Thread: Ron Paul 2012!

Originally Posted by luckyscars

because a tree has no use, unless it can be used to provide wood.

Gold has even less use unless you make it into jewelry, or something else.
Gold is no more special than opal, so why not the Opal Standard. Iron & oil is arguably more important than gold, so why not the Iron & Oil Standard. Platinum is more valuable then gold, so why not the Platinum Standard.
I think we're more or less past the days when we believed gold was the capturing of the sun. There's nothing special about gold deserving of a special controlling lynchpin over our economy; it's simply a product to make goods from.
The Gold Standard failed, and as almost no government stores gold these days, attempting to bring back a failed system would wreak (real) havoc on the world economy. But maybe that wouldn't be all bad.

Originally Posted by Rustgold

Gold has even less use unless you make it into jewelry, or something else.

which is exactly what people do, always have done, and almost certainly will continue to do for the foreseeable future...

Originally Posted by Rustgold

Gold is no more special than opal, so why not the Opal Standard. Iron & oil is arguably more important than gold, so why not the Iron & Oil Standard. Platinum is more valuable then gold, so why not the Platinum Standard.

quite right, any of those things would work infinitely better than nothing at all, which is the current status quo. the reason people choose the gold standard is because its use and value is ubiquitous and multi-functional and since it is also a naturally-occurring element its qualities cannot be replicated. it works better than all those other commodities you mentioned. iron is less-commonly used than it once was (though there were times in history when iron was considered a kind of currency) so its relevancy is unreliable. oil has the problem i mentioned in a previous post, that its use can be replaced by other to-be-discovered alternatives. and platinum is so rare it would be more difficult to implement since a 'platinum-standard dollar' would be worth such a minuscule amount of the actual material (if you poured all the pure-grade platinum in the world into an olympic sized swimming pool it would only fill it about six inches). but, in principle, virtually any commodity would do, so long as it is a commodity. however gold, and silver, is the best.

Originally Posted by Rustgold

I think we're more or less past the days when we believed gold was the capturing of the sun. There's nothing special about gold deserving of a special controlling lynchpin over our economy; it's simply a product to make goods from.

one again, that's exactly my point. it's a product to make goods from. why disregard such an important attribute? 'products to make goods from' are the base for every economy everywhere. that's why we have agriculture, mining, oil-drilling, forestry. it's all about obtaining products to make goods from.

Originally Posted by Rustgold

The Gold Standard failed, and as almost no government stores gold these days, attempting to bring back a failed system would wreak (real) havoc on the world economy. But maybe that wouldn't be all bad.

the gold standard DID NOT fail. give me one piece of evidence that it ever did. the reason it was abandoned was simply because it limited the ability of the government to manipulate the money supply. the government has a vast incentive to manipulate the money supply, since credit and loans (which are only possible when you have imaginary money) allow for greater consumer activity, which benefits certain demographics. unfortunately those demographics are exclusively the ultra-rich, since they are the only ones with real capital and ownership of commodities. somebody who is $50,000 in debt but who continues to spend has a great many uses to the government. they produce 'real wealth' (commodities) in exchange for imagined wealth (paper money).

Originally Posted by luckyscars

gold has always been an 'industrial commodity'. that's the whole point... so it is perfect. unless people suddenly decide they don't like jewelry of course.

When I speak of gold (and silver too, since you mention it) as an industrial commodity, I don't mean jewelry. I mean gold and silver are used intensively in electronics and computer manufacture. It is being consumed constantly, and a large chunk of that is happening in Asia, which runs on fiat currency and can print currency to buy it. There is a demand completely beyond jewelry that actually consumes the metal (barring awesome recycling), and it's perpetual. As a commodity on the market the price is subject to demand, and that would only intensify if governments were to start hoarding it to run their countries.

Originally Posted by luckyscars

gold ONLY rises or falls relative to a fiat currency. in which case it has nothing whatsoever to do with the value of the gold changing (because the desirability of gold does not change over time) but by the value of the fiat currency changing.

See above. The largest changes to gold prices occur when investors lose their confidence in fiat currency, but that's not the only time gold increases in value. The desirability of gold does change over time and it is changing as we speak.

Originally Posted by luckyscars

if you look at, say, the 'exchange rate' between gold and silver you will see there is no real data. gold has always been more valued than silver and to an unchanging, non-monetary rate. it is more valued than silver because it is more desired than silver. the same is not true compared to dollars because dollars have no fixed value. their value falls and rises depending on circumstance, inflation in other words. in other words, if 'gold goes up' by fifty dollars it isn't because gold has got more valuable but because the dollar has got less valuable. this is why the value of gold always increases when the value of currency decreases. why do you think that is? it's because gold is considered 'safe'. whether or not you consider it a good investment depends largely on what you expect of an investment. gold will not make you a lot of money in the same way, say, stocks in Apple might. but that's a good thing. investments that 'go up' in value are also investments that 'go down' in value.

I would like to see that data that proves out the base value of gold never goes up except for in relation to fiat currency - inflation. Gold is affected by the tides of supply and demand, and this will only increase over time as we place more industrial demand on it, and would be greatly accelerated if we pulled trillions of ounces out of availability to hold in reserve for currency.

