Patterico's Pontifications

6/17/2014

Ending the Fed Is a Free Market Solution: Part One in An Occasional Series of Posts on the Fed

Filed under: General,The Fed — Patterico @ 7:50 am

Baghdad is about to be overrun by terrorists; we have a crew of liars in the Administration; and the dollar is headed towards collapse. Let’s talk about the last, which is not in the headlines every day, but which is probably the worst of the three problems.

The situation is caused by government interference in the free market. Look at the latest manifestation of what is truly a huge and ongoing crisis: the collapse of the housing bubble. The housing bubble, recall, was actually sought after by our Keynesian economic betters like Paul Krugman, who said in 2002:

To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Yes, he really said that. Wish granted, Mr. Krugman. By artificially keeping interest rates low, the Fed spurred construction far beyond the market’s natural appetite. Banks rushed to provide demand to meet the supply, waiving normal loan requirements. CDOs were created to market the bad debt. All the while, banks felt secure, knowing that if (when) the bubble burst, the government would have their back. Fannie and Freddie had their wink-wink government guarantees, and the federal government and the Federal Reserve stood ready to provide billions to bail these institutions out and keep credit flowing.

But the Fed’s artificial lowering of interest rates started the whole trainwreck.

I’m reading a book in which the following insightful quote appears:

The market rate of interest provides crucial information for the smooth operation of the economy. A central bank setting interest rates is price-fixing and is a form of central economic planning. Price-fixing is a tool of socialism and destroys production. Central bankers, politicians, and bureaucrats can’t know what the proper rate should be. They lack the knowledge and are deceived by their own aggrandizement.

That quote is from a book called End the Fed. (Click through if you want to know who the author is.)

I intend to write more, as time permits, expanding on the concept of ending the Fed. I will explain the Austrian theory of the business cycle, and argue that this theory leads one to the conclusion that the Fed should be abolished. I’ll address the argument that the Fed smooths out recessions, explaining the causes of bank panics in the 1800s (hint: it’s almost always inflation created and/or aided by government policies). I’ll refute the idea that 18 recessions since the beginning of the Fed is a better track record than we had without a central bank. All that is for future posts.

But for now, just think about that quote. If you truly support the free market, you can’t support the Fed. You’re supporting price-fixing.

Let me know what you think.

P.S. I know: this is unlikely to happen right now. We’ll revisit the idea after the dollar collapses and see if you’ve changed your mind. Everything I am writing these days is geared towards the discussion we will have then.

187 Responses to “Ending the Fed Is a Free Market Solution: Part One in An Occasional Series of Posts on the Fed”

  1. Ding.

    Patterico (9c670f)

  2. the fed’s job is to keep the economy on life support by ruthlessly debasing the dollar so america’s fascist whore president remains in little or no danger of being held accountable for his vicious rape of the american economy

    happyfeet (8ce051)

  3. But the Fed’s artificial lowering of interest rates started the whole trainwreck.

    No. Not their lowering of interest rates, but their later raising them back up, in a world that contained adjustable rate mortgages.

    Also, the problem was not lending standards, although contoinuing to reduce them, or game them, allowed housing prices to continue rising, but housing appraisals, which didn’t take account of the possibility we were in a bubble.

    Most of the credit considerations are arbitrary.

    The only thing that matter is:

    1) Credit rating – and credit rating has nothing to do with income, but rather with an intention and ability to pay back debt. A person with a good credit rating will sell the house if he can’t pay the mortgage. Of course, he can’t sell the house if the price has dropped.

    2) The ability to pay the first year’s mortgage. (after the first year, a person’s economic situation can change, and if someone intends fraud, it will show up right away. The key factor is whether or not the house is under water.)

    Now this factor 2 is spoiled in the event there is an adjustable rate mortgage – that could mean that with no income change, amortgage might become unaffordable. But lending standards did not take account of that.

    Sammy Finkelman (59be71)

  4. One of the credit standards is what percentage of gross income would need to be devoted to payingthe mortgage.

    This credit standard, as far as I know, ignores differences in state income tax rates. Doing that never caused trouble because the whole factor of income is largely irrelevant anyway.

    The only things that matter for determining default risk are credit rating and whether or not the house is under water, and maybe you can add sufficient income to pay the first year’s mortgage the first year, if it is not an adjustable rate mortgage, and that mostly because it is way of screening out an intent to default immediately.

    Sammy Finkelman (59be71)

  5. Hey Sammy! They’re now claiming that six other IRS employee’s emails are missing. What a coincidinky? Everyone’s hard drive in the IRS crashed! Eleventy!1!!1!

    Hadoop (f7d5ba)

  6. The market rate of interest provides crucial information for the smooth operation of the economy

    A market rate of interest does not exist anywhere in the world.

    Sammy Finkelman (59be71)

  7. The Fed most undoubtedly needs to be ended. The entire system that has been created allows the banks in the fed system to skim off the top of the entire economy since they collect the interest. The government has the ability to make a dollar…but instead the banks have convinced them that they should make a bond with interest instead. This means that any debt we run up to pay for a project, we pay about twice as much towards than if we just made the dollars instead in the first place.

    But it is even worse considering the situation Patterico pointed out before. Because the banks create the money supply while generating the debt. The bank deposit they make has no interest on it, but the debt does. So you have, BY DESIGN, more debt than can ever be paid off. The money supply is less than the debt supply.

    They’ve essentially created an economy of indentured servants. Everyone has to work to pay off their debts. Everyone is beholden to their debts and it makes people do unethical things. We are not a free people because of the Fed.

    DejectedHead (a094a6)

  8. How does the Fed control the interest rate after the money leaves its coffers? Cannot banks relend it at any rate they wish? I can see how FannieMae et al guarantees give loans to non-creditworthy people which in the end are paid by the taxpayers, but how do low Fed rates do anything more than make the debt service to be paid by the borrower, and potentially the taxpayer, smaller which is a good thing? Are you arguing against usury laws? There aren’t any to speak of if legbreaking is not part of the terms of the loan.

    nk (dbc370)

  9. #9. Banks don’t lend money stored in bank accounts. They create and borrow money used for loans.

    DejectedHead (a094a6)

  10. 9. nk (dbc370) — 6/17/2014 @ 8:58 am

    How does the Fed control the interest rate after the money leaves its coffers?

    They control the lowest possible interest rate: “Overnight” loans between banks. Competitiontends to fix higher interest rates.

    Cannot banks relend it at any rate they wish?

    Yes they can, as with credit cards. However, there are certain standard loans, like the “prime rate” This will move up and down with the federal funds rate.

    The average margim may change from time to time, and I think grew after the savings and loan candal when banks had to pay more for insurance or have more capital. That caused a recession, and eventually the Fed lowered the interest rate it controlled low enough so that interest rates on loans made to businesses dropped back.

    Are you arguing against usury laws?

    Mainly he’s arguing against fixing rates. I think there actually an be only one interest rate in teh world.

    There aren’t any to speak of if legbreaking is not part of the terms of the loan

    Sammy Finkelman (59be71)

  11. Fine. And what significant part does the Fed pay in that except maybe the money’s initial cost? And why is lowering that cost anti-market if there is no requirement that it be relent at a lower rate?

    nk (dbc370)

  12. DejectedHead (a094a6) — 6/17/2014 @ 9:06 am

    [Banks] create and borrow money used for loans.

    But how much it makes sense for them to do depends on government regulations and the interest rate.

    The price of money is not set by supply and demand. Supply and demand is set by the price of money..

    The ultimate (lowest) interest rate is the federal funds rate, and teh fed affects that by buying and selling U.S. government debt.

    Sammy Finkelman (59be71)

  13. @nk
    You hit on some of the core contradictions of the anarcho-capitalist wing of the Austrian School, which, when you get past all of their rhetoric, inevitably winds up at “government should exist to ensure that no business is ever bigger than MINE!”

    Them controlling terms of loans they make?
    Excellent!
    A big bank controlling terms of loans they take out?
    Horrible!
    A central bank controlling terms of loans the big banks take out?
    TYRANNY!

    Everywhere you look, their rhetoric on that is always the same, with denunciations of “banksters” and people who have “earned enough” that is only found among them and hardcore socialists, yet somehow we are supposed to believe that they oppose “actual” socialism rather than their centrally planned “optimum” business size and bank regulations.

    Sam (e8f1ad)

  14. Sammy,

    The reason why adjustable rates went up is not because of the Fed, but because adjustable rate loans have a period usually of 2 to 5 years where the interest rate is very low, then the rate goes up. Nothing to do with the Fed, just how adjustable rate mortgages are sold. Adjustable rate mortgages should never be used long term. If someone is not going to stay in a home very long, they get an adjustable rate loan with a very low initial interest rate, then when the initial rate period is over, wham the interest rate goes up. Yes the interest rate after the initial period goes up or down usually with a rate cap because of the Fed. With an adjustable rate loan you get a low starter rate, then rate goes up and you should refinance the loan or sell the home and move.

    Sometimes people who don’t have a credit history, get an adjustable rate loan, but if they intend to stay in the home they should refinance to a fixed rate loan after they’ve built up a credit history and before the initial low rate period is finished.

    Some people think that they’ll make more when the low rate period is over and that they can afford the higher rate. They problem is that you never know what he future holds.

    Tanny O'Haley (c0a74e)

  15. 13. The creating of money against collateral isn’t the issue. It is the creation of a monetary system where you will always have more debt than you will have money supply. You can drop the interest rate to increase the money supply in the short term, as they have done recently, but eventually that interest will catch up again. Even if the debt is only at a 1% interest rate it will still outpace the money supply over the long term.

    DejectedHead (a094a6)

  16. Also, let us not forget that the Obama Administration linked credit card interest rates to the Federal fund rate a few years back. So now if the Fed raises the rate, the interest on everyone’s credit cards goes up too.

    DejectedHead (a094a6)

  17. 14. It’s not even control, Sam. It’s competition. Shylock does not want the Doge to lend to the Merchant of Venice at a lower rate than he does, because that’s undercutting Shylock. I think Patterico would have a point if the Fed rate was high, not low — I’ll accept that tightening the money supply is not a good thing for purposes of this discussion. Even more of a point if there were caps on interest (usury laws) worth mentioning but there are not.

    nk (dbc370)

  18. Partly what nk has said, but came here to address this from the original:

    “A central bank setting interest rates is price-fixing and is a form of central economic planning. ”

    No, it is not “price-fixing” but it is market warping. And just because some part of the economy flows through a central point, that does not make the economy as a whole centrally planned. I agree that things are way out of whack right now but as I believe I stated a couple weeks ago in regard to
    fractional reserve banking, etc. that the fault lies not in our methods but within our desires. Simply doing away with the Fed, which can be a useful tool when used wisely (and I agree it rarely is) does not address the root of the problem. The greatest threat to our economy are the masses who do not understand what wealth/capital is, how it is created, nor the responsibilities of maintaining it. I would hazard to say that if more economic effort were put into addressing this issue, far more progress would be made overall.

    Also, #10 “Banks don’t lend money stored in bank accounts. They create and borrow money used for loans”…as stated when this raged several weeks ago, banks can only create money under the auspices of the Fed. They cannot do so willy-nilly. I think we already established this several weeks ago.

    “Everyone has to work to pay off their debts. ” – No. No one put a gun to your head and forced you to borrow money. You don’t have to own a house. You can pay cash for a car. You can save up an buy stuff when you have the money. This smells like leftist/occutard defeatism.

    WTP (8894aa)

  19. 19. I know they don’t create money willy nilly. I was just attempting to give the short answer. Although with low interest rates, it is practically willy nilly because they get to assess the value of the collateral that they create the money against. With houses, unlike with cars and most products, they assess a higher values over time.

    Yes, no one is forced to take a loan, but people are encouraged to take loans from the government. You see it through pushes to increase home ownership and you see it with pushes to get college educations. The fact of the matter is that most people in the economy take on debt. When they own that debt, they are beholden to that debt. I don’t know where you’re getting the leftist/occutard defeatism from. The money supply is far more restrictive than the debt market, hence why the economy seized up in 2008 when the credit lines froze. All I’m saying is that if a doctor has $500,000 student loan debt (which is fairly standard), he is more likely to do something unethical in his practice because he has a debt to pay. If you want to claim that a doctor holding $500,000 in student loan debt and $500,000 in mortgage debt wouldn’t be more likely to act unethically to pay the bills…I’d like to hear why that would not be the case because you gave a flat answer of “No.”

    Also, you don’t have to say someone “put a gun” to my head. I manage my own debts and this isn’t a personal finance conversation that I’m engaging in. I’m talking about the Central Banking system that creates more debt supply than money supply to support it.

    DejectedHead (a094a6)

  20. Tanny O’Haley (c0a74e) — 6/17/2014 @ 9:17 am

    The reason why adjustable rates went up is not because of the Fed, but because adjustable rate loans have a period usually of 2 to 5 years where the interest rate is very low, then the rate goes up.

    My understanding was they were not teaser rates. Maybe they were. When it was somethng like 1% they would have been.

    Still, the level at which they would reset to was one thing at the time the loan was taken out, but acually turned out to be something else.

    The scoring used to determine credit quality was always, however, the original rate.

    Nothing to do with the Fed, just how adjustable rate mortgages are sold.

    They are/were not fixed at two rates, but variable.

    Adjustable rate mortgages should never be used long term. If someone is not going to stay in a home very long, they get an adjustable rate loan with a very low initial interest rate, then when the initial rate period is over, wham the interest rate goes up. Yes the interest rate after the initial period goes up or down usually with a rate cap because of the Fed. With an adjustable rate loan you get a low starter rate, then rate goes up and you should refinance the loan or sell the home and move.

    Which, of course, is impossible, if the selling price drops.

    Sammy Finkelman (59be71)

  21. 17. Isn’t it still the prime rate that variable credit card rates are linked to? The onlt thing is, the prime rate hasn’t changed in some time.

    Sammy Finkelman (59be71)

  22. 22. It is linked to the prime rate. It hasn’t changed since 2008.

    DejectedHead (a094a6)

  23. “I don’t know where you’re getting the leftist/occutard defeatism from”…From the wording “They’ve essentially created an economy of indentured servants”. The indentured servants made themselves that way.

    ” if a doctor has $500,000 student loan debt (which is fairly standard), he is more likely to do something unethical in his practice because he has a debt to pay. If you want to claim that a doctor holding $500,000 in student loan debt and $500,000 in mortgage debt wouldn’t be more likely to act unethically to pay the bills…I’d like to hear why that would not be the case” Because ethics, that’s why. If you’re not willing to take on that burden, don’t become a doctor. That’s actually much in my book than excusing a poor person for stealing because they are hungry or to feed their family. A doctor should expect to make enough money relative to the debt he incurs. I don’t think that is unreasonable. Any WTF does he need a $500K mortgage? Is it so wrong for a doctor to live in a middle class house until his loans are paid off? This is what I mean by ” the fault lies not in our methods but within our desires.”

    WTP (fdec5d)

  24. The Fed absolutely needs to be ended since creating one bubble after another is precisely what it was created to prevent.

    http://www.federalreserve.gov/faqs/about_12594.htm

    The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

    It was created in response to boom-and-bust cycles, or what they called “financial panics.” Particularly the Financial Panic of 1917. Now we call them bubbles; same thing. But the raison d’etre of the Fed was to end them. Thing is, with the ascendancy of the Keynesians 20 years after its creation and their continued grip on power the Fed in fact creates what it was intended to put a stop to. Krugman isn’t the only one.

    Since the Fed is actively working against its own mission statement its time to end it.

    Steve57 (d38ceb)

  25. 24. “Any WTF does he need a $500K mortgage? Is it so wrong for a doctor to live in a middle class house until his loans are paid off?”

    Talk about sounding like leftist. (I’m just kidding)

    Yes, doctors do incur debts like that and $500,000 mortgage is entirely within the realm of reality…in fact I know it happens. Could be a West Coast thing though, I don’t know your geography, but many east coast housing prices are held down with property rate rates.

