The monetary economics of Ron Paul

Here, here, and here.  I agree all around, noting only that inflation does, for mysterious reasons, seem to be a slight tax on savings (nominal interest rates don’t adjust completely to inflationary expectations, but don’t ask me why not).  But that doesn’t change the overall argument very much.  I’ll put the main point yet another way: with a commodity standard the money supply is often pro-cyclical, shrinking during business downturns.  Who wants to risk that?

I haven’t followed Ron Paul closely, and while I like many of his libertarian ideas, I am discomforted by his overall anti-intellectual demeanor.  He strikes me as the kind of person who has a natural attraction to conspiracy theories.  However he is only allowed to believe the ones that coincide with his libertarian ideology.  Which isn’t so many (most of those theories are dreamt up by non-libertarians and thus have anti-libertarian elements), and that means he ends up sounding more somewhat sensible than he really is.

I don’t doubt Paul’s sincerity, but I would like to know his theory of why most economists — even market-oriented ones — don’t agree with him on monetary policy.  I suspect he thinks he knows some secret that others do not. 

There’s what a politician believes, and how a politician believes.  As I get older I put increasing weight on the latter.  As a protest vote, Ron Paul seems fine, but hearing him or reading about him just makes me depressed.  A good rule of thumb is not to get too excited about any candidate whose actual election would make the Dow lose thousands of points.

Addendum: If you’d like a different point of view, here is Alina Stefanescu on Ron Paul.


Let me be the first of many to say,

Go Ron Paul 2008!!

Away. Far, far away. I will say that even politicians like Paul can up their analysis surprisingly behind the stage. I got a chance to talk to Nader after what should have been an embarrassingly naive oratory, and he's perfectly willing to hedge and justify in person. Perhaps if his audience changed, he'd be capable of a different level of discourse.

But it's the "mainstream" candidates who look like a bunch of fanatics and cranks to me ...

More seriously, I think there's a lot of value in the presence of people like Ron Paul, especially if/when there's no particular reason to root for any of the respected candidates. The presence of people like Ron Paul force certain questions to the surface; they make certain conversations happen that wouldn't happen at all otherwise. They help keep the other candidates a little more honest, they force the media to take on a few issues (and register a few basic facts about the populace) that they wouldn't otherwise. They're a way of letting a little fresh oxygen into the larger political exchange. Bravo to that.

Here is Tyler's colleague's take on Ron Paul's monetary beliefs.

Pete Boettke's take on the criticism of Ron Paul's monetary beliefs

Also, Ron Paul is heavily influenced by Lew Rockwell and the rest down at the Mises Institute. Rothbard did argue persuasively that a commodity standard would be better than the fickleness of a central bank. As Rothbard points out the main problem with commodity markets has been government's interference on not providing the protection for 100% reserve banking.

Here's a response, which shares my concern that libertarians should be wary of the huge amount of government control that is required to manage the money supply

Hey Tyler, why don't nominal interest rates adjust completely to--oh, wait.

Never mind.

Oh, and another benefit about Ron Paul's candidacy:

We're talking about real issues, not just talking points.

Jarick said:

"Oh, and another benefit about Ron Paul's candidacy:

We're talking about real issues, not just talking points."

Even if Paul is right or wrong, this is absolutely the most positive development as a result of his candidacy. Every discussion about Paul centers around his beliefs and not the extemporaneous stuff.

The idea of rule of law, with equality before the law, is a pretty compelling one. There are no other candidates who are willing to stand for justice and liberty. That's pretty simple. Game over. Need more? Everyone else advocates selling our children into slavery. Really. Get real. Look at the budget. The dollar is worth about 5% of what it was worth before it was turned over to private bankers, and that massive century-long robbery is just a weak foreshadowing of the collapse occuring today. By 2020, the dollar will be worth less than 20% of what it is worth today. Essentially all of the wealth of the US is being drained into Europe and China at an ever-increasing rate. This is inherently unsustainable, of course. Ron Paul FTW.

I strongly advocate backing the currency with a rolling basket of futures to insure that the PPI is always flat.


