Ron Paul

Ron Paul Mainstreams Radical Monetary Economics

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An example of what could turn out to be a major intellectual benefit of Ron Paul getting his chairmanship of the House Financial Services Committee's subcommittee on monetary policy: mainstream press–Slate here–actually giving play to his obscure ideas on monetary economics. While not endorsing them–and even jabbing at them slightly, but much more slightly than I would have expected–giving many tens of thousands or more people a chance to hear and consider them.

Bits and pieces from the long article:

His monetary policy quest has been quixotic. The closest Paul came to getting the gold standard reconsidered—let alone reinstated—came in 1981. At the beginning of the Reagan administration, Paul sat on a commission appointed to debate whether the United States might benefit from returning to commodity-backed money. Reagan had a "slight bias toward gold and its disciplines," Treasury Secretary Donald Regan told reporters at the time. But in a final report, released March 31, 1982, the panel rejected the idea.

Despite the rejection, the next day's papers described Paul as jubilant. "For the first time in 50 years they seriously considered it," he said, releasing a dissent. "I do think that in due time, possibly even in this decade, there will be another serious discussion of gold as a monetary standard. I still do believe that gold is the money."

That serious discussion never really happened, though not for a lack of trying on Paul's part. "I think for 20 years or so, they just wished I would go away," Paul explains, referring to the Fed officials he repeatedly took to task on the Hill. "They thought I was a nuisance."….for the most part, he and his ideas became something of a sideshow—he became seen as a crank, a radical, so far outside the mainstream he could be safely ignored.

That changed in 2008, when he ran for president again. This time, the run brought him cult-icon status. The very phrase "end the Fed"—the title of his most recent book—comes from his campaign. In it, he describes visiting a University of Michigan campus after an October 2007 Republican primary debate. To his surprise, when he "mentioned monetary policy, the kids started cheering. Then a small group chanted, 'End the Fed! End the Fed!' The whole crowd took up the call. Many held up burning dollar bills, as if to say to the central bank, you have done enough damage to the American people."….

Talk of a return to a gold (or silver) standard for the dollar has moved from the fringe toward the mainstream, if not into it. A dozen state legislators have proposed locally instating gold standards or, at least, commodity payment systems….

The severity of the recession prompted the Fed to take truly extraordinary measures to stabilize the banking sector during the credit crunch—measures that even Fed officials admit might not have been totally legal. It accepted more than $1 trillion in junk-rated assets as collateral, something it never had never done before the crisis. And it was not just Goldman Sachs and Lehman Bros. availing themselves of the Fed's largesse—it was Caterpillar and the Korean Development Bank….

But Paul's adversary is not only the Federal Reserve. It is also mainstream monetary economics itself….His beef is not with how central bankers do their jobs; it's with central banking itself.

And the only substantive critique:

Indeed, many economists point to evidence that banking crises and recessions were much, much more severe leading up to the Great Depression and the advent of modern monetary policymaking. They also note that the Fed's extraordinary monetary policy in 2008 and 2009 did stabilize the banking sector, boost GDP, and keep up employment.

An alternate view on whether the Fed has in fact smoothed out economic booms and busts.

And author Annie Lowrey is honest on how threatening Paul is to the Fed status quo:

Paul might be steadfast in his beliefs, but he has few plans to impose them on an unsuspecting America. He is, in fact, honest about what would happen if his fondest wishes came true. "If tomorrow we closed the Fed and started using a gold standard, it would be so chaotic nobody would know what to do," he says. "There are interim positions, such as allowing competition in currencies." But, he admits, "People aren't ready for that. It's complicated—it is very complicated."

Rather than returning America to the banking system of the 1890s, then, Paul has adopted a somewhat more modest mission: Keeping alive the current conversation about the Fed. It's a conversation that some economists and think tank scholars say can't hurt. "We have not seen a lot of hearings on monetary policy from the monetary policy subcommittee," notes Mark Calabria, the director of financial regulation studies at the Cato Institute. "To a certain extent, a lot of members of Congress don't want to bother with the topic. The way I see it, Paul will attempt a public-information campaign. It is not going to be the end of the world for the Fed."