    So, as for how the indentured servitude made themselves that way. I agree, they did. But also the system is set up to make people into indentured servants. I’m talking about the monetary system as it currently exists. The monetary system currently employed by the United States federal government. I don’t recall our federal government encouraging people to barter and save money until people have enough cash to pay for things. I do recall the federal government encouraging loans for various things and encouraging people to spend money to support the economy.

    We do not have a cash economy, we have a debt driven economy where people are encouraged to take on more and more debt. They are encouraged to do with because of how the Fed works and how it relates to the creation of money supply. But…the money supply will always be less than the supply of debt.

    DejectedHead (a094a6)

  26. “I don’t recall our federal government encouraging people to barter and save money until people have enough cash to pay for things. I do recall the federal government encouraging loans for various things and encouraging people to spend money to support the economy.”

    Talk about sounding leftist (kidding myself). When did personal responsibility start with what the government tells people to do? Perhaps you’ve lived on the left coast too long. I have a cousin who lives in San Diego. Former enlisted Navy man. Not the smartest knife in the drawer by his own admission, but a low-level system admin so not poor either. He’s managed to live in (what appears to be) an middle class neighborhood. I’m sure it’s a smaller house than it looks on FB, but it’s liveable and there’s no way in H-E-double-hockey-sticks he has a half-mil mortgage and any banker who gave him one should be beaten about the head and shoulders.

    WTP (4090b3)

  27. Also, another question for those who propose doing away with the Fed entirely. Given that the most trusted medium of exchange on the planet, even given it’s numerous faults, is the Federal Reserve Note, what do you propose to replace it with? And for godssakes don’t say gold itself, we’ve been there before.

    WTP (5c621d)

  28. 27. The personal responsibility gets a little warped because we all live within the financial system that was created for us. You probably wouldn’t argue that the U.S. electorate has been dumbed down over the years, and yet, at the same time those same people use the same monetary system you use. Your actions with regard to cash and debt are affected by the actions of the general population because the dollar is a free floating value based on the actions of millions of people. So whether you like it or not, you’re part of the game. Housing prices are set based on what the general population will pay for them. If you try to purchase a house that you like with cash, you’re to get undercut by someone using debt generating cheap cash (which is tied in value to your dollar bills).

    So it isn’t all about personal responsibility. But being personally responsible will help yourself.

    And FYI, I’m not actually on the left coast and I grew up on the east coast. I was just stating the house values difference for general knowledge. I do know an 800 sqft house in Santa Monica, CA will price at $1 million+ if it is a block or two from the beach.

    28. The medium of exchange coming from the Fed reserve right now will have to be maintained to some extent into the near future. The Treasury is more than capable of converting Federal Reserve notes to Treasury backed notes if the Federal Reserve was ever done away with.

    Personally, I think the replacement monetary system should be a digital currency…something akin to BitCoin. BitCoin will never replace the monetary system though because the Federal Government demands that they need to track the flow of money. The Central control model of a new currency still bothers me a little bit, but the Treasury clearly has constitutional authority to do that. I’d like to see a monetary system tied to citizens instead of to capital. Fix it based on population, say $50,000 per person (enough to cover the current dollars out there). If it is based on population, it would fix a control mechanism to stabilize the quantity of money available. (I’d also like a transaction tax that applies across the board for all transactions including government transactions that goes into a general fund that gets redistributed to all citizens…maybe like a 2% transaction. The 2% would never go into government coffers and hopefully…could replace the welfare system and social security) [Talk about sounding liberal right?].

    DejectedHead (a094a6)

  29. 18. Well, the control is what restricts the competition nk. As with your example, the anarcho-capitalist does not want the Fed lending money to banks at a lower rate than they want to lend money to banks, or have the banks, or at least their payday lender and credit card sockpuppets, lending money to people, particularly themselves, at a higher rate than they want to lend it to people or have to pay to borrow it.

    As for tightening the money supply, that feeds into how the whole problem is regularly confused.
    Create a banking bubble to replace the previous bubble? Never mind the influence of the Fed, what about all the laws from Congress requiring more lending in risky districts? Why blame the Fed for a problem that came from more direct socialist intervention into the marketplace?
    In general, because the Fed is a very convenient, compact, populist whipping boy, while actually addressing the core legislation that directly forces such nonsense requires actual effort and leadership.

    Ultimately, the Fed is like any other tool – like say a gun; or government; or fire.
    Used properly, it is invaluable.
    Used improperly, it is destructive.
    I am not impressed when the socialists say to get rid of guns.
    I am no more impressed when the anarcho-capitalists say to get rid of government, particularly the Fed.
    As for the Green Devolutionists who would have us get rid of fire to prevent global warming . . .

    Sam (e8f1ad)

  30. Sam, and no one is impressed when you call free-marketeers “anarcho-capitalists.”

    Steve57 (d38ceb)

  31. If you truly support the free market, you can’t support the Fed. You’re supporting price-fixing.

    Let me know what you think.

    I agree. But then, I’m for a constitutional separation of the State and Economics.

    J.P. (bd0246)

  32. Mr. Patterico the anarcho-capitalist was having a bad day. “They made more laws today,” said Mr. Patterico. “Instead of advancing the cause of anarcho-capitalism we seem to be going backwards, and I’m working so hard for to establish the anarchy. It’s quite dispiriting.”

    “Don’t worry Mr. P,” said happyfeet. “The system is sure to crumble under its own weight any second now! The dollar will collapse and we’ll have to begin anew with a more better covenant governing american affairs than the fatally flawed and corrupted neo-fascist one.”

    “But will it have that delightful balance of Anarchy and Capitalism for which I yearn?” Mr. P asked plaintively.

    “We’ll just have to wait and see, Mr. P. But I think you’re gonna like it just fine.”

    “You know what I bet you’re right, happy. Let them pass their silly laws I laugh in their face HAHAHAHAHA!”

    “Wow you got that crazed anarcho-capitalist laugh down pat, pat,” said happy.

    “Thanks I been practicing!”

    happyfeet (8ce051)

  33. Actually no, read Caldwell’s bio of Hayek, and you see his and von Mises, wider critique was not just against Keynes, but the reigning dirigiste philosophies of Wagner and Schmoller, that endured from the 1880s, to the Collapse of the CreditAnStalt in 1931, All of these philosophies like that of List, according to Fallow, fwiw, the one behind the idea of industrial policy, like Japan’s MITI,looking at it internationally, has the Bank of England, the Bundesbank, the French equivalent, really curtailed
    the severity of the business cycle,

    narciso (3fec35)

  34. Ultimately, the Fed is like any other tool – like say a gun; or government; or fire.
    Used properly, it is invaluable.
    Used improperly, it is destructive.”

    No, you’re wrong. The fundamental problem with the Fed is that it is “when”, not “if”, that the Fed will cause a disaster. You can’t say that about a gun or fire. That is, the Fed will inevitably meddle economically, culturally and morally where it has no business because it is in its nature as a political entity. It’s imbibed with the monopoly power that only the government has and, since absolute power corrupts absolutely and all that, it will invariably be used by “reformers” to fund “improvements” to the economy that intellectuals tell us that we’re in dire need of, and thus, aid in “improving” the nation itself in a variety of ways.

    Hogwash.

    The primary assertion that pro-fiat folks love to throw around is that fiat money as an absolute requirement for having a “modern economy”. Yet has any one of them stopped to consider the multitude of “gifts” that fiat money and central banking have given Americans? I submit the following for your consideration:

    1. Various economic “panics” in the U.S. during the 19th Century (from the Panic of 1819 through 1907) thanks to a variety of government [i.e., not free market] actions like: an inflated fiat money supply, suspension of specie payment, debt moratoriums, and artificially low reserve requirements* – all of this on both the federal and the state level of government – thus, artificially depressing interest rates, enabling various financial “bubbles”, governmental cronyism and creating an increasing likelihood of bank insolvencies. In other words, government created the “Boom – Bust” cycle for which free market capitalism continually gets blamed.

    (*Yes, reserve requirements by the Federal government prior to the creation of the Federal Reserve. See the Legal Tender Act of 1862 and the National Bank Act of 1863. The federal and the state governments have been choosing winners and losers with banking and monetary regulation since the beginning of the republic.)

    2. Fiat money fueled the growth of socialism – that is, large-scale government control of the economy and deficit spending by the state – in Europe first. And with fiat money and central banking providing heretofore undreamed of coffers of cash and credit, Europe to waged the First World War on an unprecedented scale. Indeed, socialist economic practices pretty much enabled the Europeans to destroy their national economies, not to mention murder an entire generation, in the process. And in the aftermath, the first modern example (and, unfortunately, not the last) of fiat money hyperinflation appears in Weimar Germany, leading to.. well, you know…

    3. In the U.S., due to the gold standard’s alleged (yet unproved) inability to be a “stable” currency and promote “consistent” growth, the Fed was created. (Note how its gold that takes it up the wazoo for fiat money/ central banking’s foul-ups.) So in 1913, America hops on the fiat money train – and within two stinkin’ decades the Federal Reserve creates a global depression, which was something that was utterly unrivaled (dare I say impossible) under a gold standard.

    4. Where 19th Century “depressions” pointed to apoplectically by the pro-fiat fanatics were considered “severe”, they were also relatively short and much smaller in scale than the Great Depression, which was absolutely catastrophic on a national (even, global) scale, lasted over a decade and showed no signs of abating. The only reasons that we finally did get out of it was not due to the huge amount of government spending for WWII but rather because of private saving (in the form of government bonds) during WWII being available as capital post-war, the soaking up of the unemployed by being either drafted or dying in the military or by marking their economic place on the G.I. Bill and, most crucially, the ending of economic regulations that had been in place since the Thirties (e.g., wage & price controls and other socialist economic policies. The depression didn’t actually end until 1947, when housewives finally got fed up with the idiotically high price of ground beef due to government price controls and subsidies that kept production artificially low started lobbying Congress for relief. A domino effect soon followed.)

    5. Fiat money and central banking’s most glorious achievement, the Great Depression, marked America’s formal descent into socialism. Now the formerly prideful and fiercely economically independent Americans changed their fundamental moral beliefs on capitalism, choosing to accept the new Progressive notion that we really can get something for nothing. (It says that we can right here in the Keynesian economic textbooks…)

    6. Crucial changes in America’s economic and political doctrines occur: The Fed moves American banking from funding short-term production and trade requirements to funding long-term, consumption, and loans to foreign countries. This sea-change brought about by central banking moves us from a saving society to a debt-based society. Like a narcotic, America (and the world) begin to become dependent upon inflation for prosperity — and, not surprisingly, that which causes inflation: government spending and regulation of the economy.

    7. With the gold standard effectively neutered in 1934 and Keynesian economics enthusiastically embraced, it then became the government’s duty to “stimulate” the economy. The citizens had idiotically surrendered their role in a market economy to a “modern” – read: an ever-increasingly government planned – economy. Thus, the government logically increased in size and scope to cope with its new “duties” to subsidize production, to finance consumer purchases, to smooth “deficiencies” in the remnants of a market economy, to provide for massive government economic projects, education and job opportunities for the benefit of “all” the citizens, and to “regulate” the “chaotic” market economy in the spirit of “justice”, “equality of opportunity” and “fair” competition.

    8. The 1950s marked the beginning of more or less permanent federal deficit spending and permanent inflation. By the 1960s, fiat money enabled the U.S. to simultaneously wage a ridiculous decades-long major war in southeast Asia, spend billions of dollars to send a man to the moon, and ramp up the economy – only to fall into a decade long “recession” in the 1970s when the bill for “The Great (Socialist) Society” came due.

    9. “Recession” has become a new term for economic downturn that was as bad as 19th Century “depressions” but paling before the level of the fiat money-created Great Depression. Except only, by the 1970s, “recessions” were not necessarily “mild” – double digit inflation and interest rates are not “mild” – and they were of indeterminate length because the economic well-being of the country has been inextricably linked to political considerations rather than (repairable and brief) economic dislocations. (Why doesn’t the pro-fiat side try telling the class the number of recessions along with the Great Depression that fiat money gave us in the 20th Century?)

    10. And in 1971, the U.S. government defaulted a second time since going on the fiat money standard (the first time was when the government defaulted on its own notes – suspending gold redeemability of the Federal Reserve dollar, i.e., a promise to pay in specie – at the onset of the Great Depression) by arbitrarily going off the international gold standard (because it “couldn’t” – actually, it just didn’t want to – pay for its foreign trade deficit in a “barbarous relic”. And if the 800 lb. Gorilla in the room doesn’t want to pay in gold, who’s going to tell him that he can’t?)

    Thanks to fiat money and central banking, the following has grown (directly or indirectly) out of the “bottomless” funding trough of the Federal government:

    a gargantuan multiplicity of economic, business and agricultural regulations & subsidies, aid programs, incentives/ dis-incentives, tax breaks, tax credits, etc. to “stimulate” production and/or consumption in a never ending attempt by the government to “pick winners & losers”– all of which have serious “unintended” economic consequences of which the government makes even worse by trying to “fix.”;

    institutionalized welfare schemes that create generations of welfare recipients;
    the creation of socialized medicine (and the consequent destruction of private medicine and the best medical system on the planet);

    the destruction of the public education system and the perversion of university academics;
    the destruction (via over-regulation) of the market-oriented banking system;

    the S & L scandal, the FSLIC collapse, Freddie & Fannie Mae’s collapse, the housing market collapse – just to mention a few;

    an entire series of bloated, unresponsive, irresponsible quasi-governmental Federal bureaucracies (and bureaucrats) that control evermore of the economy each year;

    horrific annual federal deficits (and the attendant increase in the dependency of foreign capital to finance that debt) and a seventeen trillion (!!!) dollar federal debt;

    gigantic foreign trade imbalances;

    institutionalized “pork barrel” projects;

    an abysmal personal savings rate and skyrocketing personal bankruptcy rates;

    and, in general, an unbeatable excuse for the government to regulate everything that remotely resembles something “economic”.

    That’s funny—I thought that we conservative/ libertarian/ minimalists were supposed to dislike socialism. Apparently, I was in error.

    Oh, and one more thing: fiat money has enabled us to not only “improve” our own economic situation, but it has also enabled us to “improve” the world’s economy, too. By the 1960s, 50 years of fiat money and central banking taught America the economic lesson that without monetary limits, there is nothing that we cannot accomplish – if we throw enough money at it.

    We accomplished the economic transformation of the world by having the Fed (via the political arm of the U.S. government) “encourage” (okay, strong-arm) U.S. banks to make loans to socialist governments throughout the world—loans which a banker under the “barbarous relic” of a gold standard (not to mention anyone with a half an ounce of freakin’ sense) would have avoided like the plague. But, under a fiat system, money isn’t just an economic tool anymore—its now primarily a political tool.

    So fiat money (through the Fed, the U.S. Treasury and its international stooges, the IMF and the World Bank) has enabled America to finance the “poor” nations of the world into productive juggernauts. Hey, they’re safe risks, right? After all, sovereign nations don’t default on their loans, right? Wrong. The U.S. did it in 1971 — and plenty of other nations took up the banner once the precedent was set.

    For example, take the South and Central American nations (– please!). In just the 1980s,

    Mexico (1982),

    Bolivia (1984),

    Peru (1985),

    Argentina (1986),

    Brazil (1987),

    and Venezuela (1988) defaulted to the tune of over $250 billion.

    In 1989 alone, U.S. banks wrote off $22 billion more.

    And, under a fiat regime, since we just don’t learn a damned thing by massive economic failures, by 1990 the U.S. Treasury (read: U. S. taxpayers) “assisted” [love that term—it's so warm and fuzzy] U.S. banks in a partial bailout of Mexico (only 8 years after its previous default)—to the tune of $500 million more.

    As the saying goes, billion here, a billion there and pretty soon we’re talking about some serious money… But, hey, it doesn’t matter: the money’s still in circulation and that’s what’s important under Keynesian economics, right? It doesn’t matter if the money’s used productively; it just matters that it circulates. All that money—it just automatically creates wealth, right? (So if the wealth is still there in South America—somewhere—then why is it that banks had to write off the loans?)

