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Ron Paul 2012
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The Case for the Gold Standard
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This talk was delivered at the New York Historical Society on May 8, 2011.
It took 200 years to build and perfect the classic gold standard system; then it was destroyed in about seven weeks when the Guns of August 1914 thundered across Europe; and now I am allotted seven minutes to resurrect it. Fortunately, Churchill?s defense of democracy also applies to the daunting task at hand: To wit, the classic gold standard is the worst possible monetary system ? except for all of the alternative inflation-generating, savings-destroying, debt-breeding, bubble-emitting and boom and bust-prone systems which have been tried in the 100 years since its demise. Hence, we offer six present day monetary vices which are curable by gold:
by David Stockman
Recently by David Stockman: Crony Capitalism Strikes Again
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This talk was delivered at the New York Historical Society on May 8, 2011.
It took 200 years to build and perfect the classic gold standard system; then it was destroyed in about seven weeks when the Guns of August 1914 thundered across Europe; and now I am allotted seven minutes to resurrect it. Fortunately, Churchill?s defense of democracy also applies to the daunting task at hand: To wit, the classic gold standard is the worst possible monetary system ? except for all of the alternative inflation-generating, savings-destroying, debt-breeding, bubble-emitting and boom and bust-prone systems which have been tried in the 100 years since its demise. Hence, we offer six present day monetary vices which are curable by gold:
- First, the gold standard wouldn?t have allowed the US to incur nearly 40 straight years of massive current account deficits and to live high on the hog for decades by running a $7 trillion tab against its neighbors. Indeed, before Richard Nixon and Milton Friedman instituted their floating rate fiat money contraption in August 1971, nations were compelled to live within their means. Chronic profligacy and current account deficits resulted in a drain of gold abroad, causing a domestic contraction including tighter credit, higher interest rates and deflation of prices, wages and demand ? pressures which encouraged a speedy return to virtuous living and payments balance.
- The gold standard tamed the demon of debt by delegating the pricing of money to the marketplace of savers and borrowers, not to an administrative board of interest rate riggers and manipulators. Consequently, a national leveraged buyout wasn?t possible under gold: the sky high interest rates needed to induce extra savings tended to harshly discourage binges of cheap money borrowing. Thus, the national leverage ratio ? the sum of public and private debt divided by GDP ? was 1.6 times in 1870, and was still 1.6 times a century later. Since 1971, however, the Fed has found repeated excuses to drive real interest rates toward zero or negative ? a maneuver which has generated explosive debt growth the easy way; that is, not by coaxing it from savers but by manufacturing bank credit out of thin air. Consequently, America had a full-fledged LBO and now its leverage ratio is off the charts at 3.6 times GDP. This means that our $15 trillion national economy is being crushed under $52 trillion of debt ? a figure $30 trillion larger than would have obtained under the golden constant.[TABLE="width: 135, align: right"]
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[/TABLE] - The gold standard was an honest regulator of Wall Street greed. Under gold, we did not seek Bernanke-style faux prosperity by levitating the Russell 2000; nor did we crucify Main Street on a cross of obscurantist theory like the Taylor Rule whereby the Fed naively gifts Wall Street with limitless zero-cost funding for leveraged speculations in commodities, currencies, derivatives and equities; nor did we punish people who invest in savings accounts out of an abundance of caution while placing a central bank "put" under those who speculate with reckless abandon. Moreover, unlike the Fed?s money bubbles and crashes, which heavily punish Main Street, the so-called "panics" of the gold standard era ? those of 1873, 1884, 1893 and 1907 ? had the opposite aspect. They were largely sequestered on Wall Street and were rooted not in gold but in the glaring defects of the civil war era National Banking System. The latter drained nationwide banking reserves to the Wall Street call money market where it periodically fueled stock buying manias ? but these episodes were quickly ended when deposits reflowed back to the country banks at harvest time, causing call money rates to soar and panic to supplant euphoria on the stock exchanges.