Originally Posted by luckyscars

again, you don't understand the point. the theory is not to use dollars to 'buy the gold'. that would undermine the whole theory, because then you'd simply be moving the debt to somewhere else. the answer is to liquidate the debt. you do this by cutting the size of government. you cut everything and anything that is not (in the case of the US) authorized by the constitution - the foreign wars, the development programs, the entitlements, most departments, etc. obviously you do this is a manner that is compassionate and transitional, nobody for instance would lose their social security overnight. in my (and ron paul's) book you'd achieve a large amount of the spending cuts simply by cutting so-called 'defence spending' and closing every single one of the hundreds of overseas bases and cutting military spending right down to a fraction of its current size (which, by the way, would still allow for a completely effective defence). that would give you a fine start. you'd use these savings to abolish all income, corporate and capital gains taxes. essentially giving people their money back to them. the dollar would then be pegged to a fixed amount of gold, beginning with what the treasury currently owns. as of december 31 2011 the amount of US government held gold is a hair under 300 billion ounces, which is worth almost eleven trillion dollars in paper money. the current debt level is well above eleven trillion dollars, but with the aforementioned cuts in place the government would easily be in a position to guarantee every single existent paper dollar with a fixed amount of gold. in other words, you'd give ownership of it back to the people. this would instantly stop inflation in its tracks because, as i keep saying, gold is gold is gold. nobody would be able to 'put a run on it' because the gold is there, thus if John Doe had $40,000 in the bank he would simply own $40,000 dollars worth of gold. whatever amount of gold $40,000 dollars is determined to be worth. and it would not change significantly.

Ok, but here's my question: how do you pay your american workers? They're out there earning $$$, and they want their money. Those $$$ are being earned for activities that don't produce more gold (well, except in World of Warcraft perhaps), but they need to be paid in dollars that are backed by it. Let's very conservatily say that US workers generate a $200 billion need annually for payroll. Where does the USA acquire that gold, and what if it can't? And knowing the USA needs to acquire gold or their economy ends, what do you think the chances are they're going to be overpaying for it? And what are you going to give these other nations in exchange? US dollars?

Originally Posted by Capulet

When I speak of gold (and silver too, since you mention it) as an industrial commodity, I don't mean jewelry. I mean gold and silver are used intensively in electronics and computer manufacture. It is being consumed constantly, and a large chunk of that is happening in Asia, which runs on fiat currency and can print currency to buy it. There is a demand completely beyond jewelry that actually consumes the metal (barring awesome recycling), and it's perpetual. As a commodity on the market the price is subject to demand, and that would only intensify if governments were to start hoarding it to run their countries.

wrong again. when did i say anything about the government hoarding gold? since you mention it, that's exactly what they are doing now. hoarding gold to the tune of eleven trillion dollars that is not able to be traded because the market is dominated by imaginary paper money. the gold would no longer necessarily belong to the government any more than the twenty dollar bill in your pocket does. why? because that gold is in the marketplace, by virtue of it being fixed to the currency. so the only gold that would be 'hoarded' would be in banks, and what exactly is the problem with that? they already hoard 'money'. the only difference is that the money would actually be redeemable for a product.

and the use of gold in electronics is not particularly relevant. if anything, it only substantiates the case for gold, since the more useful the commodity the longer it is likely to retain value. in any case, the quantity of fine, 24karat (what would be called 'pure gold') used in such things is minute. most industry uses very little.

See above. The largest changes to gold prices occur when investors lose their confidence in fiat currency, but that's not the only time gold increases in value. The desirability of gold does change over time and it is changing as we speak.

again, in practice the value only change because the currency goes up and down. the only other reason the desirability of gold would go up or down would be if its use changed. your correct that the desirability of gold does change slightly over time, but little. especially compared to say, the inflation rate of the US dollar. the main reasons for the value of gold changing would be if the quantity (supply) suddenly increased or decreased, which is unlikely unless they find a vast amount of it buried at the bottom of the ocean or something, or if the use for it (demand) suddenly increased or decreased, which would only happen if the whole world decided it no longer liked it and wanted their jewelry made out of, i dont know, paper or something. bear in mind that throughout the thousands of years of human history the desire for gold has remained consistent across all cultures. the onus is on the critic to prove that this would be any different in the future. but believe me, there is no concern in the gold industry as to the future value of gold as a commodity.

Originally Posted by Rustgold

I would like to see that data that proves out the base value of gold never goes up except for in relation to fiat currency - inflation. Gold is affected by the tides of supply and demand, and this will only increase over time as we place more industrial demand on it, and would be greatly accelerated if we pulled trillions of ounces out of availability to hold in reserve for currency.

there is no data and i never said anything about pulling trillions of ounces out of availability. the free market dictates that ALL commodities are in availability to anyone. you speak as though i am advocating the creation of some kind of treasure cave. that is not the case. the amount of gold in reserve does not have to change, much less increase. it's not the amount of gold held that would need to go up, it's the rate of money printed that would need to go down. no gold would need to be 'pulled' if only the dollar bills printed were in accordance with the amount of gold existent already in the market place. so if the US has 11 trillion dollars worth of gold in reserve it would print 11 trillion dollars of paper, one dollar for each nugget. the reason there is no data for the base value of gold is because the base value of gold is not a fixed monetary value, it's a value determined by the marketplace, by the demand. it's rather like you asking me to put a 'base value' on a hamburger. the answer, of course, is 'it depends'. the value of a hamburger depends on a multitude of factors: mainly my appetite, the quantity available and the quality of the hamburger. for instance, right now, i am not hungry so a hamburger currently has no value to me. in six hours i might be starving and unable to get to an alternative source, so may well give you twenty bucks for one. gold is essentially a hamburger that never spoils, is always desired, has relatively little increase/decrease in its production and a ubiquitous range of applications.

