The case against Dr. Paul

[dash]

You continually make absolute statements like this. They are fallacious and undermine your argument. You are describing the catastrophic results of economic policy in perhaps the least socialist economy in the Western world (USA) and you are then extrapolating those problems to socialism as a principle and socialist/democratic countries in general. This does not match reality.

Socialist Western democracies are not experiencing these problems - at least not anywhere near to the same degree. Our biggest concern is how your recession is going to affect our productivity.

How is personal debt-loading and government debt-loading to the point of bankruptcy (aka the American model) anything but ignoring personal (and national) responsibility? Socialism is not the bogey-man; unrestrained capitalism and consumerism is. (Not to mention rampant imperialsm).

I'm speaking about America, not Canada. American socialism has run amok. Canadian, Europpean, I consider a big part of their problems as having been caused by economic pressure from the USA. USA pumps out dollars into the world economy, then muscles the other countries to do the same.

Canada -- I love Canada. I'm invested heavily there. I want Canada to succeed. I don't want any country to follow the USA's lead.

I'm in favor of each country deciding on its own how to run its affairs. Meaning if Canadians are happy with their government, more power to them. If they like elements of socialism combined with capitalism, great. Whatever works. I don't want the American Empire dictating world policy. I don't want One World Government. I don't want a New World Order. I want independent countries, each defending their borders, and free trade all around. They all cooperate to protect free trade. We do that and we'll all thrive.

Instead what we have is massive abuse of the US, as the controller of the world's (current) reserve currency, the US dollar. Then you have US military might used to bully other countries into going along with US dictates. It's ridiculous. I'm sick of paying for it all, one way or another. I'm sick of America's bad image. We're producing more terrorists than we're stopping. Did anyone ever ask what the terrorists are upset about?

They hate us for our freedom? What a joke. They hate us because we're meddling in their affairs. Propping up dictators because they go along with our economic policies. That's not free trade. That's empire. I want it to die. People the world over want freedom. Demonizing the middle east is just propaganda in action. It's 1984.

-Dave

 

[HereticHulk]

The Bright Side of the Panic of ‘08

Speaking of you personal views on the economy, could you perhaps give some timetable for the catastrophic colapse of the economy. I'd like to know exaxtly when to come back and beat you over the head with your failed prediction.

Futurist and trends forecaster Gerald Celente, director of the Trends Research Institute in Rhinebeck, NY, predicted the 1987 stock market crash, the collapse of the Soviet Union in 1989, the Asian economic implosion of ‘97, the decline of the dollar beginning in 2005, the meteoric rise in gold prices in an age of currency volatility, and the turn of events that may be the blessing of our era, the subprime mortgage crisis.

Because of this habit of prescience, Celente has appeared regularly on CNN and Fox and MSNBC, his “Trends Reports” widely quoted in newsprint, on Oprah Winfrey, on Good Morning America.


Now in his Report for 2008, issued in mid-December, he carried the news every thinking American already knows. “The United States of America,” Celente pronounced, “has gone from first class to third rate.” It’s a “nation on the skids and heading down.”



Celente projects economic and political crisis in the coming year. “In 2008, Americans will wake up to the worst economic times that anyone alive has ever seen,” he wrote on December 17. “Just as they didn’t see 9/11 coming and were frozen in shock when terror struck, [Americans] will be frozen in shock when terror strikes again.” He predicts “failing banks, busted brokerages, toppled corporate giants, bankrupt cities, states in default, foreign creditors cashing out of US securities…the stage is set, the big one is on its way.”

A similar wake-up call was issued last summer in a report by none other than the chief investigator for the US Government Accountability Office, comptroller general David Walker, who warned that US policy on energy, education, the environment, health care, immigration, Iraq – pretty much the gamut – was on an “unsustainable” course, bound for a maelstrom of insolvency that could threaten to sink the ship.

According to the GAO chief, the fall of Rome seemed an apt historical comparison:

“[D]eclining moral values and political civility at home, an over-confident and over-extended military in foreign lands, and fiscal irresponsibility by the central government. Sound familiar? I’m trying to sound an alarm.”

http://www.godlikeproductions.com/forum1/message497350/pg1

 

[WildCat]

I'm not sure I understand your point. Gold can't be created by government fiat.

You advocated inflating the price of gold by government fiat! Far, far above what the current market price says it is. How can the price of a fungible commodity be many times greater in the US than in the rest of the world? You'd have to make it illegal for private US citizens to hold gold and ban its export, and then the government would have to determine the value of the gold.

All you're doing is substituting one fiat currency for another.

