Ron Paul thinks gold is money

The Economist article

This is kind of scary. People want to implement the economic ideas of a dude who doesn't understand the basic definition of money.

I agree the Bernank doesn't know his ass from a hole in the ground. He has been wrong about everything he has said in the past 4 years.

It used to be money. All of the bills we have were supposed to represent actual gold kept in various places. No longer. Sure is great that we no longer have gold, as the article says, "driving us off cliffs" - yup, this economy sure is stable now! Obviously this fiat money stuff doesn't work as well as the author thinks it does.

For one, I think Ron Paul has way better ideas than Bernanke.

The dollar is a confidence based belief system. It used to be based on the perceived value of a tangible asset but today it is based on the opinion of a bunch of capitalists that they can sustain belief.

That video is like two priests from differing religious sects arguing.

I dunno. As whacky a notion as pegging money value to gold is, is it really any whackier than the current fiat system where we pretend money is valued at whatever we declare it to be?

tuna55 wrote: It used to be money. All of the bills we have were supposed to represent actual gold kept in various places. No longer. Sure is great that we no longer have gold, as the article says, "driving us off cliffs" - yup, this economy sure is stable now! Obviously this fiat money stuff doesn't work as well as the author thinks it does. For one, I think Ron Paul has way better ideas than Bernanke.

Considering that there were depressions and resessions before we went off of the gold standard in 1933, it appears that the gold standard does not actually change much.

Well, unless we consider this most recent depression that was supposed to be just as bad as the 30's. Thing is, I don't seem to remember that there have been bread lines. And the company I happen to work for has had 2 years of increasing sales.

The good thing about this "depression" is that it's focused us on the fact that our consumer economy isn't that aswesome, and that buying stuff does not make you a better or worse person- one should buy more for need. Want is good, but can wait.

But who am I to question how bad things are..... I just listen to the news to remind me that I should be depressed. With a job. And a great wife. And with profit sharing. And with local supplies of food. And a neigborhood that doesnt' seem to have foreclosures happening. And an area that seems to have employment issues due to WHAT we make as opposed to making things in the first place. Wait- I guess I'm actually happy. And can see progress over where we were just two years ago.... hmm. maybe the news exaggerates things a little.

In reply to Giant Purple Snorklewacker:

OK. Then Ben is a Catholic, a man with a stock answer for everything and all his terms defined. Ron is a Unitarian who lives in a magical world where everything can mean whatever you want it to mean.

I'll refrain from unilaterally adopting the beliefs of either of their sects.

Otto Maddox wrote: In reply to Giant Purple Snorklewacker: OK. Then Ben is a Catholic, a man with a stock answer for everything and all his terms defined. Ron is a Unitarian who lives in a magical world where everything can mean whatever you want it to mean. I'll refrain from unilaterally adopting the beliefs of either of their sects.

Unless you have a self-sustaining farm you need atleast one prevailing dollar based religion to flourish in order to live well. The illusion has to be your truth because if doubt spreads... like Santa or the boogyman under the bed... it all goes away.

Giant Purple Snorklewacker wrote: The dollar is a confidence based belief system. It used to be based on the perceived value of a tangible asset but today it is based on the opinion of a bunch of capitalists that they can sustain belief. That video is like two priests from differing religious sects arguing.

[Gold] is a confidence based belief system. It used to be based on the perceived value of a tangible asset but today is based on the opinion of a bunch of capitalists that can sustain belief.

aircooled wrote:

Giant Purple Snorklewacker wrote: The dollar is a confidence based belief system. It used to be based on the perceived value of a tangible asset but today it is based on the opinion of a bunch of capitalists that they can sustain belief. That video is like two priests from differing religious sects arguing.

[Gold] is a confidence based belief system.

All of it is. If it isn't a good/service that can be consumed directly - it is faith based. You believe that you can trade a piece of paper for food because you can right now but if enough people worry about whether the folks backing your paper with their claims can sustain the claim then it gets harder and harder to find people willing to risk their food on your paper.

alfadriver wrote: But who am I to question how bad things are..... I just listen to the news to remind me that I should be depressed. With a job. And a great wife. And with profit sharing. And with local supplies of food. And a neigborhood that doesnt' seem to have foreclosures happening. And an area that seems to have employment issues due to WHAT we make as opposed to making things in the first place. Wait- I guess I'm actually happy. And can see progress over where we were just two years ago.... hmm. maybe the news exaggerates things a little.

So you're in Ann Arbor, too?

I don't know what to think exactly. It'd be nice if there were a solution to our malaise, especially one that came down to "switch back to gold!" but it seems likely that there's no answer. Maybe we're just coming to the very end of the post-war boom years. If decline relative to the rest of the world (though not in absolute terms) is inevitable, maybe we should figure out how to deal with it rather than doing stuff specifically to fight it. Believing that there's a magic bullet just makes people susceptible to political scam artists and time/money we should be spending addressing stuff we have control over.

alfadriver wrote: Considering that there were depressions and resessions before we went off of the gold standard in 1933, it appears that the gold standard does not actually change much.