- The gold standard made the world safe for fractional reserve banking. To be sure, banking ? which is to say, scalping a profit from the interest spread between loans and deposits ? is the world?s second oldest profession. While arguably doers of god?s work, banksters become positively dangerous when backed by a sugar daddy central bank ? like the Fed or the People?s Printing Press of China ? willing to supply all the reserves needed for the endless inflation of bank credit and the destructive asset bubbles which follow. Under the gold standard, by contrast, commercial bank deposits and currency notes were convertible into gold on demand, and central bank reserve injections into the banking system were firmly checked by requirements to cover such liabilities with gold at a 35-50 percent ratio. Indeed, the folly of the Fed?s recent manic reserve creation was even foreseen by the father of fiat money, Milton Friedman of Chicago, and by its grandfather, too ? Irving Fisher of Yale. Both supported 100% reserve banking in lieu of the monetary discipline of gold. So give us gold or give us 100% reserve banking ? but not fractional reserve gambling halls superintended by a Princeton math professor with a printing press.[TABLE="width: 135, align: right"]
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[/TABLE] - The gold standard made the world safe for fiscal democracy because chronic budget deficits generated immediate pain. If financed from savings, deficits caused higher interest rates and squeezed-out private investment; and if financed by central bank credit, they caused a deflationary drain on gold. Nowadays, however, central banks have become monetary roach motels ? places where treasury bonds go in but never come out. Consequently, sovereign debt has been drastically underpriced, causing Washington lawmakers to borrow lavishly and without fear.
- Finally, the gold standard protected Main Street from the boom and bust of credit cycles. Such disturbances never issue from the people?s work, saving, investment and enterprise, but always and everywhere they originate in the banking system and the speculative precincts of Wall Street. So the central bankers? "Great Moderation" is a myth ? refuted by the compelling evidence that these gosplanners of fiat money do not tame the business cycle but intensify and exacerbate it is. Their printing presses fueled the stagflationary 1970s, the real estate bust of the late 1980s, the dot-com frenzy which followed, history?s greatest housing bubble which came next, and the "risk-on" mania of recent months. Among all the arguments against gold, the claim that it would worsen the business cycle is, on the evidence of 40 years now, surely the most specious.
May 9, 2011
Former Congressman David A. Stockman was Reagan's OMB director, which he wrote about in his best-selling book, The Triumph of Politics. He was an original partner in the Blackstone Group, and reads LRC the first thing every morning.
capitalism has been perverted in the US and every other country in the world since day 1, since the transition from mercantilism in the late 1800's. we never followed the foundation of capitalism as was spelled out by say Adam Smith and others. and since capital has the natural advantage over labor what is the end result when the table is constantly titled towards capital? the complete and utter subjugation of labor by capital and that's where the US is today. top down grants from the FED in the form of QE only makes the existing problem worst not better.
everybody understand the problem with the FED but the problem with Ron Paul's message is it's not realistic. to end the FED in the US would come at the expense of the entire global financial system and global economy and the powers that be don't exactly want to live through the mess they have made. they are saving that "fun" for future generations to endure.
you do realize that global think tanks have stated everything Ron Paul has and more for the last 30-40 years? he doesn't say anything new, he only states the obvious.
this ones on me, I already negged Vancouver for ya. lol
[video=youtube;hjVs6NfR9vE]http://www.youtube.com/watch?feature=player_embedded&v=hjVs6NfR9vE#![/video]
Ron Paul
Ron Paul 2012, go!
jmoe
Registered
I am a proud supporter of RP, and just subscribed to his channel, although I haven't been able to tune into it yet due to work.
"What is Constitutional Money?" with Edwin Vieira -- Ron Paul Money Lecture Series, Pt 2/3
Start at 3 mins.
KNOW YOUR MONEY
History of United States Currency
Early American colonists used English, Spanish and French money while they were under English rule. However, in 1775, when the Revolutionary War became inevitable, the Continental Congress authorized the issuance of currency to finance the conflict. Paul Revere made the first plates for this "Continental Currency." Those notes were redeemable in Spanish Milled Dollars. The depreciation of this currency gave rise to the phrase "not worth a Continental."
