw polls)? Perhaps his incredible fundraising abilities?

  172. Damn Senator Fighter Pilot, the right answer to “has the fed cut interest enough” is ALWAYS no! Not a trip arounf the South China Sea on the way to no!

  173. the right answer to “has the fed cut interest enough” is ALWAYS no!

    Guy,

    Are you trying to get hired by CNBC?

  174. OMG, Rudy gave a great tax answer. Now if I could only believe him about leaving my guns alone . . .

  175. Larry Kudlow | October 9, 2007, 10:52pm | #

    the right answer to “has the fed cut interest enough” is ALWAYS no!

    Guy,

    Are you trying to get hired by CNBC?

    And leave my lucrative robber-barron Defense Contractor position? HA!

    But you are my favorite NBC person ever.

  176. I will never understand why people are so afraid of the trade balance. Obviously I don’t think that the current state of US/China trade is what it would be if both sides repealed some of their sillier regulations, but is it really so bad that we are trading services and investments for material goods? What we happen to have comparative advantage at that?

  177. Fred wins! Good night all!

  178. “Larry Kudlow” wins the thread.

  179. I will never understand why people are so afraid of the trade balance.

    Me neither. Negative trade balances mean that you are well-off enough to nuy lots of things. The other way means you make thigs well.

    Not sure what the problem is.

  180. Well not to worry, with the dollar loosing value every day US goods get more and more attractive. I never thought I’d live to see a Loonie worth a Sacagawea.

  181. 10:07: Kudos for Huckabee using a NASCAR metaphor to talk about energy independence. How much energy could we save if NASCAR fans learned how to read? (I exclude Clarence Thomas from this piece of angry sarcasm, as I think he is a NASCAR fan, too.)

    David, I was thinking about inviting you to a Pentagon tour. Perhaps you would prefer G’itmo?

  182. “What Makes Huckabee top tier?”

    Only that he is 2 points behind Romney in the national polls ( Poul is like 8 or 9) and is also ahead of Rudy in Iowa…..

  183. Here’s a link to Ron Paul’s utterances at the debate. For some reason, it’s spread out over several video clips, which is annoying, but you get what you pay for, I guess.

  184. Huckabee is using Nascar to make the voter understand foreign dependence on oil! How stupid does he think the voter is?

    He thinks the voter is stupid enough to vote for him; in some cases he is right.

  185. LarryA,

    “Duct tape” is the newer term… “Duck tape” is the older term. Both are appropriate.

    A bit of Duck tape history:

    First created and manufactured in 1942 (approximate date) by the Johnson and Johnson Permacel Division. Its closest predecessor was medical tape.

    The original use was to keep moisture out of the ammunition cases. Because it was waterproof, people referred to the tape as “Duck Tape.” Also, the tape was made using cotton duck – similar to what was used in their cloth medical tapes. Military personnel quickly discovered that the tape was very versatile and used it to fix their guns, jeeps, aircraft, etc. After the war, the tape was used in the booming housing industry to connect heating and air conditioning duct work together.

    Soon, the color was changed from Army green to silver to match the ductwork and people started to refer to duck tape as “Duct Tape.”

  186. Although I’ve already learned a lot just by scrolling through this thread, do the gold standard scholars have any introductory sources they could list for a head-scratching layman like myself? I’m struggling to develop an opinion on all this.

  187. “is it really so bad that we are trading services and investments for material goods? What we happen to have comparative advantage at that?”

    That’s not what a negative trade balance means.

    The value of services and overseas investments is already figured into the trade balance. So already counting those things, we have a massive negative balance of trade.

    The harm of a trade deficit comes when the foreign nations who have been sending you goods and taking nothing but your currency in exchange decide that there are other uses for their capital than using dollars to buy government debt or dollar-denominated financial market assets. Then your currency turns into the Malaysian baht during the Asian Meltdown of the late 90’s.

  188. No, fluffy…

    The trade deficit figures do not include overseas investments.

    The trade balance and net capital balance are opposite and equal.

    A trade deficit is matched by a net capital inflow.

    They match always. If people don’t want them to match, the value of the dollar (and other currencies) change until people do want them to match.

    The situation we are in recently is that the dollar is falling in value. The result should be a smaller trade deficit and lower net capital inflow. And, Americans will be a bit poorer because we will get fewer imports for our exports. (That isn’t to say that other things might not happen that will be making Americans richer. The falling dollar is a factor that will tend to at least partially offset the consequences of improving tecnhology, etc.)

