Have a question about Ron Paul Capitalism rhetoric

[MattBaggins]

All the Ron/Rand Paul supporters and many TeaKlaners are always screaming about unfettered Capitalism and bringing back a gold standard.

Now I am nothing more than an arm chair economist at best; but wouldn't Adam Smith and other fathers of Capitalism laugh at this? Wasn't one of their core tenets that Nations should turn away from hoarding gold? Wasn't getting off of the gold standard the last act in turning away from Mercantilism?

Can a person claim with a straight face, to be a pure capitalist and advocate for a return to the gold standard?

[The Northerner]

1. i think they believe that a gold standard would restrict the govt

from being able to print so much money and in order to maintain that the dollar is backed by something ever since it was removed from the gold standard during the nixon admin

i've also heard him say that we should abandon fiat currency and only use gold & silver because the founding fathers disliked fiat currency because it was easy to replicate & print

[safeinOhio]

2. founding fathers also disliked

indentured servants, other poor white people, women, slaves and natives.

[The Northerner]

4. well, i don't think that justifying hatred towards them is as a bad as a gold standard

if that's what you're implying

if we're going to use fiat currency it think it's quite reasonable to have some restraint on how much can be printed

[A HERETIC I AM]

7. There is a huge difference between then and now, as I'm sure you would agree.

One of the big problems before the advent of large central banks was that any local or regional bank could print their own script. The issues involved in maintaining some sort of parity when dealing with notes issued by literally dozens of banks in this country and others can be easily imagined.

Before the institution of the standard US dollar and the Federal Reserve system, small and large but yet localized depressions were commonplace if my understanding of history is correct. Even though the script issued by the various banks may have had actual, physical gold or silver backing it, there was no parity. A dollar issued by a bank in Nevada (for instance) was valued differently, if at all, by a bank in Delaware or Georgia.

Rapid, long distance communication was key, and it came a long way in only one hundred years after the founding of this country.

[leahcim]

3. It is a fantasy

It is a fantasy that gold is somehow a better currency than any other just because it is not under the control of any government. Inflation, deflation, bubbles, and depressions all happened under gold/silver standard regimes, and governments couldn't do anything about it because they had no control over monetary policy.

As much as we don't like the fed "printing money" to get out of an economic malaise, it is an effective way to deal with the situation. Some governments historically have gone nuts with that and made things worse for their people, but to completely remove the tool because of potential for abuse is nuts, too.

[MediaMumblings]

5. Gold Standard

The classical economists and modern Austrian economists favor commodity-based money. Mr. paul considers it part and parcel of a laissez-faire system. There were depressions in the 19th century under a gold standard, but those were almost all due to excessive credit expanansions by government central banks. The depressions never lasted long becuase the states response was to shrink itself or else do nothing. The malinvestments and debt were allowed to be liquidated. Companies were allowed to go banrupt and the economy was allowed to purge itself of all the bad investments. There was a gently falling price level throughout most of the 19 century with the exception of the Greenback and Confederacy fiat currency era of the Civil War period.

Paper money should be able to work in theory, but no government in the history of the earth has had the discipline to not overprint it. The state can pay for some of its bills simply by printing new money. Our Federal Reserve system actaully creates new electronic money or accounting money with the stroke of a keypad. Government can pay back its creditors with a debased money as well. That is what our glorious central planners at the FED are attempting to do right now. The price that the people pay is the insidious inflation tax. The government in effect steals purchasing power from savers. Our dollar has lost over 96% of its purchasing power since the creation of the Federal Reserve.

Mr. Paul and many others would eventually like to see a separation of money and government altogether. The Founders expressly enumerated the power of the central government to coin money and regulate the value there of. They only wanted commodity based money to be used because they had lived through state-issued fiat currencies and the disastrous fiat Continental paper currency. There were numerous currencies in circulation in the late 18th-early 19th centuries. The Spanish mill dollar was the most commonly used. Anyone could create their own currency and have a government official attest to its weight. Paper money was used as as a substitute for the gold or silver much like you use a check as a substitute for paper money. The money was the commodity itself though. I favor Hayek's plan to separate the state from money. Money is just a product like toothpaste. If your interested, I would recommend Hayek's " The Denationalization of Money."

[abelenkpe]

6. Ron Paul is a conspiracy theorist who travels with racists

Mr. Paul. puleeze. Idiot. Austian economics? Laissez-faire? Hayek? I think you must be lost.

[RM33]

8. Gold Standard

The reason behind the gold standard is that it prevents the government from printing money. Which helps in two regards.

First politicians can't manipulate the currency to enhance their political goals.

Second it stops inflation. I believe that inflation is at 4% a year? If so, that means in a 10 year period, your savings will be worth 40% less. That is the good thing about the gold standard. It protects your savings.

[rasputin1952]

9. The bad thing is that you pay off currency demands in gold...

which means that virtually all of the gold held by a nation, including this one, disappears as those who notes demand payment. *poof*, nothing to back currency, and within a matter of hours...that is why there is no gold standard, anywhere on earth.