Originally Posted by Rustgold

Ok, but here's my question: how do you pay your american workers? They're out there earning $$$, and they want their money. Those $$$ are being earned for activities that don't produce more gold (well, except in World of Warcraft perhaps), but they need to be paid in dollars that are backed by it. Let's very conservatily say that US workers generate a $200 billion need annually for payroll. Where does the USA acquire that gold, and what if it can't? And knowing the USA needs to acquire gold or their economy ends, what do you think the chances are they're going to be overpaying for it? And what are you going to give these other nations in exchange? US dollars?

just because i advocate an economy backed by gold does not mean i advocate an economy that consists entirely of gold. gold is only part of the economy, indeed it is a very small part. the gold standard does not mean gold is everything, it simply means gold is at the base, it's the root. to answer your question, the american workers would receive american dollars. hell, those american dollars can even be paper. i dont have a problem with that. the only change is that the dollar is redeemable in gold, so every dollar of paper john doe receives he could, theoretically, go to the federal reserve with an exchange it for gold if he wanted to. of course, that would not happen but the principle stands - essentially a paper dollar would be there for convenience. it would be a difficult thing for everybody to walk around with a pocket full of nuggets so we simply continue using paper on the understanding that the paper is ultimately worth something. as i have said several times, the amount of gold in the US economy is enough to back every single dollar currently in circulation PROVIDED we cut the size of government and eliminate the gap between the wealth (the gold and silver) we have sitting around uselessly in the vaults and what we actually spend. if we get the cost of government down to below ten trillion, which would be fairly easy to do, we could back every single paper dollar with something useful and STILL have enough gold sitting around uselessly as a 'reserve' if we wanted to. all your other questions about how to obtain gold are therefore fairly irrelevant, but i will answer them anyway. to obtain future gold for the treasury (not that i think the treasury needs much, not if government is smaller) you trade with them. you trade other commodities. hamburgers, oil, cars, whatever. the exact same things as we trade with them now.

i can anticipate your next question would be how do you trade a gold backed dollar for a fiat-based yen, pound or euro. that is probably the most difficult issue. there would be several alternatives in place. you either rewrite existing trade agreements to explicitly require that all foreign transactions are backed by their respective governments in commodities. so say if an american company like cadillac was selling cadillac cars to an indian car distributor, and the indian car distributor wanted to pay in indian rupees. the conditions of that trade could require that the indian government and/or the trading partner is liable for the risks associated with the rupee, which is a fiat currency. that's not dissimilar to the current situation, but personally this sounds a little 'big government' for me and against the principles for free trade. i would be much more in favor of leaving the decisions regarding trade up to the parties involved. so if cadillac wanted to take the risk on accepting payment in rupees they could, on the understanding that those rupees would not be exchangeable for US dollars, because US dollars is US gold and the indian rupee is paper. the US government would not recognize the rupee as money unless it was backed by gold or silver (as per the constitution). so then cadillac would have a choice. it could reinvest or exchange its indian rupees elsewhere (with no US government liability) or it could demand that the indian car distributor paid in either US dollars, gold, silver or another valued commodity. this is the epitome of free trade. there would be no restrictions or laws governing who and what is traded and the risk associated with trade would be entirely up to the parties involved.

Originally Posted by luckyscars

there is no data and i never said anything about pulling trillions of ounces out of availability. the free market dictates that ALL commodities are in availability to anyone. you speak as though i am advocating the creation of some kind of treasure cave. that is not the case. the amount of gold in reserve does not have to change, much less increase. it's not the amount of gold held that would need to go up, it's the rate of money printed that would need to go down. no gold would need to be 'pulled' if only the dollar bills printed were in accordance with the amount of gold existent already in the market place. so if the US has 11 trillion dollars worth of gold in reserve it would print 11 trillion dollars of paper, one dollar for each nugget. the reason there is no data for the base value of gold is because the base value of gold is not a fixed monetary value, it's a value determined by the marketplace, by the demand. it's rather like you asking me to put a 'base value' on a hamburger. the answer, of course, is 'it depends'. the value of a hamburger depends on a multitude of factors: mainly my appetite, the quantity available and the quality of the hamburger. for instance, right now, i am not hungry so a hamburger currently has no value to me. in six hours i might be starving and unable to get to an alternative source, so may well give you twenty bucks for one. gold is essentially a hamburger that never spoils, is always desired, has relatively little increase/decrease in its production and a ubiquitous range of applications.

I think you miss my point.

1. For every american dollar, there must be an amount of gold to back it
2. For every hour of work, americans generate X amount of american dollars worth of credit
3. Under your system, banks just can't keep this as a number in a system, that gold must be available to back not only every paper dollar, but every electronic dollar as well

How is the american government going to keep pace purchasing gold to match its GDP?

