Economics

Rep. Ron Paul on Financial Meltdown/Bailout/Etc.

|

Rep. Ron Paul (R-Texas) tells Wolf Blitzer: "The worst thing we could do is perpetuate the bad policies that gave us this trouble in the first place."

Spend approximately 7 minutes in hard-money heaven with Paul:

Ron Paul in reason.

NEXT: How Do We Clone Rep. Jeff Flake (R-Ariz.)?

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. *sheds tear*
    ::whimper whimper::

  2. Now, more than ever, I’m so proud I voted for Ron Paul in the VA primary. The Old Man was right!

  3. hard money is stupid. think of what would happen if we legalized competing currencies. the FED would go out of business. think of all the people who work for the Federal Reserve that would lose their jobs. unemployment would skyrocket! ron paul wants higher unemployment. damn, that’s not cool.

  4. The Old Man was right!

    Russian warships are heading to Venezuela right now so add that to the things he was right about. I supported Ron Paul with $2300 but didn’t vote for him in the TX primary because I wanted to participate in the LP convention. Hindsight being what it is, I should have voted Ron Paul.

    (obviously not voting for Barr)

  5. Ron Paul seems to be getting as much media exposure now as he was at the height of his campaign fundraising. I’m expecting a boomlet in “Rom Paul Was Right” dumper stickers.

  6. Can someone explain to me why Paulites have such a hard-on for gold? I’ll be the first to decry the Federal Reserve, but the sensible alternative for me seems to be free banking and competing currencies, which could be based on any standard, metal or otherwise, rather than the government dictating banks must back their notes with one specific metal.

  7. The worst is yet to come, namely: the MSM parroting to everybody that, one, the bailouts were necessary, and second, that all of this was caused by unbridled capitalism (as if we were enjoying a full laissez faire economy).

    Also, we are seeing the closing chapter of how America went fully Fascist, by having the government intervene in the banking system with the proviso that the State can have control (or “return on investment”, as some lawmakers were telling it) of the banks they are bailing out. Next, it will be the turn of the auto makers, and later, who knows? Maybe the oil companies, even if those do not need a bailout.

  8. I can’t stream video on this computer.

    Does Congressman Paul shout “GOLD!” like a bandy-legged prospector in a western movie?

  9. Can someone explain to me why Paulites have such a hard-on for gold?

    Gold has many features that make it the ideal currency: Scarce, convertible, desired by most, portable. Many other precious metals have the same properties, but gold has been universally accepted as a currency for centuries. Since it has to be mined, governments cannot inflate its supply (which is why the State and its adoring fans hate it so much). It maintains its purchasing power, and makes fractional reserve banking a more riskier enterprise. This last reason is why bankers have always pushed for a central bank and fiat currency – it was the great bankers that pushed forward the Federal Reserve Act of 1913, Wilson’s gift to the World.

    […]rather than the government dictating banks must back their notes with one specific metal.

    Under a free economy, governments would not have to do this. You misunderstand the advocacy for gold – libertarians and free market economists are not pushing for a government-mandated gold backed currency, but for the government to fully distance itself from such proposals, leaving to the people the choice of currencies to use. The Constitution actually mandates that any money coined by Congress should be gold or silver, but that’s as far as the document allows. Congress overstepped this limitation by passing legal tender laws, giving full power to control the money supply to a supposedly “private” organization, the FedRes.

  10. Anonymous – It looks like you’re not paying attention. Ron Paul has always called for exactly what you are talking about: competing currencies. He mentions doing this by repealing legal tender laws and removing certain taxes from several precious metals.

    And, if I recall correctly, I don’t think Paul mentioned gold anywhere in the interview.

  11. Anon: Form what I recall hearing Paul supporters tell me, he supported competing standards. I think he just most often gets labeled as a gold-bug because that’s the most popular vision of a hard-currency which he presumes would be the most popular in a post-fed world.

    Love to hear if that is actually what he supports or not though. Anyone know?