I'm no professional economist; I have a difficult time understanding fiat money vs. gold standard. It seems like whatever I'm reading at the moment makes sense. This is Greenspan's (in)famous treatise on the virtues of the gold standard:

Can you comment? Thanks

@Ally Kendall: A flat price index only works if you have totally unsticky prices for everything. It does not work with wage rigidity very well (and many wages are nominally rigid to some extent), if you have wages that are nominally rigid, some inflation may over time in fact be beneficial as it allows relative prices to be fixed.

@Lee: that's exactly the kind of comments I'm referring to. What exactly is it about libertarianism that no only precludes mental deficiency in your mind but also criminality? I'm assuming you're just trying to be humorous, but either way, it doesn't move the ball forward.

The other thing is that there is a difference between Paul's view that a monetary system is a better system than a centrally controlled system, and his views on how he expects to change monetary policy if he were to be elected president. He has said many times that he doesn't advocate trying to dismantle the FED once in office because doing so would be impractical. At most, he wants to legalize competing currencies. What he would likely do as president is be a cautionary voice and influence with regards to fiscal policy and against reckless monetary expansion. Would it be so bad to have a president that has conservative views on monetary policy? If Paul has one failing as a candidate, it is that he makes it very difficult to determine the difference between his idealogical positions and his practical ones. Other candidates present very clearly that their idealogical and practical policy positions are one in the same, even though they likely are not. Paul often falls into the trap of allowing his ideals speak for his policy. For instance, social security is a bad long-term program, and Paul acknowledges that, but many think he wants to deep-six social security when in actuality he has the only practical plan for saving it.

Dr. Cowen,

I see a positive corollary in your post:

I haven't followed Ron Paul closely.......He strikes me as the kind of person who has a natural attraction to conspiracy theories.

It's quite common. I suggest you read him a little more closely for a few days and ask yourself if he still strikes you this way.

On a side note, I find funny to watch a libertarian economist giving a "tsk tsk wag of the finger" to someone like Paul who is probably the only man in Congress who is well read many works from Mises to Hayek to Bastiat (Works that I'm sure you are familiar with and have read during your career).

Well, then I ask you, Dr. Cowen:

If the only Congressman in the U.S. who even has a clue about these great works (that I'm sure are part of your own rearing) doesn't get it, where did he go wrong and where did you right??

If the only Congressman in U.S. who could actually sit down with you and speak intelligently and at length about economic history and thought and Austrianism with you is dead wrong or misguided, then what does that say about all us who read your blog and Boettke's and Boudreux's and so on? Should we just stop and pick up some new material??

Please explain....

@Cliff, yeah, the author's points are very superficial, especially "Why not competing currencies?" (I don't think she has read the legal tender laws very closely, or the little print on the back of Fed notes).

I'd still like someone to explain to me how economists can accept that prices coordinate economic actions, while not accepting that artificially altering the price to borrow money would produce discoordination. Everyone knows that all business, engineering, finance and other undergraduate majors are taught in nearly every University in the country to use the rate of interest to choose between future outcomes (present-worth analysis, and so forth). Am I the only one that sees a lot of cognitive dissonance here?

Easily the WORST sentence I've read today:

"A good rule of thumb is not to get too excited about any candidate whose actual election would make the Dow lose thousands of points."

Several of the Dow components are surely much higher than they otherwise would be due to some of the deeply corrupt practices that Ron Paul keeps pointing to, especially in foreign and monetary policy. Other Dow components may be harmed by these practices, but please tell me why the Dow thing is such a "good rule of thumb?"

If you dare to read the specifics of the polls, Ron Paul has the highest ration of college graduates than any other candidate with a 2:1 ration, oddly enough quite the opposite with Huckabee who has less than a 1:2 ration.
I find it interesting that Ron Paul is not mentioned when it comes to straw polls. He has won over half of the nations straw polls and some polls are even canceled halfway in (SF Straw Poll) because they know he would win. Which would you consider more accurate, the accumulation of all straw polls in the USA or some telephone poll that is obsolete?
John Kerry had 4% in the polls days before he won the nomination. Carter and Reagan both had 1-2% in the polls, yet won. How do you explain that based on your perception that tele polls are accurate? Ron Paul broke the all time one day fundraising record (EVER) and is bringing in 20 million this quarter, quite possible more than quadruple any of the other front runners. Can you please stop the bias and get real?