    Let’s not even start with the supermassive black hole that is Africa…

    Thanks to our government’s altruistic generosity and fiat money’s ability to enable the U.S. to “aid” the entire world – whether or not it deserved it – can any pro-fiat person at least tell me if we Americans are loved one and all for the morally selfless, altruistic help that we’ve provided to the world — or are we despised near and far? Beuller? Bueller?

    Some of the pro-fiat folks here seem to think that were a fiat system implemented “properly” then everything would be just fine—but, of course, the Fed (i.e., the government) is screwing everything up.

    Bzzzttt! (And in his best John MacLaughlin impersonation) Wrong! This is as ridiculous a viewpoint as the damned fools who think that communism is the best socio-economic system in the world but, also, has never been “properly” implemented. Good grief. Neither is a noble idea that has been corrupted. Instead, they have been implemented properly, i.e., the only way that they could in the real world and not in some antiseptic, experimental academic world devoid of human nature. They’re bad ideas on their face.

    Only on paper can you possibly claim that fiat money and central banking is even marginally efficient (and it isn’t) — and to even grant that in theory completely ignores the (utterly predictable) reality that it is now inextricably wedded to politics, which was the fact that highlights the sheer genius of the Founding Fathers, who mandated a sound, moral, specie-based money system in the Constitution. They understood that it has to be this way because in the real world, when the government is in charge of the money, monetary decisions are made primarily with regard to the political desires of the administration in power and not with respect to the economic needs of individual participants in the economy.

    The pro-fiat folks need to climb down from their ivory tower isolation booth and observe how the world and human nature actually operates. It doesn’t take an advanced degree in differential calculus (or even a degree in “real” economics) to figure out that humans’ wants are unlimited and they absolutely love it when they think that they can get something for nothing, i.e., through political expediency. Simply put, fiat money and central banking gives the kids the keys to the candy store—or, more frighteningly, to booze & the gun safe.

    What has happened under a fiat money regime is that whatever alleged economic purpose central banking was claimed to be necessary to achieve (e.g., the smoothing out of economic cycles , which was caused by government intervention in the economy) has been replaced by the political necessity to fund a socialist agenda without having to resort to overt taxation. Fiat money and central banking thus are the handmaidens of political pragmatism. When economic decisions are made on the basis of whim — that is, not by right of the economic participants but by permission of one’s unprincipled political masters — then the economic system is short-circuited and your individual freedoms are necessarily violated. Indeed, your economic freedom (and, invariably, your political freedom) is sacrificed to whomever makes those political decisions in the regime because if it isn’t you, the individual, making these decisions about your economic and political freedom, then its the state.

    In order to survive under socialism, everyone has to buy into the system (because they are not given a choice to conduct their business independently) and everyone becomes dependent upon what the government (and its pull-peddling factions) decides to allow them to have, economically. And what is given by permission of the government is revocable at its discretion, prole. Free men don’t have to ask for permission from their government to exercise their individual rights. So in case you still haven’t figured it out, fiat money does not promote freedom; it promotes control – and that means control over you.

    I submit that fiat currency necessarily entails a nation eventually (and sooner, rather than later) going full-blown socialist. So why is it that the pro-fiat folks are choosing to divorce cause and effect? Why — in the real world with human nature in charge of an effectively limitless pork trough — is anyone going to voluntarily put the brakes on fiat money’s excesses? Isn’t this exactly what we’re observing in the real world? If you’re for fiat money, then you’ve gotta live by central banking and its inseparable political consequence of destroying individual rights, as world history for the past 120 years so eloquently demonstrates. For pro-fiat “conservatives” who claim to want “limited government”, how is it that you’ve wound up defending one of the primary causes of socialism? Check your premises, not to mention your definitions.

    Newsflash, folks: a socialist government isn’t a “limited government”. It is its opposite.

    And, like it or not, socialism is an economic and political reality in this country today. Even if it were true that the gold standard caused all the economic calamity that the pro-fiat critics claim – and it didn’t – at least it minimizes the State’s influence on your life and maximizes your freedom. Take a look at cause and effect in recent American history: the growth of fiat money and central banking in America (and the world) fueled the growth of socialism everywhere. This is a fact. And that fact alone makes it bad freaking news.

    J.P. (bd0246)

  35. that is a misunderstanding of Hayek

    http://hayekcenter.org/?p=2229

    narciso (3fec35)

  36. a comparison of recent times, with the Bank of England;

    http://www.economicshelp.org/blog/3750/interest-rates/interest-rate-cycle/

    narciso (3fec35)

  37. No. Not their lowering of interest rates, but their later raising them back up, in a world that contained adjustable rate mortgages.

    Wrong. The trainwreck started with their lowering of interest rates. That spurred the malinvestment.

    Patterico (9c670f)

  38. Also, another question for those who propose doing away with the Fed entirely. Given that the most trusted medium of exchange on the planet, even given it’s numerous faults, is the Federal Reserve Note, what do you propose to replace it with? And for godssakes don’t say gold itself, we’ve been there before.

    Gold. Just because you don’t like the answer doesn’t mean it’s not the right answer.

    Patterico (9c670f)

  39. It’s not that I don’t like the answer, it’s that you haven’t thought out the consequences. If you have, please explain. And if you truly mean that, what is stopping you today from using it yourself for all your transactions?

    WTP (066be7)

  40. SF: “Not their lowering of interest rates, but their later raising them back up, in a world that contained adjustable rate mortgages.”

    Patterico (9c670f) — 6/17/2014 @ 6:02 pm

    Wrong. The trainwreck started with their lowering of interest rates. That spurred the malinvestment.

    That assumes that there’s a correct interest rate. Who’s to say that the higher levels mid-decade are correct? Maybe even higher levels are correct? Whatever the rate was, raising them depressed housing prices.

    They maybe didn’t have to lower them, but it was extremely dangerous to raise them – and the same thing will be true this decade.

    Sammy Finkelman (59be71)

  41. SF, is lowering housing prices themselves a bad thing? Not talking about the interest rates involved, just the housing itself.

    WTP (066be7)

  42. 34. Yet has any one of them stopped to consider the multitude of “gifts” that fiat money and central banking have given Americans? I submit the following for your consideration:

    1. Various economic “panics” in the U.S. during the 19th Century (from the Panic of 1819 through 1907)

    Andrew Jackson threw the country into a big depression in 1837, by by trying to get rid of fiat money.

    People are also just alot poorer with fiat money.

    Sammy Finkelman (59be71)

  43. Let me reword that, are lower housing prices a bad thing? Similar to what you say about the correct interest rates. But perhaps we’re agreeing here.

    WTP (066be7)

  44. So in 1913, America hops on the fiat money train – and within two stinkin’ decades the Federal Reserve creates a global depression, which was something that was utterly unrivaled (dare I say impossible) under a gold standard.

    The depression was made severe by trying tp remain on the gold standard in 1931.

    Nothing can stop people from creating their own “money”

    In 1929, stock prices were the equivalent of money. It’s crazy, but they did it. The real problem is debt that can called on demand.

    Sammy Finkelman (59be71)

  45. 43.WTP (066be7) — 6/17/2014 @ 6:24 pm

    Let me reword that, are lower housing prices a bad thing?

    No, they’re not. In principle. Actually, I think housing prices are too high, and are being kept artificially high.

    But lower housing prices are a problem when people have borrowed money on the value of housing.

    Sammy Finkelman (59be71)

  46. We’ve got to find a way to allow housing prices to drop without causing a recession.

    Sammy Finkelman (59be71)

  47. The government pushes up medical costs. The government pushes up college tuition. The government pushes up housing costs. But only when it comes to housing do people think it’s a good idea, and a bad idea to let them drop.

    Sammy Finkelman (59be71)

  48. It’s not that I don’t like the answer, it’s that you haven’t thought out the consequences. If you have, please explain.

    My new habit is to strike out portions of comments that are insults or predicated on insults.

    Why don’t you instead try explaining to me what YOU think the consequences would be?

    And if you truly mean that, what is stopping you today from using it yourself for all your transactions?

    Many things, the most glaringly obvious of which is, the rather obvious fact that the system is not currently designed for that. Clearly, there would have to be a transition. But my view is that a return to commodity money, and a monetary system based on it, is the only way to avoid government manipulation of the currency and absurd government overspending of the sort that is going to result in the collapse of the dollar.

    Why, one could almost argue that someone who thinks we can keep going on as we have . . . hasn’t thought through the consequences. (Which I can say, because I have explained what I think the consequences of continuing the status quo would be.)

    Patterico (9c670f)

  49. That assumes that there’s a correct interest rate.

    There is a market interest rate, and that is the only one that can accurately allow purchasers, borrowers, lenders, consumers, and renters (for example) to determine whether and how their time preferences can be satisfied by the market.

    Artificially lower the market rate, and you spur investment in capital goods without the savings and decrease in consumer demand to go with it. And then bad things happen.

    Patterico (9c670f)

  50. One problem with gold today is that if you buy it, you pay sales tax.

    Patterico (9c670f)

  51. As an interim step, I would like to see currencies compete. My ultimate goal is for the market to decide what people use. Not government.

    Patterico (9c670f)

  52. Good lord you’re a sensitive Sally (now that’s an insult, true or otherwise). I’m not the one proposing a radical change in the existing system which, given its numerous faults, is still the basis of the greatest, most productive economy the world has ever seen. But here’s just the surface issues.

    1). Replace all currency with actual gold will drive up enormously the demand for gold. Which conveniently enormously enriches gold bugs. Any idea what a gram of gold would be at that point?

    2). As a result of 1, industries that rely on gold as a raw material for their products, virtually anything electronic, will make their products prohibitively expensive.

    3) I’d be cool if we end the sales tax on gold. Let gold and fiat compete.

    4). Again, you tell me. What would be your transition plan?

    WTP (066be7)

  53. Ok, the Fortune 500 pool their money and let it be known that they will make short-term loans to banks in need of liquidity same as the Fed does now. What makes that different from the Fed, except in only a bad way? That they will gouge whatever the market will bear?

    nk (dbc370)

  54. Was the price of gold, inordinately high or did it fluctuate pre 1933?

    narciso (3fec35)

  55. Good lord you’re a sensitive Sally (now that’s an insult, true or otherwise).

    Ignored.

    Replace all currency with actual gold

    I don’t think that’s practical. I would prefer paper backed by gold. That represents actual gold and can actually be redeemed into gold.

    If gold doesn’t work, people will choose something else.

    You don’t think the dollar is headed for collapse, do you? I think that’s our fundamental difference. If you think everything is fine, then sure — why would you want a change?

    Start by repealing the sales tax on gold and silver — we agree there — and let currencies compete. We’ll revisit the rest after the dollar collapses and radical solutions look more plausible.

    Patterico (9c670f)

  56. Yes, I see how firmly that comment was ignored.

    OK, paper backed by gold. How much gold to how much paper? Who sets this ratio? Note, I’m NOT saying that’s necessarily a bad idea, but someone will set that ratio. And nothing would prevent them from resetting it. How does that solve the problem?

    And no, I do not think the dollar is headed for immanent collapse. The dollar is still the world’s reserve currency and it is so for a reason. We might cease to be such and that would be a real bad problem for us. The dollar would sink. But total collapse? Highly unlikely. Other currencies are in far worse shape and would be even more trouble if our dollar hit hard times.

    Let me ask this, what other currency do you see as being in better long term shape, with a better track record ( which inspires confidence) than the USD such that it would replace it? And remember, military might is a huge psychological factor here.

    WTP (066be7)

  57. Andrew Jackson threw the country into a big depression in 1837, by by trying to get rid of fiat money.

    That’s not how I see it. Fractional reserve banking (creating new money on top of increased amounts of specie from Mexico, e.g.) and Jackson’s depositing of funds from the Second Bank of the U.S. into state banks helped spur inflation in the 1830s. Bust followed artificial boom as it always does.

    Patterico (9c670f)

  58. Yes, I see how firmly that comment was ignored.

    Good. I know you’re being sarcastic, but I like the strikeout method. It has nothing to do with sensitivity and everything to do with searching for a method to get to substantive debate, which is easily thrown off by insults, as I see happen here all the time. You’re generally pretty good about it, by the way.

    Patterico (9c670f)

  59. OK, paper backed by gold. How much gold to how much paper?

    That puts the question the wrong way. I want people to think of gold as weights, as we did when it was a currency. So it’s not “how much gold to how much paper?” that I want people to ask. I want the paper to represent (because it would be redeemable in) a specific weight of gold.

    And no, I do not think the dollar is headed for immanent collapse. The dollar is still the world’s reserve currency and it is so for a reason. We might cease to be such and that would be a real bad problem for us. The dollar would sink. But total collapse? Highly unlikely. Other currencies are in far worse shape and would be even more trouble if our dollar hit hard times.

    Let me ask this, what other currency do you see as being in better long term shape, with a better track record ( which inspires confidence) than the USD such that it would replace it? And remember, military might is a huge psychological factor here.

    I think the dollar remains the reserve currency until it collapses. People (for some odd reason) trust the United States government, at least more than the Chinese government. No other country currently combines the volume (lacking in good currencies like the Swiss franc, for example) and the veneer of trustworthiness of the government.

    But it’s a veneer. We have never witnessed an explosion of government debt (that’s what will collapse the dollar) as we have in recent decades and especially recent years. Interest is taking a larger and larger piece of the pie and that simply cannot go on forever. At the same time, we clearly lack the political will to do anything about it, and liars like Obama exacerbate the problem by assuring the public that no harsh tradeoff is necessary.

    The only choice I see is collapse. The bursting of the government debt bubble — by the obvious mechanism that politicians will doubtless use to avoid accountability: inflation, eventually leading to hyperinflation.

    How do you see the U.S. government addressing its addiction to debt?

    Patterico (9c670f)

  60. Sigh…ok, if you want the paper to represent a specific weight of gold, what weight would that be? The market rate at some Time Zero? Would it fluctuate? What if there’s a run on the gold?

    I agree the government is doing a crappy job re the debt, but it can still go into debt under any system. When the credit rating agencies start downgrading the dollar, we will see. Why do rating agencies still rate the dollar as high as they do? Inflation will only lead to hyper inflation if there are no consequences. There are way too many well off people with way too much to lose to tolerate hyperinflation of the world’s reserve currency. And worse case scenario, that would not happen overnight.

    That said…I repeat what I said before, the fault lies not in our laws and institutions, but in ourselves. The problem is not what our government does but in the ignorance of our population as to how they are being robbed, not just of their wealth but of their potential.

    WTP (066be7)

  61. Sigh…ok, if you want the paper to represent a specific weight of gold, what weight would that be? The market rate at some Time Zero? Would it fluctuate? What if there’s a run on the gold?

    100 pounds!

    Come on. Be serious. There would be different weights, and different pieces of paper representing those weights.

    Would it fluctuate? What if there’s a run on the gold?

    Would “it” fluctuate? What is this “it” you’re referring to?

    Would prices fluctuate? Undoubtedly. Would a piece of paper worth a centigram of gold today be worth less than a centigram tomorrow? No. It would always be worth a centigram. You could turn it in for a centigram. But today it might buy more pretzels, or fewer gallons of gas, than tomorrow. The market would decide.

    I agree the government is doing a crappy job re the debt, but it can still go into debt under any system. When the credit rating agencies start downgrading the dollar, we will see. Why do rating agencies still rate the dollar as high as they do? Inflation will only lead to hyper inflation if there are no consequences. There are way too many well off people with way too much to lose to tolerate hyperinflation of the world’s reserve currency. And worse case scenario, that would not happen overnight.

    I wager it will happen far more quickly than people expect. A lot of people see this coming but are just waiting for the world to recognize it. Once it does, watch out.

    That said…I repeat what I said before, the fault lies not in our laws and institutions, but in ourselves. The problem is not what our government does but in the ignorance of our population as to how they are being robbed, not just of their wealth but of their potential.

    I agree with you there.

    Seems like every time I try to educate people on this stuff, though, I get nothing but pushback. I guess we don’t all agree on how we’re getting robbed. You apparently trust the Platonic guardians at the Fed far more than I.