  12. Russian warships are heading to Venezuela right now

    Hey, if the Russians and the Venezeulans want to waste their petro-dollars on stupid stunts like this, I say go right ahead. Same with the Venezuelans buying Chinese fighter jets. I mean, really, how is it not a waste of money?

  13. Why is every corporation “run by fat cats” when politicians want to tax and regulate it but “owned by pensioners” when politicians want to bail it out.

  14. And, if I recall correctly, I don’t think Paul mentioned gold anywhere in the interview.

    Oh cut the crap, anyone who’s familiar with the Mises Institute or talked with any of Paul’s supporters knows damn well what “sound money” is a euphemism for.

    And I never heard Paul call for competing currencies and free banking. If someone could provide a link, I’d genuinely like to read it. His profile in the NYT said he supported tying the dollar to gold again.

  15. The constitution does not grant a monopoly to the government with respect to coining money-go to Article I, clause 5:

    To coin money, regulate the value therof, and of foreign coin,…

    Sure, some schmuck may make the sophomoric argument that, because the next clause states that Congress shall have the power to “provide for the punishment of counterfeiting the securities and current coin of the United States”, the government therefore has a monopoly on currency. As I said, horrible argument. The text alone precludes the proposition that the government has such a monopoly.

  16. Yeah, but it’s sort of in response to our “humanitarian aid” being delivered to Georgia on U.S. warships.

    http://www.usatoday.com/news/world/2008-09-22-russia-venezuela_N.htm

  17. Surprised the “Don’t blame me, I voted for Ron Paul” bumper stickers haven’t arrived yet.

  18. libertymike,
    Then perhaps the Constitution is in need of an amendment? Lincoln did it with the Greenbacks and it was the best, fairest, justest, most equitable currency this nation has ever had. Thomas Edison said it best concerning debt-free fiat currency:

    “”But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 per cent, whereas the currency pays nobody but those who directly contribute to Muscle Shoals in some useful way.

    ” … if the Government issues currency, it provides itself with enough money to increase the national wealth at Muscles Shoals without disturbing the business of the rest of the country. And in doing this it increases its income without adding a penny to its debt.

    “It is absurd to say that our country can issue $30,000,000 in bonds and not $30,000,000 in currency. Both are promises to pay; but one promise fattens the usurer, and the other helps the people. If the currency issued by the Government were no good, then the bonds issued would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious values of gold.”

  19. Anonymous: Here’s Paul on the subject in Reason:

    It is not really my position to close the Fed down. It would require too much adjustment to do that overnight. I advocate competing currencies-to legalize another currency that we can work in. That means repealing legal tender laws and repealing all taxes on gold and silver. If people want to use another money, then they can, and if not they can use paper.

  20. government dictating banks must back their notes with one specific metal.

    Nobody’s calling for the government to do that. The constitution says that the government can only make gold or silver legal tender, but it says nothing at all about private issuers. If you want to issue paper money backed by kumquats or kilowatt-hours, that’s fine and dandy as far as I’m concerned, as long as you can redeem the money you print.

    -jcr

  21. Jesse, how would that system work? With which currency could one pay taxes? With what currency would debts be legally enforced? Which currency would be universally accepted by banks and merchants? And what historical societies have there been that have successfully made such a policy practicable? I personally can recall no civilization in history that did not have a standardized national currency which facilitated exchange of goods and services. And the fact that money itself originated in religious and political institutions I find myself skeptical of any notion of competitive currencies.

  22. John C.,

    Where in the constitution does it say that? It is my understanding the only reference to gold and/or silver has to do with the one ability states have, and has nothing to do with the federal government who has the right to Coin Money, and regulate it’s value.

  23. Dwayne,

    Like many Ron Paul proposals, it’s an impractical idea based on pre-digital thinking. The government would use one currency, and almost every business would follow suit.

  24. Dwayne: read up on the history of Spanish dollars. Pieces of eight were legal tender alongside US dollars until 1857.

  25. Dwayne,
    [H]ow would that [competing currencies] system work? With which currency could one pay taxes? With what currency would debts be legally enforced? Which currency would be universally accepted by banks and merchants?

