he's an expert at getting an informative and persuasive answer out within the alloted time. never fails.

Oh that it could be so simple. Currency is an abstraction. As Adam Smith said centuries ago, "the great wheel of circulation, (of currency), is altogether different from the goods which are circulated by means of it."
He was a trickle down man as well saying, "though the sole end which they (the rich) propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements." In other words, the rich are selfish bastards, but they can't help but make other people money.
Just think about the trickle down from Paris Hilton alone. She's feeding a bunch of people.

snooze, that's a reply that doesn't address his concerns regarding monetary policy. It's not as if Mr. Paul is an advocate of wealth redistribution, but our current credit crisis can be related to the Fed's policy regarding liquidity when they drove the Federal Funds Rate down to 1%. The amount of currency being "created" had a number of adverse consequences which have been detailed by smarter minds than I.

Seems to me he's mainly talking about "creating money out of thin air" and "living beyond our means." (on the part of government) Currency doesn't need to have something to "back it up." It's paper and has no intrinsic worth. I'm all with him on the foreign policy bit, way, way too expensive for what we are getting in return. (What are we getting in return?)
National debt is not all bad, as long as you get something useful in return. However, I can't help but remember that quote from, I forget who, that went something like, "true democracy can only last as long as it takes the citizens to figure out they can vote all the money out of the coffers." Who did say that?

Upvoted to cancel the muzzie vote.

We need to bring back the gold standard. Our constitution says "No Legal Tender but Gold, Silver".

Gold, silver, paper, what does it matter? You can't eat it. You can't wear it. Currency is the surrogate for barter. It's too damn inconvenient to carry a pig in your pocket to trade someone for their 10 bushels of corn. It's much easier to give them $20. We switched to paper currency when someone figured out it was a lot cheaper to make a dollar bill than it was to mint $20 dollar gold pieces. Tying the amount of paper currency to some pile of shiny metal doesn't make sense to me. But, I'll be the first to admit....I only took one economics course in college.

This is indeed an excellent response from Ron Paul, though in a Republican debate like this there are two problems that make it a useless one, ergo the awkward clapping at the end: first, half of the audience doesn't understand the response. The other half understands it, but don't want any change because they benefit from the problem. Thus, some clapped because they wanted to show how respectful they are, whether they understood or not, and the others didn't clap because they were embarrassed at being ignorant or cheated out of their money (the beneficiaries of this whole big scam, those that aren't ignorant at least, all clapped respectfully, because that's how they can scam people out of their money without being killed or imprisoned).

Good points all. It's hard not to be a cynic these days. As O'Rourke says, democrats are crooked politicians and republicans are crooked business men. While the Fed Reserve is suppose to approximate the amount of currency to the national economic value, how does one do that? Ron Paul is making a valid point that the infusion of currency goes first to the banks and Wall Street, but if there is a credit crunch, and you risk economic depression, where should the money go? That's way over my head, so I'll drop out of that debate. All I know is every time I read about a fired CEO's severance package, I want to puke. Why can't a CEO's pay be tied to company performance or shareholder value? Is that too much to ask?

the currency is worth what people believe it's worth. gold is valuable because everyone agrees it's valuable. paper money is valuable because the government (and army) say it is, and everyone might as well just agree it's valuable.

so the difference is, if you have the someone printing money you are giving them power. but if you agree on gold, then there's a finite amount and that's that. i know it's not that simple but anyway.

until alchemy is invented, gold makes more sense to me, and paper tied to gold (for practical reasons) is fine as long as you can trust the banks (which you currently can't, because the money isn't tied to gold so it is fundamentally corrupt or "counterfeit" as RP says).

However, don't listen to me, i have taken zero courses in economics... i just know that the dollar isn't worth shit any more because the military power and political stability that guaranteed its value is fubar.

If you want to learn more about the gold standard, and why it can't work, go to http://en.wikipedia.org/wiki/Gold_standard
That being said, I think I'm done on my economic discourse, because I've about reached the limits of my scant knowledge.

Trickle down = Golden shower. No thanks.

The problem with trickle down is the trickle. Sure, a couple of drops are bound fall on the unwashed masses, but most of it sits in stagnation.

Why not trickle up? If it's going to end up in Paris Hilton's bank account anyway, why not let me buy some groceries with it before it gets there?

dystopianfuturetoday wrote:

"Why not trickle up?"

Much like snoozedoctor said, you fail at economics if you think returning the gold standard would do anything other than cripple our country. If you want to talk about fractional reserve banking, maybe you could have something resembling an intelligent discourse, but supporting the gold standard just represents a shocking lack of understanding about economics for someone that wants to be President.

