Ron Paul in 2012

[dre]

Why 300 years ? Why not 3000 ? And what about just showing the 20th century.

The graph doesn't show any big bump happening after 1971 to speak of.

But... they could (and did) print more money anyway couldn't they ?

Why won't we voluntarily fix it ? That seems to be the focus of discussion these days.

I don't see exponential growth in those graphs. The US went from about 45% to about 60% of GDP, and it actually declined from the peak.

The graph doesn't show any big bump happening after 1971 to speak of.

I just disagree with you here. And its a useless thing to argue about because again the fact the effect that closing the gold window had on currency and debt levels isnt contraversial.

But... they could (and did) print more money anyway couldn't they ?

Yup. The difference is under bretton woods not only were you violating an international agreement by doing this, you were putting yourself at great risk. People could show up and demand to redeem those dollars for gold. Now all they can redeem their paper dollars for is more paper dollars. People still kill each other even though theres laws against it, but they do it a lot less. Theres healthy debate over whether or not its good to give government such a powerfull tool, but very little over whether or not closing the gold window represented a radical change to the rules of game, and what the results were.

Why won't we voluntarily fix it ? That seems to be the focus of discussion these days.

You already outlined the reasons. We are afraid that the transition would disrupt economic growth and cause a disaster. People just dont solve these kind of problems without a major emergency. We cant even work together to solve EASY problems... never mind get 200 countries to sit down and implement a new global monetary regime.

We will try to prop it up until we cant anymore.

[Guest Manny]

Ron Paul should make things interesting throughout the Republican primary but I doubt very much he'll ever become US president.

I think he did something very useful for America already... he helped Perry look like the fool he truly is. The world is now a slightly safer place

[Guest American Woman]

I think he did something very useful for America already... he helped Perry look like the fool he truly is. The world is now a slightly safer place

How did he do that, exactly?

[Michael Hardner]

I just disagree with you here. And its a useless thing to argue about because again the fact the effect that closing the gold window had on currency and debt levels isnt contraversial.

Ok, but the graph doesn't show a bump. Can you give a cite that says it's not controversial ?

You already outlined the reasons. We are afraid that the transition would disrupt economic growth and cause a disaster. People just dont solve these kind of problems without a major emergency. We cant even work together to solve EASY problems... never mind get 200 countries to sit down and implement a new global monetary regime.

We will try to prop it up until we cant anymore.

But they're talking about cutting spending - that addresses the problem doesn't it ?

[Guest Manny]

How did he do that, exactly?

I just meant that he joked and helped to confuse Perry a little during the debate.

But looking at the news this morning, it's clear that Perry doesn't need any help.

[dre]

Ok, but the graph doesn't show a bump. Can you give a cite that says it's not controversial ?

But they're talking about cutting spending - that addresses the problem doesn't it ?

Ok, but the graph doesn't show a bump.

Nor should it. Closing the gold window itself did not change debt policy. It just changed the way that government is funded, and within a few years you see the results. Look at the graphs for inflation, m3, and debt during bretton woods, and then between the early seventies and now. If the trends look the same to you, then I really cant help. We are truly just seeing completely different imagess somehow. I see a line thats basically flat for 50 years... then over the last 40 years I see it grow into a massive mountain. You clearly dont see that. I have no idea why and I dont think its something I can help you with.

Its a pretty simple concept really... if you sell vouchers for clay pots, then you put yourself at great risk by issuing more clay pot vouchers than the ammount of real clay pots you are able to produce. If you unilaterally declare that those vouchers are no longer redeemable for clay pots, but instead can only be traded for other paper vouchers, then your voucher printing is no long limited by your capacity to make clay pots.

Can you give a cite that says it's not controversial

Just use google and read up on what various economists have to say. If you can find someone that claims unanchored fiat currency has had no impact on the size of the money supply Id love to read it. Like I said... the real debate is whether its a good thing for the government and fed to be able to dump gigantic mountains of money into the economy to fight recessions.... not whether that happens or not.