    The same way it worked in the US before legal tender laws: even Mexican silver pesos were used as currency, without the chaos you presume. Obviously, the current system allows the income tax to be enforced. Under a competing currency system, taxes would have to be levied in other forms (like poll taxes, or tariffs, as it was in the US for its 1st and a half Century)

    And what historical societies have there been that have successfully made such a policy practicable?

    Practically ALL of Europe before the States created fiat currencies. Europeans could trade in gold or silver. All of Asia traded in gold or silver, except during the Mongol rule of Kublai.

    I personally can recall no civilization in history that did not have a standardized national currency which facilitated exchange of goods and services.

    Other than serving as an example of the results that public education gives, I see your lack of knowledge not as evidence against competing currencies.

    And the fact that money itself originated in religious and political institutions I find myself skeptical of any notion of competitive currencies.

    Again, your lack of knowledge is as fascinating as a car wreckage, but is not evidence against competing currencies. Gold and silver were not imposed by religious or political organizations; they became currencies out of pure usage and trade. Religious and political organizations accepted payments in these currencies because not one would use or accept anything else.

  26. Dr. Paul specifically says that he doesn’t want to abolish dollars – he wants people to have the right to use alternate currencies *if they want.* Dollars ought to be a default currency, so if the parties to a contract (say) are unclear, it will be presumed that they prefer dollar transactions. But if someone loses confidence in the dollar, he or she should be free, without discrimination or penalty, to contract for payment in some other currency – gold coins, pirate treasure, shekels, conch shells, or what have you.

    If this doesn’t cure what ails the economy, at least it will somewhat widen the scope of human freedom. It will give the government a disincentive to inflate the dollar, for fear people will go to other currencies.

  27. “What currency would be used to pay taxes”
    Who said anything about paying taxes?

  28. Shane,
    Where in the constitution does it say that? It is my understanding the only reference to gold and/or silver has to do with the one ability states have, and has nothing to do with the federal government who has the right to Coin Money, and regulate it’s value.

    If the Constitution prohibits the States to issue money in other forms except gold and silver, then it FOLLOWS that Congress cannot coin other money besides gold and silver. Since the power is delegated from the States and the People to the Federal Government, and the States accepted as a limit the coinage of only gold and silver, then it would make no sense to think Congress could step beyond these limits and coin money in any other metal or through fiat currency. The States cannot delegate MORE power to Congress than the power they already enjoy.

    Legal Tender laws were made to circumvent this limit, delegating (unconstitutionally) the power to create money to a private institution (Congress still “coins” money through the US Mint, but that coinage only represents a small fraction of the entire money supply).

  29. Economist,
    Who said anything about paying taxes?

    Right on. Most of the (incompetent) objections against hard asset currency stem from that canard: how are we to pay for taxes, then? As if taxation was valid.

  30. Shane,

    The constitution only grants certain powers to the federal government. They’re given the power to coin money, and not given the power to issue bills of credit.

    -jcr

  31. Madmax,

    If this doesn’t cure what ails the economy, at least it will somewhat widen the scope of human freedom. It will give the government a disincentive to inflate the dollar, for fear people will go to other currencies.

    Right on, sir. The normal (and incompetent) objection against the free use of currencies is the supposed “chaos” that this would bring, but in fact, your premise is (almost) correct: the use of competing currencies would actually give government no incentive to spend more than what can be levied in taxes, which would have to be levied in other, more direct ways than a tax on income. The Welfare State can only exist with the help of an unsupported, fiat currency. Military spending would have to be curbed under a hard currency system, et cetera. Tyrannies have been able to create armies and war materiel thanks to fiat currencies and the help of banks.

  32. What currency would be used to pay taxes

    As in any transaction, you pay what the recipient will accept. If the state says it will only accept money issued by its own bank, then you convert enough of your preferred currency to that one in order to pay your taxes. Its really no different than buying dinner in Paris – you just convert your dollars to euros first.

    Is that so hard?

  33. the sensible alternative for me seems to be free banking and competing currencies, which could be based on any standard, metal or otherwise, rather than the government dictating banks must back their notes with one specific metal.

