Ron Paul Slams Paul Ryan’s Budget Plan

Independent presidential candidate Ron Paul recently used the FOX News podium to bash Paul Ryan’s proposed budget plan. Ryan is presumptive Republican nominee Mitt Romney’s choice for running mate and Paul contends that the plan has no teeth, criticizing Ryan’s assertion that his approach would draw down U.S. debt within 30 years. Paul went on to tout his own plan, which focuses on ending the wars in Iraq and Afghanistan and using the saved money to fund domestic programs while also cutting back on the spending for some of those programs. For more on this continue reading the following article from Iacono Research.

Rep. Ron Paul (R-TX) doesn’t seem to think too much of Paul Ryan’s budget plans, as expressed to Neil Cavuto the other day, since the goal of “maybe balancing the budget in 30 years” doesn’t fundamentally address the ongoing trouble the nation has in squaring its books (if that’s even possible anymore).

On a related note, Mineweb reports that Paul (Ron, not Ryan) has launched a new campaign to legalize alternate domestic currencies, citing Ludwig von Mises who noted, “sound money is an instrument that protects our civil liberties against despotic government. Our current monetary system is indeed despotic, and the surest way to correct things simply is to legalize competing currencies“.
It’s too bad he’s not running for another term in the House this fall – he will be missed.

This blog post was republished with permission from Tim Iacono.

Krugman Criticizes Ron Paul

Economist Paul Krugman, no lightweight when it comes to fiscal knowledge, recently debated sometime Republican presidential candidate Ron Paul on the issue of his Paul’s prediction of runaway inflation, and criticized the politician’s vague references to ancient history by way of response. Krugman contends that it is no accident that politician’s cite murky historical anecdotes as a way to establish credibility for positions on current affairs, despite having a century’s worth of well-documented knowledge from which to draw – if only it supported the desired conclusion. For more on this continue reading the following article from Economist’s View.

Paul Krugman comments:

Don’t Know Much About (Ancient) History: The things I do for book sales. I debated, sort of, Ron Paul on Bloomberg.Video here. I thought we might have a discussion of why the runaway inflation he and his allies keep predicting keeps not happening. But no, he insisted (if I understood him correctly) that currency debasement and price controls destroyed the Roman Empire. I responded that I am not a defender of the economic policies of the Emperor Diocletian.

Actually, though, appeals to what supposedly happened somewhere in the distant past are quite common on the goldbug side of economics. And it’s kind of telling.

I mean, history is essential to economic analysis. You really do want to know, say, about the failure of Argentina’s convertibility law, of the effects of Chancellor Brüning’s dedication to the gold standard, and many other episodes.

Somehow, though, people like Ron Paul don’t like to talk about events of the past century, for which we have reasonably good data; they like to talk about events in the dim mists of history, where we don’t really know what happened. And I think that’s no accident. Partly it’s the attempt of the autodidact to show off his esoteric knowledge; but it’s also the fact that because we don’t really know what happened — what really did go down during the Diocletian era? — you can project what you think should have happened onto the sketchy record, then claim vindication for whatever you want to believe.

It’s funny, in a way — except that this sort of thinking dominates one of our two main political parties.

This blog post was republished with permission from Economist's View.

Critics Examine Buffett’s Gold Claims

Legendary investor Warren Buffett has been making the financial news rounds with his claims that gold is “valueless,” and that the metal is experiencing an exaggerated bubble that is set to burst sooner rather than later. On the Edge host Max Kaiser asked Ned Naylor Leyland of Cheviot Asset Management on his opinion of Buffett’s gold rhetoric, and Naylor responded that Buffett must have an ulterior motive for the claim considering gold’s performance as compared to Buffett’s own Berkshire Hathaway. Kaiser went further, labeling Buffett a “financial terrorist” whose meddling in banking institutions and broader impact on the financial markets tinges the investor’s comments with dishonesty. For more on this continue reading the following article from Tim Iacono.

Max Keiser talks to Ned Naylor Leyland of Cheviot Asset Management about why Warren Buffett hates gold after the “Oracle of Omaha” devoted a considerable portion of his recent shareholders letter(.pdf) to discuss why the metal is not worth owning.

Among the many other interesting things you’ll learn from Ned is that Warren Buffett’s father was the “Ron Paul of his day”, meaning that, Buffett the Younger’s views toward the yellow metal are likely something he didn’t learn at home.