 

[D'rok]

(interlude)

dash,

I just apt-got xscavenger. Nice work.

(carry on)

 

[HereticHulk]

You realize that by doing this you just turn gold into a fiat currency, don't you?

Do you care to explain your theory here?

Besides that, Ron Paul isn't advocating a forceful removal of the Federal Reserve, in fact, watch his meeting at the Taft Club, he's talking about legalizing a competing currency. So when he says he's a proponent of the Gold Standard, he means to have a truely free market in the production of money.
Why competition? Any real economist knows that where there is competition, the prices and services get better for the consumer. The consumer, Americans.
If that idea sounds odd, keep in mind JFK actually had his own mint and had the same idea of monetary competition going until he got shot.
We did very well with money backed by Gold and Silver, but now our economy is close to crashing due to reckless spending.
When we run out of money, we borrow it from China, and the Fed prints more. But we have to pay our loans back somehow, sometime.

 

[WildCat]

Do you care to explain your theory here?

2 posts above yours...

 

[dash]

I just apt-got xscavenger. Nice work.

Thanks, I'm glad you liked it.

-Dave

 

[HereticHulk]

2 posts above yours...

Where does RP advocate what you are saying in #483?

He advocates a competing currency that would topple the FED via a truely free market. This is why a lot of REAL Economists actually back up Ron Paul. I found a few editorials on kitco.com (a precious metal market website for the pros) where they fully back up Ron Paul on his stance on this issue.

When you have a competing currency that has a lower interest rate of, let's say 2-5%, and I think the FED's is over 10%. It is the free market principle that makes the FED either lower the rates or give up. So it's not a crazy notion at all.

It's true that gold is not totally immune to inflation- the gold supply is continually increased through mining. But, unlike fiat currencies, there are physical limits (i.e. costs) to expanding the gold supply. Moreover, as Alan Greenspan has pointed out, Gold has a very high stock to flow ratio, meaning that new annual production is a tiny fraction of the existing stock. Gold can be inflated withing extremely narrow limits; government paper can be inflated ad infinitum. Hence gold money (and other commodities) are our best defense against inflation. At best-i.e. when politicians and central bankers behave well, such as our current situation- inflation amounts to a tax on all dollar holders, a tax which bears largely upon wage earners and pensioners, those at the bottom of the economic ladder. At worst, inflation causes severe economic distortions- business cycles- often leading to the eventual ruin of the currency and economic chaos.

Finally, I would like to point out that inflation and war go hand in hand. Inflation is very much a hidden or disguised tax, hence it is politicians' favorite way of paying for wars. If the taxes for wars had to be directly levied upon the people, beforehand, how successful would politicans be in initiating and escalating wars of agression? While it certainly would not bring an end to conflict, a true gold standard would be a great step towards international peace by the very fact of making it harder for politicians to fund their wars. Gold money goes hand in hand with peace.

Dr. Paul is an avid and intelligent student of Economics, and his advocacy of gold is well studied, well reasoned, and a very, very important aspect of his overall policy of freedom and peace.

Respectfully Yours,

Tyler Watts
George Mason University, Fairfax, VA

 

[dash]

Oh! You're one of those.

Volatile,

I refuse to continue discussion with you until you definitively answer my person X vs person Y story above. Explain the fairness of it.

-Dave

 

[WildCat]

Where does RP advocate what you are saying in #483?

He advocates a competing currency that would topple the FED via a truely free market.

Whoops, if the Fed is toppled you're back to the problem of not enough gold for the size of the economy. A problem you and Ron Paul don't seem to be able to grasp.

 

[dash]

http://www.godlikeproductions.com/forum1/message497350/pg1

Regarding Celente's predictions:

Testify, brother! Amen!

Glad it's not just me forecasting doom + gloom.

People, wake up! The building is on fire! Run. Run...RUN!!!!!

-Dave
PS What this amounts to is if you've got US assets, get rid of US bonds and most high P/E US stocks. Buy gold + silver -- physical metal is always best. Buy foreign divident paying stocks. Invest in emerging markets -- China, India, Brazil. Did I mention GET RID OF YOUR BONDS?

If you have no net worth, then max out your credit cards and buy physical silver and gold, and hide it somewhere. If you can possibly get a mortgage on a house that you're going to lose anyway, do so -- and invest the money in precious metals.

Crisis = opportunity.

 

[WildCat]

If you have no net worth, then max out your credit cards and buy physical silver and gold, and hide it somewhere. If you can possibly get a mortgage on a house that you're going to lose anyway, do so -- and invest the money in precious metals.

