Ron Paul Fights For You

“A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.” – Ron Paul

Pete Schroeder has an article over at “The Hill” today titled “Paul Returns To DC To Assail Bernanke“. It’s a short article, noting that Paul took the time to get back to DC to grill funny-money Bernanke.

At one point he held up an ounce of silver and explained to Ben that the silver ounce bought 4 gallons of gas in 2006, but would buy 11 gallons today. Hard assets and sound money don’t face the type of inflation that fiat currencies do. Or, rather, sound currencies don’t systematically pilfer the savings of the poor and working class for the advantage of the banking elites.

Now, you may argue, “hey, you can always convert your dollars into assets if you’re worried about currency valuations.” I agree – except that to do so is to face a secondary taxation on your stored wealth. So, you either get taxed by the slow bleed, or by paying the “get out of our scam” fee. Yeah, that’s fair.

By fighting for sound money, Ron Paul is fighting for you. Not sure you could say that of any other presidential candidate. (Well, I actually am sure of what you could say, but don’t want to put words in everybody’s mouth.)

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2 Responses to Ron Paul Fights For You

  1. This seems like a notion that only made sense in a time when the world was much larger than it is today. The advantage of calling one particular (and arbitrarily chosen) physical substance “money” depends on that substance having several properties, which you have described before, but at least some of which I would argue simply no longer hold.

    Specifically, a gold (or silver) standard will only work, as it worked reasonably well decades ago, if the substance’s perceived value (based on demand relative to supply) changes only very slowly, and randomly/unpredictably at that. Back then, we didn’t have the technological ability to even *learn* about those fluctuations very quickly, and so the prices of all other goods and services managed to be reasonably stable.

    We do not live in that world anymore. The entire planet, in just a moment’s time, can track those fluctuations easily. In that case, either (1) the prices of all other goods and services had better fluctuate just as rapidly, which hardly sounds like a stable environment; or (2) those prices no longer represent the true values of those goods and services, in which case I plan on cleaning up via arbitrage.

    • nomasir says:

      But gold is shiny!! Granted. The “value” of gold is not in its coolness, but in, as you note, the perceived value. Or, to put it another way, the agreement by all to use it as a means of exchange. Why though would people choose gold as a medium? Because it IS inherently stable in supply. Yes, we can produce more, but not easily – and certainly not by changing a couple of lines in a file somewhere at the central bank.

      As to “fluctuations” – I’m not sure I quite caught the point (perhaps due to lack of sleep, which I will remedy shortly). If in ‘fluctuations’ you mean the supply of money (or gold) then I’m scratching my head. Express knowledge of the money supply would seem a good thing.

      If, as I think more likely, you refer to fluctuations in PRICE of various products (thus the arbitrage reference) then the argument for gold is extremely strong. Not because it causes price stability. Quite the contrary – prices should trend in time – DOWN – due to increases in productive ability. If they trend due to currency manipulation, which they certainly will, then we must consider why:

      Is it the case that the Fed can double the money supply and thereby double the prices of everything? No. That’s not how it happens. The Fed increases the money supply (the Fed and the banks who “lend into existence”). The increase in money causes an increase in demand (bidding) for goods and services. The new money is now bidding up the price relative to the old money. As this happens, the prices will tend to rise (there is a reasonable distinction here between “money supply” inflation and “price” inflation though … but they do often go hand in hand). Some prices rise, the people who produce those items make “more” money (in the sense of more dollars, but not a greater proportion of the money supply). They then bid for other goods, prices also rise, eventually we reach stasis. But the transition is NOT immediate. Indeed, the man at the “bottom” of the rung ate the higher prices while not seeing an increase in wages until we reach stasis again. But what if we NEVER reach stability? What if the money supply never stabilizes, but is continually inflated? What happens then?

      The answer is simple – the continual “slow bleed” of the working man to the advantage of those with “first access” to the new money. His productive store is consistently transferred to the wealthy and the connected, all in the name of “modern banking”.

      But I’d gladly make a deal. Since we DO live in a much more connected world. Since we DO live in a world where financial transactions (and knowledge) are much, much faster. Let us remove all taxation on transactions in precious medals, or any commodity for that matter (or perhaps any asset?). If we did that, then those who feel that the continual inflation of the money supply to the advantage of the rich is unfair could simply transfer their currency into another freely accessible medium of exchange (gold, silver, pork-bellies) without getting taxed to get out of the system. That would work – it would work just fine. I’d take it in a heartbeat. BUT, I suspect you will not see such a system implemented. The current one works too well for the entrenched interests.

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