I know this isn't exactly a "sexy" topic, but it's a damned important one so I thought I'd throw out a line and see what bites.
The Fed/Monetary Policy
Started by freedom78, Feb 13 2011 02:52 PM
8 replies to this topic
#2
freedom78
-
- TFHL Peep
-
- 6,667 posts
Advanced Member
- LocationIndiana
Posted 13 February 2011 - 02:54 PM
Can Ron Paul crush the Federal Reserve?
For decades, he's crusaded against monetary policy; now he's calling the shots
Ron Paul's career has been devoted to two propositions: 1) The Fed is bad. 2) The gold standard is good.
Rep. Ron Paul's feelings about America's central bank are a matter of public record. An extensive public record: In dozens of congressional hearings over the past four decades, he has ribbed, cajoled, harassed, or annoyed any representative or defender of the Federal Reserve brave or unlucky enough to appear before him.
Normally, his interrogations concern America's profligate money printing, Congress' unnecessary spending, the Fed's secrecy, and, especially, gold, which he believes should underpin the currency to render it sound. But his distrust runs wide and deep. Consider this comment from a 2007 hearing: "This whole notion that a central bank somehow has the wisdom to know what interest rates should be is, to me, rather bizarre. And also the source of so much mischief."
That first sentence is a neat encapsulation of his economic worldview. And the second could well apply to Paul himself. His career in and out of public office has been devoted to two propositions: 1) The Fed is bad. 2) The gold standard is good. His consistency has been impressive—which is not to say he has been influential. He rarely gets satisfactory answers in hearings, and he'll probably never get satisfaction in his long, lonely crusade to radically alter America's monetary policy.
But if you tilt at windmills long enough, sometimes you hit. And on Wednesday, Paul did: He held his first-ever hearing as chairman of the House Financial Services Committee's subcommittee on monetary policy, inviting two Austrian-school economists and one lonely representative from the left-leaning Economic Policy Institute to debate how Fed policy affects the unemployment rate.
This may be Ron Paul's moment. The question now is what he does with it.
It was on Aug. 15, 1971, that Paul had his monetary-policy epiphany. That day, the Federal Reserve shut its "gold window," meaning foreign governments could no longer trade gold for dollars at the fixed rate of $35 an ounce. The Bretton Woods system officially ended and the dollar became fully "fiat currency," backed by nothing but the promise of the federal government. It shocked Paul, then a successful Texas obstetrician. "That's why I ran for Congress," Paul told me. He was first elected to the House in 1976, running as a Republican on a limited-government platform.
Paul has since bounced in and out of Washington, serving from 1976 to 1977, 1979 to 1985, and 1997 to the present. During that time, he has supported cutting defense spending, ending the Department of Education, stopping welfare, and slashing taxes. But he's best known for his unrelenting—and unchanging—skepticism of the Fed. Paul believes it stokes inflation and will harm the U.S. economy as long as it persists. Gold, he thinks, is the answer.
His monetary policy quest has been quixotic. The closest Paul came to getting the gold standard reconsidered—let alone reinstated—came in 1981. At the beginning of the Reagan administration, Paul sat on a commission appointed to debate whether the United States might benefit from returning to commodity-backed money. Reagan had a "slight bias toward gold and its disciplines," Treasury Secretary Donald Regan told reporters at the time. But in a final report, released March 31, 1982, the panel rejected the idea.
Despite the rejection, the next day's papers described Paul as jubilant. "For the first time in 50 years they seriously considered it," he said, releasing a dissent. "I do think that in due time, possibly even in this decade, there will be another serious discussion of gold as a monetary standard. I still do believe that gold is the money."
That serious discussion never really happened, though not for a lack of trying on Paul's part. "I think for 20 years or so, they just wished I would go away," Paul explains, referring to the Fed officials he repeatedly took to task on the Hill. "They thought I was a nuisance." But he kept bothering them. He promoted his ideas on monetary policy through his Foundation for Rational Economics and Education (acronym: FREE), his Ron Paul Investment Letter, and other publications. He brought national, if fleeting, attention to them during his failed 1988 presidential campaign. But for the most part, he and his ideas became something of a sideshow—he became seen as a crank, a radical, so far outside the mainstream he could be safely ignored.
That changed in 2008, when he ran for president again. This time, the run brought him cult-icon status. The very phrase "end the Fed"—the title of his most recent book—comes from his campaign. In it, he describes visiting a University of Michigan campus after an October 2007 Republican primary debate. To his surprise, when he "mentioned monetary policy, the kids started cheering. Then a small group chanted, 'End the Fed! End the Fed!' The whole crowd took up the call. Many held up burning dollar bills, as if to say to the central bank, you have done enough damage to the American people."