I would like to respond to your concerns stated in this sentence:

"I don't doubt Paul's sincerity, but I would like to know his theory of why most economists -- even market-oriented ones -- don't agree with him on monetary policy. I suspect he thinks he knows some secret that others do not."

You really have to name names here. The truth is that many economists agree with Paul's proposed economic and monetary policy. Some traders who consider themselves knowledgeable may not agree, but they aren't economists.

All depends on which school of economics they follow. Paul, like myself, believe strongly in the Mises school of economics which favors free markets and commodity-backed currency. However, our nation has embraced Keynesian economics and a fiat currency for the last 100 years. Now we're headed rapidly going down the tubes.

Many famous economists have been railing against following our current fiat system for years including Alan Greenspan (before he becamne Fed Chairman). Bottom line is that you really need to read more on economic theory and who supports what. You will not get unbiased information watching Bloomberg TV or CNBC.

Nice synopsis Kris. I for one am a 32 year old Ron Paul supporter. I read what I can find about monetary policy and The Fed, but since this isn't my day job, it's not as much as it should be.

Fed chairmen don't have their own resources on the line, and Greenspan was notriously politically motivated. Maybe Ben got the job because he's apolitical. Ahem.

In theory, individuals acting rationally should smooth things out. Why don't they? Why do we still have cycles and bubbles? Well, Mises says it's because the one thing that all business is denominated in, dollars, is monopoly controlled by bureaucrats. And everyone spends much of their time trying to predict what the committee will do, and the committee tries to predict what people are predicting the committee to do. And the committee tries to do it out of phase with the general election to avoid too much sunlight. Sounds like a good recipe for cycles to me.

Suffice it to say, that although I've only really been serious about the stock market for a few years now, I can benefit greatly from medium-term volatility. How much moreso must the real pros take advantage of it? Are we really to think that there is no regulator capture? This isn't conspiracy theorism, it's just plain eonomics, which after all, is human nature.

As Warren Buffett said, when evaluating managers, look for Integrity, Intelligence, and Energy. And if you don't have the first, the last two will kill you!

Go Ron Paul!

Ron Paul fails to see the difference between the Fed and a counterfeiter. The Fed puts its name on every dollar, holds assets against those dollars, recognizes those dollars as its liability, and stands ready to use those assets to buy back the dollars it has issued. No counterfeiter does that.

Dollars are no more "created out of thin air" than shares of GM stock are created out of thin air.

More at

Interestingly enough, I stopped by the "Ron Paul 2008" HQ on Wed and picked up a poster for my office.

My comments to the office staff we the following: "Ron Paul will not win but I hope he inspires a number of people to run for office under similar principles. We need a choice. When we talk about Republicans and Democrats, we are typically talking about representatives that believe in big government and reducing your freedoms. The representatives may not mean to do this. This is just a result of their need to solve everything on a national level. We need more "Ron Pauls"!"

In addition, I am really shocked at how poorly Ron Paul is treated in the media. Many have tried to link Ron Paul to about every hate group out there. I also don't understand why more everyday people don't embrace his ideas.

"anti-intellectual demeanor"?

Man.. you've got some serious reading to do.

I mean, you can argue with the man on many legitimate things, but this: anti-intellectualism? No, I didn't see that one coming.

Anti intellectual? If Ron Paul is anti intellectual, than you, sir, are braindead. It's one thing to bash someone, but at least state a case to back up your belief. Ron Paul has been able to convince me through well written and spoken argument. You have done nothing to convince me otherwise.

The fundamental problem with "monetary policy" is that it is impossible for human beings to resist the temptation to cheat. Expanding the money supply (lowering interest rates) makes things feel good and eases pain, much like cocaine or heroin. Restricting it - even in economic boom times causes pain - like withdraw symptoms.

Remember "Irrational Exhuberance"? Then we got the dot-com bubble - why did all those shell companies have billion dollar valuations? Then it popped, but just before the economy might clear out the deadwood, the too low interest rates created the housing bubble. The Greenspan, now Bernanke "put". So there is tens of trillions of debt out there that everyone is confident that Bernanke won't let collapse. But it is too big to bail out now.