    Ron Paul is for competing currencies. However, it is expected that gold would rise to the top, as it always has.

  34. Torres,
    “The same way it worked in the US before legal tender laws: even Mexican silver pesos were used as currency, without the chaos you presume. Obviously, the current system allows the income tax to be enforced. Under a competing currency system, taxes would have to be levied in other forms (like poll taxes, or tariffs, as it was in the US for its 1st and a half Century)”

    I cannot see how this answers my question. I am well aware the the American colonies used the standardized currencies of foreign national governments to conduct trade with other nations, seeing as they had little gold or silver and imported far more than they were exporting. However this is quite different from this idea of competitive currencies where private merchants issue multiple forms of money. In fact, it was not long before the American colonies began issuing their own fiat currency backed by the “full faith and credit of the government”, called colonial scrip, which gave them control of their money supply, facilitated exchange, was accepted as legal tender for the payment of debts, and was the basis for the subsequent economic prosperity of the colonies as argued by none other than Benjamin Franklin himself. When asked by the British how the colonies had recently become so prosperous he replied, “That is simple. In the Colonies, we issue our own paper money. It is called ‘Colonial Scrip.’ We issue it in proper proportion to make the goods and pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one.” This is precisely the opposite of a system of competing currencies.

  35. RC Dean,
    Yes, but in that case you are merely exchanging one national fiat currency for another. The problem in this competing currency scenario is most people have to pay taxes and no merchants anywhere are going to accept some privately issued currency that will not be accepted by the federal government as payment of their tax burden or enforced in a court of law as a payment of debt.

  36. MFI? Jesus, McCain, that’s almost enough to make me change my vote to Mr. Fair Pay Act.

  37. Joe @3:53 best line of the night.
    Don’t get me wrong I love the good doctor but funny is funny.

  38. Wow. I just got to see it for the first time.

    That was just fantastic. I certainly don’t agree with him on everything, but I am very glad his voice is being heard on this.

    This is why his credible presidential run was so important. Not because he ever had a prayer of winning, but because it made him a national figure. He’s a wise old man of Washington now. He ran for the Republican nomination for president and beat some big name politicians.

    His talking seriously about issues and policy, followed by McCain and Obama doing their campaign shticks, just made them look like clowns.

  39. Gold, dagnabbit!

  40. joe,
    Did somebody make a fake post under your name?

  41. Nope.

    What, does the liberal in your head hate Ron Paul?

  42. I’ve been selling “Don’t Blame Me! I voted for…” bumper stickers in basic black, which go perfectly with old Ron Paul stickers. It really annoys the whiners of this world that libertarians were right, but their whines are amusing enough (and I’m pissed-off enough about the repeated bailouts) that the stickers stay on ’till the election’s over. I told them the economy was going to shit & Ron Paul was the only Republican with a chance. They said I was nuts (or lied about me being a “Truther” or drug addict, etc.) and elected McSame. Now they’re lookin’ like the losers they’ve always been, and my country’s going down the tubes. What fun.

  43. PS In light of the fiscal crisis, I’m certainly glad so much money and so many law enforcement & judicial resources were spent going after those criminals at e-gold and the other tiny-ass gold backed internet currencies, instead of all the nice, honest men & women at Bear Stearns, Lehman, etc. who’d never do anything to risk other people’s money. Yep, those hard money fans must be attacked — verbally and legally — at any cost!! They’re obviously eeeeeevil!!!

  44. Nick obviously fail to mention his fiat currency heaven is coming to a crushing end. The Chinese are looking for a new currency. Maybe they will lead the world in creating a commodity backed currency.

  45. The USA led the world in creating a commodity backed currency in 1996, called e-gold. Then the US government attacked it.

  46. With a mule, and a fake white beard, and a bandana around his neck.

    GOLD!

  47. Did joe just say Ron Paul makes Obama look like a clown?

  48. It maintains its purchasing power, and makes fractional reserve banking a more riskier enterprise.

    What do you Hit&Runners think of fractional reserve banking and the traditional libertarian position of it being fraud?

Please to post comments

Comments are closed.