Ron Paul and the gold standard, explain his solution please

[Artsemis]

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He opposes dependency on paper fiat money, but also says that there "were some shortcomings of the previous gold standard because it was a fixed price and caused confusion. He argues that hard money, such as backed by gold or silver, would prevent inflation, but adds, "I wouldn't exactly go back on the gold standard but I would legalize the constitution where gold and silver should and could be legal tender, which would restrain the Federal Government from spending and then turning that over to the Federal Reserve and letting the Federal Reserve print the money." He supports parallel currencies, such as gold-backed notes issued from private markets, competing on a level playing field with the Federal Reserve fiat dollar. He believes this would restrain inflation, limit government spending, and eventually eliminate the ability of the Federal Reserve to "tax" Americans through inflation.

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I don't really understand what he's saying here. What exactly is his solution if it isn't going back to the gold standard?

[phillydilly]

[ QUOTE ]
[ QUOTE ]
He opposes dependency on paper fiat money, but also says that there "were some shortcomings of the previous gold standard because it was a fixed price and caused confusion. He argues that hard money, such as backed by gold or silver, would prevent inflation, but adds, "I wouldn't exactly go back on the gold standard but I would legalize the constitution where gold and silver should and could be legal tender, which would restrain the Federal Government from spending and then turning that over to the Federal Reserve and letting the Federal Reserve print the money." He supports parallel currencies, such as gold-backed notes issued from private markets, competing on a level playing field with the Federal Reserve fiat dollar. He believes this would restrain inflation, limit government spending, and eventually eliminate the ability of the Federal Reserve to "tax" Americans through inflation.

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I don't really understand what he's saying here. What exactly is his solution if it isn't going back to the gold standard?

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This may be a massive over simplification, but basically it comes down to we must stop printing money. And I mean that in the very literal sense.
Also involved in this, is reduce the budget, no deficit spending.

Here is a link to him discussing inflation with Ben Bernacke. He discusses the moral implications of the Fed manipulating the dollar/interest rates
http://youtube.com/watch?v=bxLXaiWmFB4

*i'm not an expert

[mjkidd]

RP wants to eliminate capitol gains type taxes, as well as relax legal tender laws. These two laws (particularly the capitol gains tax) are the main barriers to private, commodity-backed currency. Then, if the markets demanded gold (or pork-belly, or frozen orange juice concentrate) backed currency, banks would be free to provide them.

[Borodog]

[ QUOTE ]
[ QUOTE ]
He opposes dependency on paper fiat money, but also says that there "were some shortcomings of the previous gold standard because it was a fixed price and caused confusion. He argues that hard money, such as backed by gold or silver, would prevent inflation, but adds, "I wouldn't exactly go back on the gold standard but I would legalize the constitution where gold and silver should and could be legal tender, which would restrain the Federal Government from spending and then turning that over to the Federal Reserve and letting the Federal Reserve print the money." He supports parallel currencies, such as gold-backed notes issued from private markets, competing on a level playing field with the Federal Reserve fiat dollar. He believes this would restrain inflation, limit government spending, and eventually eliminate the ability of the Federal Reserve to "tax" Americans through inflation.

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I don't really understand what he's saying here. What exactly is his solution if it isn't going back to the gold standard?

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Dr. Paul has written entire books on the subject:

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GOLD, PEACE, AND PROSPERITY

Ron Paul has been the leading champion of sound money in the Congress. Here he explains why sound money means a new gold standard. The monograph is written in the clearest possible terms with the goal of explaining the basics of paper money and its effects of inflation, business cycles, and government growth. He maps out a plan to bring about a dollar that is as good as gold, one that would be protected against manipulation by government and central bankers. Part of that strategy is the minting of a new gold one but the more far-reaching plan involves a redefinition of the dollar and complete monetary competition. This monograph first appeared in 1981, and it has been in wide distribution ever since. Henry Hazlitt writes the introduction, and Murray Rothbard writes the preface.

57 pages, 6" x 9", paperback

THE CASE FOR GOLD

In 1982, Ron Paul served on the U.S. Gold Commission to evaluate the role of gold in the monetary system. In fact, the Commission was his idea. It was carrying forth a promise made in the Republican platform.

Ron couldn't pick the members, so from the beginning, the deck was stacked. The majority was dominated by monetarists, who saw gold as too scarce and paper as just fine. Ron Paul's team was ready, however, with this marvelous minority report.

Rarely has a dissent on a government commission done so much good!

The result was The Case for Gold , and it was the greatest result of the commission. It covers the history of gold in the United States, explains that its breakdown was caused by governments, and explains the merit of having sound money: prices reflect market realities, government stays in check, and the people retain their freedom.

The scholarship and rigor impressed even the critics of the minority. Ron and Lewis Lehrman worked with a team of economists that included Murray Rothbard, so it is hardly sup rising that such a book would result.

It still holds up as an excellent blueprint for moving beyond paper money and into the age of sound money. In particular, Ron favors complete monetary freedom to use any commodity as money, to make contracts in any money, and an end to the monopolization and printing power of the Federal Reserve.

There is a strong piece of history in this book. Not since the 19th century has a political figure made such a sweeping and devastating case for radical monetary reform. This congressman ran circles around even the experts at the Fed. A dazzling performance indeed, and an inspiring and learned book.

245 pages, paperback

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Basically, to summarize his position:

Dr. Paul believes that competing hard currency (gold and silver) should be legalized, legal tender laws abolished (these are the laws that require you to take Federal Reserve notes for "all debts public and private"), and that contracts denominated in any currency agreeable to the parties involved should be enforced by the courts (right now courts refuse to enforce gold contracts). Also, he says that the illusory "capital gains" on gold caused by the devaluation of the paper dollars via inflation should not be taxed.

I'm not sure his position on FRB, but I'm pretty sure he's a 100% reserve guy, which means that FRB would have to be abolished. He may be a competitive-note-issue guy though, in which case FRB could still exist (a bad mistake in my opinion, but still vastly better than what we have now).

[Scary_Tiger]

Basically, the dollar is and the Federal Reserve system is a mess and other currencies can't compete due to the laws of our country. He'd simply open currency to the free market, and see whether people would prefer a dollar backed by the threat of U.S. interventionism or another unit of currency backed by real substance or printed by an organization that doesn't inflate the currency at the government's will.

[maxtower]

Removing the capital gains tax on gold would go a long way towards providing a sound currency. People could demand that their savings/checking account be held in gold not unlike an e-gold.com account. Then when you spent it all the conversions would be taken care of electronically by Visa/MC.