Or go back to Reagan and the deficits. During the early '80s, we had a recession, so they said it was necessary. By 1986 we were booming again, but the deficits WENT UP. Then we had a crash in 1987 because the dollar tanked when the market overextended.

Monetary policy only works one way - to addict people to easy credit. Please, Mr. Pusher, give me more candy. I'll get off next week, I promise. Kudlow is the perfect advocate. Interest rates go down, Bernanke (earlier Greenspan) was a saint, genius, and whatever other nice thing he could think to call him. Interest rates go up, he's worse than hitler, destroying the economy, eats widows and orphans.

Gold is a disciplinarian. If there is a boom, it can and should be saved. If there is a bust, then you can spend the saved gold.

No one likes discipline, but consider what is happening and going to happen when this latest credit bubble collapses, we will rediscover what those in 1720 found out - John Law's Mississippi scheme, and the South Seas bubble - why paper money and central banking always lead to economic hell. And we will likely remember for another 10 generations why human beings need a gold standard.

Ron Paul "anti-intellectual?" Whether you agree with Ron or not, he quotes more intellectuals, scholars and academics in one speech than the rest of the candidates combined do in a lifetime. No one else running remotely compares to Ron's breadth of philosophic, economic and historical knowledge.

"Ron Paul fails to see the difference between the Fed and a counterfeiter. The Fed puts its name on every dollar, holds assets against those dollars, recognizes those dollars as its liability, and stands ready to use those assets to buy back the dollars it has issued. No counterfeiter does that. Dollars are no more "created out of thin air" than shares of GM stock are created out of thin air."

Mr Sproul - correct me if I am wrong, but doesn't the Fed count promissary notes as assets? Aren't dollars debt paper? Do you consider debt paper and promissary notes assets to be held in ledger? When you sign a promissary note, isn't it turned over to the bank and added to its asset ledger? That is NOT an asset used to buy back dollars it issues. This appears to be pretty obvious money mechanics. There are absolutely no REAL ASSETS backing any currency where a central bank or conglomerate of banks issues debt paper. Thin air is exactly the derivative.

This idea of commodity money contributing to business cycles bothers me greatly. If anything the fiat money of the Fed causes them just as much if not more.

Is there any question that the loose money and loose interest rates created stagflation, the 1979-1981 recession, the 1991 recession, the tech boom/bust, the credit and real estate boom/bust? (I believe the current booms/busts are getting worse/more frequent now because most economists are now of the monetarist persuasion.)

The current Fed chairman, Ben Bernanke, has said himself that the Fed's policies in the 1920's and 1930's created the Great Depression. (His views about what should have been done, however do differ greatly with what Dr Paul has suggested.)

Lastly, Paul is not anti-intellectual at all. That is a complete mis-characterization. The man is a medical doctor, an OBGYN, a extremely well-read man on all things. Just because you don't like his arguments philosophically doesn't make him any less intellectual.

With respect, sir, I ask that you do more research. He has several books out and his congressional website has critiques and essays explaining why he voted yes or no on every bill he's ever voted on. Thank you.

The Fed puts its name on every dollar, holds assets against those dollars, recognizes those dollars as its liability, and stands ready to use those assets to buy back the dollars it has issued.

Who's gonna put the FED in jail for counterfeiting?
That's a worthless distinction. The government has established a monopoly. The federal government has no assets except it's ability to extract wealth from the productive via taxes.

Dollars are created out of cotton, paper and ink. However, printing money is not the same as creating wealth. That is what Ron Paul means by creating money out of thin air.
Government printing of money is just another means for extracting wealth from citizens without the negative perceptions created by raising taxes.

I don't understand those economists who see little harm in monetary inflation.
Doesn't it discourage savings?
Doesn't that encourage dependency on government?
Doesn't it transfer wealth from the productive to the banking system?
Indeed, doesn't it require a government monopoly on currency?

How can serious economists discount the observations of the Austrian school?

