Ron Paul and the Dollar.

[maxtower]

The currency issue is a lot bigger than most people realize. The world cannot continue to finance our debt indefinitely. The US has run a trade (and government spending) deficit for many years in a row. At some point our creditors are going to want to be paid back ending the credit bubble we are in now.

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Eg staying on the gold standard would have held back the economic growth that has occurred since it was abandoned.

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This is not true. While the economy has exploded since that time, a lot of the gains are due to inflation, and are not real. My generation is expected to earn less than my parents (baby boomer) in real terms.

More of the gains have come from borrowing money, like the trade deficit that continues every year. If I give you a new credit card with a high limit each year, you are going to be able to buy a lot of stuff. At some point however, you are going to have trouble making those minimum payments. Then the credit cards are going to stop coming in the mail. When that happens, the assets you thought you had are going to have to go back to the bank.

[Woolygimp]

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The currency issue is a lot bigger than most people realize. The world cannot continue to finance our debt indefinitely. The US has run a trade (and government spending) deficit for many years in a row. At some point our creditors are going to want to be paid back ending the credit bubble we are in now.

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Eg staying on the gold standard would have held back the economic growth that has occurred since it was abandoned.

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This is not true. While the economy has exploded since that time, a lot of the gains are due to inflation, and are not real. My generation is expected to earn less than my parents (baby boomer) in real terms.

More of the gains have come from borrowing money, like the trade deficit that continues every year. If I give you a new credit card with a high limit each year, you are going to be able to buy a lot of stuff. At some point however, you are going to have trouble making those minimum payments. Then the credit cards are going to stop coming in the mail. When that happens, the assets you thought you had are going to have to go back to the bank.

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People who devoted their lives to economics, and are a hell of a lot more intelligent than you or I made the decision to change and understand the consequences and benefits of it.

[tolbiny]

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The currency issue is a lot bigger than most people realize. The world cannot continue to finance our debt indefinitely. The US has run a trade (and government spending) deficit for many years in a row. At some point our creditors are going to want to be paid back ending the credit bubble we are in now.

[ QUOTE ]

Eg staying on the gold standard would have held back the economic growth that has occurred since it was abandoned.

[/ QUOTE ]

This is not true. While the economy has exploded since that time, a lot of the gains are due to inflation, and are not real. My generation is expected to earn less than my parents (baby boomer) in real terms.

More of the gains have come from borrowing money, like the trade deficit that continues every year. If I give you a new credit card with a high limit each year, you are going to be able to buy a lot of stuff. At some point however, you are going to have trouble making those minimum payments. Then the credit cards are going to stop coming in the mail. When that happens, the assets you thought you had are going to have to go back to the bank.

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People who devoted their lives to economics, and are a hell of a lot more intelligent than you or I made the decision to change and understand the consequences and benefits of it.

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Wooly,
would you walk into a car dealership and say "tell me what car to buy, and how much I should pay for it" and then take their advice. Aren't their incentives a little different from yours?

[andyfox]

http://www.econ.ucla.edu/workingpapers/wp830.pdf

[Woolygimp]

I can't understand why you would say the incentives are different. The economists within the government would like to ensure a prosperous government, people, and nation using tools that minimize inflation and mimic actual GDP growth.

[Jeffiner99]

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I can't understand why you would say the incentives are different. The economists within the government would like to ensure a prosperous government, people, and nation using tools that minimize inflation and mimic actual GDP growth.

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No, the economists within the government want a way to tax you without your noticing. They want more of your money to spend on things they want. But they can't tax you too much or you might get mad, really mad. So they figured out a way and a time to get around the Constitution and create fiat money.

Fiat money is money that is not backed by anything. The legal tender laws make a crime not to accept it. Fiat money is nothing but paper. If the gov't wants more money all they have to do is print more. When they print more there are more dollars floating around for the same amount of goods. This means the value of your dollar has decreased. Then the price of things goes up because it takes more dollars to buy them because the dollar is worth less. That is a way of taxing you.

If you get 100 this month and can buy x number of goods and make the same 100 next month and now can only buy x-y number of goods you are worse off.

