Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
The Curious Capitalist posted the following article:
Fort Knox: What to Do with Old Yeller
Posted by Roya Wolverson Tuesday, June 28, 2011
Should the U.S. sell off its gold reserves to pay down debt? That’s the latest idea being tossed around by gold bug Ron Paul. Not only would selling Old Yeller help the U.S. pay its bills, says libertarian Paul, but it would put more gold in the hands of the American people and pull back the reins on the Federal Reserve, which is printing money like mad and debasing the value of our currency.
So insistent is Paul about this strategy that he challenged the government to a gold audit to make sure its stash of bullion at Fort Knox is really all there. (According to the Treasury’s inspector general, it is.) So is selling it a good strategy, or is Paul just a crazy kook?
Wonderful idea. The federal government exchange gold for dollars the federal government already has the unlimited ability to create??? What is his next suggestion – Hawaii exchange pineapples for salt water?
And as for “debasing” the value of our currency, the other word for that is inflation. So where is the inflation?
I see no relationship between “printing money like mad” and inflation, not for the short term (above graph) nor for the long term. Paul is just mouthing popular belief, with zero supporting data.
Can there be any doubt? The man is certifiable. Or just doesn’t give a damn about America in his hunger for political gain.
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.
Remember that the next time you’re tempted to ask a teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it ruined my future.”
7 thoughts on “Ron Paul and the gold maniacs. How ignorance trumps fact in our political world.”
Ron Paul really believes in the gold standard. It’s all part of the libertarian creed that says government is evil so having a fiat currency which is issued by the government is a bad thing. Many libertarians think that a gold standard is a solution to this perceived problem. It’s all politics and not based on any understanding of economics whatsoever. After all they love deflation and think it is an economic blessing. Just have a look at how much libertarians are in love with ‘bitcoin’, an online virtual currency designed to mimic gold. It even includes deflation and environmental damage via ‘mining’ just like real gold!
The strange thing is, I don’t know how he would plan to implement a gold standard in the future if the US government has sold off all its gold reserves. What if foreigners bought all the gold? I really don’t think he’s thought this through even according to his own economic theories.
I agree that the idea to sell real assets (gold) to get our fiat currency is absurd.
However to the point about debasing the currency, isn’t he talking more along the lines of the Federal Reserve printing money by allowing fractional reserve banking (bank credit) and increasing M1 via quantitative easing than federal deficits?
Frankly, I don’t know what he is talking about, but even using M1, there is no relationship to inflation:
The intuitive relationships between money supply and inflation simply do not square with reality. As always, I urge people to look at facts as they are and not as they “should” be.
Rodger Malcolm Mitchell
I think it’s because the mainstream economists, and the out of control FIRE sector have stuffed the economy so bad and stiffed the working and middle classes for so long, that nutjobs like Ron Paul gain traction and popularity.
I also think the progressive side of politics needs to take some blame here. They’ve adopted and therefore allowed themselves to be boxed in by the conventional economic paradigm which restricts their ability to spend in areas that benefit their constituents, and also allowing the conservatives to use the ‘tax & spend’ label, as well as running up big deficits…. which conveniently ignores their own record as big deficit spenders themselves.
Keep up writing this stuff, maybe some day people will understand and reject the nonsense that has been taught to them.
What do you think of this wonderful idea from Ron Paul?
Excellent idea. The total federal debt is about $14 trillion. Federal debt held by the public is about $9 trillion. So depending on some accounting gymnastics, there is about $5 trillion in debt the government owes to itself.
That is the kind of nonsense with which Congress busies itself.
Of course, all T-securities should be eliminated, but that is another story.
Rodger Malcolm Mitchell