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What’s Wrong with Our Money?

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at December 4, 2007 in Monetary Policy and Ron Paul Awareness. 1 Comment

What’s wrong with our money? Well, for one thing it makes us exchange something of value — e.g. a house to live in, a book to read, gasoline to get you somewhere — for something that has no intrinsic value, in our case, paper.

What paper money does to a society over time is well documented. The 1912 classic FIAT MONEY INFLATION IN FRANCE How It Came, What It Brought, and How It Ended by Andrew Dickson White, LL.D., Ph.D., D.C.L., tells the story well. Here is an excerpt from his Introduction as published in Project Gutenberg’s EBook:

In 1876, during the “greenback craze,” General Garfield and Mr. S. B. Crittenden, both members of the House of Representatives at that time, asked me to read a paper on the same general subject before an audience of Senators and Representatives of both parties in Washington. This I did, and also gave it later before an assemblage of men of business at the Union League Club in New York.

Various editions of the paper were afterward published, among them, two or three for campaign purposes, in the hope that they might be of use in showing to what folly, cruelty, wrong and rain the passion for “fiat money” may lead.

It can be hard to be aware of what paper money is doing to your world when you are focused on just doing your best to get by, even though just getting by is getting harder every year. Life seems normal, so you don’t complain.

Then someone comes along and says “hey, things could be better.” One such person is Ron Paul. From The Case for Gold which he co-authored with Lewis Lehrmann:

Having a unit of account that has no definition or one that changes continually produces a situation equivalent to a carpenter using a yardstick that on an hourly basis changes the number of inches it contains. It is easy to see how foolish it would be to have any other unit of measurement changing in definition on a constant basis, yet many believe that a whole nation’s economy can operate with a monetary system in which the “dollar” has no definition and its measurement and value depend on politicians and bureaucrats. (page 158)

For an excellent review of the gold standard as a political issue in American history please read Howard Katz’ Report from New Hampshire of November 30, 2007, in which he points out that whenever this issue is fought out in the open the gold standard wins. By bringing it out in the open Ron Paul has started the ball rolling back to sound money.

The damage caused by paper money escalates in exponential fashion. It is only a matter of time before the house of cards collapses. However, just as paper money has damned mankind throughout history, so has gold always redeemed these most dire of situations. And so, quoting from the Constitution of my Commonwealth, Massachusetts, I look forward to a future when the “principles of humanity and general benevolence, public and private charity, industry and frugality, honesty and punctuality in their dealings; sincerity, good humor, and all social affections, and generous sentiments among the people” will be simply a matter of course.

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Gresham’s Law and the War on Drugs

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SueM

at September 16, 2007 in Drugs and Monetary Policy. 1 Comment

I just finished watching passions run high in three YouTube clips from 1988. Libertarian Presidential candidate Ron Paul and two others were on the Mort Downey Jr. Show and when I say passions ran high, I do mean high, very high. The subject was the War on Drugs, with Ron Paul et al for legalization and almost everyone else, including the host, for keeping illegal drugs illegal.

This happens to be a topic I’ve been trying to get a handle on of late. Maybe I’ve just gotten used to the idea of certain drugs being illegal, maybe I’ve fallen for the propaganda I know is out there, but anyway it is something I haven’t really been able to form an opinion on.

However, I do have an opinion on another fairly hot-button issue and that is the war on Honest Money. So I would like to try to form an opinion on the drug issue by considering the template that defines the money issue.

One very important rule that explains the money thing is Gresham’s Law: Bad money drives out good.

Or, as refined by Dr. Gary North, “…bad money drives out the good money only when the government says the two are equal in value, and enforces this decision with the threat of punishment.” (“Honest Money,” Christian Liberty Press, p. 53)

In other words, the currency artificially overvalued by a government will be spent (circulated) while the artificially undervalued currency will be hoarded (not circulated).

Can this principle be applied to drugs? Bad behavior drives out good.