Also, the government doesn't produce hamburgers, commodities, or anything like that, the private sector does. What is the government going to use to buy the gold? How much are you willing to tax your people? Enough to cover both federal/state programs and maintain gold reserves? Sounds pricy.

And, I don't know how many trade requirements the USA could enforce on a country like China. More importantly, I don't know how attractive US products would be to fiat countries with all those restrictions, considering they can go to Japan, Korea, China, Germany, France, Australia, Brazil... and not have to worry about it. Some will, but the cost of complying will not make for very attractive pricing for American shoppers. Cross-border shopping anyone?

Seriously, the gold standard is pretty flawed in a modern world, particularly if blended in with other states using fiat currency. The overall goal of fiscal responsibility and security is the right one, but I don't think this is the solution.

NO.

NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO.

jeez capulet, how many times do i have to answer the same question put in a slightly different way? The government doesn't have to purchase gold. the gold is already there for every dollar. yes there would still be some, very limited taxes and yes those taxes would be invested in gold and silver to fund the growth in currency. but virtually all government programs would be gone and the ownership of most federal gold would be in the private sector. it's not 'for every american dollar there must be an amount of gold to back it'. that logic is confused. its the other way round, for every amount of gold there is a dollar and those dollars - at least the majority of them - would be in the private sector. so the government would not be buying gold. the private sector would be and it is the private sector that would be responsible for virtually every function government currently does with the only exceptions being functions outlined by the constitution. all else belongs in the private sector, controlled by the people. there is already a vast treasury of 'useless' gold stacked up in the treasury. as i keep saying, enough to guarantee the entire GDP provided the cuts are made. the problem is the gold there is not being used, as it is constitutionally intended, to provide assurances for the dollar.

the US is a sufficiently large trading entity to single-handedly enforce most trade requirements anyway. but only if it ceases the weakening of its dollar. and there is nothing wrong with cross-border shopping, that's what free trade is all about - the freedom to buy from wherever you want. american shoppers would be at a huge advantage over foreign exporters with a gold backed dollar because the dollar would have such weight in trade that we could virtually eliminate trade deficit because every chinese businessman is going to want to buy american dollars because of the gold they represent. but that isn't to be feared, we - as individuals - can and will sell them that gold. in exchange for commodities of use that we need.

I'm jumping into the discussion fairly late so I apologize if I derail the thread. I like Ron Paul, however I have reservations with him being elected and the reasons are not what you'd expect.

I am a libertarian, like Paul. However the last thing I want is to have a libertarian at the wheel when the economy falls apart. Keynesian economics and government influence brought us into this mess and I don't want to see a small government, Austrian economist getting stuck with the grenade when it goes off. Free market ideas are fringe enough already. They'll become the scapegoat if things go wrong, as usual.

Second: I notice some misconception people have on the gold standard. Having a currency backed up by gold doesn't mean people will use gold instead, or that a central agency has to buy gold. It means that every dollar can be exchanged for a dollar's worth of gold. It works like this (at least how I understand it). You know how different countries have different exchange rates? The US dollar might be worth more than the Euro at a point in time, which affects purchasing power if you go overseas. When the Euro has a lower exchange rate, companies send their US dollars to Europe to buy cheap goods, which then increases the value of the Euro. That acts like a value equalizing from high pressure to low pressure.

The gold standard works similarly as an exchange rate within a single currency. When the market becomes flooded with dollars (inflation), each dollar becomes less valuable in relation to other dollars, thereby making gold more valuable. People would then exchange their dollars for gold. When the market doesn't have enough dollars (deflation), the dollar becomes more valuable than the gold linked to it, and people exchange their gold for dollars. Additionally, because gold is difficult to mine out of the ground, it puts a physical limitation on how many dollars can enter the market, thereby putting a cap on the rate of overall inflation. In a nutshell, it makes the currency and therefore the economy more stable. Fiat currencies, like the current day US dollar and Euro, do not have such internally regulating mechanisms. That is why every example of fiat currency either has failed or is in the process of failing.

Just thought I'd add my two cents. Carry on.

Originally Posted by Man From Mars

I'm jumping into the discussion fairly late so I apologize if I derail the thread. I like Ron Paul, however I have reservations with him being elected and the reasons are not what you'd expect.

I am a libertarian, like Paul. However the last thing I want is to have a libertarian at the wheel when the economy falls apart. Keynesian economics and government influence brought us into this mess and I don't want to see a small government, Austrian economist getting stuck with the grenade when it goes off. Free market ideas are fringe enough already. They'll become the scapegoat if things go wrong, as usual.

Second: I notice some misconception people have on the gold standard. Having a currency backed up by gold doesn't mean people will use gold instead, or that a central agency has to buy gold. It means that every dollar can be exchanged for a dollar's worth of gold. It works like this (at least how I understand it). You know how different countries have different exchange rates? The US dollar might be worth more than the Euro at a point in time, which affects purchasing power if you go overseas. When the Euro has a lower exchange rate, companies send their US dollars to Europe to buy cheap goods, which then increases the value of the Euro. That acts like a value equalizing from high pressure to low pressure.

