Economic Information in March of 2010

From http://www.dailypaul.com/node/104200

Is the Gold standard Unconstitutional?
Submitted by kidwave on Fri, 08/21/2009 - 23:30
in Economy
Is the Gold standard Unconstitutional?
By Whigswin

http://forum.kucinich.us/index.php?topic=894.0



I agree with a lot of what Ron Paul has to say about the constitution, and politics. I have nothing against the man personally or his foreign policy at all, but I've come to understand that his Economic policy would be detrimental to this country not just because it would not create any kind of monetary reform, but because his economic policy is unconstitutional.

Ron Paul is an Austrian Economist, and The Austrian Economist believes that the market should regulate the market. You'll notice that whenever something goes wrong Ron Paul will blame the government for America's problems. When the FED spends 24 Trillion dollars, Ron Paul blames the Government. When the private sector creates 1.5 Quadrillion dollars in worthless debt based securtized assets, Ron Paul blames the Government. When the President imposes outright fascist policy, he again points his finger at the Government and calls it socialism. The government definitely deserves some blame, but to blame the government exclusively for corruption is ignorant of what is really going on. Most of the laws passed in washington today are lobbied for by corporations and banks. Nobody denies that, but Ron Paul will rarely if ever mentions that corporations are involved. If he did he wouldn't be able to call it socialism, and he never mention that most of Americas debt comes from derivitives cause by deregulation on the market. If he did talk about Derivatives people would understand that the market is not perfect and that you can't let it Regulate itself.

Quote:“The free market doesn't mean Wall Street should be free to steal from the American taxpayer. It's a free market, not a spree market.”

-Dennis Kuchinich

Ron Paul is also a supporter of the Gold Standard, which I would be for if not for two things. One There is not enough gold in the world to create gold standard for 300 million Americans. You can find out more about that here:
http://money.howstuffworks.com/question213.htm


http://www.youtube.com/watch?v=9E0UPBtmTb0


And two because it's unconstitutional! Now why is the Gold standard unconstitutional? Well lets look at the constitution. Section 8 of the constitution, which says what the powers of congress are gives congress the power

Section 8 constitutio Wrote:“To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

What part of that makes the gold standard unconstitutional? Lets ask Ron Paul...

http://www.rense.com/general75/aabol.htm


Quote:“Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity.”

Ron Paul- Abolish the Federal Reserve

You notice when reading this article that just before this paragraph Ron Paul quotes the constitution and says that the constitution gives congress the power coin money and to regulate the value of the currency, but with gold standard congress cannot control it's value because the value of gold is already set in stone, so to speak. In that system congress can never do the job the constitution gave them which is to regulate the value of the currency In the interest of the American people.

Now your going to love what I've found out about What ending the fed would do to the economy. Here's a little history lesson on Andrew Jackson.

Quote:In the Panic of 1837, the stage had been set for depression by outgoing President Andrew Jackson's and Secretary of the Treasury Roger Taney's abolition of the Second Bank of the United States, by their cultivation of the state "pet" banks, by their imbecilic Specie Circular of 1836, which demanded gold payment to the federal government for the purchase of public lands, and by their improvident distribution of the Treasury surplus to the states. London's ultimate weapon turned out to be the Bank of England bank rate. With all the American defenses sabotaged, the Bank of England sharply raised its discount rates, sucking gold specie and hot money liquidity back across the Atlantic, while British merchants and trading houses cut off their lines of credit to their American customers. In the resulting chaos, not just private banks and businesses went bankrupt, but also the states of Mississippi, Louisiana, Maryland, Pennsylvania, Indiana, and Michigan, which repudiated their debts, permanently impairing US credit in the world. Internal improvements came to a halt, and the drift towards secession and civil war became more pronounced. - Webster Tarpley - AGAINST OLIGARCHY

The fact is that that the Federal reserve is currently the engine of the world economy. Nations around the world hold dollars in reserves. If the Fed was suddenly abolished the engine that drives the dollar would implode and any banks that have dollars in reserves would be forced to sell dollars for other currencies. At that point what is there to buy gold for a gold standard with? Will you just get the gold for free? Or will you buy gold from other countries at interest and become a debt system again? Not to mention what will the IMF and world bank do if the Federal reserve was suddenly gone? Will we go to the SDR (The world currency)?

http://www.imf.org/external/np/fin/data/rms_five.aspx


This is a very serious issue and it's why I'm for nationalizing the fed with The American Monetary Act rather than abolishing it. This is the only way to return the control of money to the American People.

I'll follow this up with a history lesson on usury and the gold standard soon

_______________________


From http://waronyou.com/forums/index.php?PHPSESSID=b569dbd50dfab7c42c356b697a38432b&topic=11341.0

http://propagandamatrix.com/forum/index.php/topic,5084.0.html


Austrianism vs Keynesianism – flaws of both theories
by Whigswin


The difference in doctrine between Austrian and Keynesian economics is not clear to most people. However the main difference between both economic theories is their beliefs on supply and demand. Keynesian economists claim that the government can directly influence the demand for goods and services by altering tax policies and public expenditures.. Austrian economist are more on the supply side believing that the Price of a commodity determines the demand thus regulating the value of it's purchase. They believe that when the price of something is greater the demand for that product will be much lower. However others would argue that if the demand for a product were greater than the price of that product the price would also go up. I would also argue that if the supply of the product were greater than the demand because of the private or public regulated price than the price of that product or commodity could be made to be artificial. A good example of this is is the value of diamonds, which are more valuable when less of the supply is mined thus creating artificial scarcity. Diamonds are actually much more plentiful than their value suggests as they are barely even semiprecious stones. This contradicts the marginal utility theory ( that supposedly resolved the Diamond-water paradox) that assumes that since Diamonds are scarce they are much more valuable than bread or water which are essential for life. In actuality diamonds are much more plentiful than these economists observed and their value depends on artificial scarcity caused by mining less than is actually available.

