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What if Ron Paul had his way?

joko104 said:
You left off eliminate the Civil Rights and Voting Rights Act, amending the Constitution to declare "Life Begins at Conception, and shutting down the FDA, EPA, OSHA, USDA. For starters.
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Ron Paul would eliminate the Civil Rights act, and the VRA? Please so be a source.

On the other things, bring it on!
 
Peter Grimm said:
It seems to me, you are describing a central bank. How is this concept any different?
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the difference would be no one entity setting an interest rate, and no one entity determining when to expand or restrict the supply of money.

fractional reserve regulations could either be regulated by congress, or market competition, or possibly via a defacto standard implemented by member banks insuring deposits. Lots of choices here.


Central banks stop bank runs by pouring cash into banks when "runs" on banks begin. For example, say the Bank of Kalamazoo has $10 million in deposits. They have $1 million in the vaults, $9 million are lent out to small business

Now, say there is a panic in the economy, and a bank run on the Bank of Kalamazoo. People want their money out. Well, the bank only has $1 million in the vaults. So what happens? The Fed to the rescue. The Fed dumps money in to the Bank of Kalamazoo, people are able to withdraw their money, and the panic ends.
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you familiar with how insurance works. banks could pool the risk of a run paying a premium that allows individual deposits to be insured up to a point. some banks could even risk not belonging to such a group, and could likely offer higher interest rates at a greater risk. Individuals decide how risky they want to invest.

Except that you can't insure all bank deposits without a central bank.
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even our own central bank isn't foolish enough to insure all deposits.
 
rocket88 said:
I think you'll be able to get married there :mrgreen:

But don't lie, we all know you'll follow the Thrashers to Winnipeg.
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Oh good grief no. Subzero temps and a ****ty hockey team? No thank you. Vancouver is very mild, and the weed is excellent. ;)
 
ARealConservative said:
the difference would be no one entity setting an interest rate, and no one entity determining when to expand or restrict the supply of money.

fractional reserve regulations could either be regulated by congress, or market competition, or possibly via a defacto standard implemented by member banks insuring deposits. Lots of choices here.
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That doesn't sound like much of a plan. What does Ron Paul want to do? Has he ever talked about this?

All I've heard is "end the Fed," but what is going to replace it?



ARealConservative said:
you familiar with how insurance works. banks could pool the risk of a run paying a premium that allows individual deposits to be insured up to a point. some banks could even risk not belonging to such a group, and could likely offer higher interest rates at a greater risk. Individuals decide how risky they want to invest.
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I know. It's not a bad idea, but the math doesn't add up. See, insurance is fractional too. They don't need to have funds for 100 percent of everything they insure. At the end of the day, the insurance industry just doesn't have the $$$ to bail out the banks.

Your idea of having the government do it would work... but it would essentially just be a government-run central bank.


ARealConservative said:
even our own central bank isn't foolish enough to insure all deposits.
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They do prop up the banks though. They do this in the form of loans... so if people want to withdraw more money than the bank has in the vault, they'll take out a short-term loan from the Fed to pay their depositors. That's how banks stay liquid.
 
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Peter Grimm said:
That doesn't sound like much of a plan. What does Ron Paul want to do? Has he ever talked about this?
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you need to be more specific. You first acted like fractional reserve banking was born with the fed, when it existed first. now you took a large group of text and asked a generic question.

All I've heard is "end the Fed," but what is going to replace it?
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nothing replaces it.

I know. It's not a bad idea, but the math doesn't add up. See, insurance is fractional too. They don't need to have funds for 100 percent of everything they insure. At the end of the day, the insurance industry just doesn't have the $$$ to bail out the banking industry.
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If the math doesn't add up, then banks can't profit. If you are ultimately saying that the only way to allow fractional reserve banking is because a central bank can erode currency by creating it, then you are really saying fractional reserve banking itself isn't solvent.
 
ARealConservative said:
the difference would be no one entity setting an interest rate, and no one entity determining when to expand or restrict the supply of money.

fractional reserve regulations could either be regulated by congress, or market competition, or possibly via a defacto standard implemented by member banks insuring deposits. Lots of choices here.




you familiar with how insurance works. banks could pool the risk of a run paying a premium that allows individual deposits to be insured up to a point. some banks could even risk not belonging to such a group, and could likely offer higher interest rates at a greater risk. Individuals decide how risky they want to invest.



even our own central bank isn't foolish enough to insure all deposits.
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You know, if you ever have time to watch a movie, you should really check out this one: The Secret of Oz - English - FREE.mov - YouTube

It's called The Secret of Oz, it won the Beloit International Film Festival's award for best documentary. Basically, it talks about how bad central banks are and lays out a plan to end the Fed.