The gold standard works similarly as an exchange rate within a single currency. When the market becomes flooded with dollars (inflation), each dollar becomes less valuable in relation to other dollars, thereby making gold more valuable. People would then exchange their dollars for gold. When the market doesn't have enough dollars (deflation), the dollar becomes more valuable than the gold linked to it, and people exchange their gold for dollars. Additionally, because gold is difficult to mine out of the ground, it puts a physical limitation on how many dollars can enter the market, thereby putting a cap on the rate of overall inflation. In a nutshell, it makes the currency and therefore the economy more stable. Fiat currencies, like the current day US dollar and Euro, do not have such internally regulating mechanisms. That is why every example of fiat currency either has failed or is in the process of failing.

Just thought I'd add my two cents. Carry on.

thank you.

I'm a great supporter of Ron Paul, and I'm British. Mainly because of his opponents: all they ever do is shriek 'insane' or 'extremist.' Well, what's insane about ending pointless wars? Or auditing a bank that controls the currency? Those two policies strike me as the epitome of sensible. What gets me the most is how his opponents on both right and left turn around and attack him for wanting to do things they've been calling for for ages! Policies they wore on their sleeves for the best part of a decade suddenly become 'radical' when someone else proposes them.

If nothing else, Ron Paul is the antidote to stagnation, which surely will become (if it is not already) the greatest challenge that western democratic systems have to overcome? Had we a libertarian candidate in the UK that wasn't either tiny (the Libertarian Party) or a one-man band/cash cow (UKIP), I'd vote for them in a heartbeat.

gallowglass, you're correct in your post generally but i disagree with you citing UKIP as a libertarian party. UKIP is not even in the same universe as ron paul. i am originally from the UK and still have british citizenship so i do feel qualified to have views on what would otherwise be a foreign country. yes they do advocate lower taxes, but they still support a flat tax rate of a huge 31percent. that kind of taxation is not coherent with a libertarian platform. not to mention their hideous views on 'defence' which include HIGHER defence spending and a larger military. now its true that the UK military is significantly weaker in support than the US military, so i'm not necessarily opposed to improvements in defence, but UKIP do not necessarily oppose withdrawing from afghanistan, do not support withdrawing from NATO and, europe aside, are in fact in favor of much of the current policy regarding international treaties. this is not a libertarian viewpoint. libertarianism is about national sovereignty and individual liberty.

Originally Posted by Man From Mars

I am a libertarian, like Paul. However the last thing I want is to have a libertarian at the wheel when the economy falls apart. Keynesian economics and government influence brought us into this mess and I don't want to see a small government, Austrian economist getting stuck with the grenade when it goes off. Free market ideas are fringe enough already. They'll become the scapegoat if things go wrong, as usual.

I don’t understand your thinking, if you believe that Ron Paul has the answer, then why would “that grenade go off”? Are you not confident in what you say? If you’re worried that what happened to President Obama (scapegoat) might happen to Paul, then you're too late, way too late, that grenade already went off in 2007-08 (it was a time lapse grenade). One clue might be current political discourse, “jobs, jobs, jobs!”

Sorry but, your Austrian “hands-off” economics is to blame. Free market ideas pushed by powerful financial lobbyist have been a growing reality since President Reagan first took office. Unless, of course, you believe that either these same powerful lobbyist have been ineffective, as in not so powerful after all, or they’ve been lobbying for more regulations against their industry, which is counter intuitive.

Here’s a run down of financial deregulation, 1980 was the year…

START with Tilt toward Keysian Economics. No financial crises had occurred since WWII. Lessons learned from stock market crash of 1929 lead to the Class-Steagall Acts of 1932 and 1933. Strict financial and banking regulations.

Deregulation. Strengthening Regulation (following crises).

• 1978, Marquette vs. First of Omaha – Supreme Court allows banks to export the usury laws of their home state nationwide and sets off a competitive wave of deregulation, resulting in the complete elimination of usury rate ceilings in South Dakota and Delaware, among others.

• 1980, Depository Institutions Deregulation and Monetary Control Act – Legislation increases deposit insurance from $40,000 to $100,000, authorizes new authority to thrift institutions, and calls for the complete phase-out of interest rate ceilings on deposit accounts, which allowed S&L's to raise interest rates on deposits, make commercial and consumer loans, and removed restrictions on loan-to-value ratios. At the same time, the Federal Home Loan Bank Board regulatory staff was reduced thanks to budget cuts.

• 1982, Garn-St. Germain Depository Institutions Act – Bill deregulates thrifts almost entirely, allowing commercial lending and providing for a new account to compete with money market mutual funds. This was a Reagan administration initiative that passed with strong bi-partisan support.

• 1987, FSLIC Insolvency – GAO declares the deposit insurance fund of the savings and loan industry to be insolvent as a result of mounting institutional failures.

S&L, First U.S. Financial Crises in over 40 years.

• 1989, Financial Institutions Reform and Recovery Act – In the wake of the Savings and loan Crises (made possible by deregulatory act of 1982, the Garn-St. Germain Depository Institutions Act.) The Act abolishes the Federal Home Loan Bank Board and FSLIC, transferring them to OTS and the FDIC, respectively. The plan also creates the Resolution Trust Corporation to resolve failed thrifts.

• 1994, Riegle-Neal Interstate Banking and Branching Efficiency Act– This bill eliminated previous restrictions on interstate banking and branching. It passed with broad bipartisan support.

