Re: [base570] Econ 101
I'm a registered Libertarian, which means that I'm generally in agreement with a lot of Ron Paul's positions (he was, after all, the Libertarian candidate the last time he ran this race).
But, I think that some of those statements on inflation, money supply, and the Fed are a bit misguided, and based on some misunderstanding.
First, I think the "the Fed is a secret conspiracy to take over the world" business that I've hard from some Ron Paul supporters is absolute bunk, and damages both Paul's campaign and the general public view of free market economics. I'm not saying that you are pushing that--just that I've heard it from people who are vocally supporting Ron Paul.
Long term, slow (and here's the key) and predictable inflation is actually a good thing for the economy. It provides "price lubrication" that makes price adjustments to supply and demand easier and less painful. In the long run, a moderate inflation rate of perhaps 1% a year is probably going to serve us better than zero inflation.
Characterizing the Federal Reserve as a totally private organization is also a little misleading. The governors are appointed by the President and confirmed by the Senate, much like Supreme Court justices. Like the judiciary, it's in the long term interest of the people that the Fed be relatively insulated from day to day pressures. Their role (primarily protecting the economy from inflation and bank runs) demands that they not be open to political coercion. If they had to run for office every two years, you'd see all kinds of political pandering going on, which would probably lead to huge inflation (because giving "cheap money" is almost always popular in the short run, and an easy way to buy some votes).
In reply to:
The disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation, are some of the greatest threats facing our nation today.
That I'll agree with. But I think the problem is largely one with Congress (and the President) spending money like a drunken sailor (actually that's not fair to the sailor--he at least spends his own money). Abolishing the Fed would not fix that problem. In fact, removing the long term outlook the Fed provides might actually make things much worse.
In reply to:
By legalizing competing currencies, we can end the Federal Reserve’s stranglehold on our money supply and begin to restore value to the dollar.
Again, I agree with some of the principles there, but the conclusion appears short sighted. Having a single unified currency for the nation offers massive advantages in trade standardization. How much of a pain would it be if I had to change money every time I crossed state lines? Now what about if I had to change money every time I went shopping, because one store only takes "wells fargo notes" while another wants "bank of america money"? How much inefficiency (and extra transaction costs) will such a system introduce into my daily life?
Bottom line: I think that Paul supporters are aiming their attacks in the wrong direction. The problem here is the unrestrained spending of our Federal Government. The Fed has (so far) appeared to do a pretty good job managing the money supply and controlling inflation. Congress, on the other hand, has done an abysmal job of controlling spending and has behaved with tremendous fiscal irresponsibility. Dr. Paul's supporters would be far better served to point at the real root of the problem (government spending) rather than trying to cast the Federal Reserve system as some kind of bogeyman (one Paul press release I read almost seemed to compare the Fed to the Bavarian Illuminati, which gave me a good chuckle, but makes Dr. Paul sound like a wacko conspiracy theorist--which he is most definitely not).