Well, what it changes is our ability to manipulate things. Like it or not, being off the gold standard allows us to do things to fiddle with the value of money and that allows us to at least do something in tough times. Otherwise you just have to ride it out.

Yeah, I know a lot of folks think just riding it out is the way to go. But there are a lot of people who know more about economics than I do who say the gold standard helped cause the great depression, and leaving it played a big role in ending it. I don't know enough to say. What I do know is strict adherence to a gold standard opens currency to speculative volatility. It's like the speculators who drove the price of oil up a month or so ago. Better than our current system? I don't know. More stable in some concrete ways, but much more volatile in other very important ways. Look at the price of gold recently.

fast_eddie_72 wrote: What I do know is strict adherence to a gold standard opens currency to speculative volatility.

Weird, that's almost like if there is strict adherence to basing the value of ones currency off of the other, the currency is open to speculative volatility.

Wait... wait I feel something coming on. Oh, NO WAY! That's exactly what the US dollar is! Oh, but now instead of the whole world suffering, one can simply destroy an economy by devaluing it's currency while having no affect on its own. Huh. So instead of everybody's currency being "devalued" (and therefore, it making no difference as everybody else is poorer together), you can create economic imbalances that play in your favour. Sounds like a great idea.

But, as you said, who are we to think we know anything compared to the financial people. They obviously have it under control.

Giant Purple Snorklewacker wrote: All of it is. If it isn't a good/service that can be consumed directly - it is faith based. You believe that you can trade a piece of paper for food because you can right now but if enough people worry about whether the folks backing your paper with their claims can sustain the claim then it gets harder and harder to find people willing to risk their food on your paper.

And that's different than the exact same thing but with a shiny metal coin?

How about using diamonds, or iron, or some other item that we can intentionally manipulate it's supply/value?

The only way you don't have an abitrary piece of currency (be it paper, gold, or a slab of steel), is that you trade good for good, or good for service. You agree with your trader that you buy a loaf of bread for 3 eggs. Or a side of beef for 6 chickens. Or some machining on their engine for some wine you made last week.

Going from one agreed upon and limited abitrary item to another changes nothing.

"Money" or "Currency" is a thing that can be readily exchanged for a good or service. Gold is and always has been eagerly accepted.

"Legal Tender" is currency in specified denominations that a creditor must by law accept in redemption of a debt. Gold can be currency as coinage.

That aside, a return to the gold standard is as miguided an attempt to apply discipline to Congress as the proposed balanced budget amendment. Each has the potential to do greater harm than has already been done.

ppddppdd wrote: So you're in Ann Arbor, too? I don't know what to think exactly. It'd be nice if there were a solution to our malaise, especially one that came down to "switch back to gold!" but it seems likely that there's no answer. Maybe we're just coming to the very end of the post-war boom years. If decline *relative to the rest of the world* (though not in absolute terms) is inevitable, maybe we should figure out how to deal with it rather than doing stuff specifically to fight it. Believing that there's a magic bullet just makes people susceptible to political scam artists and time/money we should be spending addressing stuff we have control over.

Yea. But we travel enough to see what is going on. I've spent about 3 weeks in Puerto Rico this year, and can honestly not see that they are now worse off than 2 years ago. In many ways, things are better- more farming, more support for businesses, more tourist things opening up, more local support of local art, etc etc.

We went on a few cruises earlier this year. They were all pretty full. We have one schedule for September- we know it's full- with 6000+ passengers.

yes, I know there are more forclosures- but how many of those are due to people who are reality speculators, and were taking advantage of the lower capitol gains taxes? Yes, I know there's more unemployment- but stop comparing this to the Great Depression- there are no bread lines, and huge crews of CCC workers cleaning things up. AFAIK, there are ~300k jobs that are NOT being filled due to lack of qualifications in this country. And I do recognize that there are job problems- petty theft is up in our area. But it's not armageddon out there.

Wall Street controls everything, which sucks, since they do nothing. They don't make anything, they just loan money to people who do. And somehow, they should pay low taxes for that loaning of money??? Excuse me? And they also speculate whether investor X will or will not make money on that investment- that's all derivatives do. Knowing what the stock price means to work here, I honestly think that the daily reporting of stock indexies are a complete waste of time. It's a agreed upon value that we are talking about- one that is quite fluid based more on emotions that actual hard facts.

Anyway... Life isn't nearly as bad as the politicans and news people sure seem to make me think it is.

Otto Maddox wrote: This is kind of scary. People want to implement the economic ideas of a dude who doesn't understand the basic definition of money.

Since the basic definition of money is "something we attribute value to in order to buy E36 M3", I'd say Ronnie has a pretty good grasp of what it is.

ppddppdd wrote: I don't know what to think exactly. It'd be nice if there were a solution to our malaise, especially one that came down to "switch back to gold!" but it seems likely that there's no answer. Maybe we're just coming to the very end of the post-war boom years. If decline *relative to the rest of the world* (though not in absolute terms) is inevitable, maybe we should figure out how to deal with it rather than doing stuff specifically to fight it. Believing that there's a magic bullet just makes people susceptible to political scam artists and time/money we should be spending addressing stuff we have control over.