Or taken a step further, punishing bad behavior drives out good behavior. Making drugs illegal instantly classifies a whole bunch of behaviors as “bad” and this drives out the good behavior that should be a reward in and of itself but no longer is. Now that bad has been defined as using drugs, good comes to mean not using drugs while real goodness continues unnoticed, sort of like honest money being hoarded.

So it seems to me that Gresham’s law does apply here and in dealing with the problem of drug addiction we’ve traded civility, compassion, individual responsibility and self-restraint for crime and punishment. The good has been driven out by the bad. And just as the badness of bad money only gets worse, so too will the badness of bad behavior when it comes to drugs only get worse over time.

On a positive note, just as sound money will mend the economy so will good behavior mend the soul. This process will naturally reassert itself once we effectively tell our governments to stop meddling in our affairs, be they economic transactions or helping one another through the rough spots in life.

Author’s note: For the reader’s interest, a comment on this article, which originally appeared at “TheLawOfIdentity.org Reason, constitutional government, sound money” on September 2nd, 2007, provides a link to a debate on the Gold Standard between Congressman Ron Paul and Charles Partee, member of the Federal Reserve Board of Governors. The debate was part of the Capitol Hill Gold Conference, held in Washington DC in November 1983 and hosted by the Ludwig von Mises Institute.

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Mojica: Money Will Be The Death Of Us

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peter

at August 30, 2007 in Monetary Policy, Political Issues and Ron Paul Awareness. 2 Comments

The following is a letter to the editor from our very own Sue Mojica (a very dedicated member of the Boston Ron Paul 2008 Meetup Group) which was published in the MetroWest Daily News on August 10th. We are publishing it here in its entirety; the last paragraph (in italics) was omitted.

To the Editor:

A bridge rated “structurally deficient” collapses and speculation abounds…how could this have happened? As our hearts go out to the people affected by this terrible tragedy, I would like to offer a little-discussed but very basic reason for the bridge collapse in Minneapolis. We have too much money.

A surprising statement, I know, but consider this: when an economy is based solely on fiat money, as ours has been for forty plus years because of a process set in motion some fifty years before that, there is never enough, because there is always too much. More units of currency = less value per unit = prices rise = calls for more currency = more units of currency = less value, prices rise, etc., a literal death-spiral to any society.

Consider what happened during the last decade of the 18th century when France tried such a system. The first several issues of paper money had a good effect, but after that it was all downhill to a ruined economy and a demoralized society. Their only recourse was to destroy the machinery, the plates and the paper, which they did on February 18th, 1796. No wonder our founders saw fit to prohibit the use of paper money as a tender in payment of debts (Art I Sec 10).

As I write this, I fear that we are now nearer to the end than the beginning of the inevitable course of fiat money. As the currency depreciates so do our values and the very stuff of our lives. There was enough money to build the Minneapolis bridge some forty years ago, but now there isn’t enough to either maintain the original or build a new and safer one if necessary. That doesn’t make sense, until you understand not only what has happened to our money but also how our relationship to government has changed.

During these last thirty to forty years our previously somewhat limited government has become very much unlimited. This is not surprising since as the money depreciates we all become needier, and the Federal Government, having given itself unlimited capacity to print currency, steps in to help. So, Minneapolis bridge, get in line with all the rest of us who no longer have the means to take care of ourselves. There is no money for you THIS year.

As it turns out however, that last statement might soon no longer be true. I wrote this on Friday morning and by that evening reports were coming in that there may be money for the Minneapolis bridge this year after all. Congress is currently considering an appropriation for emergency repairs and reconstruction, but first members of the House of Representatives must agree to waive the $100 million limitation on such appropriations in order to approve the estimated $150 to $350 million price tag for this one bridge alone. Something is seriously wrong here.

There is a silver lining however, and that is the one candidate in the 2008 Presidential election campaign who publicly acknowledges our predicament and promises to do something about it. His name is Ron Paul and his depth of understanding offers true hope for America.

Susan Mojica
Framingham