End the Fed is Stupid
Retarded Ron Paul wants to End the Fed - Why?
As you’ve probably noticed, Ron Paul and Ron Paul supporters are complete fanatics about the Federal Reserve. This is a topic that I really wanted to get into here because it’s one of the most misleading positions by Paul. I know that he puts on happy spins to his deep down views, but this takes the cake. Audit the Fed, End the Fed all derive from the same place. They derive from a conspiracy that the Federal Reserve runs the government, is controlled by powerful international banks, and it was all hatched on Jekyll Island.
The Fed Conspiracies
I need more time to prepare a proper response to this. The reason is that there is so much on the subject, but it’s all pretty much half truths or outright lies.
The Gold Standard Solution
I get very scared of people that are fanatical for the gold standard. The reason for it is that they simply are coming from an apocalypse type place where they have their stash of gold in their bomb shelter with their armory of weapons. Is the concept of having money backed by a commodity a bad thing? No. You could have your money back by housing, by beer, by just about anything on the market and that will allow it to hold it’s value. Anyone that suggests gold as a backing is someone that is a moron.
There simply isn’t enough Gold to make this plausible. In the history of man we’ve only extracted 20 cubed meters of it. That’s all the recorded gold. More can be dug, but gold comes in veins, making it very hard to find a mother load of it. There will always be too little. And these facts are readily available, so why would a “free thinker” like Ron Paul or his supporters support the idea of money being back by gold? The simple answer is that they are heavily leveraged in it. The whole collapse of the economy, apocalypse and conspiracy theories are really their driving factor.
Even if there was an economic meltdown, gold would never be the main game. In fact, Paultards would only be able to use their gold to buy things from other Paultards. The fact is that gold doesn’t naturally become the currency because it just isn’t suitable. In post WW1 Germany, when the government was running the printing presses, cigarettes (not gold) became the currency. Cigarettes are light, easy to transport, market based, and a pretty popular item. Gold on the other hand is a rock that is shiny.
Inflation Retardation
A big argument for Ending the Federal Reserve is that it creates inflation. The only time the statement is true is when you have the concept of quantitative easing. The problem with a lot of Ron Paul supporters is that they don’t even understand the positions they support when it comes to the Federal Reserve. Paultards will often rattle on about how the government deficit is just printing money causing inflation and so on/so forth.
Fact: Government debt is funded through bond sales purchased by the private sector.
If I buy a bond for $1, this means I have one less dollar and the government has one more dollar. Net: zero change. There is no inflation caused by running a deficit. It’s when quantitative easing (QE) is put into place that causes this problem. QE is when the Federal Reserve (forced by the government and lack of market interest) has to buy these bonds in order to fund the deficit. These are extreme circumstances and QE isn’t something that happens that often. I will agree that it is inflationary in a sense and it’s the big reasons why deficit spending can’t be out of control.
I’m trying to point out the misinformation that Paultards often go on about.
Fact: A Gold Standard will not create balance of inflation or deflation
The fact of the matter is that inflation and deflation are caused by market discrepancies with the supply and demand of the market place. It is true that our current system of paper money is more inflationary because that is really the goal it has for itself. The target is about 2-3% a year. If you’re wondering why this is the number aimed for it is just due to history. Our economies have been the most stable with a slight inflationary monetary policy. In the past we’ve had very bad economic times because the Federal Reserve or the gold backed market couldn’t do it right.
The gold standard isn’t going to stop the boom and bust because these things do happen. Ron Paul and his crew have this notion that the economy is driven by sound money. Sound money is something that allows the economy to flow properly, but it isn’t a driver. The driver is making money. Booms and busts tend to be the results of speculative ventures. People throwing money into things because the money is so easy, but the fundamentals don’t justify it. This is why there has been plenty of booms and busts with gold backed money. Remember, it wasn’t until the 1971 that the US currency become fiat. Just think of all the booms and busts before that point. Just look at the booms and busts before the Federal Reserve was even created. Paultards will try to tell you that booms are caused by the expansion of the money supply and busts are caused by the reduction of the money supply. Not true. The money supply adapts to the market. Booms require more money and busts require less.
