You mean allowing private citizens to use gold and silver as legal tender? If you had a stable dollar - like I would like to see - there would be no incentive for people to do that. But as long as the Fed is around inflating the dollar - I see no problem with allowing people to do it...
No, in my understanding, Ron Paul wants to create a basket of currencies within America, some private. I believe the reference of choice is to Hong Kong and HSBC notes. If I am wrong, then I have severely overrated his intelligence. The impracticalities of using a pure gold or silver standard are very well documented.
From what I understand, what he is asking for amounts to a repeal of some taxes on gold & silver (to give it currency status). I've never heard anything about HSBC or Hong Kong... Also, like I said before, I agree that a gold or silver standard is impractical. I don't know why you are bringing this up here...
...because this is a thread about Ron Paul and his crazy ideas? If you're a fan of abolishing the Fed, you do know that you have to choose a new currency or set of currencies right? That's kinda the whole point.
No you don't - you keep the US dollar. And obviously before abolishing the Fed you would have to balance the budget first. At which you give the printing of money back to the Treasury and pass some kind of balanced budget amendment...
Okay, it's at this point that you have to step back, and research the difference between monetary and fiscal policy, deficit spending, and therefore why it would be a terrible idea to concentrate both branches of policy in the same party, especially if that agency is bound by law not to use excessive fiscal policy. You want to abolish the Fed...to pass the power to regulate banks and pass monetary policies to Treasury? That has to be the weirdest position I have ever heard. You might want to consider not voting for Ron Paul, and to look at the post-Keynesian school of economics if you're all about more judicious use of government power.
The point being that no new money would be created by the Treasury. Its only purpose would be to replace old bills with new ones...
No. A balanced budget amendment only takes care of the fiscal side of the equation. It doesn't say anything about the monetary side. In theory it would exacerbate the situation by allowing Treasury to directly print the amount of money it needed to "balance a budget", and recapitalize its' monetary side when it could. It would in effect be the same system as we have now, except the tenuous "independence" of the monetary authority (at times a facade anyways) would be destroyed, therefore destroying all monetary credibility. You're trying to argue for the removal of monetary discretion, which you can do without folding the Federal Reserve into Treasury. You could convert the Federal Reserve into a currency-board like system. In any case, this itself is a terrible idea for a variety of reasons (chiefly that we aren't still in 1850). Here's a case study for why it's a bad idea--- http://www.frbsf.org/publications/economics/letter/2002/el2002-25.html
The point of balanced budget amendment is that you DON'T print the money to balance it. .. You'll have to do better than "this isn't 1850" to convince me that keeping the Fed is a good idea...
I'm not asking for the creation of currency board or a currency exchange rate peg. All I am advocating are balanced budgets and a stop to the printing presses (and yes - they are connected as you can't stop the magic money machines at the Fed unless you balance the budget)....
No, the point of a balanced budget amendment is to create legal restrictions on governments in order to address an issue that isn't a huge deal when your debt is the basis of "risk-free" rates, and your currency is the reserve currency of the world. It only forces desperate governments to indirectly seeking circuits to escape these stupid and arbitrary restrictions when the s*** hits the fan. Witness the states who had BBAs, and had to bailed out with federal money to save themselves from their stupidity. Now you want the lender of last resort to be handicapped too. Swell. Then you take it even further, and allow them control of the monetary authority to bail their asses out from your arbitrary legal restrictions, which somehow manages to destroy the point of limiting monetary discretion, and decreasing moral hazard by creating perverse incentives to print your way out of trouble...which destroys the credibility of the monetary agent. In short, you managed to create a system that somehow has none of the benefits economists seek in a monetary system...and all of the costs. That's actually...commendable in a certain way. Anyways, removing discretion in monetary policy is very stupid, and if you want me to expand on why, the reasons are so numerous that one by one is the only way to think about it. Removing discretion in monetary policy creates a completely inflexible arrangement that cannot respond to any macroeconomic shocks.
Yes, a balanced budget is a "stupid" and "arbitrary" restriction... What are you talking about? My idea here is for them NOT to have control to bail themselves out. And a policy that wouldn't have any those shocks. When we didn't have a central bank pumping out new currency at artificially low interest rates - there was no boom and bust cycle. The very policies you advocate are what help create the boom/busts and recessions and depressions...
No, booms and busts are private cycle affairs. Even before the age of central banks, people were being idiots with their money; witness Tulipmania in the Netherlands in the 1600s. The problem is that capitalism is in of itself inherently prone to these bouts of speculative euphoria; excess liquidity or not, there will always be idiots thinking prices will go up forever. Yes, a balanced budget amendment is a stupid and arbitrary restriction, especially as it is a solution looking for a problem. The "debt debacle" for America is just LOL to anyone with a background in finance or economics. As a quick example, Treasury yields went down after the super committee failed to agree on a debt deal. In any case, if you want a BBA and removal of discretion in monetary policy you are creating a system that somehow manages to be more inflexible than the currency board set up in Argentina, and the fixed pegs in South Asia. Just putting that out there. And yes, BBAs are stupid and arbitrary, the EU was founded on that notion, and no one or their mothers are running balanced budgets thanks to exogenous macroeconomic shocks. The BBAs are just hastening recession-causing policies that are making the situation so much worse, and the thing is, even with "forced" BBAs, you can't legislate international macroeconomic events away.
Well according to Ron Paul, we should stay out of foreign wars so I guess that isn't an issue. I mean big deal, Hitler takes over Europe. At least we get to preserve liberty with our badass balanced budgets over here.
Nope, he wouldn't have stayed out of World War II as we were attacked by Japan. And - guess what - World War II was the last war that was actually properly declared by Congress. So in fact, out of all the wars of the past 70 years, World War II is the war he would have supported the most... See above...
Yes, you are right to some extent. But if you have time please listen to: <iframe width="560" height="315" src="http://www.youtube.com/embed/TxcjT8T3EGU" frameborder="0" allowfullscreen></iframe> Right, running up $1 Trillion dollar annual deficits is no problem. Even though much of that debt is being paid for by printed money - inflation isn't a problem! Don't worry, the fact that this private bank - the Federal Reserve - is wiping out your savings is no problem at all! Be a good citizen and support more war and debt!!
Oh, and by the way, Mitt Romney is complete IDIOT who thinks we can increase defense spending (he wants to add 100,000 more troops to the military), lower taxes and balance the budget. Who in their right mind supports that guy anyways?....