    Patterico (9c670f)

  62. ==Seems like every time I try to educate people on this stuff,….==

    With respect, perhaps it’s the word “educate” that some people react to– not the fact that you’re providing insight and fodder for a good discussion on an important topic. Do you want to “school”, us, or do you want people to think and contemplate even if it draws a challenge back? Is the science settled?

    elissa (433a2d)

  63. OK, so no dollar. A certificate that represents gold. Thought you were endorsing a dollar backed by gold. So we come around to the problem of demand. If all certificates must represent an amount of gold sitting in Fort Knox or wherever, Again I ask, do you understand that this will drive the demand for gold way beyond what it is today? Do you understand what this will do to products that require gold as a component?

    As for your wager, I’ll take it. In fact, I’d wager that nanotechnology will enable the creation of gold before this collapse you expect ever happens. 15 years from now? 10? Hmm…what shall we bet? Seeing as we don’t agree on a medium of exchange or the value of such over time.

    Look, it’s not a matter of trusting the Fed, it’s also a matter of the external factors that for better or worse drive the Feds decisions. No one knows or controls that. It’s late and I’m done for now. Have a good one.

    WTP (066be7)

  64. With respect, perhaps it’s the word “educate” that some people react to– not the fact that you’re providing insight and fodder for a good discussion on an important topic. Do you want to “school”, us, or do you want people to think and contemplate even if it draws a challenge back? Is the science settled?

    No, I welcome a challenge. Sometimes the challenge is haughty and dismissive, and those challenges I don’t really appreciate. A challenge and a real discussion is always good though.

    Patterico (9c670f)

  65. OK, so no dollar. A certificate that represents gold. Thought you were endorsing a dollar backed by gold.

    If you scroll up, you’ll see I said paper backed by gold.

    So we come around to the problem of demand. If all certificates must represent an amount of gold sitting in Fort Knox or wherever, Again I ask, do you understand that this will drive the demand for gold way beyond what it is today?

    I imagine that it would.

    Do you understand what this will do to products that require gold as a component?

    It would probably make them more expensive.

    In which case, businesses would find substitutes for the gold, or society might find a better currency.

    I still think anything is better than government control. But we don’t perceive the crisis in the same way.

    Patterico (9c670f)

  66. With respect, perhaps it’s the word “educate” that some people react to– not the fact that you’re providing insight and fodder for a good discussion on an important topic.

    It’s interesting you say that, elissa. I was just reading through all the comments and thinking how great it is to become further educated in an area that I have a lot of interest in, but haven’t really read enough to have a fully formed opinion. I appreciate the schooling as it continues to more fully inform me. (Even if I disagree).

    I guess what I’m saying is, why the reaction to “educate” – isn’t that why we’re all here? To learn, discover and be challenged?

    Dana (fe2228)

  67. Dana-I have not participated in this interesting discussion other than reading, either. I was merely sticking my nose in and reacting to Patterico’s expression of wonder and frustration that some people did not seem to appreciate his efforts or see what he sees. That’s all. I’m glad he clarified that it’s not actually the presence of the pushback that annoyed him, but the tone of some of the pushback.

    elissa (433a2d)

  68. When I say I want to “educate” people it’s mainly because it took me such a long time to learn some of these things that I took a lot of conventional wisdom for granted, even through many of my blogging years. GDP, for example: it’s only recently that I have learned exactly what goes into it, and why it’s so problematic. I’ll probably refer to GDP again, but never again without an asterisk in my head. Since it took me so long to learn the problems, I figured some other people could benefit from what it took me a lifetime to discover.

    I am surprised, therefore, that virtually nobody comes along and says: hey, thanks for sharing that, I didn’t know that! It’s generally a mixture of silence and disagreement. Which seems kind of weird.

    I don’t expect everybody to agree with me that GDP is a bad measure, for example — but was nobody else in my boat? Somewhere in the back of my head, I think I knew government spending was included, for example, but it never actively occurred to me how distorting that is. Until recently. Am I the only person in that category??

    Patterico (9c670f)

  69. The Fed will either become the framework for our new government by corporatists, or it will be eliminated. If it is eliminated, so, too, will be an ungodly amount of our collective debt.

    I’m thinking it will be destroyed and the real power (ADM, Monsanto, Energy consortium of the usual suspects) will issue the equivalent of bonds (not bank notes), which will pass for currency. Wealth will be attached to the value of essential physical assets.

    Ed from SFV (3400a5)

  70. The insoluble problem with returning to a standard of backed money (by gold, silver, or anything else with inherent value) is that no one with common sense will trust that the government won’t turn it into fiat money again just as FDR did.

    Nick M. (f8e14b)

  71. The insoluble problem with backed money is that no valuable commodity or any combined five commodities will provide enough currency for today’s economy. The other insoluble problem is that no commodity is stable, with or without human manipulation, in its scarcity, plentitude, or desirability, and you will never know what your money is really worth. The most insoluble problem is the internal combustion engine — we no longer live in the world of Herbert Spencer and Ludwig von Mises.

    nk (dbc370)

  72. And neither were they. The Industrial Revolution was changing the order of things in a way that no war or conquest ever had, they had no clue what would come next, and they were looking for ways to bring it into some order they could live with in their minds. Some people will do that. ;)

    nk (dbc370)

  73. The insoluble problem with returning to a standard of backed money (by gold, silver, or anything else with inherent value) is that no one with common sense will trust that the government won’t turn it into fiat money again just as FDR did.

    That does seem to be the biggest problem. If government would get out of our way, I think things would be much better — but government never does

    The best thing to do, I think, is make these arguments. The more people love freedom, the better chance we have.

    Patterico (9c670f)

  74. @nk
    You hit on some of the core contradictions of the anarcho-capitalist wing of the Austrian School, which, when you get past all of their rhetoric, inevitably winds up at “government should exist to ensure that no business is ever bigger than MINE!”

    Them controlling terms of loans they make?
    Excellent!
    A big bank controlling terms of loans they take out?
    Horrible!
    A central bank controlling terms of loans the big banks take out?
    TYRANNY!

    Everywhere you look, their rhetoric on that is always the same, with denunciations of “banksters” and people who have “earned enough” that is only found among them and hardcore socialists, yet somehow we are supposed to believe that they oppose “actual” socialism rather than their centrally planned “optimum” business size and bank regulations.

    Sam,

    I think you are confusing Austrian economists with someone else. Name an Austrian economist who supports central planning. That is the antithesis of their philosophy.

    Patterico (9c670f)

  75. Any WTF does he need a $500K mortgage? Is it so wrong for a doctor to live in a middle class house until his loans are paid off? This is what I mean by ” the fault lies not in our methods but within our desires.”

    I don’t know where you live, that $500K can buy you a rich people’s house. Around here it isn’t even middle class.

    Milhouse (b95258)

  76. Sam, and no one is impressed when you call free-marketeers “anarcho-capitalists.”

    Unless he is referring to the actual anarcho-capitalists. Who, you know, call themselves exactly that.

    Milhouse (b95258)

  77. “Don’t worry Mr. P,” said happyfeet. “The system is sure to crumble under its own weight any second now! The dollar will collapse and we’ll have to begin anew with a more better covenant governing american affairs than the fatally flawed and corrupted neo-fascist one.”

    Cloward-Pivens, anyone?

    Milhouse (b95258)

  78. Seriously Milhouse? I mean, I understand that in certain areas of the country, Cali, DC, NYC this may well be the case, but there are options. Doctors are needed outside of major metropolitan areas and such. Come out to fly over country, or even Orlando/Miami/Atlanta/etc. and you can buy a nice home on half that and a very nice home on 2/3 of $500K. And that is excluding the outlying areas. Even outside the major areas of California you can find a home for less than that. And a smart person puts 20% down so a $500K loan should buy a $600K house, more or less.

    WTP (aca208)

  79. “Don’t worry Mr. P,” said happyfeet. “The system is sure to crumble under its own weight any second now! The dollar will collapse and we’ll have to begin anew with a more better covenant governing american affairs than the fatally flawed and corrupted neo-fascist one.”

    Cloward-Pivens, anyone?

    I don’t want the dollar to collapse. It is going to be horrible when it happens.

    I’m just looking for the silver (gold?) lining.

    Patterico (9c670f)

  80. FannieMae/FreddieMac conforming laws are 80% of value, with an income requirement of three time PITI, and limited to $417,000 for most of the country for a single-family home; $625,000 for New York and San Francisco certain designated high cost areas. The government did not cause either the bubble or the crash; pretentious buyers, greedy builders, and mortgage brokers committing loan fraud, a/k/a the free market, did.

    nk (dbc370)

  81. The government did not cause either the bubble or the crash; pretentious buyers, greedy builders, and mortgage brokers committing loan fraud, a/k/a the free market, did.

    This was particularly evident here in the Land of Lincoln. What grinds me is that mrs. carlito is an honest mortgage broker. She actually got out of non-conforming because she saw what was happening and couldn’t abide by it. And that leaves aside the actual full-on criminals and fraudsters.

    carlitos (05f67f)

  82. WTP and Milhouse–You’re both right. The cost of living varies widely in this country depending on geography and desired physical and cultural amenities. I’m all for people thinking through, and spending their housing dollars mindfully and wisely. But life is short and people also want to live where they want to live. There are factors beyond cost that weigh into people’s choice of where to live. Perhaps its a place where they grew up, or where their spouse did and who also has a good job. Perhaps close friends and family live there and they do not wish to be separated by many miles even if it meant their house would cost less. Maybe they want their kids to grow up with cousins or grandparents close at hand. Maybe they are a physician with a specialty for which they need to be near a particular medical institution or research facility.

    elissa (433a2d)

  83. A client of mine is a CPA. A mortgage broker xeroxed his signature off a correct financial statement, put it on a fake one, and faxed it to the “lender”. When my client told “whomever” at the lender, the response was “whatever”. The lender had almost certainly already sold the loan (the assignment is part of the package at closings), and some investor somewhere in the Pacific was stuck. The fraud ran deep and wide, with application fees, appraisal fees, processing fees, points, title company fees, and all other kinds of money, sticking to a lot of fingers.

    nk (dbc370)

  84. Carlitos and nk–I am not quite as willing as you are to let “government” off the hook when it comes to a list of all the bad actors and horrible policies that brought us the housing bubble and collapse. Gretchen Morgenson’s excellent book Reckless Endangerment made that clear to me and anyone who read it. There were many interlocking “causes” –not the least of which were unscrupulous mortgage brokers and banks, greedy builders, naive to downright crooked buyers, bad legislation, and agenda driven Fanny Mae under several “leaders” who knew full well it was happening and did absolutely nothing to rein it in despite repeated warnings.

    elissa (433a2d)

  85. “But life is short and people also want to live where they want to live. ”

    OK, true. But I’m not saying a doctor should have to live their entire lives or spend their entire careers in flyover country. God forbid. We all have to make choices in life. And poor and/or rural areas need doctors. Is it the end of the world for a doctor to live somewhere inexpensive until he/she can earn enough to get out of loan debt? I lived in BFE Cape Canaveral for five years for the engineering experience. Yeah, it sucked. A friend who was a good engineer worked in Lynchburg, VA for a few years to get experience and to pay down loans. I understand doctors do sacrifice a lot, but do they really have to live in a half million dollar home right out of residency? I don’t think so. I have a cousin who lives in Corona, CA near a golf course. 4BR/3BA, 1700 sq. ft. showing now on Zillow for under $350K. And again, the fault lies not in our methods but within our desires.

    WTP (41d24a)

  86. Sam,

    I think you are confusing Austrian economists with someone else. Name an Austrian economist who supports central planning. That is the antithesis of their philosophy.

    I am talking about Ron Paul, whose book you cited, who promotes the Murray Rothbard wing of the Austrian School, which Murray Rothbard named “anarcho-capitalism”, which is linked to the “paleo-libertarian” wing of libertarianism which was founded by Rothbard and Llewellen Rockwell, who was a primary staffer for Ron Paul, finishing the circle.
    I am taking the rhetoric of Ron Paul and his more rabid supporters at absolute face value.
    If that rhetoric happens to be incompatible with the “orthodox” Austrian School then so be it. I really do not care and it really does not matter as the core of the proposal you are advancing is based on what Ron Paul advocates, and this is absolutely anarcho-capitalism, and that rhetoric is virtually indistinguishable from the rhetoric of anarcho-socalists such as the OWS movement to the point of high support, endorsement, and cross-participation by Ron Paul and his supporters for the OWS movement.

    As for the complaint about opposing central planning, again I am taking the rhetoric of the advocates at absolute face value over any appeals to a presumed ideological theory and treatise.
    That rhetoric is quite clear in its opposition to allowing any corporation to grow above a certain size, using the force of government to prevent such growth. It is also clear in its support of the government setting a direct value on a key commodity – namely the price of gold by setting a gold standard. Both of these combine in the very direct support for the government to impose massive limits on the size and functioning of banks.
    You can parse any of those as much as you as like but it does not change that those are all aspects of what has been declared “central planning” and “socialist control of the economy.” It is not my rhetoric that is failing to match my ideology, or my rhetoric that is advocating for such “socialist” policies. That is what your cited authority and his cited inspirations and followers are saying. Take it up with them if you really object to what they are looking for.

    Mind you, when doing so, it would be instructive to note that the whole concept of “paleo-libertarianism” was devised as a scheme to infiltrate, subvert, and take over the Republican Party in order to effect the long term goals of “anarcho-capitalism”, both terms having been “repudiated” by their originator for not being “useful” to achieving the objective anymore. They have appealed to racists, Truthers, and worse in the past for support, it is not surprising they would appeal to anarcho-Marxists now. Not that such is a problem for me, as I already would triple check any weather report one of them might offer me (no doubt for an excessive amount of gold).

    Sam (e8f1ad)

  87. No, you’re wrong. The fundamental problem with the Fed is that it is “when”, not “if”, that the Fed will cause a disaster. You can’t say that about a gun or fire.

    Well actually, you can say that about a gun or fire, mostly because, you know, both have been used in crimes.
    Again, a tool is in how you use it.

    Hogwash.

    Yes, those anti-fiat arguments are.

    1. Various economic “panics” in the U.S. during the 19th Century (from the Panic of 1819 through 1907) thanks to a variety of government [i.e., not free market] actions like:

    So having specie didn’t work perfectly because of government.
    Yes, I already know that.
    But wait, that means government is the problem, and not specie or fiat, so clearly we must get rid of government.

    2. Fiat money fueled the growth of socialism – that is, large-scale government control of the economy and deficit spending by the state – in Europe first.

    Seriously?
    There was no large-scale government before fiat money?
    Diocletian didn’t try and set price controls and mandate people remaining in the profession of their parents back in the Roman Empire?
    William the Conqueror didn’t declare all land in England to belong to him and only held by license?
    Louis XIV and his various ministers didn’t try and manage and micromanage the French economy?
    Darn that history!

    blockquote>3. In the U.S., due to the gold standard’s alleged (yet unproved) inability to be a “stable” currency and promote “consistent” growth, the Fed was created. (Note how its gold that takes it up the wazoo for fiat money/ central banking’s foul-ups.) So in 1913, America hops on the fiat money train – and within two stinkin’ decades the Federal Reserve creates a global depression, which was something that was utterly unrivaled (dare I say impossible) under a gold standard.

    BUZZZ!
    Wrong.
    The global depression was caused by the aftermath of WWI.
    For the world, it had mostly passed within a few years of the various countries abandoning the gold standard.
    For the U.S. it continued for decades because of the policies of the government, maintaining a gold standard.

    4. Where 19th Century “depressions” pointed to apoplectically by the pro-fiat fanatics were considered “severe”, they were also relatively short and much smaller in scale than the Great Depression, which was absolutely catastrophic on a national (even, global) scale, lasted over a decade and showed no signs of abating.