My personal response is in the next paragraph. First, I have a question: Why would anyone who calls themselves a Libertarian want the government involved in the currency at all? It seems to me that the only legitimate Libertarian policy with regard to money is the one in which all money is private. Why NOT let money compete in the free market without government interference like any other good?

I have several reasons why I am for a hard currency standard: anything else can be easily manipulated by the whims of bureaucrats; fiat money allows the government to easily increase in size and scope by printing money at will; and frankly, as a Christian, I believe that fiat money whose value can be arbitrarily manipulated constitutes dishonesty. The Bible teaches that we should have one set of weights an measures. That sound archaic until you realize that is just means we the grocer should have one scale that he uses as a seller, and another scale that he uses when he is the buyer of goods. Money whose value is consciously manipulated by government for the benefit of either borrowers or lenders, importers or exporters, rich or poor, is simply wrong.

"I haven't followed Ron Paul closely, and while I like many of his libertarian ideas, I am discomforted by his overall anti-intellectual demeanor."

As I am discomforted by your projection of the idea that ignorance is knowledge. Which given this demonstration, I consider to be due to your overall anti-intellectual demeanor.

BTW, I haven't followed you closely either, but this one example is more than sufficient to draw conclusions on, don't you think?

Meanwhile, thanks for your inadvertent support of Dr. Paul. Nothing, and I mean nothing motivates people quite like being exposed to the ignorance of conventional wisdom.

Ron Paul "has a natural attraction to conspiracy theories" but doesn't believe in many conspiracy theories. Isn't there a simpler explanation for the latter fact than the one suggested in this post, i.e., his natural attraction for belief in conspiracy theories is kept in check by libertarian constraints? What if he doesn't have such a natural attraction?

Tyler, people like you make me sad. You probably defend Gov Arnold as an intellectual.Give us a break, or lay off your passive aggressive tacts.We know that you don't know much.HOT AIR is what you offer. This stance, fake as it is, of insulting people who question 911 or any of the other conspiracy theories...practically 50 % of the world doesn't believe the official story regarding 911. guess "we all crazy folk". Piss off!!

I can't believe that I read such a thing. The author first admits, that he is posting an opinion on Ron Paul that is not based on sufficient knowledge about Ron Paul. Which is, I would say, an anti-intellectual action: talking without knowing. And then, having made this admission, he proceeds to tell us that Ron Paul is "anti-intellectual." Oh, by the way, the same Ron Paul who seems to have read more books than all his MSM interviewers together.

I guess, if only Dr. Paul could stop talking common sense and kinda make peace with the Establishment... That would make him "intellectual," right?

Three links to Megan McCardle is supposed to prove that Ron Paul is an anti-intellectual.
It is too laugh.

"..he is only allowed to believe the ones that coincide with his libertarian ideology. Which isn't so many.." They isn't? Is attrocious grammar okay now in "intellectual" circles?

As for why economists disagree with him, perhaps it is because government funding at universities where the mercantilist agenda is not upheld would dry up in an instant. Perhaps that has something to do with it. Proving, of course, that it really is all about money.

are you that naive? Just a slight tax on savings? A good portion of this country's people cannot afford a slight tax. I noticed recently that the price of o.j. is up 20%,bread 15% and there have been other large increases in many other food prices. You talk about Wall Street as if it is the only place that matters. Yet you seem to either be unable or refuse to see the real scope of this country's financial and yes social problems. 69% of our economy is spending,60% of our consumer goods are made overseas, we carry huge trade; budget deficits, agiant national debt + its interest.
Most jobs generated nowadays are low paying service types. We are fighting a war that is consuming vast resources. Of cousre there is CHINA(big,huge,ravenous, country eating CHINA. Oil is at an all time high(its is winter),most people do not have adequate savings. and then there is this mortgage problem. Who gets to pay this one off,why it the taxpayer. Why does the taxpayer, who do not make these mistakes have to foot the bill? Why is this great system which forces the taxpayer to bail rich people out acceptable? Its bad enough that those wonderful people in the stock market who make all the money, force us to by products that we can get no where else any more and now they are shipping many, many of the best manufacturing and other good jobs overseas. This the best system Right?There many other problems also.
It is kind of funny this started happening just about the time Nixon officially disconnected us from gold. maybe if we did pay for things in gold(Ron Paul would like competing currencies) the government would think twice about its monetary policies. If things were paid for in gold do you think any of this bull would exist?
I think not. All of these problems come right back to CREDIT,CREDIT,CREDIT,debt ,debt,debt!
By the way look at the other candidates and look at how much money they have wasted, how many are in debt. I bet they run their campaigns the same way they would run the government. Go ahead take a look at how they have spent money. They stand in contrast with Ron Paul except maybe Huckabee.
I think the main point is people worry so much about the stock market. We are going to get buried by the Chinese and the Indians,Brazilians,Europeans. Just take a look at our educational system and you will understand. This not the same country like it was in 1979 when we had a way out.We still had a strong system but not any more look at the condition of the roads and bridges. All these things are more integrated than ever. None of the candidates have any systemic answers Ron Paul does and if they do not work at least this country will try to solve them together.

