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Ron Paul: Small-town ideals for the global economy

Posted January 27, 2008

"At the core of Ron Paul's economic program are purist libertarian considerations that I find quite endorsable at least in principle." — J. Christoph Amberger

by J. Christoph Amberger 

Baltimore — (TFN): Ideals and reality — in every campaign year, the candidates lay on the first with the same dainty touch as the late Tammy Faye Bakker applied mascara and skimp on the second. It's all about Hope and Promise and pretending all will be well if only "Change" were to occur. Or not.

But listening to Obama supporter's enthused chants of "Yes we can!" in the aftermath of the South Carolina Democratic primaries, a sceptic might well ask: "Can do what exactly?" Establish what liberals consider social justice (vulgo: redistribution of property and penalizing ambition, competence and thrift) and magically turn international relations into a kind of global diversity jamboree by sending Madeline Albright and Maya Angelou out on a "Listening Tour" to al-Sadr and Kim Jong-Il?

Laudable intentions indeed. If you find people who'll play… and play nice.

War and economics remain the true touchstones for political ideals

My friend and colleague Bill Bonner recently asked me what my opinion was on the candidacy of Ron Paul — who Bill believes "deserves to win but can't".

(Of course as a "gold bug" and hard money advocate, Bill is unlikely to pick Giuliani…)

At the core of Ron Paul's economic program are purist libertarian considerations that I find quite endorsable at least in principle. Reduce government's role in the economy and monetary policy. Get rid of the IRS and cut government spending. End inflation by introducing a gold standard by repealing the "legal tender monopoly" enjoyed by Federal Reserve Notes (FNRs), and allow monetary competition — which would also "limit the ability of politicians to hide the true cost of government through the inflation tax."

Ron Paul and the gold standard

That monetary competition would be achieved by giving people the choice of being paid and paying for goods and services in FNRs — or as you and I know them: dollars — or in increments of gold. According to Ron Paul, this would not only eliminate inflation and deflation, but also restrict boom and bust cycles, recession, depression and everything else associated with the modern world economy.

A nice, solid, stable and ideally air-conditioned economy would ensue where everyone saved, the economy grew steadily despite of it, foolish spending came to an end, and a Golden Age (literally) were to dawn.

Of course, I'm never quite sure why exactly a gold standard would create order out of creative chaos. It's track record is not exactly sterling, err, spotless.  Even in the era during which governments upheld a gold standard, its limitations became painfully obvious: During World War I, Britain was forced to abandon it to finance its military efforts. (Apparently, it doesn't quite work in situations that require centralized government effort to survive a military threat…) Stripping Germany of its gold reserves in the Treaty of Versailles created a political witches' brew that spawned Hitler and National Socialism.

Pegging currency valuations to gold also had its problems, as Churchill experienced in 1925 when he, as the Chancellor of the Exchequer, set the value of the pound sterling at its prewar gold price, ignoring high wartime inflation. Strikes, riots, and economic mayhem ensued. The Great Depression, the market crash of 1929, Germany's hyper-inflation of 1923 — all occurred under the gold standard. 

Why would it work in a global economy that has commoditized debt, leveraged inflation into monetary instruments… and turned physical gold into a speculative commodity? especially given the fact that, adjusted for dollar inflation, gold has been a terrible hedge against inflation for more than two thirds of the past 30 years.

Of course, there are those who think practical considerations really shouldn't be a reason not to test the propositions. Here's one I found on a pro-Ron Paul blog yesterday:

"Rom Paul's 'Pipe Dreams'

Many liberals like Ron Paul for his consistent opposition to the Iraq war and for his strong defense of civil liberties. Many conservatives like Ron Paul for his unquestioned fiscal conservatism and his time-tested Constitutional purity. Yet in both groups, many voters who agree strongly with Ron Paul on issues important to them dismiss his chances of effecting the changes he calls for, calling them "pipe dreams."

Sure, it would be nice to repeal the income tax and abolish the IRS, small-government conservatives insist, but "it'll never happen." Yes, Ron Paul would like to repeal the Patriot Act and the Military Commissions Act, progressives admit, but how will he get Congress to go along? According to his otherwise admiring critics, he won't be able to cut government spending as much as he plans to, to restore the Bill of Rights in its entirety, or to end the dollar's slide and reestablish sound monetary policies.

Skepticism toward campaign promises and political goals is always a good policy, but abandoning a candidate who agrees with you on your key issues is not. Simply because Ron Paul wants to accomplish more than you think he could deliver, why vote for someone else who isn't even trying?

If Ron Paul falls short of his goal of cutting spending enough to repeal the income tax, we'll still be far better off than if another candidate takes office and doesn't try at all."

Continue to read here… 

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Posted by J. Christoph Amberger · Filed Under Politics 

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