The reality is that the gold standard would create a deflationary trend. Like I mentioned before, there isn’t a lot of gold. In the entire history of man we’ve only been able to get our hands on about 20 cubed meters. If the economy grows by 3% a year, then the money supply needs to grow 3% a year to balance it out. That’s how the market will try to work, but there simply isn’t enough. At a 3% yearly growth, after 15 years we’d need over 10 cubed meters more just to balance it out. It’s not going to happen.
This means that the demand for gold will increase while the supply can’t keep pace. If you can earn 5-10% a year by simply holding onto your gold, then why would you invest it? Why would you spend it? The economy would turn into nothing more than hoarding because that’s where you can make the best return. The economy would collapse on a hoarding orgy and eventually turn into anarchy as jobs would be far and few inbetween. This is the economy that Ron Paul is talking about. One where people hoard because the system is built so poorly.
Fact: We have fiat currency because it’s the best we’ve come up with so far
The fact is that this is the best we’ve come up with so far. It presents the best incentives to prosperity and economic growth. It’s not perfect, but neither is the alternative to gold back currency. The reason we ended up with fiat is that we’ve had issues in the past with gold and it didn’t work for us. It created economic disasters and we didn’t want to repeat them. Paultards will talk of conspiracies of rich bankers looking to make money by getting rid of gold and so forth. They’re conspiracies. They’re not important. They have no evidence or facts. They require revisionist history books to get their facts.
Fiat is definitely not perfect, but it is a hell of a lot better than the gold standard.
Fact: Fiat Currency Has Value
One of the most common things Paultards and gold standard morons say is that paper money is worth the value of paper. That isn’t true. The paper is worth pennies and I can buy things more than pennies. Their idea of value only comes from the physical characteristics of it. I guess this is probably the big reason why they don’t believe in intellectual property rights. The value of paper money comes from the same place the value of gold comes from. Whether you’re trading pieces of paper(dollar bills) or shinny rocks (gold) the value comes from the same place.
Fact: Gold isn’t an indicator of inflation
I don’t know if you’ve ever argued about the economy with a Paultard, but you’ll probably learn quickly that they have warped views of inflation. They’ll often say that Gold is a hedge against inflation. That gold is REAL money and it’s value stays the same no matter what *rolls eyes* and it’s really the dollar that is getting weaker. I had one blatantly tell me that in today’s economy where we have very low inflation and a little deflationary trend that gold was going up, so there is inflation. 10 years ago an ounce of gold was worth around $300 and today it is roughly $1700. Anyone thinks that $300 10 years ago will buy the same amount of stuff at $1700 today is an idiot and huffing glue.
Gold has nothing to do with inflation. It’s just a convenient talking point for Paultards because of the economy. They often quote long hundred year graphs to show their point. In the year 1800, if you bought $1 worth of gold you’d have $80 today. If you put $1 into the stock market, you’d have well over a million today. Inflation hedge my *$$. If you look at 1975 we had inflation of 10%, so we would expect a 10% jump in Gold. Nah, it lost 22%. Through 1980-82 there was 10% annual inflation, and gold lost 33%.
The fact of the matter is that gold is in such a speculative bubble right now, and Paultards are so delusional to see it (they see inflation *rolls eyes*). Gold doesn’t follow inflation.
Feeling sorry for you.
Not necessary. The New World Order pays me well. – Site Owner
It’s BECAUSE Gold is scarce that it would make a good backing commodity for our money. That way, we couldn’t just print more money out of thin air and back it by the silver/trust system we have today. In post WW1 Germany they were using their money as wallpaper because their money was absolutely worthless due to it 1. not being backed by a valuable commodity and 2. Having more money printed to stave off the horribly rising cost of goods due to inflation caused by issue number 1. We shouldn’t just print money that doesn’t have something LIKE Gold backing it, it would be like paying in cigarette paper with no tobacco in it, it has nothing really making it of value to anyone.