This must mean Tyler fashions himself as a cosmopolitan libertarian much like the near great Steve Horwitz.

sooooo sorry can't seem to let this "conspiracy" thing go.Tyler is it another kooky conspiracy that Prescott Bush, W's grandfather, was part of a group of bankers that were busted for helping finance Hitler? this just never seems to see the light of day yet there ARE records proving it. So a conspiracy that can be proved to not be a conspiracy but a FACT are still treated as conspiracies and the people talking or relaying the information just kooks?

If Ron Paul is anti-intellectual, what the heck does that make the rest of the presidential field?

Giulliani thinks shouting "9/11" amounts to debate about foreign policy, does that make him anti-intellectual?

Oh, and as for the silly comment about the Dow falling: it's clear that you don't spend much time listening to CNBC. Among analysts there, there's no consensus, but I have yet to hear as many investment analysts affirm any other candidate more than they do Ron Paul. Those of us who spend time studying the market know that this wild inflationary policy can't help. You can't stimulate an economy into prosperity. THAT was the essence of Friedman's Monetarist ideal. Somehow that simple truth seems to have been lost on this new generation of economists. Sad.

Ron Paul beliefs are about as close to Tyler Cowen's philosophy and economics as any serious candidate in the last 50 or 100 years. And that's not enough? I am simply agog. As for Paul's monetary views, Tyler may disagree with the Austrian approach, but to pretend they're some bizarre unfathomable invention of Ron Paul's strikes me as more than a tad disingenuous.

Praise Jesus...that isolationist Ron Paul is just not very intellectual he is a big naive dummy who doesn't understand the islamos are going to come over here and make us all wear burkas unless we nuke the heck out of all those idiots over there. We also hae to be very worreid because their alaha might tell them to stop selling us oil so we need to nuke them first...and give them freedom too...are you so selfish that you aren't willing to killa few million collateral damage folks in order to give some heathens some they'l be fre to sell us oil, but not too much oil we don't want it to flood the market or anything...and we might need to fund some of the bad guys over there to fight for our interest's just all complicated and ya'll aren't intellectual enoguh to understand we need to kill those people they aren't civil like me and my kin...and what are we gonna do about global warming if we have a billion muslims sending out poison carbon can't deny that we gotta do something to stop this global warming, might have to nuke a few billion folks anyway...might as well be muslims and if you don't agree then youa re a terrorist!

Praise Jesus - Halleluliah! hilarious

You are so right Tyler, Ron Paul would be a terrible president because the Dow would fall when he is voted in. And on that basis the greatest leader in the world right now is.... Robert Mugabe!!! As Zimbabwe's stock market is going through the roof.

It is usually easy to call myself a libertarian when I can see that socialists, welfare statists etc are so stupid, but it grieves me that I should associate my beliefs with such a fool as you.

Most of the comments to this post have gone nuts (justifiably so) on Tyler's remark that Ron Paul comes off as "anti-intellectual." Perhaps Tyler could clarify by giving us an example of some other politicians who are the "intellectual" type. By the way, does Tyler think that appearing intellectual is good?