I want to just post the same thing to every Ron Paul thread, since the same stuff seems to come up again and again, but I'm not sure what video sifts policy on that is. Instead I'll just post some links with the heading:

READ THIS STUFF BEFORE YOU SUPPORT RON PAUL FOR THE LOVE OF GOD:


Or a nice summary of all his crazy:
http://www.iidb.org/vbb/showthread.php?p=5000274#post5000274
(at least read that, please, especially the gold standard part)

http://www.stormfront.org/forum/showthread.php?t=388512
http://www.lewrockwell.com/paul/paul148.html (4th paragraph for the lazy)
http://www.nizkor.org/ftp.cgi/people/g/ftp.py?people/g/gannon.dan/1992/gannon.0793
http://www.offthekuff.com/mt/archives/007597.html
http://www.youtube.com/watch?v=s4QbJ3phEYs

Simply giving money to poor people does not get them out of poverty. (Unless it's winning the lottery or something.) I'm not ragging on the poor people here, but it pains me to see a dirty kid in the back of a beat-up car, parked in the convenience store lot, while their parent is in the store buying a twelve pack of beer, a carton of cigarettes and 5 lottery tickets.

I welcome dissent, but I think what bothers us is this.....it's like Grimm says, you can't tell what the rich are going to do with their money. And it's more than that. It's how the rich people get rich. I know I will probably get bombed for making him an example, but Bill Gates has given the world technology that benefits society. You just can't deny that. While the company's tactics have been less than noble, at times, he has given us something we can use to be more productive. Aren't we really bothered by the many out there who are pushing piles of currency, or commodities around, making huge sums of money, and they don't contribute anything in return. They don't give us cars, computers, food, or anything we can use. I'm getting old and I can't remember who said these things anymore, but someone once said, "the saddest day in a man's life, is the day he tries to get some money for nothing."

This is the most political videos I've ever seen in the top 15 at one time.

I guess we are starting to care. Just coincidence, but there's a decent article in the latest "The Economist" about the US dollar problems. It's called "Losing faith in the greenback" and it's pretty informative.

The Gold Standard is not the answer to our economic woes. It is too easy to go into deflation when we base our currency on something that has a finite amount that will fluctuate depending on factors that are really out of our control (new deposits, hoarding). Right now one problem that is looming is deflation and recession, with one important factor being the exorbitant national debt. This is why Ben Bernanke is the best appointment that Bush has made during his otherwise pitiful presidency. Bernanke is an expert on deflation and recession, having written a great deal on the Great Depression. His experience means that he is better able to deal with this problem, but switching back to the Gold Standard would multiply his problems even further.

Trickle down economics doesn't work, see Reagen years. Rich people would only move their assets off shore to avoid being taxed, employ accountants to lessen their tax exposure, and invest where it's most suitable for them to make a profit, this is not necessary the US, it would be China right now.

Everyone who attacks Ron Paul on his support of bringing back the Gold Standard is being a little rash to presume he means a return to the '1900s', all he is saying is that the US dollar has no value based backing behind it as a currency and it requires one to prevent the senseless spending that has lead to such a large deficit and precarious currency position in the first place.

The US has been writing bad checks on it's currency for several years now based of it's de facto status as currency of reserve and exchange, this allowed them to increase spending without balancing it's huge trade deficits, essentially borrowing from China and Japan (combined they hold about 2.1 trillion USD in reserve).

The US continued to import most of it's goods, meanwhile off-shoring and the dismantling of the manufacturing sectors has meant that the US economy has become reliant on services mostly sold to each other. CEOs got paid massive paychecks for essentially off shoring manufacturing operations, the US now basically imports back most of it's products, a computer made by Dell in Asia is an import not an export to the US.

This splits off into two now, with the sub-prime mortgage crises and investor panic the Federal Reserve needs to lower interest rates to contain the problem, however if it does that the dollar depreciates even more, so the Federal Reserve needs to increase interest rates to convince foreign reserve holders to continue buying and holding US dollars, and thus allow Washington to continue borrowing. This is because the US dollar has depreciated rapidly against all currencies, because people are buying less dollars now, seeing how the US has not addressed it's budgetary and deficit problems.

The question now is will those holding to US dollars continue to do so? No one is selling now because no one wants to induce a panic, many have been talking of propping up the US dollar so it doesn't continue its decline, however this is unrealistic, how much value are foreign governments and banks willing to back against a falling US dollar? 100 billion? 1000 billion?

You might be wondering how it lead to this, The Federal Reserve has been backing non wealth creation financial instruments for several years now which lead to the sub prime mortgage crisis instead of investment into capital creation manufacturing industry (think of gambling instead of proper investment in industry).

Expectation was that the war in Iraq would mean the US would control massive oil resources that would allow it to continue writing bad checks, however this assumption back fired with the instability in Iraq.

The Fed now is cutting interest rates further to provide more money for investors, more cuts are expected that will send the dollar falling even further. With that might come the jettison of dollar reserves and a switch into the Euro, and then a recession in the US economy.