I don't agree with everything in it, but I thought it was interesting and educational. It really puts a lot of what Ron Paul says into perspective.
 
Why the huge crusade on inflation? It is supposed to exist, and it does in all healthy economies. Certainly, very high or uncontrolled inflation is bad, but inflation is, by definition, only a nominal value. All real values increase to compensate. It does not eat away retirement savings, because the interest you are receiving on that retirement account is only as high as it is because of inflation. If the real interest rate is 6%, and inflation is 2%, your return will definitely be 8%. If you get rid of inflation, you just slow the rate of income growth and the interest rate as well. It does, literally, nothing except remove some of the options of the federal government.

For example, since there is inflation, the government can lower interest rates to near 0% to achieve a similar effect to negative interest rates (which would probably not go over too well). Inflation provides a buffer and a tool to keep the economy running smoothly.

Also, devaluing a currency is the most reliable, painless way to stimulate a global economy. It doesn't change your purchasing power, because you are supposed to get paid more to compensate (or now, simply not paid less). The idea that inflation eats away savings is a complete myth, unless you hide cash under a mattress, in which case you have bigger problems.
 
astein said:
Why the huge crusade on inflation? It is supposed to exist, and it does in all healthy economies. Certainly, very high or uncontrolled inflation is bad, but inflation is, by definition, only a nominal value. All real values increase to compensate. It does not eat away retirement savings, because the interest you are receiving on that retirement account is only as high as it is because of inflation. If the real interest rate is 6%, and inflation is 2%, your return will definitely be 8%. If you get rid of inflation, you just slow the rate of income growth and the interest rate as well. It does, literally, nothing except remove some of the options of the federal government.

For example, since there is inflation, the government can lower interest rates to near 0% to achieve a similar effect to negative interest rates (which would probably not go over too well). Inflation provides a buffer and a tool to keep the economy running smoothly.

Also, devaluing a currency is the most reliable, painless way to stimulate a global economy. It doesn't change your purchasing power, because you are supposed to get paid more to compensate (or now, simply not paid less). The idea that inflation eats away savings is a complete myth, unless you hide cash under a mattress, in which case you have bigger problems.
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inflation is an extremely unprogressive form of taxation, but the real insidious nature is the hidden component to it.

because it is hidden, it allows governments to grow, expand, and do business in the dark.

deflation is actually the natural order of most things. Technological evolution alone dictates lower prices, so how can you even measure inflation without knowing the amount of deflation that has already been negated?
 
ARealConservative said:
inflation is an extremely unprogressive form of taxation, but the real insidious nature is the hidden component to it.

because it is hidden, it allows governments to grow, expand, and do business in the dark.

deflation is actually the natural order of most things. Technological evolution alone dictates lower prices, so how can you even measure inflation without knowing the amount of deflation that has already been negated?
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If inflation ends up being a regressive tax, it is not because of the inflation per se, but rather because of sticky wages (these can also be good sometimes). Over the long run, however, wages rise to compensate for inflation (if the inflation is not too extreme). It might just have a slight lag.

During the recent financial crisis, would we really be better off without inflation? Lots of the world actually had deflation in 2009, and I am sure they loved that. In fact, the problem in Greece right now started after the Euro appreciated. This made Greek goods less competitive in exports and tourism, and that exacerbated the debt problem.

Inflation does not allow governments to grow larger, it is simply uneducated folks who do not understand how the economy works and who automatically assume that currency appreciation and deflation are good for them. There are a lot of smart, good economists out there, and almost none of them think we should go back to the gold standard/pursue an aggressive anti-inflation policy. The world tried going back to gold after WW1, and it just screwed with the economy for a very long time.
 
I can't stand Paul supporters, even if I'm not a US citizen.
They have no freaking clue that if Paul gets his way, the world economy will go to hell, and a few days later, the whole world with it
 
I think the FDIC covers depositor losses so in a non-FED world, I would still feel safe keeping my money in a local bank.

The FED has too much power and is a secretive organization. They run the economy by their philosophies and their partisanships.

As for the joys of inflation and 0% interest rates, it is pretty tough on people who have followed the "rules" and saved. No interest on your saving, your savings declining in purchasing value. It rewards only the profligate, such as our bloated Government and those individuals that live far beyond their means.

This endless creation of money by the FED in the name of stimulation puts us at tremendous risk of the loss of the value of our currency. It seems that bankers are the most stimulated and yes, I know, it will trickle down when they hire another butler.
 