    If we were on a gold standard, the dollar wouldn’t fall (being tied to gold.) Gold would leave the U.S. (which is what fluffy seems to identify with a trade deficit.) The U.S. money supply would fall. Dollar incomes would drop in the U.S., lowering U.S. costs, and U.S. prices. This would result in greater U.S. exports and lower U.S. imports. (Lower imports because Americans are poorer and because buying at home is now cheaper.) This would reduce the trade deficit and bring it back in balance to the net capital inflow less gold.

    This process has traditionally been associated with a recession in the short run. That is, rather than dollar incomes and prices dropping smoothly, dollar incomes drop as production and employment drops. Then, in the face of unemployment of labor and surpluses in most markets, prices (including wages and other recource prices) drop, resulting in a recovery of employment and production while dollar incomes and prices remain lower.

    In U.S. history, the fragility of the unit banking system (and yes, fractional reserves) would magnify even small disturbances. But, this “magification” would be rapidly reversed once recovery began.

  189. I can’t believe we have talked about fiat money this long without mentioning sticky wages. Sticky wages are why increases in the money supply acts to increase production in the short run. You basically give all the working stiffs in the country a secrete, stealth pay cut.

  190. We have had near price stability for over 25 years.

    We haven’t even had inflation stability for 25 years, never mind price stability.

    Raging inflation can return at any time. All it takes is a Fed that gives in to political pressure to “pump up” the economy.

  191. “Food is more expensive. Fuel is more expensive. Medical care is more expensive. School is more expensive, Shelter is more expensive. About the only things that aren’t more expensive are the products that have benefited from technological innovation.”

    I don’t write the economic statistics, I just read them. We haven’t had a serious bout of inflation in this country since the early 80s. If anything in the 1990s, deflation was the danger. There are just as many economic dangers to deflation as their is to inflation. A moderate rate of inflation of about 2% is pretty ideal for long term growth and that is what we have had for most of the last 25 years.

    Two things I have got to stop doing; trying to convince creationists man didn’t live with dinosaurs and trying to convince gold standard people the currency is not going to collapse and the world end because we no long have the gold standard. Some superstitions die harder than others and some, like those two, never die.

  192. SxCx “Although I’ve already learned a lot just by scrolling through this thread, do the gold standard scholars have any introductory sources they could list for a head-scratching layman like myself? I’m struggling to develop an opinion on all this.”

    I can post several links where you can get a “crash course” that make the case for a return to the gold standard, which Paul advocates, but I would suggest just checking out what Dr. Paul himself has to say on YouTube (search Ron Paul FED). Yesterday I posted an excerpt from a book entitled “Capitalism: The Unknown Ideal”, authored by Ayn Rand, in which Alan Greenspan authored two (or three) chapters. One of those chapters is entitled “Gold & Economic Freedom”, which details the importance of the gold standard as well as how the powers that be ushered us away from the gold standard; and how it’s negatively impacted us all. You can also check out any historical gold pricing chart to actually see how those price changes coincide with significant events in monetary history. Here are several links:

    Ron Paul on The FED:
    http://www.youtube.com/watch?v=gTV1VLPZnRk
    http://www.youtube.com/watch?v=A4kxTkhwR_Q

    Historical gold charts:
    http://kitco.com/scripts/hist_charts/yearly_graphs.plx

    As you look at this chart, some key events to remember: 1933- Executive order 6102, which called in the gold coin in circulation. 1963- Executive Order 11110, designed to strip the Federal Reserve Bank of its power to loan money to the government at interest. 1971- the year we “officially” went off the gold standard (and you can see what effect that had on the price of gold). Keep the faith and spread the word!

  193. BTW John, fiat money IS inflation.

  194. SxCx Although I’ve already learned a lot just by scrolling through this thread, do the gold standard scholars have any introductory sources they could list for a head-scratching layman like myself?

    These speeches from Murry Rothbard from Misis.org are really good, even funny and entertaining at times.

    The Founding of The Federal Reserve

    Banking and the Business Cycle

    Money and Prices

  195. So, Edward, continuous inflation of 2% is the ticket? With no real deflation? Where did you get the notion that deflation does not occur with growth? There has been plenty of growth with deflation. Your continuous inflation (which is only low because “core” inflation does not count numerous sectors) negates economic growth, does not spur it. Inflation causes too much growth in some sectors, not enough in others.