 

[dash]

Whoops, if the Fed is toppled you're back to the problem of not enough gold for the size of the economy. A problem you and Ron Paul don't seem to be able to grasp.

You're not understanding it. The dollars go <<<POOF>>> and are suddenly worthless. Priced in dollars, gold goes to very high levels. Then you can't buy gold for any amount of dollars. We're talking about a new currency that replaces the dollars.

Too bad if you were stuck holding the bag, or didn't find a seat when the music stopped.

Look up the Weimar republic. Or the currency explosion in the Confederate States of America. I think it's going on in Zimbabwe today.

There is no way of making it so that today's buying power of all the dollar backed assets will carry over into a new currency. There is too much debt to pay down. The government is going to renege on the debt. Either by an outright default, or by currency devaluation. It's what they do.

-Dave

 

[volatile]

You're basically posting a version of Aesop's "Ant and the Grasshopper", right? Let me see if I can demonstrate where you thinking fails - it's principally in extrapolation.

Person X buys an overpriced house in 2004, doesn't read the paper on the loan agreement, signs onto an ARM loan. Person Y buys an equivalent overpriced house in 2004, but he read the loan agreement, and got a 30 year fixed mortgage.

2007 rolls around and person X's mortgage resets, suddenly he can't afford to live in his home. Person Y has managed to make his higher payments on time. He has had to forego a big screen TV, a nicer car, and eating out. Person X suffered no such hardships. He spent the savings on his home payment.

So now the government steps in and says it's not fair that person X should lose his house. We'll adjust the terms of the ARM so that the bank can't foreclose, person X can go on maying his subprime payments.

Is this scenario fair? Fair to who? Person Y got royally screwed.

Well, you could argue that Person X also got royally screwed, given that he is massive debt, has no savings and risks having all his stuff seized. Maybe he didn't understand the loan agreement. Maybe the bank mis-sold him the loan, or he was taken in by the advertising.

Nevertheless: how is Person Y "screwed"? He has a house he owns, and savings. His retirement will be better than that of Person X. Person X remains flat broke, but is not homeless and out on the street. Also: bailiffs come and take his stuff away if he can't pay his bills. What's the point you're making?

Do you believe Person X should have to live on the streets because he made a bad set of decisions? Or what? You want to punish the foolhardy, or the economically naive?

In any case, I don't know of any governments, socialist or otherwise, who advocate interfering in the loan rates of private banks. In the real world, Person X loses his house and everything he owns, but does not starve to death or be forced to live on the street because the society he lives in provides a floor beyond which he cannot fall, through the provision of housing benefit.

Socialism doesn't mean everyone can freeload.

 

[WildCat]

You're not understanding it. The dollars go <<<POOF>>> and are suddenly worthless. Priced in dollars, gold goes to very high levels.

Gold is already priced in dollars! The price is determined by the free market, and is the same whether you buy gold in the US or China. You're not making any sense at all here!

You want to see a real mortgage crisis? Back the dollar with gold, and watch the price of a $400,000 house drop to $1,500. Though I suspect the price of your house would be the least of your worries in that scenario.

 

[dash]

You're basically posting a version of Aesop's "Ant and the Grasshopper", right? Let me see if I can demonstrate where you thinking fails - it's principally in extrapolation.

Person X also got royally screwed. Maybe he didn't understand the loan agreement. Maybe the bank mis-sold him the loan, or he was taken in by the advertising.

How is Person Y "screwed"? He has a house he owns, and savings. His retirement will be better than that of Person X. Person X remains flat broke, but is not homeless and out on the street. Also: bailiffs come and take his stuff away if he can't pay his bills. What's the point you're making?

Do you believe Person X should have to live on the streets because he made a bad set of decisions? Or what?

In any case, I don't know of any governments, socialist or otherwise, who advocate interfering in the loan rates of private banks. In the real world, Person X loses his house and everything he owns, but does not starve to death or be forced to live on the street because the society he lives in provides a floor beyond which he cannot fall, through the provision of housing benefit.

Socialism doesn't mean everyone can freeload.

Haven't you heard about Bush's plan to avert the housing crisis? There is talk of freezing interest rate payments so people won't get foreclosed. "I don't know of any governments..." Welcome to USA, it's going to happen here, evidently. The government is preparing to interfere in signed, contractual loan agreements.

When the government uses taxpayer money to bailout irresponsible borrowers (and lenders) person Y is hurt because his tax dollars are used to save someone else who made poor decisions. That's not fair by any stretch of the imagination.