This blog post was republished with permission from Tim Iacono.

Ron Paul Talks Gold Standard

Presidential candidate Rep. Ron Paul (R-TX) spoke with Judge Andrew Napolitano, host of FOX Business News “Freedom Watch”, about his belief in the gold standard and the current state of U.S. monetary policy. Paul discusses the transition from fiat currency back to the gold standard by legalizing gold and silver tender without having a fixed exchange rate between the two currencies. Judge Napolitano questions whether there is a possibility of a true gold standard that allows exchange between the two, and Paul responds that while that scenario is a long way off, the current system cannot sustain itself and that an audit of the Federal Reserve is a good place to begin reform. For more on this continue reading the following article from Tim Iacono.

Rep. Ron Paul (R-TX) appeared on Fox Business News yesterday to talk about the nation’s money and a return to the gold standard in the unlikely event that he’s elected president.

His discussion of the U.S. dollar throughout American history reminded me of a Wall Street Journal book review yesterday by James Grant that, from what I could tell, was a lot better than the book – Greenback Planet by H.W. Brands. From the book review:

“Greenback Planet” is the story of this amazing monetary transformation. The narrative begins in the 18th century and races to the present, pausing to catch its breath at some of the great American monetary landmarks: Andrew Jackson’s veto, in 1832, of legislation rechartering a predecessor to the Federal Reserve; Abraham Lincoln’s recourse to greenbacks, or fiat currency, to finance the Civil War; resumption of the gold standard in 1879, with which it once more became possible to exchange gold for paper and vice-versa at a fixed and statutory rate; J.P. Morgan quelling the Panic of 1907; the Federal Reserve not quelling, never mind preventing, the Great Depression; the crazy-quilt monetary improvisations of the 1930s; the halfway gold dollar of the post-World War II era; and the creation, in 1971, of the pure paper (later digital) model of today.

Mr. Brands is a paper-money man, though the subtitle of his book—”How the Dollar Conquered the World and Threatened Civilization as We Know It”—seems to betray some reservations.

This blog post was republished with permission from Tim Iacono.

Ron Paul ‘Faces Nation’

Ron Paul recently fielded questions from Bob Schieffer on Face the Nation, and critics of the interview point out mainstream media’s tendency to put words in Paul’s mouth and otherwise find ways to undermine the GOP candidate’s message. Schieffer questioned Paul on his stance on U.S. foreign policy and military presence, Iranian nuclear proliferation, and the closing of several government agencies. Paul explained and defended his position despite Schieffer’s clearly argumentative approach, demonstrating why Iowa numbers have placed him in the running with contenders Mitt Romney and Herman Cain. For more on this continue reading the following article from Tim Iacono.

GOP hopeful Rep. Ron Paul (R-TX) appeared on Face the Nation yesterday and host Bob Schieffer provided a very compelling display of how, for the most part, the mainstream media works against any fundamental reform for the U.S. government as Schieffer seems to only be interested in putting words in Paul’s mouth that, fortunately, are rejected.

Some media-watchers have called this a hit-job after Paul had risen to a statistical tie for the lead in some Iowa polls and it’s hard not to come away with that impression when you examine Shieffer’s words closely, as was done by Paul Mulshine of the New Jersey Star Ledger in the article No wonder these talking heads don’t like talking to Ron Paul.

This blog post was republished with permission from Tim Iacono.

Should The Fed Be Abolished? Ron Paul Thinks So...

This isn't the first time that Ron Paul has brought this measure to abolish the Federal Reserve before Congress, and it probably won't be the last. While most politicians, and Americans for that matter, write Paul off as crazy because of proposals just like this, is he really that offbeat? His arguments seem a lot more powerful now that the economy is struggling so mightily, however, there is still no chance that his legislation will be accepted, at least in his life time. Tim Iacano from The Mess That Greenspan Made talks more about Paul, and his new legislation, in his blog post below.

Earlier this week, Rep. Ron Paul (R-Texas) reintroduced legislation to abolish the Federal Reserve. While it's not likely to go any further than it did last time, efforts like this are an important first step toward making substantive changes in the future:

Madame Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve. Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.