    Again, the global depression ended pretty much with the abandoning of the gold standard.
    Indeed, the national depression continued because of government policies, but then I’ve already made it clear how bad those could be, and the only way to “solve” that is to get rid of government altogether.
    Further, you are wrong. With the exception of the Great Depression, recessions before the Fed were long and growth periods shorter than they were after the Fed.

    5. Fiat money and central banking’s most glorious achievement, the Great Depression, marked America’s formal descent into socialism.

    The most glorious achievement of fiat money and central banking has been the U.S. going from a Third World backwater to the sole superpower.
    While that is now being challenged, other than rhetoric there is no actual evidence that fiat money and central banking is causing it, particularly when it can be seen that the rising rivals ALL have much more severe government control over their economies.

    6. Crucial changes in America’s economic and political doctrines occur: The Fed moves American banking from funding short-term production and trade requirements to funding long-term, consumption, and loans to foreign countries.

    That move was caused by the shift from the U.S. being a Third World backwater to being the Superpower responsible for the Pax Americana.

    7. With the gold standard effectively neutered in 1934 and Keynesian economics enthusiastically embraced, it then became the government’s duty to “stimulate” the economy.

    The stupidity of unrestrained Keynesianism is distinct from the function of fiat currency and a central bank.

    8. The 1950s marked the beginning of more or less permanent federal deficit spending and permanent inflation. By the 1960s, fiat money enabled the U.S. to simultaneously wage a ridiculous decades-long major war in southeast Asia, spend billions of dollars to send a man to the moon, and ramp up the economy – only to fall into a decade long “recession” in the 1970s when the bill for “The Great (Socialist) Society” came due.

    The 1950s were still recovering from the devastating interventions of the 1930s and 1940s.
    The war in southeast Asia was not major by any stretch when compared to WWI or WWII.
    Sending a man to the moon created a major technological and economic boom.
    Yes, the “Great” Society was bad, but again is not inherent in a fiat currency and central bank.

    9. “Recession” has become a new term for economic downturn that was as bad as 19th Century “depressions” but paling before the level of the fiat money-created Great Depression.

    Absolutely untrue.

    10. And in 1971, the U.S. government defaulted a second time since going on the fiat money standard (the first time was when the government defaulted on its own notes – suspending gold redeemability of the Federal Reserve dollar, i.e., a promise to pay in specie – at the onset of the Great Depression) by arbitrarily going off the international gold standard (because it “couldn’t” – actually, it just didn’t want to – pay for its foreign trade deficit in a “barbarous relic”. And if the 800 lb. Gorilla in the room doesn’t want to pay in gold, who’s going to tell him that he can’t?)

    Which highlight a core problem with a unilateral gold standard, which is what drove Mercantilism before real (not the pseudo Austrian School version) Laissez Faire was introduced, not to mention what drove the Smoot-Hawley Tariff Act which was key to causing the Great Depression.
    Yet you demand we repeat this error for some reason.

    Thanks to fiat money and central banking, the following has grown (directly or indirectly) out of the “bottomless” funding trough of the Federal government:

    Subsidies, etc. existed well before fiat money and central banking.
    So did institutionalized welfare.
    And banking scandals and bubbles.
    And bloated bureaucracies.
    And government deficits.
    And trade imbalances.
    And “pork barrel” projects.
    Public education and higher education were corrupted all on their own.
    Savings rates have changed more because of lifespan changes than the monetary system, while bankruptcies are dependent on the economy as a whole.
    In general, it is more an unbeatable excuse for demagogues to criticize everything that remotely resembles something “economic”.

    That’s funny—I thought that we conservative/ libertarian/ minimalists were supposed to dislike socialism. Apparently, I was in error.

    I certainly do.
    As for others . . .

    Oh, and one more thing: fiat money has enabled us to not only “improve” our own economic situation, but it has also enabled us to “improve” the world’s economy, too. By the 1960s, 50 years of fiat money and central banking taught America the economic lesson that without monetary limits, there is nothing that we cannot accomplish – if we throw enough money at it.

    Which is why the world economy has grown so massively since the end of WWII, with Europe being completely rebuilt, Japan, Korea, and China becoming economic powerhouses, India and Brazil surging, and more.
    Has every nation “won”?
    Of course not – only socialism promises that.
    And apparently people promoting a gold standard.
    . . .
    Oops.

    Sam (e8f1ad)

  88. Sam, anarcho-capitalism is not limited to Rothbardians or Austrians. I don’t think Rothbard coined the term, and he certainly didn’t have a monopoly on it. Most A/Cs with whom I’m familiar are not Rothbardians or paleos. David Friedman, for instance.

    Milhouse (b95258)

  89. That rhetoric is quite clear in its opposition to allowing any corporation to grow above a certain size, using the force of government to prevent such growth.

    Sounds like nk.

    Milhouse (b95258)

  90. I thought about it with TARP and the rescue of General Motors. If it’s too big to be allowed to fail, it’s too big to be allowed to exist.

    nk (dbc370)

  91. If it’s too big to be allowed to fail, it’s too big to be allowed to exist.

    The premise is wrong, therefore so is the conclusion. But you have openly written that you are willing to rob or kill people in order to prevent them from getting richer than a certain amount.

    Milhouse (b95258)

  92. And you don’t mind welfare as long as it’s to rich a**holes who made the wrong business decisions.

    nk (dbc370)

  93. But you have openly written that you are willing to rob or kill people in order to prevent them from getting richer than a certain amount.

    Where did I write that, BTW? At the bottom of your brandy glass, or on your crack pipe?

    nk (dbc370)

  94. If the International Financial Community drops the Dollar as the Reserve Currency, and moves to Special Drawing Rights (SDR), we’re phuqued.

    askeptic (8ecc78)

  95. the best way to get the International Financial Community to do that is to shift America to a “new normal” of sub-2% gdp growth Mr. skeptic

    Food Stamp has it all under control

    happyfeet (8ce051)

  96. Actually, argument for the SDR began with a refusal on the part of the US to print more dollars. Either way the USD is a factor in the makeup of SDR. IMF to some extent handcuffs the USD in the financial/political world. It’s a double-edged sword but ultimately the free-market world decides which reserve currency it will use. Either overtly or via a black market.

    WTP (fd3093)

  97. If OPEC shifts to Euro’s or to SDR’s, that will be a major upheaval.

    askeptic (8ecc78)

  98. Yeah, that Euro is a stable mo-fo. Long track record as well. And just count the armies and navies those EU colossi have, not to mention their effectiveness.

    WTP (aca208)

  99. In comparison to Baracky’s?

    askeptic (8ecc78)

  100. Baracky will be gone shortly and *he* doesn’t have an army, we do. And it’s might effective when the idiots are not in charge. Unlike EFools. Only the UK can field a real team and that is mostly defensive.

    WTP (fd3093)

  101. And you don’t mind welfare as long as it’s to rich a**holes who made the wrong business decisions.

    Liar.

    But you have openly written that you are willing to rob or kill people in order to prevent them from getting richer than a certain amount.

    Where did I write that, BTW?

    Here: It is the foolish government which allows the unfettered accumulation of wealth
    Here: The only right anybody has is to rejoin the food chain
    Here: I do [think that the right not to be murdered or robbed has no relationship to reality]

    There is only one possible way to understand your position: there is no such thing as a right not to be killed or robbed, governments are instituted among men merely as a practical way to advance our collective interests, which most of the time involve not getting killed or robbed, but sometimes involve killing or robbing other people, and in particular you want the government to fetter the accumulation of wealth, i.e. to rob or kill anyone who accumulates more than you like them to have. You want that, and you endorse it as perfectly right and proper, because you deny the very basis on which this country was founded, i.e. natural rights.

    Milhouse (b95258)

  102. All the voices in your head, Milhouse? Don’t they give you a terrible headache?

    nk (dbc370)

  103. They’re your words, not mine, nk.

    Milhouse (b95258)

  104. Like Patterico says, the most important part of effective communication is the audience. Anyhow ….

    nk (dbc370)

  105. 88.Sam, anarcho-capitalism is not limited to Rothbardians or Austrians. I don’t think Rothbard coined the term, and he certainly didn’t have a monopoly on it. Most A/Cs with whom I’m familiar are not Rothbardians or paleos. David Friedman, for instance.
    Milhouse

    It is not limited to them, and there are suggestions of “proto-anarcho-capitalists”, but it was actually Rothbard who coined the term, as he coined “paleo-libertarian” with Rockwell, who worked with Paul, who was the one cited as a source for an argument to end the Fed, and so it is them and their rhetoric that I am focusing on.

    Sam (e8f1ad)

  106. 90.I thought about it with TARP and the rescue of General Motors. If it’s too big to be allowed to fail, it’s too big to be allowed to exist.
    nk

    Since nothing is too big to be allowed to fail, then nothing is too big to be allowed to exist.

    As Milhouse said, you have a false premise and thus a false conclusion there.

    And that is the problem with such interventions.
    They first create false categories, work to enable them, and then try to blame others because it didn’t work.
    Compounding it, that failure enables others to then claim that the underlying structure is broken when it fact it was an additional, external, intervention that caused the actual difficulty.

    Sam (e8f1ad)

  107. A century has been enough time, to gauge the effectiveness of this central bank, Greenspan was my tutor in this endeavor, spiking the rate in 1999-01, then 2004-2006,

    narciso (3fec35)

  108. Oh, I don’t think we should have bailed them out. We should have let AIG, Citigroup, and GM eat their losses, and let FannieMae and FreddieMac go bankrupt, in the sub-prime crisis; and stayed out of GM’s later bankruptcy. “Too big to fail” was the DC rationale.

    nk (dbc370)

  109. As for the complaint about opposing central planning, again I am taking the rhetoric of the advocates at absolute face value over any appeals to a presumed ideological theory and treatise.
    That rhetoric is quite clear in its opposition to allowing any corporation to grow above a certain size, using the force of government to prevent such growth.

    You could not be more absurdly wrong. In your entire comment there is not one link or quote to back up that insanely incorrect assertion. That is because none exists.

    I will now proceed to shred your claims with something called evidence. Watch, and learn.

    You need only watch the first two minutes of this video to see a young Ron Paul decrying laws against monopolies.

    Like other Austrian economists, the only monopoly he opposes is one created by government privilege. Similarly Rothbard saw no problem with monopoly prices per se in an unhampered market. Rothbard opposed only one thing, which he argued was the true definition of monopoly: “a grant of special privilege by the state.”

    Accusing the Ron Pauls and Murray Rothbards of the world of wanting to use the power of government to keep companies small, or of arguing for any form of “central planning,” is so misguided that one wonders if you’re simply here functioning as a troll, looking to waste my time by making patently ridiculous claims and reveling in the thought that I am spending time to refute them.

    If you are actually serious, you need to take your fingers off the keyboard and do some reading before you beclown yourself further.

    Patterico (9c670f)

  110. It is also clear in its support of the government setting a direct value on a key commodity – namely the price of gold by setting a gold standard. Both of these combine in the very direct support for the government to impose massive limits on the size and functioning of banks.
    You can parse any of those as much as you as like but it does not change that those are all aspects of what has been declared “central planning” and “socialist control of the economy.”

    No, they do not seek government support for limits on the size and functioning of banks, but rather the removal of government privileges for banks. Those are two quite different things.

    But never mind that. I want you to admit you were wrong to claim that Austrian economics supporters like Ron Paul and Murray Rothbard favor using government to attack monopolies. That is so ridiculous a proposition that I am not going to let you off the hook, especially after you doubled down today.

    Patterico (9c670f)

  111. Sorry for venting, but the guy’s combination of a totally ranting tone coupled with 100% misinformation got under my skin.

    Patterico (9c670f)

  112. You could not be more absurdly wrong. In your entire comment there is not one link or quote to back up that insanely incorrect assertion. That is because none exists.

    Ron Paul: Corporations are not people.
    http://www.youtube.com/watch?v=Ds7-1Nemrng

    Ron Paul followers frenzying . . . over Ron Paul’s position?
    http://www.dailypaul.com/243358/ron-paul-joins-the-dark-side-opposes-internet-freedom

    Accusing the Ron Pauls and Murray Rothbards of the world of wanting to use the power of government to keep companies small, or of arguing for any form of “central planning,” is so misguided that one wonders if you’re simply here functioning as a troll, looking to waste my time by making patently ridiculous claims and reveling in the thought that I am spending time to refute them.

    Ron Paul supporting OWS:
    http://www.weeklystandard.com/blogs/ron-paul-praises-occupy-wall-street_614967.html

    OWS supporting Ron Paul:
    http://occupyorganizer.com/occupy-movement-supports-ron-paul-for-2012/

    And let us be clear:
    You, citing Ron Paul, are declaring that a central bank setting interest rates is “central planning”.
    I find that declaration to be absurd and unsupportable.
    However, having set that as a standard, then you must accept that setting restrictions on the size of corporations, establishing a price for a key commodity, and other limitations advocated by Ron Paul or his followers is equally “central planning”.
    You opened the door to that, not me.
    Your objecting to my reflecting the same ridiculous standard back cannot stand.

    No, they do not seek government support for limits on the size and functioning of banks, but rather the removal of government privileges for banks. Those are two quite different things.

    I notice you don’t address the issue of setting a price for gold with a gold standard. Are you acknowledging that is in fact “central planning” affecting the marketplace?

    As for “removing privileges” versus “supporting limits on the size and functioning of banks”, here are his supporters being all dreamy about Paul’s support of Glass-Steagall:
    http://www.dailypaul.com/63189/more-regulation-idiots-reinstate-the-glass-steagall-act

    So in fact, Paul very much DID support a limit on the functioning of banks.
    Meanwhile here is Rand Paul musing about using government to limit the size of banks:
    http://www.randpaulreview.com/2013/03/rand-paul-cool-on-breaking-up-big-banks-open-to-starving-them/

    And there is a limit on size.

    Perhaps if you had spent a modicum of time in making yourself aware of these things before so eagerly embracing them you wouldn’t now have to deal with anyone pointing out the glaring flaws in them.

    But never mind that. I want you to admit you were wrong to claim that Austrian economics supporters like Ron Paul and Murray Rothbard favor using government to attack monopolies. That is so ridiculous a proposition that I am not going to let you off the hook, especially after you doubled down today.

    Well, seeing how I have shown that I wasn’t wrong to claim that anarcho-capitalist/paleo-libertarians like Paul and his supporters favor using government to control businesses they don’t like, which is what I said and not your wildly introduced strawman about monopolies, and since you have doubled and redoubled on you unrestrained advocacy for Paul and Rothbard, I will return it and insist on an explanation from you about Paul’s support for OWS. In fact while you are at it, you can explain Paul and the newsletters. And his endorsement of Adam Kokesh. And all of the other truly outrageous political allies he has solicited over the years. Do tell precisely how you feel anything from Paul or his mentors can be trusted in the face of such actions.
    If you don’t know what those are then again the fault is your for not investigating and making yourself aware of these things beforehand and not on me for daring to suggest that the Emperor Paul is as into streaking as the Emperor Barack.

    And as for Rothbard’s definition of a monopoly, seeing as how the word goes back to Aristotle, I feel quite comfortable in rejecting Rothbard’s attempt to control the language and redefine it in a way that exclusively endorses his political goals.

    Sam (e8f1ad)

  113. Where did Sam go? You’d think he’d want to stick around after having his ass handed to him.

    [UPDATE: Sam's comment had been in the moderation filter.]

    Patterico (1daa89)

  114. I’m right here.
    My last comment is sitting in moderation for 12-1/2 hours and counting.
    Feel free to approve it anytime you can handle it.

    Sam (e8f1ad)

  115. OK, sorry. Will look now. I don’t get to the comments in moderation often, but I should obviously check that filter before asserting that someone has disappeared. My apologies. Back in a sec.

    Patterico (9c670f)

  116. I notice you don’t address the issue of setting a price for gold with a gold standard. Are you acknowledging that is in fact “central planning” affecting the marketplace?

    First of all, a gold standard does not mean setting a price for gold, and Paul does not advocate setting a price for gold.