I would suggest that you do some reading on this subject. Go to Mises.org. If you don't feel like reading here is a video: http://video.google.com/videoplay?do...10540567002553

The federal reserve is a cartel of private persons that no one knows (not even the president) and with the help of Congress they control the money supply. In this manner, the rich are able to take trillions of dollars from the poor. (Collectively of course).

If our creditors ever decide that they don't like taking worthless dollars anymore (and they are making moves in that direction) then this whole house of cards can come falling down. See the definition of hyper-inflation.

Do not trust those in power. They are there because they like power, not you.

BTW - the word inflation has been hijacked. It really means monetary inflation that leads to price inflation but they have substituted price inflation as a way to say it is something they can't control. Monetary inflation is just how much extra printing the gov't has done. It is easy to control that. Don't print.

Ron Paul wants to take away the govt's ability to tax you in this manner. Goods and services should get cheaper every year and they would if the feds would stop interfering. Money would be spent where it would do the most good and the country would prosper. The rich at the top wouldn't have as much though. In a way it is a wealth transfer, from the people who are robbing you back to the ones who are being robbed.

[John Kilduff]

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The federal reserve is a cartel of private persons that no one knows (not even the president) and with the help of Congress they control the money supply.

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Is this really true, that not even the President of the USA knows who the Federal Reserve board members are? If so that strikes me as rather bizarre and somewhat worrisome.

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BTW - the word inflation has been hijacked. It really means monetary inflation that leads to price inflation but they have substituted price inflation as a way to say it is something they can't control. Monetary inflation is just how much extra printing the gov't has done. It is easy to control that. Don't print.

Ron Paul wants to take away the govt's ability to tax you in this manner. Goods and services should get cheaper every year and they would if the feds would stop interfering.

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I am guessing the reason things would get cheaper every year is due to more efficiency and competition? If there is no upwards artificial inflationary pressure (printing money), that would make sense. An interesting perspective that had never occurred to me. Hopefully someone with more background than I have can confirm, deny or further explain the forces at work as described in this post.

[bobman0330]

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I am guessing the reason things would get cheaper every year is due to more efficiency and competition? If there is no upwards artificial inflationary pressure (printing money), that would make sense. An interesting perspective that had never occurred to me. Hopefully someone with more background than I have can confirm, deny or further explain the forces at work as described in this post.

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Sounds like you have it. Things get cheaper because people get better at producing them. A few goods, maybe oil, might get more expensive because oil gets more expensive to produce, not cheaper, but generally things should go down in price as workers get more productive.

Of course, at least in a perfectly rational economic world, wages would also go down, so most people wouldn't see much effect on their purchasing power.

[Copernicus]

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There are plenty of economic analyses that show that as long as there are sufficient reserves of whatever is backing the currency, there is ultimately no effect on the economy of "fiat money". If there are insufficient reserves to accomodate economic growth a hard currency is a disaster. Eg staying on the gold standard would have held back the economic growth that has occurred since it was abandoned.

The best non technical analysis is probably "There Is No Such Thing As Fiat Currency" , from the UCLA economics department, but I havent been able to track it down online.

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So, what's the "whatever" that's "backing the currency"?

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So Ron Paul could possibly be a disaster to the economy?

...and to the question asked, our word.

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No, this is a bunch of nonsense. What's the worst case scenario if the demand for money is greater than the supply? The value of money goes up? Oh noez!!!

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Wrong. Recession and/or deflation are the worst case scenarios.

[tolbiny]

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I can't understand why you would say the incentives are different. The economists within the government would like to ensure a prosperous government, people, and nation using tools that minimize inflation and mimic actual GDP growth.

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Two things- look at the history of the federal reserve, the people who pushed for its creation were private, wealthy bankers like JP Morgan, or otherwise Powerful industrialists, like Rockefeller. Do you think having people whose lifestyles are very different from the average person write the rules (these after all were the types of guys who got appointed as reserve chairmen) is going to end up with a fair system that doesn't benefit one group over another?

2 Politicians live in very limited time frames, their immediate goals are almost always to get reelected. There are very good reasons to believe that politicians would favor immediate growth over long term growth even if the long term growth would be better for their constituents.