But they're talking about cutting spending - that addresses the problem doesn't it ?

No, that doesnt even scratch the surface. The problem isnt a few spendy politicians is the macro-economic environment in which they operate, and the trade imbalances created by using a national fiat currency as the worlds reserve. Changing the lightbulb isnt going to help if all the wiring in your house is faulty. Under the existing system the US must continue to go deeper and deeper into debt. Why? Because the US dollar is the worlds reserve currency and the fed has to satisfies the global demand for reserve dollars, it needs to keep expanding the size of the monetary base and the only way to do that is through the creation of more debt, and this causes the massive trade imbalance.

In other words... its useless saying the government should spend less money. If they dont spend the money into the economy then they will need to put it into the economy through the banking system, or with quantitative easing. At least if you spend it into the economy you get some stuff out of the deal.

And all that debt is a real claim on someones labor.

http://www.bloomberg.com/news/2011-04-10/stiglitz-calls-for-new-global-reserve-currency-to-prevent-trade-imbalances.html

The existing monetary system means “there’s a very good risk of an extended period of low growth, inflationary bias, instability,” Stiglitz said. It’s “a system that’s fundamentally unfair because it means that poor countries are lending to the U.S. at close to zero interest rates.”

Even the claim that we need a whole new monetary system isnt that contraversial anymore. The guy I just quoted is a fairly mainstream nobel prize winning economist. We now have Chinas top banker publically calling for a new system as well. Keynes didnt want this system either... he proposed the "bankor".

Edited November 30, 2011 by dre

[Michael Hardner]

Nor should it. Closing the gold window itself did not change debt policy. It just changed the way that government is funded, and within a few years you see the results. Look at the graphs for inflation, m3, and debt during bretton woods, and then between the early seventies and now. If the trends look the same to you, then I really cant help. We are truly just seeing completely different imagess somehow. I see a line thats basically flat for 50 years... then over the last 40 years I see it grow into a massive mountain. You clearly dont see that. I have no idea why and I dont think its something I can help you with.

Yes, I see it but I don't know that it can be directly attributed to the change in policy. Wasn't debt high during WW2 also ? How did they get around the requirements against debt at that time ?

Its a pretty simple concept really... if you sell vouchers for clay pots, then you put yourself at great risk by issuing more clay pot vouchers than the ammount of real clay pots you are able to produce. If you unilaterally declare that those vouchers are no longer redeemable for clay pots, but instead can only be traded for other paper vouchers, then your voucher printing is no long limited by your capacity to make clay pots.

Ok, I understand that.

Just use google and read up on what various economists have to say. If you can find someone that claims unanchored fiat currency has had no impact on the size of the money supply Id love to read it. Like I said... the real debate is whether its a good thing for the government and fed to be able to dump gigantic mountains of money into the economy to fight recessions.... not whether that happens or not.

I don't have a counterpoint to that argument and I have such basic questions that reading ... even Wikipedia ... doesn't answer them.

Because the US dollar is the worlds reserve currency and the fed has to satisfies the global demand for reserve dollars, it needs to keep expanding the size of the monetary base and the only way to do that is through the creation of more debt, and this causes the massive trade imbalance.

Reserve dollars are bought by whom ? And how does debt result ?

In other words... its useless saying the government should spend less money. If they dont spend the money into the economy then they will need to put it into the economy through the banking system, or with quantitative easing. At least if you spend it into the economy you get some stuff out of the deal.

Put it into the economy through the banking system ?

Again.. I apologize but my understanding is basic.

[msj]

How did he do that, exactly?

Ron Paul "helped" out Perry by joking about cutting out the EPA rather than commerce, education and, um, uh, er... oops!

See around 1:40 on in the

. Edited November 30, 2011 by msj

[cybercoma]

Has anyone posted his attack ad on Newt?

http://t.co/ocATwcO2

[dre]

Yes, I see it but I don't know that it can be directly attributed to the change in policy. Wasn't debt high during WW2 also ? How did they get around the requirements against debt at that time ?