From the Great Depression, to the stagflation of the seventies, to the current economic crisis caused by the housing bubble, every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

How can you argue with any of this?

While the "lender of last resort" function of the Fed makes a good deal of sense, the "master of the economy" and "master of the money" roles do not.

They never did (unless you're a banker or a politician).

With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation.

Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of special interests and their own appetite for big government.

Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.

In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true freemarket economy.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.

This post can also be viewed on themessthatgreenspanmade.blogspot.com.

Barack Obama Could Win The Election Thanks To Ron Paul?

The fact that the Ron Paul Revolution is still kicking, despite the fact that the Republican nominee has already been decided, could potentially help Barack Obama and hurt John McCain’s chances at the presidency. I read an interesting blog post from Tommy Christopher at the Political Machine that brought up a key point. According to Christopher, one of the strongest ties of the Ron Paul revolutionaries is that they strongly oppose the war in Iraq. Since McCain plans to keep the Iraq war going indefinitely, this will likely lead to many Ron Paul supporters crossing party lines to vote for the Democratic candidate, which will likely be Obama.

McCain’s party hasn’t worried too much about the Ron Paul fallout, probably assuming that it would taper off once he clearly won the nomination, but that doesn’t appear to be happening. In the recent Pennsylvania primary, Ron Paul won 16% of the vote, which in itself is not a huge number, but if a majority of these Ron Paul supporters turn to Obama come election time, they could easily swing the race.

Ron Paul seems intent on continuing to use his platform as a presidential candidate to spread his revolutionary ideas for as long as he can. The more people who hear Paul’s message, about the Iraq war in particular, the more people who could demand the end to this war, which would likely only come if Obama is elected president.

By staying in the race Ron Paul is in effect helping Obama. I don’t think that Ron Paul supporters are truly excited about the prospects of McCain or Obama, or they would be supporting one of these candidates by now. Which way they go in the end though could possibly decide the presidential race, and it is hard to ignore that the biggest issue in many of the Ron Paul Revolutionaries minds is the Iraq war. I can’t imagine many things more upsetting to Republican leaders than the idea of the Ron Paul Revolution helping Obama win the presidency, but it just might happen.

Iraq War: Is It The Cause Of The U.S. Economic Recession?

The Iraq war is being debated on many different levels. One is the idea that it could be the cause of the U.S. economic recession. Politicians and economists are divided on the subject. Most Democrats, including presidential candidate Barack Obama, claim that the Iraq war has had a substantial effect on the U.S. economy and should be examined as one of the primary reasons for the U.S. recession. Most Republicans quickly dismiss the claim as being without merit, but a growing number of Republican s, including Republican Presidential candidate Ron Paul, strongly oppose the war based on its economic fallout. But is the Iraq war to blame for our economy’s problems? Let’s look at arguments from both sides of the debate:

The Iraq War caused the U.S. economic recession

In a Washington Post article, Nobel Prize-winning economist Joseph Stiglitz argues that the Iraq war is to blame for the economic recession for the following reasons:

• The oil-producing countries have so much money that they don’t need to produce much oil. Because they don’t have the immediate need for cash, they are able to plan better for the future by pumping less oil and charging more for what they do produce. By doing this they are able to keep more oil for future use.
• The government has spent so much on the Iraq war and gone so far into debt that it has been unable to keep the domestic economy in check through tax cuts and other internal investments.

Senator Barack Obama had the following to say at a recent forum, according to the same Washington Post article: "If we can spend $10 billion a month rebuilding Iraq...we can spend $15 billion a year in our own country to put Americans back to work and strengthen the long-term competitiveness of our economy."

Senator Obama has a valid point to his argument. This war was entirely financed with debt, which in itself is bad, but ultimately what has our country received in return for that investment? At least if we are going to go deeper in debt, we should probably be using those funds for something that might actually help our economy, and our country.

According to a CNN poll, 71 percent of Americans believe that the Iraq war is at least partially responsible for the economic downturn.

The Iraq War Is NOT responsible for the U.S. economic recession

While it is easy for politicians to say the Iraq war has caused many of the world's problems, there is little evidence that the war is directly responsible for the economic recession. In response to the arguments made by Stiglitz, according to the Washington Post most economists believe that the price of oil is rising because of increased demand rather than a shortage of supply. Furthermore, Martin Baily, former chairman of Bill Clinton’s council of economic advisors, had this to say: “The credit crisis we got into is because of the housing boom, the relaxation of lending standards and certainly a lack of adequate supervision," Baily said. "I don't see a connection with government borrowing."