    But I was waiting to address that issue because I wanted to stick to one issue at a time. I wanted to force you to support your claims. I’ll click your links this evening when I have time, but even assuming your characterization of what they supposedly say is true, you have not proved your point. Saying corporations are not people is not supporting limits on their size. Support for OWS, depending on what that support is (perhaps it’s sharing their anger at bailouts? I predict when I do click the links that’s what I’ll see) does not prove the point either.

    I suspect that not a single link you have provided shows Paul’s support for government limiting the size of business.

    As for his supporters, that wasn’t who you said you were referring to. You said, and I quote: “I am talking about Ron Paul, whose book you cited, who promotes the Murray Rothbard wing of the Austrian School, which Murray Rothbard named “anarcho-capitalism”, which is linked to the “paleo-libertarian” wing of libertarianism which was founded by Rothbard and Llewellen Rockwell, who was a primary staffer for Ron Paul, finishing the circle.” I will not be held responsible for defending the statements of Ron Paul supporters. You need to be held responsible for backing up what you say.

    Patterico (9c670f)

  117. Here’s from just one of your links: the Weekly Standard piece.

    Paul praised the Occupy movement for focusing attention on the “very rich” who became wealthy because of government bailouts or contracts, but said that wealthy people who make an honest living “have to be protected. We shouldn’t be jealous or envious of those people.”

    That is exactly the position I said he had, and does not support your claim at all.

    I’ll address more links tonight. Other commenters, feel free to look at Sam’s so-called evidence.

    Patterico (9c670f)

  118. First YouTube clip: his point is actually correct. Corporations are not people. They are made up of people. Paul is opposing collectivism with that answer.

    But does that mean that Paul opposes the decision in Citizens United? Nope. You can listen to this interview and learn that Paul believes that you should never restrict lobbying, because lobbying is free speech and in fact is specifically protected in the Constitution. His point is that individuals own the corporations, and those people should have rights, just like TV station owners or newspaper publishers.

    That’s why, drum roll please:

    In his book Liberty Defined, Ron Paul criticizes foes of Citizens United: “Those who attack the court’s decision say that corporations and unions have no rights of free speech, following the flawed belief that government can regulate commercial speech in advertising.” A page later, Paul also decries limits on campaign fundraising, even though “the amount of money being spent on elections is obscene.” Pro-Paul super-PACs have spent about $360,000.

    He supports the decision in Citizens United.

    You lose, again.

    Seriously, you have no idea what you’re talking about, Sam.

    Patterico (9c670f)

  119. First of all, a gold standard does not mean setting a price for gold, and Paul does not advocate setting a price for gold.

    Well actually, it is.
    You may not want to accept that, but the history of bullion currency is quite clear:
    Government selects a particular weight of bullion and assigns it a specific value, be it in drachma, denarii, marks, shillings, or dollars.
    http://nesara.org/files/coinage_act_1792.pdf
    That is the Coinage Act of 1792. Scroll to the third page and see where it very explicitly assigns particular values to particular amounts of both pure and alloyed bullion.
    That is the government setting a hard and fast value on the price of specific commodities.
    More, it is the government setting a hard and fast value on the exchange rate between particular commodities.
    Do you need me to go over just how that did not work out as well?

    But I was waiting to address that issue because I wanted to stick to one issue at a time. I wanted to force you to support your claims. I’ll click your links this evening when I have time, but even assuming your characterization of what they supposedly say is true, you have not proved your point. Saying corporations are not people is not supporting limits on their size. Support for OWS, depending on what that support is (perhaps it’s sharing their anger at bailouts? I predict when I do click the links that’s what I’ll see) does not prove the point either.

    Yes, it will have proved my point.
    Saying corporations are not people enables stripping them of numerous protections in law. It means wiping out LLCs to begin with, and setting the ground for the return of McCain Feingold, not matter the lip service to opposing it.
    Sharing anger at bailouts is one thing, making yourself so appealing that they endorse you?

    I suspect that not a single link you have provided shows Paul’s support for government limiting the size of business.

    I’m not going to do all your research for you. If you don’t want to know who you are endorsing that remains on you.

    As for his supporters, that wasn’t who you said you were referring to. You said, and I quote: “I am talking about Ron Paul, whose book you cited, who promotes the Murray Rothbard wing of the Austrian School, which Murray Rothbard named “anarcho-capitalism”, which is linked to the “paleo-libertarian” wing of libertarianism which was founded by Rothbard and Llewellen Rockwell, who was a primary staffer for Ron Paul, finishing the circle.” I will not be held responsible for defending the statements of Ron Paul supporters. You need to be held responsible for backing up what you say.

    I guess you missed this:
    “I am taking the rhetoric of Ron Paul and his more rabid supporters at absolute face value.
    If that rhetoric happens to be incompatible with the “orthodox” Austrian School then so be it. I really do not care and it really does not matter as the core of the proposal you are advancing is based on what Ron Paul advocates, and this is absolutely anarcho-capitalism, and that rhetoric is virtually indistinguishable from the rhetoric of anarcho-socalists such as the OWS movement to the point of high support, endorsement, and cross-participation by Ron Paul and his supporters for the OWS movement.”
    Citing my quotes is fine, but do include everything.

    118.Here’s from just one of your links: the Weekly Standard piece.

    Paul praised the Occupy movement for focusing attention on the “very rich” who became wealthy because of government bailouts or contracts, but said that wealthy people who make an honest living “have to be protected. We shouldn’t be jealous or envious of those people.”

    That is exactly the position I said he had, and does not support your claim at all.

    And who exactly determines which of those people became wealthy because of government and which became wealthy by making an honest living?
    I’m certain that will be done on an absolutely fair basis, with no government force or anything at all, much as with say Microsoft and the Redskins. Oh wait . . .
    Ron Paul has a long history of such hedging and parsing around his positions, endorsing the worst fringe elements on a conditional basis, glossing over their offenses, and holding himself up a icon of purity when challenged.
    You really need to spend as much time investigating this person as you seem willing to commit to investigating his expert opinion.

    Sam (e8f1ad)

  120. I’m pretty sure the coinage act of 1792 is fixing the price of currency to bullion, not setting the price of bullion. Effectively they are saying that the dollar is to be made of out certain metals (These are coins). The value of the dollars would float in relation to the availability of the precious metals they are made out of.

    I think you have the currency relationship with bullion backwards.

    DejectedHead (a094a6)

  121. Up to 2000, I had to do business with the Greek Consulate in Chicago. Its fees were in “metallic drachmas” which were not the same as regular drachmas. They had a chart which converted the metallic drachmas into regular drachmas, and then I gave them dollars based on the current exchange rate for regular drachmas. It reminded me of the Mongols imposing paper money on the Chinese but themselves accepting only gold and silver for taxes/tribute, but in the end all the Greek government got was paper. Were the metallic drachmas based on a dram’s worth of silver? I never investigated it. It could be useful to limit raising of government imposts to inflation, I suppose. I can’t think of any other reason.

    nk (dbc370)

  122. Ron Paul is interesting to have around, like your cranky uncle who has a few ideas that seem interesting while you’re drunk.

    carlitos (c24ed5)

  123. I’d say Ron Paul has excellent ideas that people don’t like to hear because they don’t want to really think about the situations.

    It is a lot harder to grasp why the Civil Rights Act is not good than it is to say people against the Civil Rights Act are racists.

    DejectedHead (a094a6)

  124. 121.I’m pretty sure the coinage act of 1792 is fixing the price of currency to bullion, not setting the price of bullion. Effectively they are saying that the dollar is to be made of out certain metals (These are coins). The value of the dollars would float in relation to the availability of the precious metals they are made out of.

    I think you have the currency relationship with bullion backwards.

    It was very much fixing the price of the commodity.
    Think about it:
    A certain number of grains of gold is a “dollar”.
    That number of grains is contained within each coin.
    You go to the comoodities market.
    Gold is offered for sale.
    You say you will pay “50 dollars” for a particular amount of gold.
    Will the gold contained in your coins be more or less than the amount of gold you are buying?
    What if you want to pay with silver coins, or buy silver with gold coins?
    Hmmm . . .

    That plan worked out as well as can be expected, with the copper pennies being a complete kludge but accepted anyway, and the ration of silver to gold changing constantly requiring first a revision of the amount of bullion in the currency, and then major political and financial upheavals fighting over bimetallism versus a gold standard only.

    Such issues have always existed with bullion currency when economic cycles made the value of the metal within the coins worth sufficiently more or less than the face value of the coins so as to encourage hoarding or destruction of the coins, aggravated by government fiddling with the weights and content of the coins. Indeed we even face such issues today, where it costs more to make a penny than a penny while the metal in older ones is worth more than a penny.

    Sam (e8f1ad)

  125. I wholeheartedly endorse one idea of his — that all spending bills should be “earmarks”. That is, that each government project should be individually funded. Now, I don’t know that we “need” a separate bill for each box of paper clips for the Social Security annex in Keene, Indiana, but it’s fun to think about. We can reduce spending by simply keeping Congress busy “writing the checks” and never finishing or even getting close to writing all of them.

    nk (dbc370)

  126. I always explain inflation, as opposed to prices going up, as viewing dollars as something you buy and sell. One day you need four bananas to buy a dollar, the next you only need three. If it’s only bananas, you can suspect a revolution in Honduras. If it’s gumdrops and pencils and shoelaces and a lot of other things, it’s inflation, your dollar is not worth the same anymore. So, yes, you can as easily say you’re pricing gold with dollars as you can you are pricing dollar with gold.

    nk (dbc370)

  127. Which is the conceptual problem inherent in any discussion of “money” – when you finish manipulating terminology to suit your ideology all that remains is an abstract imposed by fiat.

    Even if you go with the suggestion of, effectively, turning the term “dollar” into a unit of weight and bartering currency by weight, it is still going to be dependent on the abstract valuation of the bullion used. Alter the market, be it by government, private, or “natural” action, and you alter the abstract value of your “currency”.

    Sam (e8f1ad)

  128. I love it when people lost links claiming they support their position, when they do nothing of the sort.

    JD (e4a0ec)

  129. Yup. Gold has exactly as much inherent worth as some paper with a dead president on it. The value is assigned by the market.

    carlitos (c24ed5)

  130. 125.

    The value of the dollar floats with the value of gold. So yes, exchanging a coin for gold at a market would equate to the amount of gold in the coin. But, it is relation to other commodities that change. If gold tanks, so does the dollar. (It is kind of like how the Chinese Yuan was pegged to the dollar.)

    So if a dollar contains an ounce of gold, the worth of the dollar is 1 ounce of gold. If 1 ounce of gold buys you a bushel of wheat, then 1 dollar will buy you a bushel of wheat. If a lot of gold floods the market due to a gold rush…and 1 ounce of gold buys you 1/2 bushel of wheat. Then 1 dollar buys you a 1/2 bushel of wheat.

    The content of precious metals in the coin ensure the coin retains its value because you can melt down the coin for its metal. Typically, currency backed with metals only drop when they are no longer honestly minted, as happened with the Denarii during the Augustus Caesar wars when precious metals were reduced.

    The other way currency backed with gold is undermined is through government dictates to fix the price above the currency’s value. In which case, the ability to metal the coin for the precious metals was a feature…not a flaw.

    Just FYI, I’m not advocating for a gold backed currency myself. Just trying to make the discussion more understandable.

    DejectedHead (a094a6)

  131. I agree, gold is inherently just as worthless as paper. It holds no value outside of historical value…which isn’t worth anything if people refused to accept it.

    But the nature of money is entirely dependent on the acceptance of that currency and because people still do accept gold, it does have value. That value shouldn’t hold over time though while moving further into modern economies.

    DejectedHead (a094a6)

  132. I’m told that it’s against the law to melt down my pre-1983 pennies now worth 2.5 cents for the copper. I thought to take them to Mexico, where it’s not against the law to melt them down, but Sammy tells me that I can only take $5.00 (face value) worth out of the country. So, a couple of more manipulations of a commodity turned currency.

    nk (dbc370)

  133. Yes, they did make a law to prevent you from melting coins down. That would be a sign of government manipulation of the currency. It SHOULD be a feature of a bullion backed currency, but we don’t have a bullion backed currency anymore anyways.

    It is also why they changed the composition of pennies to zinc recently. Copper got too expensive. I’m sure they’d like you to turn all your pennies in for the Treasury Dept to melt down. They’ll recoup the 2.5 cents per penny value and replace it was a shiny new worthless zinc stamped arcade token…I mean penny.

    DejectedHead (a094a6)

  134. To be clear:
    There are pretty much ALWAYS laws against melting down coins for their metal. And on clipping coins. And other manipulations, just like there are laws against direct counterfeiting.
    As with most such laws they are effective in proportion to the return on breaking them.

    Sam (e8f1ad)

  135. OK, so just for the interest of discussion…So presumably, the purpose of encasing a small amount of gold and/or silver in a larger coin was to enlarge the coin for convenience but also, by stamping a figure/icon of the state on the coin the implication that the state is the entity authenticating that the coin contained the amount within the coin. Of course, such could be independently verified by a third party at some point using a randomly chosen sample. But why the name of “dollar”, “drachma”, “franc”, etc. when “1 gram gold coin” or such would be more accurate and universal? Perhaps I’m wrong here but I don’t recall a time in recent history where such was the generally accepted understanding.

    As DH, not endorsing gold standard here either. So I’d note that this is putting aside the impact of paper money where the actual gold/silver is held in some remote location and thus fodder for conspiracy, rumors of government cheating, etc. and resulting panic. Though, no different from what the Fed does, I suppose.

    And again, putting even further aside what the tremendous increase in demand for gold/silver will do to industries (electronics, etc) that require said limited resources for producing their goods.

    WTP (24fa3a)

  136. 132.I agree, gold is inherently just as worthless as paper. It holds no value outside of historical value…which isn’t worth anything if people refused to accept it.

    Whoa!
    Let’s not got THAT far.

    Gold currency can inevitably be as worthless as paper currency.

    Gold commodity has a particular value in industrial applications.
    That value is typically going to be above the raw value of paper in its applications, and even above the raw value of source wood in all its varied applications.

    That is why gold tokens have a more visceral appeal than paper tokens as a reserve commodity.

    Sam (e8f1ad)

  137. Yes, it is more than clear that laws are constantly made against melting currency down. It is a valid point against having a currency minted with precious metals.

    To be fair, I don’t think Patterico is talking about actually minting coins with gold in them. So it is kind of a moot point. He’s more talking about pegging the paper money with gold so that the paper money is backed by something.

    DejectedHead (a094a6)

  138. 137. Gold has extremely limited industrial worth as a commodity. Those applications in which it is used, typically use very small amounts.

    DejectedHead (a094a6)

  139. heh…wrote the above off and on whiilst discussion of the crime of melting coins down was raised. Kinda defeats the purpose. Though this raises the question, since we all know the copper in a penny is worth more than the 1 cent, why aren’t pennies more in demand? The law on melting them of course, but still it would seem there would be more people being prosecuted for said crime than there are. Of course also, I haven’t run the numbers on the cost of the melting process but it seems if you can get a 150% profit off of your primary raw material…hmmm…busy working so haven’t really thought this through….

    WTP (41d24a)

  140. 136.OK, so just for the interest of discussion…So presumably, the purpose of encasing a small amount of gold and/or silver in a larger coin was to enlarge the coin for convenience but also, by stamping a figure/icon of the state on the coin the implication that the state is the entity authenticating that the coin contained the amount within the coin. Of course, such could be independently verified by a third party at some point using a randomly chosen sample. But why the name of “dollar”, “drachma”, “franc”, etc. when “1 gram gold coin” or such would be more accurate and universal? Perhaps I’m wrong here but I don’t recall a time in recent history where such was the generally accepted understanding.

    First, people VERY rarely used tiny amounts of gold or silver encased in a larger coin. It was done a handful of times at best.
    Alloy mixes were used, sometimes because they wear better, sometimes to devalue the currency, ultimately as a combination of the two. Most all coins though were 90-95% pure metal particularly in the most recent periods.