After the U.S. Constitution was ratified, Congress passed the "Mint Act" of April 2, 1792, which established the coinage system of the United States and the dollar as the principal unit of currency. By this Act the U.S., became the first country in the world to adopt the decimal system for currency. The first U.S. coins were struck in 1793 at the Philadelphia Mint and presented to Martha Washington.
The government did not issue paper money until 1861. In the interim years, however, the government did issue "Treasury notes" intermittently during periods of financial stress, such as the War of 1812, the Mexican War of 1846, and the Panic of 1857.
During this same period (1793 - 1861), approximately 1,600 private banks were permitted to print and circulate their own paper currency under state charters. Eventually, 7,000 varieties of these "state bank notes" were put in circulation, each carrying a different design!
With the onset of the Civil War, the government--desperate for money to finance the war--passed the Act of July 17, 1861, permitting the Treasury Department to print and circulate paper money. The first paper money issued by the government were "demand notes" commonly referred to as "greenbacks." In 1862, Congress retired the demand notes and began issuing United States notes, also called legal tender notes.
Under Congressional Acts of 1878 and 1886, five different issues of "silver certificates" were produced, ranging from $1 to $1,000 dollar notes. The Treasury exchanged silver certificates for silver dollars because the size and weight of the silver coins made them unpopular. The last series of silver certificates was issued in 1923. However, the last series of modern silver certificates produced were the series 1957B/1935H $1 notes, series 1953C $5 notes, and 1953B $10 notes.
During the period from 1863 to 1929, the Government again permitted thousands of banks to issue their own notes under the National Banks Acts of 1863 and 1864. These were called "national bank notes," but unlike the earlier "state bank notes," they were produced on paper authorized by the U.S. government and carried the same basic design.
In 1913, Congress passed the Federal Reserve Act, establishing this nation's Federal Reserve System. This Act authorized the Federal Reserve Banks to issue Federal Reserve Bank notes. In 1914, the Federal Reserve Banks began issuing Federal Reserve notes--the only currency still being manufactured today by the Bureau of Engraving and Printing.
http://www.secretservice.gov/money_history.shtml
Start at 3 mins.
KNOW YOUR MONEY
History of United States Currency
Early American colonists used English, Spanish and French money while they were under English rule. However, in 1775, when the Revolutionary War became inevitable, the Continental Congress authorized the issuance of currency to finance the conflict. Paul Revere made the first plates for this "Continental Currency." Those notes were redeemable in Spanish Milled Dollars. The depreciation of this currency gave rise to the phrase "not worth a Continental."
The government did not issue paper money until 1861. In the interim years, however, the government did issue "Treasury notes" intermittently during periods of financial stress, such as the War of 1812, the Mexican War of 1846, and the Panic of 1857.
During this same period (1793 - 1861), approximately 1,600 private banks were permitted to print and circulate their own paper currency under state charters. Eventually, 7,000 varieties of these "state bank notes" were put in circulation, each carrying a different design!
With the onset of the Civil War, the government--desperate for money to finance the war--passed the Act of July 17, 1861, permitting the Treasury Department to print and circulate paper money. The first paper money issued by the government were "demand notes" commonly referred to as "greenbacks." In 1862, Congress retired the demand notes and began issuing United States notes, also called legal tender notes.
During the period from 1863 to 1929, the Government again permitted thousands of banks to issue their own notes under the National Banks Acts of 1863 and 1864. These were called "national bank notes," but unlike the earlier "state bank notes," they were produced on paper authorized by the U.S. government and carried the same basic design.
In 1913, Congress passed the Federal Reserve Act, establishing this nation's Federal Reserve System. This Act authorized the Federal Reserve Banks to issue Federal Reserve Bank notes. In 1914, the Federal Reserve Banks began issuing Federal Reserve notes--the only currency still being manufactured today by the Bureau of Engraving and Printing.
http://www.secretservice.gov/money_history.shtml
So do you finally understand why I despise the financial sector?
yes but you're despising the effect not the cause. your not liking them should be directed at the federal reserve and the federal govt. for creating policies that gives them the ability to act the way they do.