He remains an iconoclast even within his own party, and his actual legislative proposals tend to go nowhere. Since 1997, he has acted as the primary sponsor of 422 bills. Just four of those have ever made it to the floor of the House for a vote: a bill withdrawing the United States' support for the World Trade Organization, a bill recognizing the Hispanic Chamber of Commerce, another commending a NASA mission, and one granting some property to the Galveston Historical Foundation. Only the last became law.
But last year Paul had what may be his greatest triumph as a legislator. He and other members of Congress successfully placed a provision to perform an audit of the Federal Reserve into the Dodd-Frank law, against the strong opposition of both the Fed and the Obama administration. The bill also forced the bank to release the details of 21,000 loans granted to financial firms during the credit crunch. Now Paul is in charge of the House subcommittee that actually oversees the Fed. That might cause some awkward moments, to say the least. The title of his book is not misleading. The central bank "is immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty," he writes.
That's part of the reason he supports reinstating the gold standard, which would obviate the need for a monetary policymaking apparatus as well as rein in government spending and end inflation. Talk of a return to a gold (or silver) standard for the dollar has moved from the fringe toward the mainstream, if not into it. A dozen state legislators have proposed locally instating gold standards or, at least, commodity payment systems.
"I believe that freedom itself is at stake in this struggle," Paul says in End the Fed. Just a few years ago, he reiterated the point to New York Times: "We will go back to the gold standard, even if it takes the near-destruction of the dollar to get there."
Continued
For decades, he's crusaded against monetary policy; now he's calling the shots
Ron Paul's career has been devoted to two propositions: 1) The Fed is bad. 2) The gold standard is good.
Rep. Ron Paul's feelings about America's central bank are a matter of public record. An extensive public record: In dozens of congressional hearings over the past four decades, he has ribbed, cajoled, harassed, or annoyed any representative or defender of the Federal Reserve brave or unlucky enough to appear before him.
Normally, his interrogations concern America's profligate money printing, Congress' unnecessary spending, the Fed's secrecy, and, especially, gold, which he believes should underpin the currency to render it sound. But his distrust runs wide and deep. Consider this comment from a 2007 hearing: "This whole notion that a central bank somehow has the wisdom to know what interest rates should be is, to me, rather bizarre. And also the source of so much mischief."
That first sentence is a neat encapsulation of his economic worldview. And the second could well apply to Paul himself. His career in and out of public office has been devoted to two propositions: 1) The Fed is bad. 2) The gold standard is good. His consistency has been impressive—which is not to say he has been influential. He rarely gets satisfactory answers in hearings, and he'll probably never get satisfaction in his long, lonely crusade to radically alter America's monetary policy.
But if you tilt at windmills long enough, sometimes you hit. And on Wednesday, Paul did: He held his first-ever hearing as chairman of the House Financial Services Committee's subcommittee on monetary policy, inviting two Austrian-school economists and one lonely representative from the left-leaning Economic Policy Institute to debate how Fed policy affects the unemployment rate.
This may be Ron Paul's moment. The question now is what he does with it.
It was on Aug. 15, 1971, that Paul had his monetary-policy epiphany. That day, the Federal Reserve shut its "gold window," meaning foreign governments could no longer trade gold for dollars at the fixed rate of $35 an ounce. The Bretton Woods system officially ended and the dollar became fully "fiat currency," backed by nothing but the promise of the federal government. It shocked Paul, then a successful Texas obstetrician. "That's why I ran for Congress," Paul told me. He was first elected to the House in 1976, running as a Republican on a limited-government platform.
Paul has since bounced in and out of Washington, serving from 1976 to 1977, 1979 to 1985, and 1997 to the present. During that time, he has supported cutting defense spending, ending the Department of Education, stopping welfare, and slashing taxes. But he's best known for his unrelenting—and unchanging—skepticism of the Fed. Paul believes it stokes inflation and will harm the U.S. economy as long as it persists. Gold, he thinks, is the answer.
His monetary policy quest has been quixotic. The closest Paul came to getting the gold standard reconsidered—let alone reinstated—came in 1981. At the beginning of the Reagan administration, Paul sat on a commission appointed to debate whether the United States might benefit from returning to commodity-backed money. Reagan had a "slight bias toward gold and its disciplines," Treasury Secretary Donald Regan told reporters at the time. But in a final report, released March 31, 1982, the panel rejected the idea.
Despite the rejection, the next day's papers described Paul as jubilant. "For the first time in 50 years they seriously considered it," he said, releasing a dissent. "I do think that in due time, possibly even in this decade, there will be another serious discussion of gold as a monetary standard. I still do believe that gold is the money."