Of all the economic problems we have at the moment, truly massive swings in the purchasing power of the dollar don't really seem to be one of them. At least not in the US. These guys could use a better standard:

We have had some prices going up, true, but inflation could and did happen on the gold standard as well. Spain even found out that sending conquistadors to capture more gold mines was the gold equivalent of printing more money.

I don't see a gold standard adding more jobs, stopping banks from making loans to people who can't pay them back (or Bank of America from generally, well, being Bank of America), preventing people from investing in totally incomprehensible investments, or other modern economic problems.

All money is based on the faith that what I collect today, I can spend tomorrow. It's a convenient way of "storing" our labor. So instead of having to milk the farmer's cow for 2 hours in order to get dinner, I can do something I'm better at, get a little piece of paper that says "Dave worked", and then give that to the farmer, who can then give it to someone else to milk that cow for 2 hours. There is no more intrinsic value in gold than there is in green pieces of paper.

What there is though, is more people who have faith that gold will be worthy tomorrow and less who have that same confidence in green pieces of paper.

Giant Purple Snorklewacker wrote: All of it is. If it isn't a good/service that can be consumed directly - it is faith based. You believe that you can trade a piece of paper for food because you can right now but if enough people worry about whether the folks backing your paper with their claims can sustain the claim then it gets harder and harder to find people willing to risk their food on your paper.

alfadriver wrote: And that's different than the exact same thing but with a shiny metal coin?

Read first sentence again. It is the same for gold as it was salt to the Romans or Paper to the Americans. You have to believe it is valuable and you can trade it for things you really need.

alfadriver wrote: Going from one agreed upon and limited abitrary item to another changes nothing.

Well, it does actually change something. When there is a tangible asset backing your intangible one you have to actually produce the asset to justify the intangible. When there is no asset - you can always print more and say "I'm good for it" but you have to acquire more asset (or manipulate the value of your current holding) to do that in the old system. Now, that does not mean any asset is any better than the perceived/manipulated value - or that any monetary belief system is better or worse. They are all only as good as their ability to fulfill the promise.

I don't forsee us ever going back to any sort of gold standard. Our current system is going to collapse however - that is not an opinion, it is a mathematical fact. Exponential growth cannot continue without limits. Never has and never will. If we replaced our current monetary system (which is one where we let private banks create dollars from nothing and then our government borrows them with interest, so that almost all money is really just debt) with one where the government printed it's own money and did not have to borrow it all, we'd have hope. The world is currently saturated in debt and adding more will not cure what is wrong. Sure in other decades adding some stimulus in the form of more debt might've helped things out (at least in the short term), but now it is no longer the case. We need a new system. Our failure to adequately understand exponential growth is a major shortcoming.

No, you can't make up your own definitions of money. You have to use what exists.

A grain silo is a way of storing your labor. Money is a unit of exchange.

Here is an example. If you will sell your car for gold, ok then. But if you say to yourself, gold is worth $XXX per ounce, and my car is worth $XXX, therefore I will exchange my car for a certain amount of gold, the dollar is the unit of exchange not the gold. This is really basic.

I wasn't claiming we should or should not be on a gold standard or that money should be intrinsically worth something or not, I was just stating that Ron Paul doesn't understand the basic definition of money.

alfadriver wrote: ... And the company I happen to work for has had 2 years of increasing sales. snip... But who am I to question how bad things are..... I just listen to the news to remind me that I should be depressed. With a job. And a great wife. And with profit sharing. And with local supplies of food. And a neigborhood that doesnt' seem to have foreclosures happening. And an area that seems to have employment issues due to WHAT we make as opposed to making things in the first place. Wait- I guess I'm actually happy. And can see progress over where we were just two years ago.... hmm. maybe the news exaggerates things a little.

not that i disagree with you, but saying "i don't see how this is so bad, i didn't lose my job" is about as relevant as saying "it snowed in suchandsuch place, so much for global warming!"

sidenote: you know who else wanted the gold standard? Hitler!

now that that's out of the way....

HiTempguy wrote: Wait... wait I feel something coming on. Oh, NO WAY! That's exactly what the US dollar is!

Sardonic wit aside, no, it's not really what we have now. In our current situation we have some means to affect our own currency. On a strict gold standard you have much less. Or more accurately, the government has means to control our currency that no one else can implement. That insulates us from the volatility of a strict commodity like oil or gold. No, it's not perfect, but the fact that it isn't perfect doesn't mean a gold standard is better.

Grizz wrote:

Otto Maddox wrote: This is kind of scary. People want to implement the economic ideas of a dude who doesn't understand the basic definition of money.

Since the basic definition of money is "something we attribute value to in order to buy E36 M3", I'd say Ronnie has a pretty good grasp of what it is.

Given that there can't be a sane person in America who thinks Bernanke knows his ass from a hole in the ground, I assumed he was referring to Bernanke.