    As for the names, if you go back far enough, a number of terms were weight related. Terms changed and evolved over time, mostly due to rival coins being minted. “Dollar” for examples, ultimately traces back to the Anglicization of “taler” from “Joachimstaler”, which was the name of the place a large silver coin (IIRC) was minted to compete in the market against Spanish coins.

    Also, if you go back, you will discover another concept – currency of account (again IIRC) as opposed to currency of circulation. These were nominal values that were not minted but were used for accounting purposes. Originally it referred to the highest value coins. Eventually, due to inflation, those denominations wound up being actually minted. In the U.S. we have the reverse, with the “mille” existing by statue. It is worth 1/10th of a penny (1/1000th of a dollar, hence the name), and can be found in some limited place, like gasoline prices or on coupons.

    Sam (e8f1ad)

  141. 139. Gold has extremely limited industrial worth as a commodity. Those applications in which it is used, typically use very small amounts.

    Just as with rare earths.
    As long as the demand is there the price will follow.

    And note, I am not including the aesthetic demand, which is significantly larger but fundamentally impossible to objectively quantify. That is what has traditionally skewed the price of gold beyond any other commodity, and what is most destructive to maintaining the supply.

    140.heh…wrote the above off and on whiilst discussion of the crime of melting coins down was raised. Kinda defeats the purpose. Though this raises the question, since we all know the copper in a penny is worth more than the 1 cent, why aren’t pennies more in demand?

    Because they are stamped “One Cent”.
    You are only ever guaranteed to get “one cent” for one.
    Add in how many of those it takes for any significant purchase and that most people will refuse such a proffer and the demand inevitably plummets.
    They become like those “unique fixer upper opportunities” – really great deals, but more than some assembly required so people just shrug and “pay” the cost to get them in shape.

    Sam (e8f1ad)

  142. 142. The demand for gold isn’t currently linked to its industrial usefulness. Rare earth elements are used in electronics at relatively high quantities compared to what gold uses. I can’t think of an industrial application for gold beyond plating and conducting electricity (which both have alternative resources that can be used).

    140. Pennies are currently made out of zinc and are copper plated to maintain the look.

    DejectedHead (a094a6)

  143. 142. The demand for gold isn’t currently linked to its industrial usefulness. Rare earth elements are used in electronics at relatively high quantities compared to what gold uses. I can’t think of an industrial application for gold beyond plating and conducting electricity (which both have alternative resources that can be used).

    I don’t really understand all the specific uses, I just know there are uses.
    That means the quantifiable value of gold is indeed considerably lower, though I’m pretty sure still above paper.
    It would however considerably aggravate the problem of a market collapse should an aesthetic alternative seriously come into vogue.

    Sam (e8f1ad)

  144. “I can’t think of an industrial application for gold beyond plating and conducting electricity (which both have alternative resources that can be used).”

    Be that as it may, this has a certain socialist ring to it when you think about it. What we are doing if/when we convert gold from its industrial use to a storage-of-value use, we are in effect confiscating the existing gold supply for an entirely new (relative to the modern world, anyway) purpose.

    While you may not consider use of the alternatives a big deal, you might want to consult with some engineers. Some engineers are going to be reallly pissed if we effectively convert one of their favored materials to be used as a currency unit:

    The use of gold in electronics is based on the combination of its electrical conductivity, its ductility and its total freedom from corrosion or tarnishing at either high or low temperatures. Its near perfect corrosion resistance means gold provides an atomically clean metal surface which has an electrical contact resistance close to zero, while its high thermal conductivity ensures rapid dissipation of heat when gold is used for contacts.

    The high price of gold in the early 1980s caused the electronics industry both to use gold more selectively and sparingly and to look for alternatives. Most manufacturers, however, found there was no practical substitute; nothing quite combined the properties of gold. So fabrication demand has stabilised and fluctuates largely in tandem with a boom or recession in electronics.

    http://info.goldavenue.com/info_site/in_glos/in_glos_electronics.html

    Just a thought before you piss off the guys who make weapons.

    WTP (5ea774)

  145. Nickels now contain more than 5 cents worth of metal, but it is illegal to melt them, and not very practical, unless you have thousands, and also illegal to export them. (in large quantities)

    http://coins.about.com/b/2006/12/14/new-law-it-is-illegal-to-melt-down-pennies-and-nickels.htm

    Sammy Finkelman (95e288)

  146. I’ve been to Canada several times since they eliminated the penny. Chaos did not ensue. They just round up or down and give you your change to the nearest nickel. It seems very practical.

    carlitos (c24ed5)

  147. If you take more than $5.00 worth of pennies and nickels out of the country with you, or ship more than $100 worth at one time, you’re breaking the law, and if you do send a shipment it must be for numismatic or coinage purposes.

    http://www.nytimes.com/2012/04/08/your-money/canada-drops-the-penny-but-will-the-us.html

    In its 2013 budget proposal, the Obama administration has asked for authority to alter the composition of the nickel, too.

    Mr. Velde has suggested what he calls a “medieval solution to a medieval problem.” The United States could resolve the penny and nickel quandaries simultaneously, by revaluing the penny as a five-cent piece and abolishing the nickel. Nickels would be melted down rapidly even now, as a business proposition, he says, if not for regulations imposed in 2006 prohibiting the melting or exporting of both pennies and nickels.

    Anti-melting measures have a long history — medieval England instituted one in 1299 — but market pressures limit their effectiveness. (English silver coins were debased — their silver content was reduced — in 1343.)

    “The whole situation is ridiculous,” Mr. Velde says. “My medieval solution is, well, medieval. The serious, simple solution is to do away with the penny.”

    Sammy Finkelman (95e288)

  148. 145. I don’t know how I would piss off the guys who make weapons. All I’m saying is that the uses for gold in industrial settings is not valued at $1300 per ounce.

    But thank you for informing me of an industrial usage of gold as electrical contacts.

    I do wonder if gold plating the contacts would also serve the function…yet use much less of the material.

    DejectedHead (a094a6)

  149. 145.Be that as it may, this has a certain socialist ring to it when you think about it. What we are doing if/when we convert gold from its industrial use to a storage-of-value use, we are in effect confiscating the existing gold supply for an entirely new (relative to the modern world, anyway) purpose.

    While you may not consider use of the alternatives a big deal, you might want to consult with some engineers. Some engineers are going to be reallly pissed if we effectively convert one of their favored materials to be used as a currency unit:

    And note the particular synergy of these things with the other aspects of banking related to this gold currency being floated:
    Right now, anyone who feels like it can up and take their gold coins and sell them for industrial use.
    If those coins are required to be held for currency, that can no longer happen. That gold is absolutely removed market circulation and cannot easily be restored without a direct impact on the money supply, which means a direct economic impact.
    Conversely, increasing the production of electronics requires decreasing the money supply.

    The mind boggles at the horrific effects this will have on economic cycles.
    At least it should.
    Yet somehow this is handwaved into irrelevance by the advocates of a gold standard and nobody is supposed to bring it up or be accused of supporting complete socialist control of the economy.

    Sam (e8f1ad)

  150. Why would it be necessary to hold all gold in reserve for currency? I think you’re making a leap to say that gold could no longer be used in industrial settings.

    And again, I’m not supporting the gold standard or anything. I think the problem with the Fed is much deeper than an unpegged/backed dollar. (It is more that it creates more and more debt that exceeds the money supply while a private bank skims off the top)

    DejectedHead (a094a6)

  151. Not saying it would be necessary to hod ALL the gold in reserve, but holding gold in reserve is the point here I believe. So let’s say we limit our need for gold as a temporary storage of value to the equivalent to what exists in the US economy today for this purpose. This value being M1. Note, this would not include bank deposits, just the volume of money needed for transactions currently done in US Dollars.

    OK, so this is just back-of-the-envelope here, but if M1 is currently at about $2.5 trillion. The total known amount of gold in the world is supposedly around 3.1 million pounds. Doing the math, and forgive my old age creeping up on me here, I get something like $50,000 for every ounce of gold in the world. That’s just if the US were to use gold in place of M1. Then what if every other country wants to do so? What is left for engineers to build their space lasers? Assuming if we…I mean they…don’t take it all first.

    WTP (fdec5d)

  152. I love it when people [p]ost links claiming they support their position, when they do nothing of the sort.

    Yup. Sam did that, and I am about to dismantle his arguments. I understand that the discussion has somehow mutated into musing about melting pennies or some such, but I am about to hand Sam his ass, so sit back and enjoy.

    Patterico (9c670f)

  153. Let me start by clearly explaining the issues as defined by Sam in his comments. Sam said:

    I guess you missed this:
    “I am taking the rhetoric of Ron Paul and his more rabid supporters at absolute face value.

    Yes, you said that. Let’s place that in its full context. This discussion started when you made the following asinine statements:

    @nk
    You hit on some of the core contradictions of the anarcho-capitalist wing of the Austrian School, which, when you get past all of their rhetoric, inevitably winds up at “government should exist to ensure that no business is ever bigger than MINE!”

    Them controlling terms of loans they make?
    Excellent!
    A big bank controlling terms of loans they take out?
    Horrible!
    A central bank controlling terms of loans the big banks take out?
    TYRANNY!

    Everywhere you look, their rhetoric on that is always the same, with denunciations of “banksters” and people who have “earned enough” that is only found among them and hardcore socialists, yet somehow we are supposed to believe that they oppose “actual” socialism rather than their centrally planned “optimum” business size and bank regulations.

    I responded:

    I think you are confusing Austrian economists with someone else. Name an Austrian economist who supports central planning. That is the antithesis of their philosophy.

    You replied:

    I am talking about Ron Paul, whose book you cited, who promotes the Murray Rothbard wing of the Austrian School, which Murray Rothbard named “anarcho-capitalism”, which is linked to the “paleo-libertarian” wing of libertarianism which was founded by Rothbard and Llewellen Rockwell, who was a primary staffer for Ron Paul, finishing the circle.
    I am taking the rhetoric of Ron Paul and his more rabid supporters at absolute face value.

    So we are clear: your utterly false assertion was that Ron Paul, Murray Rothbard, Lew Rockwell, AND Ron Paul’s supporters advocate a “centrally planned ‘optimum’ business size” as well as the principle that “government should exist to ensure that no business is ever bigger than MINE!”

    Let me be as clear about this as I possibly can, Sam: I don’t give a rat’s ass what the “supporters” of these people might say. You can always find a “supporter” of anyone who is willing to say something stupid. I’ll go ahead and concede that supporters of these folks, or of Ronald Reagan, or Che Guevara, or Barack Obama, might have said any of these things. So stop talking about supporters.

    But you said “and.” You said that Paul, Rothbard, Rockwell, AND these other people believe in central planning and using the government to limit the size of corporations. Meaning that you said Paul, Rothbard, and Rockwell believe in central planning and using the government to limit the size of corporations.

    Anybody who is even remotely familar with these people is now laughing at you. Because your statement is so absurdly false that the only logical response is laughter.

    You are, quite simply, not telling the truth. And that is what I am about to demonstrate, by taking your links and arguments to pieces, one by one.

    Patterico (9c670f)

  154. Sometimes I think, in instances like this, that people google something like “Ron Paul supports X” and just pulls the nicest looking list from the early returns.

    JD (d11cfd)

  155. JD, before I discuss these links one by one, let me say: I don’t support Ron Paul on everything — just like Ron Paul clearly does not support OWS on everything. I agree with him just about 100% on fiscal matters, Austrian economics, and the like. I find his views on foreign policy and the criminal justice system to be less agreeable — although I try to give them a fair hearing, and am probably less abruptly dismissive of them today than I was a year or two ago.

    Now for Sam’s dishonest links.

    Patterico (9c670f)

  156. Remember: the issue is whether Sam’s links prove that Ron Paul, Murray Rothbard, and Lew Rockwell support central planning, and the use of government to limit the size of corporations. That’s based on what he himself said, and that’s what we’re looking at.

    (What a stupid exercise this is. Why am I even doing this? Surely I am being trolled.)

    Patterico (9c670f)

  157. Sam’s link #1: Ron Paul saying corporations are not people. I already explained this. I’ll say it again. Paul is opposing collectivism here. But as I said in comment 119, Ron Paul is firmly on record as opposing Citizens United and as opposing limits on campaign contributions. His point is that the people whose First Amendment rights are being violated by laws like McCain/Feingold are the PEOPLE who are the owners of the corporations, and not the corporations themselves, which are not people.

    Libertarians like Ron Paul and Murray Rothbard try to be, and I think largely are, very consistent about rejecting groupthink and holding particular individuals accountable for their actions. That is not the same as embracing McCain/Feingold.

    Saying corporations are not people enables stripping them of numerous protections in law. It means wiping out LLCs to begin with, and setting the ground for the return of McCain Feingold, not matter the lip service to opposing it.

    Bull$h!t. Saying corporations are not people, once again, is an opposition to collectivism. As far as Ron Paul paying “lip service” to opposing McCain/Feingold, once again, Sam is not telling the truth. Ron Paul said this about McCain/Feingold: “In a devastating blow to political speech, the Supreme Court recently upheld most of the McCain-Feingold campaign finance bill passed by Congress last year.” Protip: that means he doesn’t like McCain/Feingold, Sam. That is more than lip service. It’s part of Paul’s core belief.

    After one link, Sam has proved exactly: nothing. Let’s move on to the next link.

    Patterico (9c670f)

  158. Ron Paul followers frenzying . . . over Ron Paul’s position?
    http://www.dailypaul.com/243358/ron-paul-joins-the-dark-side-opposes-internet-freedom

    Nope, sorry, Sam. What Paul’s supporters think does not matter. I already conceded that his supporters might say anything.

    I tried to understand the ravings of the lunatic at this link, to see if it reveals Paul himself to be in favor of using the power of the government to limit the size of corporations, as you falsely claimed. As best as I can decipher the gobbeldygook at the link, the misguided fool is upset that Paul opposes so-called “net neutrality.” Net neutrality, supported by radical leftist Michael Hiltzik, seeks to use the power of government to place limits on how Internet providers handle Internet traffic. Paul’s position is the libertarian one: keep government out of it.

    So your link, to the extent it shows anything, demonstrates the exact opposite of your thesis.

    Two links so far. The first shows nothing. The second shows the opposite of what Sam said. Let’s now look at the third.

    Patterico (9c670f)

  159. Now let’s look at the third link: Paul’s praise for OWS.

    Ron Paul supporting OWS:
    http://www.weeklystandard.com/blogs/ron-paul-praises-occupy-wall-street_614967.html

    I already addressed this upthread.

    Paul praised the Occupy movement for focusing attention on the “very rich” who became wealthy because of government bailouts or contracts, but said that wealthy people who make an honest living “have to be protected. We shouldn’t be jealous or envious of those people.”

    How does that quote show that Paul advocates central planning, or that he favors government using its power to keep corporations from getting too big, as you have repeatedly and falsely claimed? It does not. As I have said throughout, Paul (and Rothbard, as to whom, like Rockwell, you have supplied precisely zero links) opposes monopoly only when it results from a privilege granted by government.

    Your supremely clueless retort to this:

    And who exactly determines which of those people became wealthy because of government and which became wealthy by making an honest living?
    I’m certain that will be done on an absolutely fair basis, with no government force or anything at all, much as with say Microsoft and the Redskins. Oh wait . . .

    Your suggestion appears to be that Paul supports using government force to harm corporations that he believes have been made too powerful by government privilege. Again, if you can find such a quote from him, supply it. I will wager you, right here, right now, $100 that you will find no such quote. At most, you will find Paul arguing that we should remove government privilege from corporations that have grown fat through government largesse. That is not using government to oppress corporations. It is removing government’s ability to benefit corporations at the expense of the public.

    Once again, you fail miserably to prove your point with your third link. Three for three! Now let’s look at the fourth.

    Patterico (9c670f)

  160. Sam’s fourth link:

    OWS supporting Ron Paul:
    http://occupyorganizer.com/occupy-movement-supports-ron-paul-for-2012/

    I don’t give a sh[vowel deleted]t what OWS says about Ron Paul. Your OWS link does not cite a single Paul position, much less one that proves your thesis. So your fourth link is a failure.