Why is scarce good though? I guess that would be my first question. Being able to print money out of thin air is wrong, but it isn’t quite that simple. The expansion of the money supply comes from credit with a fractional reserve. Whether the reserve has gold or paper money in it, it can be expanded. Without a person to accept the loan, the money supply can’t be expanded. Unless they’re dropping it from planes, but as I know the Federal Reserve isn’t doing that.
You say it doesn’t have any value. I can purchase my internet, the rights to this domain and the hosting to keep it online with this worthless money. The better question is what makes a shiny rock like gold any more valuable? Scarcity isn’t an answer. I think you’ll find the value of that shiny rock comes from the same part of the brain that provides value to a piece of paper.
I also made the argument in that post about Gold being a STUPID idea for the backing of a currency. What makes gold better than say a bottle of beer, pack of cigarettes or an iPhone. At least those things are of use to people, other than being shiny.
The thing that makes it better then those that you listed are, it doesn’t degrade, destroy, or stop working.
We could use pebbles if we wanted, but it seems you are missing the greater point. Growing the money supply, devaules all the money in the system. You keep stating that ‘the value of paper money and a shiny rock come from the same part of the brain’, but you don’t seem to be actually engaging that part of your brain. It’s because there is a finite supply of both. If suddenly, tomorrow, the treasuray printed 3 trillion dollars and put it in circulation, you can sure bet prices would rise and the ‘value’ of the dollar would fall. Same as if someone discovered 30 cubed meters of gold, the value of gold would fall.
The reason ‘paultards’ want a gold backed currency (in reality they just want competition to the dollar) is because the likelihood of someone discovering 30 cubed meters of gold is quite a bit less then the government printing 3 trillion dollars. It removes the power of manipulation away from the government. This is the same reason the government collects a ton of cash and shreds it every year, they are trying to artificially create the same scarcity of something like gold. They don’t have to print money to devalue the dollar, they just have to destroy less of them.
It’s true that gold doesn’t degrade, destroy or stop working, but that doesn’t mean anything about whether it is good for money. For me, it’s simple supply and demand. The supply of money needs to grow with the growth of the economy. This is how an ideal market based currency would work. The problem is that gold is just a rock. The value of gold comes from the same place the value of fiat currency comes from, which is this pretend value. For example, silver is a better form of currency because it actually has a MARKET based demand for its use. It can be used for medical purposes and water purification if my memory serves me right. Wouldn’t you think that a real product would be better way of meeting supply and demand of the market, rather than a rock that is for the most part completely hoarded?
You make the statement that growing the money supply devalues all the money in the system and that is simply not true. The devaluation happens when the money supply grows faster than the demand for it. For example, each day there are many people that enter the work force and others that are born. There will be more demand for it. The math explanation would be if you had a country of 10 people and the total money supply is $10. You have $1/person. If the country grows to 20, but there is only $10. You have $0.50/person. There is an increased demand. If the money supply had doubled, the value of the dollar would have remained constant.
Lastly, you mention the discovery of gold. Sure there could be vast discoveries. Or there could be perfectly good things that aren’t rocks that could be it. Why gold? I’ve yet to get an explanation on why gold is better than anything else produced by the market.
You keep speaking of the printing of money and I know that is a very cliche thing to throw around, but unless the Fed is flying planes over cities and dropping these bills everywhere, it means nothing. A market transaction has to take place to get this money into the market. Someone has to lend the money and someone has to accept it. That injection of money, based on a market transaction, has a stimulating result in the economy. Whether that stimulating is worth more or less than the money injected is another debate.
The real issue that you don’t seem to pick up on is that the money supply can be grown with gold backed currency. It’s called fractional reserve banking. The elimination of that, whether with fiat or gold would result in a massive decline in monetary creation through credit. What’s your position on that?