For example: In a free market there would be no FDIC to insure bank deposits, so the banks would have to be more accountable to their customers. If people knew their deposits weren't federally insured up to $250,000 they'd do some research to find a reputable bank that won't gamble with their money. The FDIC gives the banks the ability to do what they do because the customers don't care, their cover either way, there's no accountability. Without the FDIC insuring bank accounts the banks would have to compete to be the most transparent and trustworthy to gain and retain customers.
That's just one example just image how much more the "free market" is distorted with the thousands of rules and regulations there are in the financial industry. the financial industry is the most heavily regulated industry in the world.
The FDIC is there because the banks want it there. They don't want to be held accountable.
exactly that's why we need to get rid of it.
Many countries do not have deposit insurance it but they also have financial sectors that function very different from the U.S. The U.S is on the extreme end of everything.
Not hardly much of it is voluntary and financial products are so complex in nature the Feds don't have enough skilled people to monitor activities or have the man power to go through data which can easily take tens of thousands of man hours. Considering that the entire U.S economy has been financialized it needs to be heavily regulated, history clearly shows that the financial sector in the U.S is highly exploitative in nature. Many countries around the world don't even like fucking with the U.S financial sector because essential to compete with the shenanigans that goes on they also have to deregulate to the same degree or risk getting plundered themselves. Most of the innovation that took place since the 80's is nothing more then legalized forgery since the financial sector can legally create new forms of money to create artificial profits that don't actually create anything of physical value and only exist in financial systems and move explicitly via financial channels.
MI1972
Registered
The most unregulated is the FED, and for that the most powerful.
And most distructive to the economy.
Ron Paul: "All I Want For Christmas Is A (Real) Government Shutdown"
The political class breathed a sigh of relief Saturday when the US Senate averted a government shutdown by passing the $1.1 trillion omnibus spending bill. This year?s omnibus resembles omnibuses of Christmas past in that it was drafted in secret, was full of special interest deals and disguised spending increases, and was voted on before most members could read it.
The debate over the omnibus may have made for entertaining political theater, but the outcome was never in doubt. Most House and Senate members are so terrified of another government shutdown that they would rather vote for a 1,774-page bill they have not read than risk even a one or two-day government shutdown.
Those who voted for the omnibus to avoid a shutdown fail to grasp that the consequences of blindly expanding government are far worse than the consequences of a temporary government shutdown. A short or even long-term government shutdown is a small price to pay to avoid an economic calamity caused by Congress? failure to reduce spending and debt.
The political class? shutdown phobia is particularly puzzling because a shutdown only closes 20 percent of the federal government. As the American people learned during the government shutdown of 2013, the country can survive with 20 percent less government.
Instead of panicking over a limited shutdown, a true pro-liberty Congress would be eagerly drawing up plans to permanently close most of the federal government, starting with the Federal Reserve. The Federal Reserve?s inflationary policies not only degrade the average American?s standard of living, they also allow Congress to run up huge deficits. Congress should take the first step toward restoring a sound monetary policy by passing the Audit the Fed bill, so the American people can finally learn the truth about the Fed?s operations.
Second on the chopping block should be the Internal Revenue Service. The federal government is perfectly capable of performing its constitutional functions without imposing a tyrannical income tax system on the American people.
America?s militaristic foreign policy should certainly be high on the shutdown list. The troops should be brought home, all foreign aid should be ended, and America should pursue a policy of peace and free trade with all nations. Ending the foreign policy of hyper-interventionism that causes so many to resent and even hate America will increase our national security.
All programs that spy on or otherwise interfere with the private lives of American citizens should be shutdown. This means no more TSA, NSA, or CIA, as well as an end to all federal programs that promote police militarization. The unconstitutional war on drugs should also end, along with the war on raw milk.