Conclusion

I can see validity in the arguments from both sides. Considering all the other problems that the U.S. is facing—in particular, the housing bubble—while I think it is a little farfetched to say that the Iraq war was the sole cause of the economic recession, it is equally foolish to say that the costs of the Iraq war have had little if any impact on the U.S. economy. Wars are not free, and the U.S. has spent billions of dollars on this war, financing it entirely with debt, which will have to be repaid one way or another.

Think Barack Obama Is Going To Be The Next President? Wanna Make A Bet?

If you are so confident that your candidate—be it Barack Obama, Hillary Clinton, Ron Paul or John McCain—will become the next President of the United States, then why don’t you put your money where your mouth is? To show just how far the free market has come, there is now a website that allows you to make money by betting on the outcome of world events from the U.S. presidential race to whether or not Venezuela or Ecuador will declare war on Colombia. The company, which operates out of Ireland, is called Intrade. The website offers a trading platform similar to the U.S. stock exchange, but traders on Intrade buy and sell options on things most people might consider a bit out of the ordinary.

Investors who consider placing bets on Intrade should keep in mind that Intrade is still a small marketplace. This means that positions can be volatile and may be difficult to close out of. Therefore, Intrade should not make up a large portion of an investment portfolio, and should probably be viewed more in terms of entertainment than an actual investment.

Smart investors may be able to profit from some of the holes in the Intrade system and capitalize on the small marketplace. According to an article by The New York Times, a professional poker player named Serge Ravitch made a 35 percent return on his money in just 6 weeks by identifying these weaknesses. One trade he took advantage of was based on the Republican Presidential nomination, which more than 10 percent of traders on Intrade thought would go to Ron Paul. No one in the Republican Party—or any party for that matter—was giving Ron Paul a prayer to win the nomination. Because of the market’s small size, the diehard supporters of Ron Paul raised the percentages in his favor higher than they really should have been.

For other events, Intrade’s predictions have proven surprisingly accurate. The following is a quote from The New York Times article:

“In 2004, President Bush won every state in which Intrade’s contracts—as of the night before Election Day—gave him a better than 50 percent chance of winning. He lost every state where the traders thought Mr. Kerry was the favorite. Late on election night in 2006, while the talking heads on CNN and MSNBC were still saying that the Republicans would hold onto the Senate, Intrade knew better.”

Investors should take caution when making bets on Intrade, and not invest too much at this point. If nothing else, Intrade could prove to be a source of entertainment for investors who want to see if they can outsmart the public. For those investors who want the entertainment value without putting up real money, Intrade also offers play money accounts for free.

$1,000 Gold Has Officially Arrived: A Warning From Ron Paul

It long appeared inevitable, but it has now officially happened: today the price of gold hit the $1,000 mark. Wondering what’s so important about the $1,000 gold price? Well, let's see what Congressman Ron Paul has to say.

The following excerpts were pulled from an article posted on Lewrockwell.com by Paul (all emphasis mine):

“Buying gold and holding it is somewhat analogous to converting one’s savings into one hundred dollar bills and hiding them under the mattress–yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There’s a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, e.g., gold, however, goes up if the government devalues the circulating fiat currency.”

“Holding gold is protection or insurance against government’s proclivity to debase its currency. The purchasing power of gold goes up not because it’s a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.”

“A soaring gold price is a vote of ‘no confidence’ in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to reign in runaway spending.” (This was written back in 2006, so you can probably add the uneasiness being felt from the credit crisis.)

“Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations (hello China). This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.”

Congressman Paul then gets in-depth about how the fiat system will inevitably fail, as it has throughout history (which is an interesting truth). If you are interested in knowing the details, read the complete article. It is fairly lengthy, but well worth the time to read, whether or not you agree with his ideas—it will get your mind spinning a bit if nothing else.

I don’t envision the U.S. moving to a gold standard as Paul suggests, and I’m not sure exactly how I feel about that idea one way or the other. Paul makes an interesting—and extreme—point at the end of the article that I do want to bring up:

“Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 (which arrived today) of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Runaway inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.”