ARealConservative said:
you need to be more specific. You first acted like fractional reserve banking was born with the fed, when it existed first. now you took a large group of text and asked a generic question.
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Oh no, fractional reserve banking has been around for a few hundred years. It has existed on its own (without a central bank) from time to time throughout history (even in the United States), but in today's economy that would be at our peril.

ARealConservative said:
nothing replaces it.
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So, we allow banks to fail?

ARealConservative said:
If the math doesn't add up, then banks can't profit. If you are ultimately saying that the only way to allow fractional reserve banking is because a central bank can erode currency by creating it, then you are really saying fractional reserve banking itself isn't solvent.
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Fractional reserve banking has its problems, and you've touched on one of them. Now, when the loans are repaid, the money goes out of circulation, so it's not like money is always being pumped in to the system, but still...

Fractional reserve banking does create money, yes. That process can cause inflation, yes.
 
Proud South Korean said:
I can't stand Paul supporters, even if I'm not a US citizen.
They have no freaking clue that if Paul gets his way, the world economy will go to hell, and a few days later, the whole world with it
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You are so right. It's hard to grasp the enormity of Paul's insanity.
 
astein said:
Why the huge crusade on inflation? It is supposed to exist, and it does in all healthy economies. Certainly, very high or uncontrolled inflation is bad, but inflation is, by definition, only a nominal value. All real values increase to compensate. It does not eat away retirement savings, because the interest you are receiving on that retirement account is only as high as it is because of inflation. If the real interest rate is 6%, and inflation is 2%, your return will definitely be 8%. If you get rid of inflation, you just slow the rate of income growth and the interest rate as well. It does, literally, nothing except remove some of the options of the federal government.

For example, since there is inflation, the government can lower interest rates to near 0% to achieve a similar effect to negative interest rates (which would probably not go over too well). Inflation provides a buffer and a tool to keep the economy running smoothly.

Also, devaluing a currency is the most reliable, painless way to stimulate a global economy. It doesn't change your purchasing power, because you are supposed to get paid more to compensate (or now, simply not paid less). The idea that inflation eats away savings is a complete myth, unless you hide cash under a mattress, in which case you have bigger problems.
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Predictability is huge here. An uncertain economy is a bad economy, after all. If we don't know what the value of the dollar is going to be tomorrow, that doesn't help anyone.

Playing devil's advocate... I'm sure you could look back at the history of the Fed and make a pretty good case that they have not always done the best job of controlling inflation.
 
Peter Grimm said:
Oh no, fractional reserve banking has been around for a few hundred years. It has existed on its own (without a central bank) from time to time throughout history (even in the United States), but in today's economy that would be at our peril.
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based on some of the things you have said in this thread, I don't think you really know what you are talking about


So, we allow banks to fail?
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this is a perfect example. the Fed isn't propping up failed banks. The FDIC insured depositers, but the bank still goes bottom up

FDIC: Failed Bank List
 
Proud South Korean said:
I can't stand Paul supporters, even if I'm not a US citizen.
They have no freaking clue that if Paul gets his way, the world economy will go to hell, and a few days later, the whole world with it
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I hear this alot, but when I actually debate people, as I have done in this thread, I find that I have a far greater grasp on how things operate then those that argue against me.
 
Peter Grimm said:
Predictability is huge here. An uncertain economy is a bad economy, after all. If we don't know what the value of the dollar is going to be tomorrow, that doesn't help anyone.

Playing devil's advocate... I'm sure you could look back at the history of the Fed and make a pretty good case that they have not always done the best job of controlling inflation.
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I agree with you 100% here. I am not even trying to defend the Fed necessarily (although I think abolishing it would be folly). I would still argue, however, that the dangers of uncontrolled inflation are not a problem with the idea of inflation itself. Inflation serves a few important purposes, just like government spending. And just like government spending, it is easy to have too much or to do to much to manage it.

In the end, I was trying to simply clear up the misconception that inflation is unequivocally bad, because most people do not even realize some of the good things associated with it.
 
astein said:
If inflation ends up being a regressive tax, it is not because of the inflation per se, but rather because of sticky wages (these can also be good sometimes). Over the long run, however, wages rise to compensate for inflation (if the inflation is not too extreme). It might just have a slight lag.
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As life spans continue to increase, the length of time you live without a salary increases. For these people, inflation is particularly damaging as you can't really prreict how long you will live, and how high inflation goes.