To me, it's maddening that Al Gore, probably the dumbest cluck that EVER held high public office, is routinely portrayed in the media as some kind of intellectual, even a "towering" one. Here's a guy who stumbled thru college, quickly failed both law school and theology studies, had to have his first book, "Earth in the Balance", totally ghost-written by Carol Browner, lost 3 consecutive presidential debates to W (and was ridiculed on SNL for this--w so much on the line, don't you think someone "smart" would correct his mistakes in the first debate and go on to win the next two against a complete dummy?), and apparently doesn't see the inconsistency in traveling around in a private jet and consuming 20X as much electricity as the average American while telling the rest of us we urgently need to cut way back.

Meanwhile, Ron Paul, who wrote or co-wrote all his material, has medical degree, etc., is somehow "anti-intellectual?" He's "anti-establishment," alright; maybe that's what Tyler really meant. One can hope.

Folks on this thread have set up a false dilemma - a reduction to either an absolute gold standard or an absolute centrally managed fiat currency. This is not the case with Dr. Paul's position.

Dr Paul advocates the legalization of multiple competing currencies. His policy would not force either a gold-backed currency or a fiat-currency, but would instead legalize competing private currencies subject to the preferences of currency "consumers." If some folks wished to add a 100% reserve, commodity-backed currency to their portfolio or to faciliate exchange - the option would be available.

Even under the current system, we have several competing "private" currencies, but they are tied to the Fed's monopoly on money/credit creation. Have you ever heard of Traveler's Checks? How about credit and debit cards?

Dr. Paul advocates currency choice in the market, not a government enforced "gold standard."

Mike_Sproul: I think you have a lot of insights to add, but I'm not sure I follow your claim that Federal
Reserve Notes are a Federal Reserve liability. Precisely which legal obligation, unique to the Fed, does
the Fed gain by issuing these notes? No amount of FRNs will allow me to force the Fed to do anything.
Certainly, it has a reliable promise to maintain currency value and only issue notes in exchange for assets
of equal value. But where is the liability in any of that?

Ron Paul is THE most intellectual candidate running for president period. If you don't think so, then listen to this mp3.


I wonder if what makes you think Paul is anti-intellectual is not that he is anti-intellectual but that he has a strong pessimistic bias. Although I disagree with his view that we are going to hell in hand basket or that inflation has made us poorer than we were in the 1960s but I agree with all the proposals that he thinks we need to prevent going to hell in a hand basket.

Also Ron Paul represents big changes and big changes is always risky. Tyler you need to task some big risks like going to gold. If it causes a depression, I doublt that would be that bad in this much wealthier world than existed in 1929.

>>I'll put the main point yet another way: with a commodity standard the money supply is often pro-cyclical, shrinking during business downturns. Who wants to risk that?

Good grief! It shrinks during business downturns because -- wait for it -- PEOPLE SAVE! Who wants to risk that!? Goodness me! Why risk an economy where people save their money instead of opting for easy credit?! Is that really the question that you're asking?

Ummm. Well, it is an historical fact that business
cycles were much more pronounced during the gold
standard era than since it ended. Increasingly the
consensus among economic historians is that it was
overly rigid adherence to the gold standard that played
the crucial role in bringing on the Great Depression,
with the rise of Hitler and the slaughter of millions
following thereon.

For those who think this is baloney, I suggest you read
Barry Eichengreen's 1992 _Golden Fetters: The Gold Standard
and the Great Depression_. It was not called a
"barbrous relic" for nothing. Good riddance.

CJS: Why have Ron Paul supporters derailed Ron Paul's election? Have you actually read the counterpoints made by RP's supporters? I grant you that some may sound (or are in fact) angry (I would say passionate, though), but many of those responding to Tyler are offering very legitimate economic reasons.

Baube, Jeff, Sam, and Person:

The liability side of the Fed's balance sheet shows $819 billion of paper dollars in circulation. The asset side shows $11 billion worth of gold (valued at $42 per oz, so it's more like $200 billion worth), plus Treasury securities worth $769 billion. If the Fed wanted to, it could use the Treasury securities to buy back $769 billion paper dollars, then use $50 billion of its gold to buy back the rest of the dollars, and still have $150 billion in gold left over. (That assumes none of those $819 billion have been lost in house fires, landfills, etc.) Of course, the Fed isn't likely to buy back all of its dollars any time soon, but they could if they wanted to. So what would happen if some great new kind of credit card were invented, and nobody wanted to hold paper dollars? The unwanted paper dollars would pile up in bank vaults, and the Fed would (if it wanted to avoid inflation) use its bonds (or gold) to buy them up. The fed obviously could not do this if it did not have those bonds. That's one way of seeing why the Fed's bonds matter to the value of the dollar.