Ok, I understand that.

I don't have a counterpoint to that argument and I have such basic questions that reading ... even Wikipedia ... doesn't answer them.

Reserve dollars are bought by whom ? And how does debt result ?

Put it into the economy through the banking system ?

Again.. I apologize but my understanding is basic.

Yes, I see it but I don't know that it can be directly attributed to the change in policy. Wasn't debt high during WW2 also ? How did they get around the requirements against debt at that time ?

The US did borrow some of the money used to fund the war but there was limits on what could be borrowed in those days (the limits we have been talking about).

But that is an excellent question and it really underscores how different our system is now.

In order to fund WW2 the US had tax the crap out of American citizens and draw on their savings.

The number of people who were required to pay federal taxes in 1939 was 4 million. By 1945 45 million were paying federal taxes and a massive payroll tax was created.

Americans who earned as little as $500 per year paid income tax at a 23 percent rate, while those who earned more than $1 million per year paid a 94 percent rate. The average income tax rate peaked in 1944 at 20.9 percent

You couldnt just conjure up a few trillion dollars back in those days like you can now in the funny money system. The money simply did not exist to be spent.

And this is another big problem with the global fiat regime. Its the engine the powers all these needless wars. Do you think Iraq would have happened if instead of "borrowing" all the money they had to raise taxes on the wealthy to 94% like they did in WW2? Not a freakin chance. If you wanted to fight a major war it wasnt just the soldiers that had to contribute it was the whole country, and the contribution expected was huge.

Now days you can fight two elective wars at the same time, while planning for a third one! And cut taxes right in the middle of it

In other words theres more more war than there would be under a sound money system, and the global fiat empire is responsible for a lot of real human casualties, and the rate at which we are consuming resources to make products we simply explode.

[maple_leafs182]

People are against having political dictators yet they are okay with having economic dictators, that is the problem. No small group of people can centrally plan the economy.

[Michael Hardner]

The US did borrow some of the money used to fund the war but there was limits on what could be borrowed in those days (the limits we have been talking about).

But that is an excellent question and it really underscores how different our system is now.

In order to fund WW2 the US had tax the crap out of American citizens and draw on their savings.

The number of people who were required to pay federal taxes in 1939 was 4 million. By 1945 45 million were paying federal taxes and a massive payroll tax was created.

You couldnt just conjure up a few trillion dollars back in those days like you can now in the funny money system. The money simply did not exist to be spent.

Graph

It looks like they borrowed about 3 trillion.

And this is another big problem with the global fiat regime. Its the engine the powers all these needless wars. Do you think Iraq would have happened if instead of "borrowing" all the money they had to raise taxes on the wealthy to 94% like they did in WW2? Not a freakin chance. If you wanted to fight a major war it wasnt just the soldiers that had to contribute it was the whole country, and the contribution expected was huge.

Now days you can fight two elective wars at the same time, while planning for a third one! And cut taxes right in the middle of it

In other words theres more more war than there would be under a sound money system, and the global fiat empire is responsible for a lot of real human casualties, and the rate at which we are consuming resources to make products we simply explode.

Debt also pays for other things...

How about my other questions:

Reserve dollars are bought by whom ? And how does debt result ?

You said 'If they dont spend the money into the economy then they will need to put it into the economy through the banking system,'... how does that work ?

[dre]

Graph

It looks like they borrowed about 3 trillion.

Debt also pays for other things...

How about my other questions:

Reserve dollars are bought by whom ? And how does debt result ?

You said 'If they dont spend the money into the economy then they will need to put it into the economy through the banking system,'... how does that work ?

Reserve dollars are bought by whom ? And how does debt result ?

Its bought by everyone... and debt results from creating the money to keep up with all that demand.

Growing the money supply = growing debt.