All forms of welfare should be shut down, starting with those welfare programs that benefit the wealthy and the politically well connected. Corporate welfare, including welfare for the military-industrial complex that masquerades as ?defense spending,? should be first on the chopping block. Welfare for those with lower incomes could be more slowly phased out to protect those who have become dependent on those programs.
The Department of Education should be permanently padlocked. This would free American schoolchildren from the dumbed-down education imposed by Common Core and No Child Left Behind. Of course, Obamacare, and similar programs, must be shut down so we can finally have free-market health care.
Congress could not have picked a worse Christmas gift for the American people than the 1,774-page omnibus spending bill. Unfortunately, we cannot return this gift. But hopefully someday Congress will give us the gift of peace, prosperity, and liberty by shutting down the welfare-warfare state.
http://www.zerohedge.com/news/2014-12-15/ron-paul-all-i-want-christmas-real-government-shutdown
The political class breathed a sigh of relief Saturday when the US Senate averted a government shutdown by passing the $1.1 trillion omnibus spending bill. This year?s omnibus resembles omnibuses of Christmas past in that it was drafted in secret, was full of special interest deals and disguised spending increases, and was voted on before most members could read it.
The debate over the omnibus may have made for entertaining political theater, but the outcome was never in doubt. Most House and Senate members are so terrified of another government shutdown that they would rather vote for a 1,774-page bill they have not read than risk even a one or two-day government shutdown.
Those who voted for the omnibus to avoid a shutdown fail to grasp that the consequences of blindly expanding government are far worse than the consequences of a temporary government shutdown. A short or even long-term government shutdown is a small price to pay to avoid an economic calamity caused by Congress? failure to reduce spending and debt.
The political class? shutdown phobia is particularly puzzling because a shutdown only closes 20 percent of the federal government. As the American people learned during the government shutdown of 2013, the country can survive with 20 percent less government.
Instead of panicking over a limited shutdown, a true pro-liberty Congress would be eagerly drawing up plans to permanently close most of the federal government, starting with the Federal Reserve. The Federal Reserve?s inflationary policies not only degrade the average American?s standard of living, they also allow Congress to run up huge deficits. Congress should take the first step toward restoring a sound monetary policy by passing the Audit the Fed bill, so the American people can finally learn the truth about the Fed?s operations.
Second on the chopping block should be the Internal Revenue Service. The federal government is perfectly capable of performing its constitutional functions without imposing a tyrannical income tax system on the American people.
America?s militaristic foreign policy should certainly be high on the shutdown list. The troops should be brought home, all foreign aid should be ended, and America should pursue a policy of peace and free trade with all nations. Ending the foreign policy of hyper-interventionism that causes so many to resent and even hate America will increase our national security.
All programs that spy on or otherwise interfere with the private lives of American citizens should be shutdown. This means no more TSA, NSA, or CIA, as well as an end to all federal programs that promote police militarization. The unconstitutional war on drugs should also end, along with the war on raw milk.
All forms of welfare should be shut down, starting with those welfare programs that benefit the wealthy and the politically well connected. Corporate welfare, including welfare for the military-industrial complex that masquerades as ?defense spending,? should be first on the chopping block. Welfare for those with lower incomes could be more slowly phased out to protect those who have become dependent on those programs.
The Department of Education should be permanently padlocked. This would free American schoolchildren from the dumbed-down education imposed by Common Core and No Child Left Behind. Of course, Obamacare, and similar programs, must be shut down so we can finally have free-market health care.
Congress could not have picked a worse Christmas gift for the American people than the 1,774-page omnibus spending bill. Unfortunately, we cannot return this gift. But hopefully someday Congress will give us the gift of peace, prosperity, and liberty by shutting down the welfare-warfare state.
http://www.zerohedge.com/news/2014-12-15/ron-paul-all-i-want-christmas-real-government-shutdown
dogsoldier
Elite Member
If a real shutdown happens, the biggest fear of the Washington Political class is people may finally wake up and realize, WE DON"T REALLY NEED THEM!