The difference between 19th century Austrian economics, and the 20th century's Keynesian economics. Is mainly where their theories are drawn from. The opponents of Austrian economics are mostly history buffs. While Austrian economists, and the like, are more focused on monetary theory based on mathematics. History and mathematics are both very important factors for economists, but excluding one over the other is what creates flaws in both theories. While Austrian Equationites see an economy like a giant math equation of people products and commodities, Keynesian Historicists, on the other hand, base their theories more on past events rather than mathematics. So while Austrian economics is mostly based on the deduction based on numbers and variables, Keynesian economics is based on prediction of future events based on past events. The economic history that Keynesians use is only reliable when it is relevant to the times, but today we face a situation that is very different from history, although similar in some ways. Both views, thus, leave a huge gap in perspective on how to determine the value and sustainability of monetary systems by leaving out either the perspective of history or the perspective of mathematics out of their theories. So one could argue that since their perspectives on economics systems are narrowed that they are both holding half of what could create a truly be a prosperous economic system, which is the American system of competition between public and private systems.

.So as to show the flaws in this two party, capitalist, paradigm I have suggested that both systems are fundamentally flawed. I suggest that the the fight between 19th century and 20th century economic ideas is an old paradigm based on a debate of ideas that don't even begin to address a solution to current crisis. While Keynesian economics allows for some Government intervention such as spending on infrastructure and changing tax laws, Austrian economics has the belief that the state (government) should stay 100% out of the economy. This idea is based on the invisible hand theory, of the 18th century, that emphasized the role of individuals over that of the state and generally attacked mercantilism. .However claiming that this is an American system is fundamentally flawed when you consider George Washington's history of dedicating himself to infrastructure projects as president. Of course 100% government involvement in the economy is not an American system either, but when you consider the idea that American capitalism is based on competition you shouldn't assume that government cannot compete with the private sector.

If you assume that any form of competition with the private sector is “socialism” than you are denying the American tradition of competition. In addition we now have people in government that are inclined to subsidize nonwork over work that is valuable. To assume that this is the fault of government alone however is ignorant of the influence the market has on the the government. It is true that the government does pass laws that regulate the market occasionally, but it is also true that in past decades government has deregulated the market and laxed laws against usury as well as legalized derivatives. The subsidies given to these nonwork jobs in past decades have typically been given because the corporation claims that they will use the money to create more jobs. How it is spent though is typically making less jobs. This is mostly because the parts of the market that are subsidized create nothing of value for the market. Most of these corporations are speculative banks that hoard money, rather than lend money to industry, and media moguls that are all controlled by few corporations,.(Viacom and Disney being examples) Although these subsidies have been called a “spending plan”, today it is nothing of the sort. Because the money isn't being spent in places of value, but are rather being used to pay for CEO's vacation time or it is used to make do nothing jobs more valuable than jobs that would that would create higher employment. What should have been done was what Franklin Roosevelt did, which was the seizing of do nothing, bum, corporations under chapter 11 of the US code.This made FDR's spending plan much different than Herbert Hoover's unpopular subsidies (bail outs.) Using a chapter 11 to convert the parts of the market that has been called the “zombie banks” into something useful that creates jobs is something the US code demands. Although this is the opposite of what Obama has done because he has completely ignoring the possibility of a chapter 11. Many other bum corporations today would be eligible to be reformed under chapter 7 of the US code as well. Of course the seizing of these corporations by the government in FDR's Administration was only temporary and it only reformed the policies and spending of those corporations..To Free market economists though this is socialism and it goes against all their values. I would argue that since the seizure is only temporary it is not soccialism. I would also argue that it it gives people more jobs because industry would be converted for more modern uses (like maglev trains and tractors). Whether your for this or not, the point is that spending has to go to places that make jobs rather than places that take jobs and even spending has it's limits.

The only other alternative I see besides Industrial spending is "balancing the budget", which historically has caused a recession shortly afterward. Just look at this graph of what balancing the budget does.

http://wealthmoney.org/budget.html


Even a Digitized money system, as an alternative appears, to be fundamentally flawed. This is mainly because Digitized money would be predisposed to be regulated by a private party. It would also create an artificial “supply” and make demand (consumerism) oven more important to society. I would also argue that interest rates would be unpredictable by economists in a digitized money system. Interest rates in a digitized money system could be high or low depending on the choice of the private distributor. I think that this would be unethical and against the general welfare of the people. I also think tha congress would not be able to regulate digitized money. That may not matter though because congress does no currently regulate any of the money In the United states like it should



I hope this essay gives people an entirely new perspective on American capitalism as well as the two party paradigm of economics . (Austrianism vs Keynesiansism and capitalism vs marxism)

If anyone is interested in solution to the economic crisis I would suggest you read my previous articles for my take on solutions.

http://www.dailypaul.com/node/104200


http://wizardofoswald.com/forum/world-economic-takeoever/a-history-of-commodities-currencies-and-usury

Well I think the government would be more honest at least because they would have less pressure from private enterprise.I should add something to this though. This essay applies a lot more to what the Keynesians and Austrians beleive about commodities, and what they beleive about spending and government involvement. What they beleive about what determines the value of money is a totally different ballgame.The fact is though that on money they are both wrong. Supply and demand, by itself, does not determine the value of money. It's the person/entity controlling it that determines the value of money.