• 1996, Fed Reinterprets Glass-Steagall– Federal Reserve reinterprets the Glass-Steagall Act several times, eventually allowing bank holding companies to earn up to 25 percent of their revenues in investment banking.

• 1998, Citicorp-Travelers Merger – Citigroup, Inc. merges a commercial bank with an insurance company that owns an investment bank to form the world’s largest financial services company.

• 1999, Gramm-Leach-Bliley Act – With support from Fed Chairman Greenspan, Treasury Secretary Rubin and his successor Lawrence Summers, the bill repeals the Glass-Steagall Act completely.

• 2000, Commodity Futures Modernization Act – Passed with support from the Clinton Administration, including Treasury Secretary Lawrence Summers, and bi-partisan support in Congress. The bill prevented the Commodity Futures Trading Commission from regulating most over-the-counter derivative contracts, including credit default swaps.

END with Free Market (Austrian type) Economy.

• 2004, Voluntary Regulation (Ha!)– The SEC proposes a system of voluntary regulation under the Consolidated Supervised Entities program, allowing investment banks to hold less capital in reserve and increase leverage.

• 2007, Subprime Mortgage Crisis (The Main Event) – Defaults on subprime loans send shockwaves throughout the secondary mortgage market and the entire financial system.

• December 2007, Term Auction Facility – Special liquidity facility of the Federal Reserve lends to depository institutions. Unlike lending through the discount window, there is no public disclosure on loans made through this facility.

• March 2008, Bear Stearns Collapse – The investment bank is sold to JP Morgan Chase with assistance from the Federal Reserve.

• March 2008, Primary Dealer Facilities – Special lending facilities open the discount window to investment banks, accepting a broad range of asset-backed securities as collateral.

• July 2008, Housing and Economic Recovery Act – Provides guarantees on new mortgages to subprime borrowers and authorizes a new federal agency, the FHFA, which eventually places Fannie Mae and Freddie Mac into conservatorship.

• September 2008, Lehman Brothers Collapse (The 2^nd Main Event) – Investment bank files for Chapter 11 bankruptcy. This was the beginning of future bank failures and that lead to the stock market crash of October 2008.

• October 2008, Emergency Economic Stabilization Act – Bill authorizes the Treasury to establish the Troubled Asset Relief Program to purchase distressed mortgage-backed securities and inject capital into the nation’s banking system. Also increases deposit insurance from $100,000 to $250,000.

Source: https://docs.google.com/viewer?a=v&q...xfm-OOepOCq11g

For actual, bona fide, reliable facts leading up to our present day economic situation, all theories aside, follow this link… http://www.writingforums.com/debate/...ml#post1495802

Note, the information on the other side of that link provides a condensed synopsis of events, much more could be said including the Federal Reserves role in the 2007-08 financial meltdown. However, it was a relatively minor role resulting from the Fed not remaining loyal to their policies.

Originally Posted by Blood

Sorry but, your Austrian “hands-off” economics is to blame. Free market ideas pushed by powerful financial lobbyist have been a growing reality since President Reagan first took office. Unless, of course, you believe that either these same powerful lobbyist have been ineffective, as in not so powerful after all, or they’ve been lobbying for more regulations against their industry, which is counter intuitive.

there are no free-market lobbyists who follow a true austrian model. your problem, blood, is that you don't appear to understand what free market libertarianism actually is. it has nothing to do with simple de-regulation so it's pointless quoting events since 1980 since no significant political action has taken place since then that accurately follows the doctrine.

de-regulation IS a big part of the austrian model. however it is one of those components that at best does nothing and commonly acts against the libertarian economic model should the other components not be concurrently adopted, or not be adopted fully. it may sound paradoxocal, but it is true. ironically enough, if ron paul (or another similar candidate) is not offered come november i would actually suggest that overall obama is a better choice for president than, for instance, mitt romney or any of the other republican candidates because on balance (and you wont hear me say this often) a highly-regulated economic model is actually preferable if: deregulation is not comprehensive, taxation is not virtually eliminated, a sound monetary system is not put in place, credit-based consumerism is not abolished and federal spending is not curbed.

the fact is that for deregulation to have its intended effect - creating jobs and prosperity - it has to be accompanied by elimination of taxation. all deregulation does on its own is make it easy for companies (large and small, but mostly large) to continue to commit financial fraud and corporate crimes against the working and middle class and against the consumer. this is fairly easy to understand. there's no point in abolishing, for the sake of argument, restrictions on interstate banking and branching if capital gains taxation makes it prohibitively expensive for a small to medium sized bank (or any other company, for that matter) to actually go ahead and expand their operations into other states. all that happens is that the american economy becomes increasingly dominated by a few, large players. so that's number one - taxation. if you want to only go back so far as 1980 then i would suggest that regardless of individual events within that time period, taxes are still overwhelmingly higher for the majority of small businesses and citizens than before that date.