My Reason features on these matters: the unexpected rise of Ron Paul during the 2008 campaign, and the unexpected rise of anti-Fed fervor.

NEXT: Mitch Daniels Admits Inevitability of Death, Becomes Unelectable?

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    1. That’s the punishment by law for debasing the currency (Coinage Act of 1792)
      http://en.wikipedia.org/wiki/Coinage_Act_of_1792

  1. Gee, maybe the boring old fuck will mainstream race baiting too.

    1. “Racism is an ugly form of collectivism, the mindset that views humans only as members of groups and never as individuals. Racists believe that all individual who share superficial physical characteristics are alike; as collectivists, racists think only in terms of groups.”

      1. And they publish raicst newsletters for political gain. Don’t forget that part.

        1. Way to avoid the topic. Bring up some obscurity from 30 yrs ago.

          1. Fuck. Max is on the bullshit “Ron Paul racist newsletters” jihad again.

            Oh, and for the record:

            http://www.merriam-webster.com/dictionary/racism

        2. And they publish raicst newsletters for political gain.

          They weren’t racist, shitmouth, but you are.

    2. Please, leave the pet yorkie alone.

      1. arf, yip, snap, nip!

      2. You know what you do with yorkies that won’t stop biting at your heals?

        You punt them like a fucking football. If they live through it, they sure as hell won’t do it again.

        1. You could always have them “fixed.”

  2. We all owe Dr. Paul a debt of gratitude for throwing a spotlight on the real and lasting harm the central planning of the monetary system has done to our economy. The Fed’s insidious inflationism is no longer permitted to pass by unnoticed, beyond reproach.

    If Ron Paul accomplishes nothing else by the end of his political career, this alone will make him more successful than most politicians.

  3. Brian Doherty verbs nouns.

    Ron Paul’s economic views get coverage from the media for the same reason they show deluded people tunelessly croaking on American Idol…so that those of us who know better can have a chuckle.

    1. “It’s a fuckin’ Catch-22 man.” I said. “You can’t identify an antenna before a transmission, but once you are exposed to a transmission, you might be under its influence.” I paused, my mind forming a disturbing thought. “Perhaps I’m an antenna myself now? I may have only killed Tyler because his code told me to. They wouldn’t need him anymore once I got the transmission. Shit, how can I tell?”

    2. Re: Hobie Hanson,

      Ron Paul’s economic views get coverage from the media for the same reason they show deluded people tunelessly croaking on American Idol…so that those of us who know better can have a chuckle.

      I will be crying all the way to my gold stash, Hobie…

      You think whatever you want… No worries.

    3. tell us about your stock portfolio.

    4. Danny, I just watched Battlefield Earth, and it reminded me of nothing so much as your horrible short stories. Thanks for sucking, dipshit.

      1. Go back to ‘baitin’ to Mao’s Little Red Book, Hobie.

  4. Indeed, many economists point to evidence that banking crises and recessions were much, much more severe leading up to the Great Depression and the advent of modern monetary policymaking.

    US banking crises, you mean. There have been worse crises since in foreign countries that had “modern monetary policy”…and the advent they point to also represents the era of unquestioned US economic dominance over the globe, and in particular the reign of the dollar as reserve currency.

    They also note that the Fed’s extraordinary monetary policy in 2008 and 2009 did stabilize the banking sector, boost GDP, and keep up employment.

    s/note/opine/

    1. Stop spoofing me!

  5. “Indeed, many economists point to evidence that banking crises and recessions were much, much more severe leading up to the Great Depression and the advent of modern monetary policymaking. They also note that the Fed’s extraordinary monetary policy in 2008 and 2009 did stabilize the banking sector, boost GDP, and keep up employment.

    Which means that many economists are unrepented liars.

    It is FALSE that depressions were more severe than during the Great Depression. It is FALSE that the monetary policy of 2008 and 2009 “stabilized” banking and employment, when it was the Fed’s policies that led to the Great Housing Bubble of 1999-2007, which lead to the Great Correction of 2008-2010.

    1. Plus I thought it was only in France were they considered 9+% unemployment “keeping up employment”.

  6. The severity of the recession prompted the Fed to take truly extraordinary measures to stabilize the banking sector during the credit crunch ? measures that even Fed officials admit might not have been totally legal.