    You advanced a remarkably ignorant thesis, Sam: that Ron Paul, Murray Rothbard, and Ron Paul support central planning and the use of government to restrict the size of corporations. Your links have not only utterly failed to prove your point, they have actively undermined your point in several places.

    What you’ve said about Paul, Rothbard, and Rockwell is one of the most insanely idiotic things I have ever read. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone on this blog is now dumber for having read it. I award you no points, and may God have mercy on your soul.

    Patterico (9c670f)

  161. How’d I do, JD?

    Waste of time, huh?

    Sometimes you just have to meet the dishonesty head on.

    Patterico (9c670f)

  162. Patterico,

    You did a fine job of making your case, and dismantling Sam’s.
    Have you ever considered a career as a prosecutor ?!

    Elephant Stone (80b246)

  163. Disbanding the Federal government is the only platform I support.

    gary gulrud (46ca75)

  164. So we are clear: your utterly false assertion was that Ron Paul, Murray Rothbard, Lew Rockwell, AND Ron Paul’s supporters advocate a “centrally planned ‘optimum’ business size” as well as the principle that “government should exist to ensure that no business is ever bigger than MINE!”

    Except my assertion is not false.
    That you do not like my view does not make it false no matter how much you seem to think so.
    That you disagree with my assessment of their statements does not make my view of them false no matter how much you seem to think so.
    You have confused a difference of opinion and assessment with quantifiable fact.

    Let me be as clear about this as I possibly can, Sam: I don’t give a rat’s ass what the “supporters” of these people might say. You can always find a “supporter” of anyone who is willing to say something stupid. I’ll go ahead and concede that supporters of these folks, or of Ronald Reagan, or Che Guevara, or Barack Obama, might have said any of these things. So stop talking about supporters.

    No.
    When a person claims one thing in a book but endorses something completely different with his actions, when people citing him as inspiration believe he stands for something different, it matters.
    This is especially so with politicians.
    Ron Paul has made it more than clear that he is willing to mortgage his beliefs for political support at a moment’s notice.
    Lew Rockwell worked with him throughout his career doing so.
    Murray Rothbard worked with Lew Rockwell to set up paleo-libertarianism with an express purpose of subversion and appeal to extremely disreputable elements.
    These people are absolutely unreliable, and you have produced nothing to suggest otherwise.

    Sam’s link #1: Ron Paul saying corporations are not people. I already explained this. I’ll say it again. Paul is opposing collectivism here. But as I said in comment 119, Ron Paul is firmly on record as opposing Citizens United and as opposing limits on campaign contributions. His point is that the people whose First Amendment rights are being violated by laws like McCain/Feingold are the PEOPLE who are the owners of the corporations, and not the corporations themselves, which are not people.

    Except that is precisely the context in which Romney was addressing the issue.
    And yet Paul stood out to directly contradict what Romney stated, then tried to hedge himself back to . . . exactly what Romney said.
    Why then would he bother to contradict Romney?

    Bull$h!t. Saying corporations are not people, once again, is an opposition to collectivism. As far as Ron Paul paying “lip service” to opposing McCain/Feingold, once again, Sam is not telling the truth. Ron Paul said this about McCain/Feingold: “In a devastating blow to political speech, the Supreme Court recently upheld most of the McCain-Feingold campaign finance bill passed by Congress last year.”

    Not in the least.
    Once you remove the concept of the corporation being a separate and distinct person and assert that you want to “hold[ing] particular individuals accountable for their actions”, you are on a direct path to destroying the concept of the LLC whether you want to believe it or not. If the executives are directly responsible for everything, then not only will they be personally liable, but every single investor will be as well.

    Protip: that means he doesn’t like McCain/Feingold, Sam. That is more than lip service. It’s part of Paul’s core belief.

    Really?
    How do you know that?
    Have you read his mind?
    No. Like me, you have read his books and statements.
    You choose to believe his “core” claims.
    I do not.

    And to be very clear:
    No, I am not trying to troll you. I really do have much better things to do than that, and despite my other flaws I am not a bad person in that manner.
    I like your blog; that is why I bookmarked it in the first place. You provide a lot of insight and useful opinion and links on legal issues.
    But when it comes to this particular area of economics and the government behind it, I simply and fundamentally do not agree with your choice of expert because I simply and fundamentally do not trust your choice of expert.
    Now if it really and truly outrages you beyond tolerance for me to express that dissent, or my other, sometimes opposing, views on the history, functioning, sociology, and political aspects of those economics and government then so be it. Say so and I will skip those posts and not comment on them anymore. I’ve come to such agreements with others on similar topics when we agree on 90+% of everything else.
    But do me grant me at least of modicum of respect that I might really and truly believe something fundamentally in opposition to what you believe in regards to that particular area, and am just trying to engage in a discussion about them, not merely looking to entertain myself at your expense.

    Sam (e8f1ad)

  165. Lord you give sophists a bad name, resolved, a central bank has not appreciably improved economic prospects, a century should be enough time you think,

    narciso (3fec35)

  166. Patterico – well executed. I am more concise, but that was expertly done.

    JD (d11cfd)

  167. Sam,

    This is how this has gone:

    1. You made a series of assertions.

    2. I destroyed them.

    3. You pigheadedly stuck to your story while offering not a shred of evidence.

    If you don’t want to like Ron Paul, be my guest. I don’t like all his positions myself. He’s not my “choice of expert” — he’s one of many people expounding Austrian economics publicly.

    But not trusting him is one thing. Offering bullshit assertions is another thing entirely. Specifically, claiming that Paul and his fellow travelers espouse precisely those views which they have consistently and vocally opposed is misleading to the readership here. Misrepresenting his views simply sows confusion, and I don’t appreciate that. And when you stick to that position in the face of overwhelming evidence to the contrary, it severely undermines your credibility.

    I wouldn’t be so hard on you if I thought for one moment that you would admit error, and say: “Well, there’s just something about that Ron Paul I don’t like, I can’t put my finger on it, but I admit that I can’t back up the specific allegations I made about his views on central planning and monopoly.”

    But that’s not what you’re saying. You’re just saying: well, I was right all along, and pretty much to hell with the specific refutations Patterico offered.

    I’m glad you like the blog, but I don’t like your style of argumentation because it appears to be 100% impervious to reason, logic, and evidence.

    Patterico (9c670f)

  168. Sam, I’ll take your word for it that you are not trolling me. But everyone can see that you are not truly engaging with my arguments.

    Patterico (9c670f)

  169. Except that is precisely the context in which Romney was addressing the issue.
    And yet Paul stood out to directly contradict what Romney stated, then tried to hedge himself back to . . . exactly what Romney said.

    That’s not how I interpret that clip. Paul was standing up for the concept of individualism while also standing up for the concept of freedom of speech and the unfettered right to petition the government for redress of grievances.

    It was, to be kind to you, a tortured interpretation to hear him as supporting McCain/Feingold when he is on record saying it is a disaster.

    As far as LLCs, that’s a separate argument. If you want to argue that his support of individual responsibility undermines the concept of LLCs, go nuts. That has zip to do with central planning or using government power to keep corporations small.

    Patterico (9c670f)

  170. 168.Sam,

    This is how this has gone:

    1. You made a series of assertions.

    2. I destroyed them.

    3. You pigheadedly stuck to your story while offering not a shred of evidence.

    What I see is:
    1. I made a series of assertions of opinion.

    2. You disagreed and said nothing could exist to support any such difference.

    3. I offered that evidence.

    4. You said it didn’t count because you didn’t agree with it.

    I am really missing where that “destroyed” anything.

    If you don’t want to like Ron Paul, be my guest. I don’t like all his positions myself. He’s not my “choice of expert” — he’s one of many people expounding Austrian economics publicly.

    It was his book you cited. That does pretty make him your choice of expert witness.

    I wouldn’t be so hard on you if I thought for one moment that you would admit error, and say: “Well, there’s just something about that Ron Paul I don’t like, I can’t put my finger on it, but I admit that I can’t back up the specific allegations I made about his views on central planning and monopoly.”

    I did. You never actually addressed those points. To make them more explicit:
    1. “Paleo-libertarianism”, as a movement, was explicitly created by Rothbard and Rockwell in an attempt to use social “conservatism”, which at the time included segregationism, as a lever to insert their anarcho-capitalism into the Republican Party.
    2. Paul published his infamous newsletters during his time out of Congress. He has since then claimed credit for them, denied credit for them, and denied ever knowing they existed. Among the chief suspects for a possible ghostwriter if Paul actually did not write them is Rockwell, who has been a key staffer for Paul.
    3. Paul has appeared with and worked to gain the support of fringe elements to this day, including but not limited to Truthers, Birthers, white supremacists, and holocaust deniers. His most recent foray with that was a speech to a group that has been cited for holocaust denial.
    4. Paul has also endorsed a number of questionable characters, most notably Adam Kokesh, who after his failed run for Congress took his conspiracy theorist/anti-government show to Russia Today, also known as KGBTV. He was kicked off of that gig for soliciting contributions to Paul’s last presidential campaign. He was later arrested for “dancing” at the Jefferson Memorial. He was also involved with Iraq Veterans Against the War, a group similar to Kerry’s Vietnam Veterans Against the War.
    So I can very much put my finger on precisely why I do not trust Ron Paul.
    And from that, can very much say precisely why I give the absolutely worst conceivable interpretation to any and all of the statements he made in those various links.
    You can disagree with my conclusion all you like, but I really do have reasons for reaching that conclusion.

    But that’s not what you’re saying. You’re just saying: well, I was right all along, and pretty much to hell with the specific refutations Patterico offered.

    I’m glad you like the blog, but I don’t like your style of argumentation because it appears to be 100% impervious to reason, logic, and evidence.

    I believe you are conflating two different things here:
    1. Your arguments directly in support of particular economic policies.
    2. Your arguments directly in rebuttal to my attacks on Ron Paul.

    As for the second, I submit that you have not offered any reason, logic, or evidence to rebut my dislike of Ron Paul – your believing him does not constitute evidence that obligates me to believe him anymore than my not believing him obligates you to also dismiss him as untrustworthy. If you want to actually bother with that side issue, see above for four points that you are free to offer reason, logic, and evidence to rebut to convince me to change my mind and trust him.

    As for your arguments in support of particular economic policies, see below.

    Sam, I’ll take your word for it that you are not trolling me. But everyone can see that you are not truly engaging with my arguments.

    Are you engaging with mine?
    You: Ron Paul says end the Fed.
    Me: I don’t trust Ron Paul when he says that.
    You: But he said it.
    Me: I know he said it, I don’t believe him.
    You: But he said it.
    Me: He has said a lot of things then denied them so I don’t believe him on this.
    You: But he still said it.
    Me: . . .
    Clearly there is a major disconnect going on there that is far from unilateral.

    That’s not how I interpret that clip.

    It is how I interpret it.
    If that is tortured, then it is because his actions have abused his dialogue so much that is how I am left to view it.
    More simply: you are inclined to believe him; I am not.

    As far as LLCs, that’s a separate argument. If you want to argue that his support of individual responsibility undermines the concept of LLCs, go nuts. That has zip to do with central planning or using government power to keep corporations small.

    Then argue it.
    But . . . you aren’t.
    You are just dismissing it out of hand without explaining exactly why, when you consider having a central bank set interest rates for other banks it constitutes central planning, but somehow undercutting limitations on corporate liability is not using government power to keep corporations small.

    And let’s be clear, declaring that Ron Paul doesn’t believe that is NOT a rebuttal. That is addressing my dislike of Ron Paul, not the actual argument at hand as to equating two economic policies, or setting forth the consequences of one.

    Sam (e8f1ad)

  171. Now you want to pretend this has all been about whether to trust Ron Paul. I don’t give a crap whether you do or don’t. Stop lying about his positions and admit it when you’re shown as unable to support absurd statements.

    Those goalposts are moving alllll over the place. I can’t converse with someone who does that. It’s just not worth the frustration.

    I’m content to leave it to the reader to decide who has debated logically here, and who has run around changing the subject every time he is shown wrong. Hint: it ain’t me.

    Patterico (c799d6)

  172. If you don’t say corporations are people then you hate LLCs which means you are a socialist who wants to use central planning to keep corporations small. Or something. #SamLogic

    Patterico (7d6a02)

  173. Denouncing McCain/Feingold as an assault on free speech shows love of McCain/Feingold. #SamLogic

    Patterico (7d6a02)

  174. Denouncing antitrust laws = love of central planning to keep corporations small. #SamLogic

    Patterico (7d6a02)

  175. F.A. Hayek is famous for arguing that big government maximizes freedom. Also he was the world’s foremost Keynesian. To prove that here is an irrelevant Youtube clip. Sure maybe he says the opposite but I don’t believe him. Ergo I just proved I’m right, quod erat demonstrandum. #SamLogic

    Patterico (5a517e)

  176. I said the discussion had gotten confused and offered to simplify it.
    I said you don’t have to deal with the flaws in your expert, though I presented them if you really wanted to. (Hint: I’ll stop “lying” about what he believes when he does.)
    I offered a discussion on corporate personhood directly. (You know who endorsed antitrust laws? Adam Smith. There’s a right proper supporter of central planning for you.)

    #EngagingArgumentsPattericoStyle

    Sam (e8f1ad)

  177. Yeah, so uhhh…anyone interested in getting back to the subject of free market vs. the Fed and what the alternatives to the Fed would really be about? What Ron Paul really believes is kinda irrelevant even in the context of the appeal to authority fallacy. Damn it Jim, he’s a doctor.

    WTP (fd3093)

  178. Sure. My basic position is I want currency competition. “Gold” is my shorthand for “let gold compete” not “cram gold down people’s throats.” By “let gold compete” I mean: repeal sales taxes on gold (and silver). Repeal legal tender laws. Enforce contracts written to require payment in alternate currencies.

    I just want a free market in money. As I have said many times, I don’t pick gold because I hold some brief for gold; rather, gold is what humans have always picked as money when it’s left up to the market.

    Nowadays, it’s not up to the market. It’s up to government. I want government out of selecting and controlling our money and out of setting interest rates. That simple.

    Patterico (9c670f)

  179. OK, I suppose I’m cool with most of that. But the Fed would remain to do its thing then? Not sure what “repeal legal tender laws” encompasses. Would sales tax on gold still apply to value-added gold, such as jewelry or are we strictly limiting to raw and/or ingots?

    WTP (aca208)

  180. Surreal

    JD (9fd0e3)

  181. I don’t trust Ron Paul therefore I can attribute positions to him that stand in direct contrast to his actual positions, and call it my opinion. #SamLogic

    JD (9fd0e3)

  182. You know who endorsed antitrust laws? Adam Smith.

    Sam, it’s been a long time since I read Wealth of Nations, and I may have read this and forgotten it, but I don’t think I’d forget something as startling as that. Could you please point me to the passage where he does that?

    Milhouse (b95258)

  183. Sam, on the subject of Ron Paul, you seem to be arguing that if someone’s expert witness holds some disreputable opinions, then we should disregard his testimony. You don’t like Paul. Nor do I, and guess what, nor does Patterico. Why should that preclude him from citing Paul on a matter of economic theory? I think we all hold Noam Chomsky in utter disdain, and yet it would not surprise me if someone were to cite him on a matter of linguistics.

    Milhouse (b95258)

  184. Patterico (9c670f) — 6/20/2014 @ 7:49 am

    They’re called free ports, and throughout history have varied in their relative degrees of freedom. Some are controlled by the mercantile oligarchy which pays protection to the nation; others are controlled by the state but with looser regulation. Anything at hand is negotiable, but are futures specifically enforceable? Bills of lading? But that’s a small thing anyway; goodwill is very important to merchants and they will do their best to deliver as promised.

    nk (dbc370)

  185. It doesn’t even matter who gave the quote in the post. It just makes sense.

    Patterico (9c670f)

  186. I don’t trust Ron Paul therefore I can attribute positions to him that stand in direct contrast to his actual positions, and call it my opinion. #SamLogic

    Exactly. That appears to be Sam’s position in a nutshell.

    Patterico (9c670f)


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