    The Stock Market bubbles and Dot Com bubble and Housing bubble and numerous Fed bailouts with taxpayer money are caused by your continuous inflation. The inclination to spend and not save is also. The productivity of the economy and Wall Mart and China have kept our heads above water, not the continuous inflation.We need gold to encourage saving and keep the workers solvent and Wall Street honest.

  196. href=http://www.mises.org/article.aspx?Id=1040

    There are four types of inflation presented. Two are positive, two negative. The deflation that Edward is worried about is the deflation of the great depression. However, that deflation was not allowed to run its course due to government intervention, in particular the constant push to keep wages high, resulting in wage inflation while prices were plummenting. Wages in a free economy have to fall, as well as prices, for the system to purge out the effects of the bank inflation we experienced in a vain attempt to keep England a “great nation”.

    Note to Edward: Keynesian economics is dead. Have a good sob, and get over it.

  197. The original populists, the Grangers and William Jennings Bryant and the like started as a movement to end the gold standard. That was the famous cross of gold speech.

    Paul’s rhetoric is populist with a small p, not Populist as in Populist Party. I’m aware of the irony of someone coming off as William Jennings Bryan while advocating a position closer to William McKinley’s, but it’s not really that absurd: Think of Paul as a Barnburner Democrat of the antebellum period, when hard money and free trade were the populist, anti-monopolist positions.

  198. “trying to convince gold standard people the currency is not going to collapse and the world end”

    Got news for you:
    You are going to die.
    The world will end.
    The dollar will collapse.

    Superstition?

  199. Morat made, I think, a good point the other day. While I think a return to a free-market in money would be desirable, the hard fact is there’s very few people out there (aside from us) who care much–for the simple reason that inflation has been low and stable over the past several years.

    A gold standard is just the most foolproof way of giving paper money a real anchor and imposing discipline on monetary growth. By no means is it the only way, though–inflation targeting (now practiced by many central banks) is just one, and, for all its theoretical flaws, has worked well enough in practice that inflation is the last thing from most voters’ minds these days in countries (like Canada) where it is practised.

    US voters aren’t so worried about inflation yet, but that could change if the drop in the dollar goes on much longer. Paul might want to keep his powder dry for 2012.

    BTW, the loonie is at $1.02 today.

  200. Quote from a Forex report in todays news;

    “This morning the U.S. dollar is down to 78.35 (from 78.83 yesterday). Support is at its all time record low at 77.657. Below this is uncharted territory for the U.S. dollar.”

  201. An Ottawa Reader,

    Come on man, don’t you know that the commodity of the future is tin?

    It was well documented in an episode of Barney Miller.

  202. That’s actually a great episode.

    My favorite Barney Miller episode, naturally, is the one where Dietrich’s knowledge of the plot of The Fountainhead is key to knowing what the angry architect is going to do.

  203. My favorite Barney Miller episode, naturally, is the one where Dietrich’s knowledge of the plot of The Fountainhead is key to knowing what the angry architect is going to do.

    My favorite is the one where Dietrich tracks down the Vietnam protestor who stayed in his apartment for 10 years. Took him 24 – 72 hours to find the guy I think?

  204. I’ve voting for the head of Richard Nixon and Headless Agnew.

  205. “US voters aren’t so worried about inflation yet, but that could change if the drop in the dollar goes on much longer. Paul might want to keep his powder dry for 2012.”

    He is old!
    He needs to get the message out, people will remember him as being right.

    “the hard fact is there’s very few people out there (aside from us) who care”
    Yeah, and keeping quiet about such an important issue is not going to help with that.

  206. How about the episode where that guy is staging a hunger strike, protesting the TV station “radiating” him with beams of some kind. Dietrich explains to him that there is an entire sect of people that don’t eat food, needing only air & water, and to just breath deeply. The guy does that for a bit and Dietrich says, “Don’t stuff yourself.” By the end of the show, the hunger strike is over and he asks Dietrich for a doughnut, to which he replies, “You just had some air.”

  207. Now if Maria Bartiromo showed up wearing a shirt that says, “I’d napalm Laos” or some other conservative slogan, I’d buy it, and wear it, and pretend Maria was in that shirt with me.

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