That serious discussion never really happened, though not for a lack of trying on Paul's part. "I think for 20 years or so, they just wished I would go away," Paul explains, referring to the Fed officials he repeatedly took to task on the Hill. "They thought I was a nuisance." But he kept bothering them. He promoted his ideas on monetary policy through his Foundation for Rational Economics and Education (acronym: FREE), his Ron Paul Investment Letter, and other publications. He brought national, if fleeting, attention to them during his failed 1988 presidential campaign. But for the most part, he and his ideas became something of a sideshow—he became seen as a crank, a radical, so far outside the mainstream he could be safely ignored.
That changed in 2008, when he ran for president again. This time, the run brought him cult-icon status. The very phrase "end the Fed"—the title of his most recent book—comes from his campaign. In it, he describes visiting a University of Michigan campus after an October 2007 Republican primary debate. To his surprise, when he "mentioned monetary policy, the kids started cheering. Then a small group chanted, 'End the Fed! End the Fed!' The whole crowd took up the call. Many held up burning dollar bills, as if to say to the central bank, you have done enough damage to the American people."
He remains an iconoclast even within his own party, and his actual legislative proposals tend to go nowhere. Since 1997, he has acted as the primary sponsor of 422 bills. Just four of those have ever made it to the floor of the House for a vote: a bill withdrawing the United States' support for the World Trade Organization, a bill recognizing the Hispanic Chamber of Commerce, another commending a NASA mission, and one granting some property to the Galveston Historical Foundation. Only the last became law.
But last year Paul had what may be his greatest triumph as a legislator. He and other members of Congress successfully placed a provision to perform an audit of the Federal Reserve into the Dodd-Frank law, against the strong opposition of both the Fed and the Obama administration. The bill also forced the bank to release the details of 21,000 loans granted to financial firms during the credit crunch. Now Paul is in charge of the House subcommittee that actually oversees the Fed. That might cause some awkward moments, to say the least. The title of his book is not misleading. The central bank "is immoral, unconstitutional, impractical, promotes bad economics, and undermines liberty," he writes.
That's part of the reason he supports reinstating the gold standard, which would obviate the need for a monetary policymaking apparatus as well as rein in government spending and end inflation. Talk of a return to a gold (or silver) standard for the dollar has moved from the fringe toward the mainstream, if not into it. A dozen state legislators have proposed locally instating gold standards or, at least, commodity payment systems.
"I believe that freedom itself is at stake in this struggle," Paul says in End the Fed. Just a few years ago, he reiterated the point to New York Times: "We will go back to the gold standard, even if it takes the near-destruction of the dollar to get there."
Continued
Sister burn the temple
And stand beneath the moon
The sound of the ocean is dead
It's just the echo of the blood in your head
#6
freedom78
-
- TFHL Peep
-
- 6,667 posts
Advanced Member
- LocationIndiana
Posted 13 February 2011 - 10:46 PM
As I've said before, I like Ron Paul. He's among the most honest politicians out there, which earns my respect even when I don't share his beliefs.
I do find his whole gold standard approach weak. I'm not saying that I love the Fed, but backing money with something that is highly valuable because it's rare-ish, shiny, and mostly without use doesn't strike me as much better than saying money is backed by government. With the exception of its use in the making of electronics (ironically, many of which didn't exist when we left the gold standard), it has very little real, useful value. We might as well back our currency with impressionist art.
Sister burn the temple
And stand beneath the moon
The sound of the ocean is dead
It's just the echo of the blood in your head
#7
Mr. Roboto
-
- Admin
-
- 6,721 posts
Administrators
- LocationProvo Spain
Posted 13 February 2011 - 11:33 PM
If he throws his hat in the ring, Paul will get my vote in 2012.
He tried like hell in 08 but the GOP treated him like the crazy uncle. Now he's their hero. Too little too late IMO. I liked Ron Paul a lot in 07, but I've fallen out of love with him by now as I learned more about him.
"It was like I was in high school again, but fatter."
#9
Gomer Pyle
-
- Members
-
- 595 posts
Members
Posted 25 June 2011 - 09:25 PM
If Paul was 20-30 years younger, he'd be a serious threat to the establishment.
I'm not an expert on this shit, but wouldn't it be nearly impossible to go back to the gold standard since there is so much money in circulation? Is there even enough gold on the planet to back every US dollar currently in existence? Would going back to the gold standard require a new currency?
SLC is right on the money. The Fed is so misunderstood that its one of THE hot topics on all conspiracy sites. Like SLC, there are things about Paul I don't like but then other issues I do agree with him on.
I don't think he will ever be president. He's too old. Someone can say Reagan ascended to the presidency at 70, but these are different times.He's also on the fringe with some of his ideas but I do agree with him regarding the need to do something on this particular issue. He also makes great points on changing course on the Bush-Obama strategy of never ending wars.
An Obama-Paul debate would be very interesting to say the least.
Would I vote for Paul in 2012? Depends.
Surprise, surprise, surprise!
0 user(s) are reading this topic
0 members, 0 guests, 0 anonymous users