You can't reward people for stupidity, by protecting them from the pain of their mistakes. That's how you dumb down your people.

"Socialism doesn't mean everyone can freeload" you're correct in this. Everyone can't freeload, the system collapses. But right up until that point more and more people give up and just go for the free ride. Of course it depends on the population. If they keep asking for more and more "free" government giveaways, the outcome is certain -- collapse!

-Dave

 

[volatile]

Haven't you heard about Bush's plan to avert the housing crisis? There is talk of freezing interest rate payments so people won't get foreclosed. "I don't know of any governments..." Welcome to USA, it's going to happen here, evidently. The government is preparing to interfere in signed, contractual loan agreements.

Well, that is certainly preferable to a tonne of homeless people all being created at the same time, isn't it? If the alternative is widespread misery and abjection, I can see how a case can be made.

When the government uses taxpayer money to bailout irresponsible borrowers (and lenders) person Y is hurt because his tax dollars are used to save someone else who made poor decisions. That's not fair by any stretch of the imagination.

You're making out like people who are still locked in to mortgages they can't repay, who have no savings and who are flat broke but not homeless are doing well, which is obviously absurd. Stopping people becoming homeless is a very sensible strategy for the good of a nation - homlessness leads to crime, declining health, dropping education and all the rest.

You can't reward people for stupidity, by protecting them from the pain of their mistakes. That's how you dumb down your people.

Stopping people from starving to death is not a "reward". Also, if the bank cuts rates (or the government forces a rate cut, even), everyone benefits. In fact, your Person Y actually benefits more, because he can pay off his home quicker.

"Socialism doesn't mean everyone can freeload" you're correct in this. Everyone can't freeload, the system collapses. But right up until that point more and more people give up and just go for the free ride. Of course it depends on the population. If they keep asking for more and more "free" government giveaways, the outcome is certain -- collapse!

When, exactly, is the Swedish economy going to collapse? They've had a very, very Socialist (quasi-Marxist) ruling party since 1917, almost a hundred years!

Your hypotheticals don't stack up in the real world.

 

[dash]

Gold is already priced in dollars! The price is determined by the free market, and is the same whether you buy gold in the US or China. You're not making any sense at all here!

You want to see a real mortgage crisis? Back the dollar with gold, and watch the price of a $400,000 house drop to $1,500. Though I suspect the price of your house would be the least of your worries in that scenario.

There is a difference between existing Federal Reserve Notes, which are backed by nothing whatsoever (they're literally IOU Nothings), and paper currencies that can be redeemed for a fixed amount of gold. This is what the gold standard is all about. For a long time the dollar was pegged to $35 per ounce of gold. That means for every dollar in circulation the government had better be able to lay its hands on the equivalent amount of gold, if anyone were to redeem their dollars for gold.

Roosevelt killed the gold standard, "For the good of the country". Prior to making it illegal for Americans to hold gold, the dollar was fixed at about $20/ounce. Then FDR tells everyone to turn in their gold, the country needs it. Immediately the government priced gold at $35/ounce. They just cheated everyone who turned in their gold for $20/ounce. See? The buying power of the dollar didn't suddenly collapse such that $20 before this devaluation was equivalent to $35 after.

Then in the 1960's when the USA started up the printing presses again, dollars were flooding the world. No one was redeeming their dollars for gold, they were content to trust dollars were sound. Remember WWII, the USA emerged super powerful, the rest of the world was devastated. We had 20 years high on the hog, and could flood the world with our dollars.

France started redeeming their dollars for gold. The French navy was sent over to the USA and was going back with loads of gold bullion. Nixon called a halt to this, and ended the gold standard. Suddenly all those dollars could not be redeemed for gold. The price of gold soared on the open market. The dollar continued to go down, down, down in purchasing power throughout the 70's. Somewhere in 1980 the Fed set the interest rates really high to stop the devaluation of the dollar. US suffered through years of recession, but then the economy recovered somewhat.

Here's an essay I found while writing this:

http://www.kitco.com/ind/Degraaf/aug152007.html

It talks about what money is.

-Dave

 

[volatile]

Dash - what happens when the economy grows beyond the total amount of gold available? You need to deflate the value of the dollar to keep up with your standard, ruining your economy. That's what WildCat is trying to explain to you.

Also, if you fancy sending me any of those worthless IOUs you happen to have lying around, I'll PM you my address.

 

[WildCat]

Haven't you heard about Bush's plan to avert the housing crisis? There is talk of freezing interest rate payments so people won't get foreclosed.

No, there is no Bush plan to do that.