the other essential that you seem to have disregarded in your assessment of financial deregulation is that there has been no legislation concerning reforming of the monetary system, which is by far the most regulated sector of the economy. i know i keep banging on about the gold standard, but it really is that important to ensure a working free market system. not just because of the weaknesses of fiat currency i've identified throughout this thread, but because of the immense dangers caused by credit. credit in a tightly-regulated banking system is bad enough, but in a deregulated system it is a recipe for disaster. that is why for deregulation to work the monetary system must be fixed, and fixed in such a way as to ensure all assets are guaranteed. this is not as daunting a proposition as it sounds. consider that it was simply made a requirement (as per the constitution) that all debts, public and private, must be paid in gold and silver (or, in this case, in federally-issued banknotes redeemable in gold and silver) then you can bet your butt that every bank would instantly need to invest in 'real currency' as opposed to derivatives and stocks in order to meet their own obligations and those of their customers. do remember that we libertarians want very low taxes, based on a flat or fair tax system with no capital gains, corporate or federal income taxes, so it isn't as though suddenly bank of america will suddenly need to meet a tax bill worth hundreds of tons of gold bullion. it does however mean that credit and paper assets would need to be liquidated and REAL currency will once again top the agenda. this isn't a particularly revolutionary idea. the constitution states very clearly that gold and silver ARE the only legal tender, so no additional amendments would be needed. just one collective 'show us the money'.

as far as what this would mean for, say, a homeowner with a mortgage this should have no ill-effects for the average citizen. why? because of the constitution, again. if john doe was granted a mortgage by bank of america that stated he was liable for 300,000 'dollars', he can challenge the bank's attempt to repossess his home in the supreme court on the basis that the 'money' he borrowed was, in fact, not money because it was not based on gold or silver assets but on fiat currency. a correct reading of the constitution would confirm this as fact. so its not like liquidation would necessarily hold ill-effects for the average citizen. if anything, it would hold large corporations, who are main beneficiaries (perhaps the only beneficiaries) from the credit-based monetary system. so the fact there are corporate lobbyists for the free market is simply false. corporate lobbyists have a vested interest in not seeing a completely free market because credit as we know it cannot survive in a free market libertarian system. why? because there aren't the assets there to pay for it.

Originally Posted by Blood

I don’t understand your thinking, if you believe that Ron Paul has the answer, then why would “that grenade go off”? Are you not confident in what you say? If you’re worried that what happened to President Obama (scapegoat) might happen to Paul, then you're too late, way too late, that grenade already went off in 2007-08 (it was a time lapse grenade). One clue might be current political discourse, “jobs, jobs, jobs!”

I am completely confident in what I say, which is that I am not confident that Ron Paul can or ought to fix a broken system. The state is going to fail, it's just that simple, and to have Ron Paul at the wheel when (not if) it collapses will be a hard blow to libertarian ideas. Second, the grenade has not gone off yet. The amount of malinvestment in the system has not been reallocated nor has the system itself seen an overhaul to make it sustainable. That overhaul will not come from government, but from the absence of it, as historical evidence shows that more managed economies face higher malinvestment and misallocation of resources due to the economic calculation problem. The stimulus has only put off the crash that is coming and has not fixed anything. The US government will go bankrupt whether politicians say so or not and there really isn't anything we can do at this point. The debt, the deficit spending, and the 65 trillion in unfunded liabilities will end the US. My only reservation is putting Ron Paul in power at the wrong time, or if he does get into power and starts fixing things, that the next person to come in after will only revert to old policies and merely prolong the inevitable.

To put our debt situation into context, if the US were to cut it's military, end the wars, close down all military bases, stop making every piece of military equipment from tanks to bullets, "fire" everyone from private to admiral/general in every branch, not spending one cent on defense (which was 663 billion in 2010), the federal government would still be spending more than its revenues and therefore increasing its debt. Hypothetically if we cut federal spending entirely, meaning the government's only job was to take in revenues to pay its debt and nothing more (no medicare, medicaid, pensions, regulations, FBI, CIA, library of congress, no federal employees getting paid, not even the post office), it would still take 6-7 years for the government to collect enough money to pay off the debt it has already incurred, not counting the interest added onto the debt in the meantime. If you think that's bad enough, the debt does not take into account the federal government's future payments - medicare, social security, pensions. That adds up to about 65 trillion dollars, which to put into perspective, is the GDP of planet Earth. Every transaction from every person in every country added together for an entire year over the entire planet is what the federal government needs to pay within the next few decades. Based on this evidence, I am 99% confident that the US collapse is inevitable. Even if we reversed course right now, this very day, it wouldn't change anything. It would only push it further down the road. Not only is the federal government not doing that, but we're quickening the process.

Originally Posted by Blood

Sorry but, your Austrian “hands-off” economics is to blame. Free market ideas pushed by powerful financial lobbyist have been a growing reality since President Reagan first took office. Unless, of course, you believe that either these same powerful lobbyist have been ineffective, as in not so powerful after all, or they’ve been lobbying for more regulations against their industry, which is counter intuitive.

Here’s a run down of financial deregulation, 1980 was the year…

There has never been a year where the number of regulations in the financial sector has gone down. To say we've been in this laissez faire financial system is the exact opposite of reality. Your analysis has not gone into the moral hazard that government created by insuring loans, the government creation of Fannie Mae and Freddie Mac, the artificial manipulation of interest rates, the government push for home ownership. In general, the bigger the crisis, the more time it takes to make. If you think this all started in the 80's then you're about a hundred years too late.