I'm merely asking the question..
Can China and Japan afford to dump dollars at a low? If they dump and buy Euros, are they taking a huge hit? I guess it's like owning an individual stock, you have to decide where it' going in the future. But, the more you own, the tougher the decision. With the history of the dollar bouncing back, aren't they more likely to stick with it. If they start, from this point on, stock-piling Euros, or equivalent, as a cash reserve, is that all bad? Some on you folks with economic backgounds lend a hand here, please. Thank you.

You are right, both China and Japan wouldn't really benefit on exchanging their dollar reserves and buying up into the Euro. Since they would be essentially losing their value by buying into the Euro. The Euro is politically unstable given that the EU keeps expanding and lacks a cohesive multinational economic policy, instead of tracking one economy you are tracking all the members of the EU, economic shocks are less predictable.

But then they risk holding on to dollar reserves that are quickly dwindling in value, the question is how long will they continue to buy into a currency that is quickly losing it's value? In essence they are basically stuck and locked in, if they start to offload their reserves they do not benefit at all.

But then there is the question of rising US national debt and paying them off that interest rate and if people will still lend money to the US government to offset its debt obligations, for which I suggest reading this:

"So long as somebody is willing to keep loaning the U.S. government money, the debt is largely out of sight, out of mind.

But the interest payments keep compounding, and could in time squeeze out most other government spending — leading to sharply higher taxes or a cut in basic services like Social Security and other government benefit programs. Or all of the above.

A major economic slowdown, as some economists suggest may be looming, could hasten the day of reckoning.

The national debt — the total accumulation of annual budget deficits — is up from $5.7 trillion when President Bush took office in January 2001 and it will top $10 trillion sometime right before or right after he leaves in January 2009.

[........]

For now, large U.S. trade deficits with much of the rest of the world work in favor of continued foreign investment in Treasuries and dollar-denominated securities. After all, the vast sums Americans pay — in dollars — for imported goods has to go somewhere. But that dynamic could change.

"The first day the Chinese or the Japanese or the Saudis say, `we've bought enough of your paper,' then the debt — whatever level it is at that point — becomes unmanageable," said Collender.

A recent comment by a Chinese lawmaker suggesting the country should buy more euros instead of dollars helped send the Dow Jones plunging more than 300 points.

The dollar is down about 35 percent since the end of 2001 against a basket of major currencies.

Foreign governments and investors now hold some $2.23 trillion — or about 44 percent — of all publicly held U.S. debt. That's up 9.5 percent from a year earlier.

Japan is first with $586 billion, followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries account for $123 billion, according to the Treasury.

"Borrowing hundreds of billions of dollars from China and OPEC puts not only our future economy, but also our national security, at risk. It is critical that we ensure that countries that control our debt do not control our future," said Sen. George Voinovich of Ohio, a Republican budget hawk."

Thanks Farhad, that was really helpful.
Although the latest figures I saw, although I couldn't tell you where, was that China had a reserve of at least 1 trillion US dollars, and Japan almost as much.

I was listening to NPR this morning and I couldn't help note the irony of this. Historians say, in a democracy, the government usually echoes the people.
Well, personal credit card debt in the US is estimated at nearly a trillion dollars, or on average about 2200 dollars per household. Seems the citizens aren't learning much about deficit spending. It's also making the banks tons of money on interest.

I suspect people will argue that they need to borrow because of their economic circumstance, but that's not what I see in the people I know. Although I think it's crazy, I have friends living a lifestyle consistent with upper middle class, who are maxed out on several credit cards.

Anyhow, thanks again, I enjoyed your insight.

Well there are two figures, USD reserves and US debt.

Both Japan and China hold both around 2.1 trillion USD in reserves, at they same time they hold US debt as the article says - "Japan is first with $586 billion, followed by China ($400 billion) and Britain ($244 billion). Saudi Arabia and other oil-exporting countries account for $123 billion, according to the Treasury."

The reason that most don't know about this is that it's not a political issue being put forward by either congress or presidential candidates. It's ridiculous quite frankly.

One thing that surprises me about all the discussion in these forums, regarding deficit spending, cost of foreign policy, etc. is the spare mention of health care costs. The cost of health care in the US is about 17% of GNP, or about 4 times what is spent on national defense.
Being a physician, I agree with some of Paul's stances and disagree with others. Regardless, THE NATIONAL COST OF HEALTH CARE IS KILLING US! (no pun intended.

The employee health care benefits, paid by business, are crippling our competitiveness in the world market. Product liability insurance costs are crippling our competitiveness in the world market. How much do you think corporations in China and India are paying for these in comparison? About zip.

Paul and I agree......A NATIONAL HEALTH SERVICE WILL WORK, BUT ONLY IF YOU ARE WILLING TO ACCEPT MAJOR HEALTH CARE RATIONING AND POOR SERVICE.
Therefore, we are both against it.

Tags for this video have been changed from 'Ron, Paul, monetary, policy, spending, debt, federal reserve' to 'Ron Paul, monetary, policy, spending, debt, federal reserve' - edited by Grimm