You said 'If they dont spend the money into the economy then they will need to put it into the economy through the banking system,'... how does that work ?

Theres two ways to grow the money supply. The government can create money or banks can loan new money into existance.

[Michael Hardner]

Theres two ways to grow the money supply. The government can create money or banks can loan new money into existance.

Ok so ... "Because the US dollar is the worlds reserve currency and the fed has to satisfies the global demand for reserve dollars, it needs to keep expanding the size of the monetary base and the only way to do that is through the creation of more debt, and this causes the massive trade imbalance."

Does this mean that the fed sells US bonds that it wouldn't otherwise sell, and goes into debt as a result ? That seems backwards. Is the US government borrowing more than it wants to ? Does that drive deficits ?

[dre]

Ok so ... "Because the US dollar is the worlds reserve currency and the fed has to satisfies the global demand for reserve dollars, it needs to keep expanding the size of the monetary base and the only way to do that is through the creation of more debt, and this causes the massive trade imbalance."

Does this mean that the fed sells US bonds that it wouldn't otherwise sell, and goes into debt as a result ? That seems backwards. Is the US government borrowing more than it wants to ? Does that drive deficits ?

It means that it sells bonds that it would otherwise be UNABLE to sell, and runs defecits that it would not be able to run. And it means they need to make sure theres enough US dollars in the global banking system to support the trade of commodities on dollar denominated exchanges, and it basically makes the US central bank responsible for liquidity in the system, which is why theyre doing things like bailing out foreign banks with US dollars to the tune of 15 Trillion dollars according the last (and only) audit of the FR.

It also allows the US to engage in the same kind of competitive devulation that china does.

[Guest American Woman]

Ron Paul "helped" out Perry by joking about cutting out the EPA rather than commerce, education and, um, uh, er... oops!

See around 1:40 on in the

.

Actually, that's Mitt Romney asking if the third agency Perry was trying to think of was the EPA.

[Michael Hardner]

It means that it sells bonds that it would otherwise be UNABLE to sell, and runs defecits that it would not be able to run. And it means they need to make sure theres enough US dollars in the global banking system to support the trade of commodities on dollar denominated exchanges, and it basically makes the US central bank responsible for liquidity in the system, which is why theyre doing things like bailing out foreign banks with US dollars to the tune of 15 Trillion dollars according the last (and only) audit of the FR.

Ok... but the driver behind this is unclear to me: are they trying to sell as many bonds as possible, or are the obligated to do so ?

[dre]

Ok... but the driver behind this is unclear to me: are they trying to sell as many bonds as possible, or are the obligated to do so ?

I dont know if they are "obligated" exactly. But if the Fed doesnt meet the global demand for dollars then it could harm the US economy and the global economy because of the lack of liquidity. THey call this the "Triffin Dilemna", and its a collision between domestic policy goals of the reserve currency issuer and the its international goals. If the US stopped running a defecit the global fiat empire would collapse.

THe “Triffin Dilemma” postulates the necessity of US external deficits as long as the US dollar is the only global reserve currency. In a famous warning to Congress in 1960, the Belgian Yale economist Robert Triffin explained that as the marginal supplier of the world’s reserve currency, the US had no choice but to run persistent current account deficits. As the global economy expanded, demand for reserve assets increased. These could only be supplied to foreigners by America running a current account deficit and issuing dollar-denominated obligations to fund it. If the US stopped running balance of payments deficits and supplying reserves, the resulting shortage of liquidity would pull the global economy into a contractionary spiral (Triffin, 1961). Note that demand for foreign exchange reserves forces developing countries to transfer resources to the countries issuing those reserve currencies – a case of “reverse aid”.

This is what some economists believe caused the meltdown in 2008. That was the conclusion of Chinas top banker...