The Austrian school actually predicted the dot com, housing, and financial bubbles bursting, and it predicts a future collapse. It's funny how people ignore history. You know the great depression of 1929 wasn't the only depression in the 1920's, and it wasn't even the worst. In 1920 we had a depression that initially hit harder than the great depression of 1929, both of which were predicted by Ludwig Von Mises. The reason why the great depression of 1920 has such little notoriety is because it was met with a hands-off, free market approach, which caused the economy to return to normal in about a year. The great depression of 1929 however was met with massive government intervention, which as the Austrians predicted, caused higher rates of unemployment and prolonged the depression until after WW2 when economists begged the government to stop spending on a war that wasn't being fought.

In almost every historical case, the Austrian economists have been right and the Keynesians have been wrong. This crisis was not about individual bills being passed, or individual actors, but incentives and wide-ranging distortions within the financial system itself caused by government interference. If you think bringing up pieces of the picture is a complete analysis, then I think you might be missing the forest for the trees.

Originally Posted by luckyscars

the fact is that for deregulation to have its intended effect - creating jobs and prosperity - it has to be accompanied by elimination of taxation.

i know i keep banging on about the gold standard, but it really is that important to ensure a working free market system.

If you eliminate taxation, what is the source of revenue for your government? I ask specifically because, if your economy does continue to grow in strength (and value), you're going to need to continuously purchase more and more gold.

I won't even get into infrastructure and government programs, which have costs associated with them too. Or are you only thinking of eliminating corporate taxes? That would be discriminatory, since corporations are officially "people", and you shouldn't eliminate taxes for one type of "people". Not that it would be an issue for long, as every citizen in America incorporates as fast as the lawyers can process the requests.

So I have read the majority of everyones posts. I am a HUGE supporter of Ron Paul. Mainly because of his position on ObamaCare, His disapproval of the Unions, and his Foreign Policy of peace! Ever since WW2 our National Debt has increased and right before that we basically ran our country like how Dr. Paul thinks. Now that we "Babysit" the world our national debt has done nothing but sky rocket since WW2. To add worse to the matter. Obama has increased our national debt more than any president including Busch. Even though we are "pulling out" our debt went from 12 trillion in 2008 to roughly 16 trillion 4 years later.

Look at it this way, If America was a business then in the last 4 years Obama as the CEO did a horrible job because he spent twice that of the revenue generated. Meaning you are spending at a higher rater than what you can initially afford. Although in a business you would be bankrupt. In a Government I feel like you should atleast spend no more than what you bring in for revenue. I dont just blame Obama I blame the entire government for this massive spike in National Debt.

Personally I think we should have not just one person that is like Ron Paul to be able to fix the mess that has been going on for over a century now but rather an entire government FULL of people who have similar beliefs.

Another thing about electing Ron Paul would be the fact that he would be more or less a Checks and Balance system for the Congress and Senate rather than someone who is going to get up there and just start making a huge difference. This is why I also feel that pointing the finger at the president should be considered the concept of someone ill informed of how our government truly works.

Why I dislike Obama is the fact that his economic policies remind me so much of Herbert Hover who also believed that to fix a declining economy the government should throw around money and try to create jobs for people. (also Known as Alphabet Soup) all this ever did for the country was cause chaos for the economy and headaches for the government. Even to this day we still have a few of the original branches of government that the Hover Administration and the Congress of the time created. So really shouldnt we blame the government in WW2 for the problems we are facing today? they started the road to big government, Broke our idea of not getting militaristically involved in the world, and to what end? We STILL to this day Have our hands in germany AND japan although we claim we are not an empire interested in the conquest of other countries or land. However it sure feels like we are trying to control the world through power. Who said we could go around and tell countries how they can and cant run their governments? I agree dictatorships are horrible but it kept the Suni`s and Shiites from basically wiping each other off the face of the earth. Which now they are free to do so. Something like this is SUPPOSED to be done by the U.N. they are the ones who are suppose to overthrow a dictator and try him for international crimes against humanity. Which would make entirely more since if the U.N. was actually funded properly by the other countries. Instead of crippling one countries budget based on doing this the debt could be spread out amongst several countries world wide and no one would really care all that much if the U.N. Peacekeeping forces stayed in Iraq to help maintain peace... Since you know, Thats what they do... Or rather should do but dont.

But at the same time if we are being the World Police, then why do we still choose to stay out of africa? Could it just be that the Wars in the middle east are naturally an extension of the Wars that have been going on there since the medieval period? Actually even before that the land between the Euphrates and the Tigris have been battled over since the day man invented the idea of war. Yet thousands of years later same regions and locations but different reasons to fight... I find that very curious. I agree with Ron Paul being over there or anywhere else in the world we are not welcome does not help us reach a goal of peace in fact it causes more conflict.

Further more, Ron Paul is only one small pebble, if elected, that would help to control the raging river that is the problems with our country. I honestly believe its very likely I will not see the resolution of all the problems we see today. Although if we stand by watching all of this and shrugging like we cant do a thing the future children of America could see the dissolving of the US and possibly the creation of many smaller countries similar to what happened following the fall of rome. if we choose to control the future then our new slogan could be "I have not yet begun to fight!" after the brilliant John Paul Jones.

Below is a Graph of our National Debt since 1938
Source: http://cedarcomm.com/~stevelm1/USDebt.png