You are also simplifying things greatly. When the Fed expands the money supply, those most closely connected to the fed (the 1%) get the new money first befor. it dilutes the money supply, and is a huge reason we see a growing wage disparity.
Inflation does not allow governments to grow larger, it is simply uneducated folks who do not understand how the economy works and who automatically assume that currency appreciation and deflation are good for them. There are a lot of smart, good economists out there, and almost none of them think we should go back to the gold standard/pursue an aggressive anti-inflation policy. The world tried going back to gold after WW1, and it just screwed with the economy for a very long time.
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fiat currency allows the govenrment to grow. Inflation is used as a tool and makes spending beyond your means to go on for longer periods of time before creating a calamity. this is both a good and bad thing for govenrment.
 
ARealConservative said:
based on some of the things you have said in this thread, I don't think you really know what you are talking about




this is a perfect example. the Fed isn't propping up failed banks. The FDIC insured depositers, but the bank still goes bottom up

FDIC: Failed Bank List
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The Fed does not 'prop up´ banks in a really literal sense, but they most definitely do give them temporary loans that keep a lot more banks from failing. That list you posted would be pages longer without the Fed's intervention. I do not think anyone informed would argue seriously that the destruction of the modern banking system would be a good thing. There is a reason that central banks are ubiquitous throughout the world.

Even for maintaining the value of the currency: who do you think protects the markets against undue speculation and fluctuation in exchange rates? Granted, this is not as true anymore, as these rates are not as fixed as they were earlier, but it is still a big part of their job.

Returning to the gold standard is simply ridiculous, as it is still a relatively worthless currency, the value of which is derived almost completely from its rarity. We would have the same situation as exists today, as the dollar makes up ~90% of all foreign currency reserves. No one wants their currency to fluctuate too much against the dollar, and they really would not want large depreciation in the dollar. If you had gold, it would be the exact same, but there would be no flexibility to work with monetary policy, which actually does work a lot of the time.

Also, there would be huge unpredictability with gold as well. What if they find a huge new deposit of gold in South Africa. This would be a very immediate, unexpected form of inflation that would still mess with people's savings.
 
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ARealConservative said:
As life spans continue to increase, the length of time you live without a salary increases. For these people, inflation is particularly damaging as you can't really prreict how long you will live, and how high inflation goes.

You are also simplifying things greatly. When the Fed expands the money supply, those most closely connected to the fed (the 1%) get the new money first befor. it dilutes the money supply, and is a huge reason we see a growing wage disparity.


fiat currency allows the govenrment to grow. Inflation is used as a tool and makes spending beyond your means to go on for longer periods of time before creating a calamity. this is both a good and bad thing for govenrment.
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You are living without a salary, yes, but you are presumably earning interest from investments which are sustaining you, right? The interest is higher because of inflation. If there was less inflation, the rate would also be lower, by the exact same amount. Many pension plans and things of that nature are tied to the cost of living anyways.

How, exactly, does the 1% get the money first? Yes, it usually comes through the banks, with the intention that the banks will lend that money out. Some of this surely ends of with the 1% first, but if it does, it is because they already spent money in the past to buy bonds.
 
Even if financial disaster could be averted, what would happen is political disaster. A weakened and castrated government would be powerless to opposes a growing powerful corporatocracy and be soon co-opted as a partner in much the same way the Italian fascista government was structured. Just look at ALEC here in America and you can see the framework the right wing would impose on the rest of us in place of the government we have now.

Soon, this new American fascism in which the states is a mere toadie and sycophant of the corporate world, would begin to impose its will upon all of us and even the libertarians who pushed for Paul and his ideas would find themselves crying in their beer about the loss of their precious LIBERTY and FREEDOM when they helped bring on the nightmare.
 
rocket88 said:
Returning to the gold standard would result in an absolute collapse of the world economy. The whole thing thrives on people participating in the fiction that their money is actually worth something. (And then replace that with the fiction that gold is actually worth something)

Your money is only worth what you can get with it. Devaluing the currency reduces the buying power of every cent in your pocket.

You'd be left longing for the good old days of Obama.
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Obama didn't take us off gold, so there are no good old days of Obama, and there never will be.
 
AdamT said:
You are so right. It's hard to grasp the enormity of Paul's insanity.
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his bias is pretty obvious. We subsidize their defense greatly, we pump millions into their economy indirectly with our troops stations there, and we have given massive amounts of aid to the country.

his username is ironic too me though. Like most nations we do this for, we don't do it for free. We use this as extortion money to ensure they do exactly what we want them to do in agencies like the U.N. or in how they open dialogue with other nations.

Essentially, South Korea is our bitch, many South Koreans have enough pride to see this fact and want the relationship to change dramatically.
 
astein said:
You are living without a salary, yes, but you are presumably earning interest from investments which are sustaining you, right?
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houses presumably never lose value either.

your house of cards have been exposed before, they will be exposed again.
 
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