    They tortured money?

    1. Also, they make it sound soooo heroic

      1. my money is liquid, it got water-boarded.

    2. No, they sent it to a foreign nation so officials there could torture it.

  7. mainstream press —Slate[…]– actually giving play to his obscure ideas on monetary economics.
    The “obscure” ideas that were mainstream before the Great Fascist Era of 1933-2011. Right, Brian?

  8. They also note that the Fed’s extraordinary monetary policy in 2008 and 2009 did stabilize the banking sector, boost GDP (what would the formula be without that misplaced ‘G’!?!), keep up employment, prevents lions from roaming the streets, reinvigorated Mickey Rourke’s career (though he never stopped being great, just richer), and started the whole short skirts and no panties celebrity flash-a-thon.

    1. Re: ftfy,

      and started the whole short skirts and no panties celebrity flash-a-thon.

      And also made the winds that made the flash-a-thon such a success…

  9. I’ve never understood why proposing the idea of a gold standard makes someone crazy. I can see arguing against it, but why is holding that idea make you immediately dismissible? People treat it like they are saying we should go back to using bleeding patients with leaches.

    1. There are a lot of powerful people who would be up shit’s crick if we ended the fiat monetary system. I’m not talking about a shadowy conspiracy here…the marginalization of any opposition to fiat currency has been done quite openly.

      A bad idea doesn’t need to be marginalized to be defeated, only a good one.

    2. People are used to being surrounded by the technological fruits of hard sciences, in which newer ideas are rigorously, experimentally, provably better than conflicting older ideas. This makes it too easy to be suckered by the “Appeal to Novelty” fallacy in unscientific fields like politics where no such rigor exists.

      On the other hand, wanting to switch to a gold standard now is a bit nuts. We’ve promised $10^10 to our creditors and $10^11 to our entitlees that we can’t afford to pay except via more creditors and bigger promises. At the very least we owe our children the option of inflating their way out of our mess.

      1. That’s like saying that we owe our children a chance to jump off of a tall building….

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  11. Thanks for the good information

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  13. I think there is a better chance of a Gorilla Crawling out of my Ass than we going back to the Gold Standard.

    Remember the analogy of the PIE that is sliced in 100 slices where two people own 98 slices while the other 98 people fight over the two? Well, the classic conservative/libertarian argument is that the analogy is wrong. That the PIE grows BIGGER in diameter and the two slices get bigger. Well, that CAN’T happen with a FINITE commodity like GOLD. That is WHY they got rid of GOLD.

    1. “Well, that CAN’T happen with a FINITE commodity like GOLD. That is WHY they got rid of GOLD.”

      Yes it can. It’s called deflation. You have more goods and services with a slower rate of increase in the money stock.

      We have had deflation at all times when there were not central banks in America, including the 19th century when we had 4% a year compounded GDP growth vs 20th century 3% a year growth.

      1. Do we really want deflation? Is that what u really want? U obviously r not amongst America’s Rich. The LAST thing the Rich need is for their $1mm to turn into $800k.

        Hope I did good tarran:

        1. ME, bitches.

    2. The pie represents wealth, not outstanding IOUs from society (ie, money). Christ.

  14. Can’t be any crazier than letting Geithner run the printing presses.

  15. err, sound money is not “obscure economics”. Nor is the idea that the Federal manipulates the business cycle.

  16. Wow. Mr. Paul. The Fed. That’s not small bites, its swallowing the whole dang chicken! You rock.

    Plus you friggn NAILED industrial hemp for it’s fuel, oil, human foodstock and 50,000 other products and benefits in helping to save the planet. Help save the planet, gawd thats corny. Can’t believe I typed that, but its totally true.

    With industrial hemp re-integrated worldwide up to an easily attained and correct market and economic levels, the farmers will leave the planet as a beautiful garden instead of a toxic waste dump. Industrial hemp has been demonized and mis-understood and you GET it.

    I’m Canadian. I need to find a way to vote for you damnit!

  17. My god, reason magazine (lower case), stop the hate on Ron Paul.

    Why you still distance yourself from this man is puzzling. Or, should people just follow the money?

  18. Ron Paul 2012

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