In the wake of the financial crisis of 2007–2008, the governor of the People's Bank of China explicitly named the Triffin Dilemma as the root cause of the economic disorder, in a speech titled Reform the International Monetary System. Zhou Xiaochuan's speech of 29 March 2009 proposed strengthening existing global currency controls, through the IMF

Edited December 2, 2011 by dre

[Michael Hardner]

Ok. Well, it's clear that the world economy is dependent on these vehicles existing, and that governments depend on them to fund debt.

All is well, then. Or ... wait ... we're back where we started but at least I know a little more than I did.

Thank you.

[dre]

Ok. Well, it's clear that the world economy is dependent on these vehicles existing, and that governments depend on them to fund debt.

All is well, then. Or ... wait ... we're back where we started but at least I know a little more than I did.

Thank you.

Well... all isnt well. The system is a house of cards thats getting more and more unstable, and 12 private corporations basically have a license to commit outright theft from everyone in the economy any time they feel like it.

Its inherently unjust, and confiscatory, and it concentrates wealth at an alarming rate.

This is just stunning. $7.77 trillion!? This money was handed out by the Fed. Reserve at 0.01% and is being loaned back to the US government at 3%.

Think about what that means for a second... And its more like sixteen trillion. Just the act of creating that money was confiscatory. But for the government to give the money to 12 private corporations at .1% and then borrow it back at 3% is obscene.

A stack of 16,000,000,000,000 (sixteen trillion) one dollar bills would be 1,085,856 miles high.

Over a million miles. Im pretty sure that if you actually printed it out on paper that would be enough money to paper mache the planet, and you could just whip up a few trillion more dollars to buy the paste.

That stack of bills would reach the moon... then back to earth... then to the moon again... and back to earth again... And there would still be a 100,000 mile high stack of dollars to buy beer after the trip.

I think people are pretty much numb to all this now. They are making so much money that people literally cannot comprehend the numbers involved. Thank god they invented electronic money, or the Fed would have harvested most of the worlds forests by now. .

With the stroke of a pen, the federal reserve, which is a privately run consortium of 12 different gigantic private corporations has just extracted thousands of dollars worth of real wealth and purchasing power from each and every person that has any dollars and taxed the wages of every single worker in the economy.

[maple_leafs182]

Anyone watch Ron Paul on The Tonight Show with Jay Leno on friday? he was followed by Joe Rogan who is a Ron Paul supporter. It was a good interview, Jay asked question that actually matter, the MSM should take notes.

[punked]

I just want to point out that Ron Paul is wrong. Period he is wrong. Where is the inflation he promised with the expanding of the monetary base? It hasn't materialized I can't believe in the face of this people still support a guy running one issue in which he is clearly wrong.

[dre]

I just want to point out that Ron Paul is wrong. Period he is wrong. Where is the inflation he promised with the expanding of the monetary base? It hasn't materialized I can't believe in the face of this people still support a guy running one issue in which he is clearly wrong.

Theres the inflation.

http://goldprice.org/bob/uploaded_images/dollar_USD_Purchasing_Power-753629.gif

[maple_leafs182]

I just want to point out that Ron Paul is wrong. Period he is wrong. Where is the inflation he promised with the expanding of the monetary base? It hasn't materialized I can't believe in the face of this people still support a guy running one issue in which he is clearly wrong.

Are you a Krugman fan cause you sound just like him. Ron Paul predicted and warned us about the housing bubble. Also, the governments fudges the numbers when it comes to the inflation rate.

[Bonam]

Theres the inflation.

http://goldprice.org/bob/uploaded_images/dollar_USD_Purchasing_Power-753629.gif

Why measure inflation specifically in gold price? What does the price of gold have to do with inflation? What % of spending does gold comprise for an average American consumer? You may as well measure inflation by looking at how many kB of computer memory you can purchase for a dollar:

http://www.kurzweilai.net/images/chart07.jpg

What do you know, the dollar has deflated greatly, its purchasing power has increased ten billion fold in the last 65 years!

I'd say the 1000000000000% change there outweighs the 92% change shown in your graph

Edited December 19, 2011 by Bonam