This is explained in my paper "There's No Such Thing as Fiat Money", at the previously mentioned website

Money has no maturity date and pays no interest
Fed securities have a maturity date and pay interest ( in fiat dollars not anything of real worth).
Both are promise backed.
Both are fiat items, one ( FRNs ) we must accept, the other is bought to make a return to try to cover the inflation caused by the continued printing of the other. But it would be nice if the Fed sold all that gold to the people, because then the Fed could confiscate it again as they did in the 30's. And theft is one of the real "value adding" occupations.
Mr. Sproul you would do as well to title your paper ;"There is nothing left but Politician's Promises". While you are at it you might come up with a way to confiscate the SWFs of China and Japan, I do believe they hold well over several Trillion of those on demand promises.

Off-kilter paulnuts!!?? CJS has obviously never come up against anything remotely akin to betrayal of his human rights by his government, nor is he likely to search libraries(no not just the internet) and confirm for himself the obvious lies we have been fed.
P.S. who owns the Federal Reserve?

Ron Paul is a hard-working genius. Most Americans are lazy and retarded.

I don't have anything else to add.

I'd like to add that this:

"I'll put the main point yet another way: with a commodity standard the money supply is often pro-cyclical, shrinking during business downturns."

is a horrible argument against commodity-backed money. A former economics professor once, who now teaches at Indiana Univ., made this same argument years ago. Let me "clarify" it a bit further:

Gold would be bad money, because the current FR dollar price of gold fluctuates.

If, Tyler, you can't see why this is a TERRIBLE, TERRIBLE, TERRIBLE argument against gold-backed money, then there is no hope for you. I don't wish to come across too harshly, but a smart person should be able to see why this line of reasoning is, at most, an argument against the FR dollar.

check out Jekyll Island Conference and what transpired

Tyler has a point. Empirically, since Paul Volker, America has had the best monetary system it has ever had. Low and stable inflation with few recessions and very shallow ones at that. The proof is that money and inflation haven't been election issues since Volcker at all. When the system works, Joe six pack can ignore it. The only reason Paul can't see how good we have it in this regard is because he's walking around with ideological blinders on. That being said, he may still be the best of an exceptionally weak slate of Republican candidate.

Jim Cramer apparently gets Ron Paul's point, at least as to the FED.

Okay, getting close to my bedtime, but I'll keep trying.

Monetary policy is what got Paul into politics 30 years or so ago when, yes, it was a big problem.

His main impetus now is the foreign policy and how the deficits caused by it and the coattail domestic spending is unsustainable, without future inflation.

In his speeches, he makes a one-liner about the Fed and "honest money" much like an old band plays their first big hit that made them popular to fire up the fans. From what I've seen, it is the people criticizing Paul for his monetary positions making a big deal about it more than the man himself, which necessitates a philosophical response from his supporters, which then snowballs for future commentators into being a key plank for the man.

I think he believes that the solution is commodity currency. I agree. That doesn't mean he is going to do it overnight. He's said his first order of business is bringing our troops home. The man also understands priorities and opportunity costs. If you listen to him.

Yes, we have it better than most of the rest of the world. Does that mean we pat ourselves on the back and call it a day? One guy (Carl Milsted) made a good analogy between lawyers and engineers (and doctors and economists can fit in with the latter). Lawyers find a non-ideality, and squeeze it through and call it precedent. Then, the next non-ideality can be a little bigger and squeeze through. Thus is The Law. Engineers on the other hand, when they find tradeoffs and imperfections they note them for the future. When the opportunity presents itself, they fix them. Fiat currency is a non-ideality. We can either say "good enough," or we can say "fix it later," or we can say "fix it now."

Ron Paul is saying, "I'm going to fix first the things that The President has authority over." Foreign policy. Presidential lawbreaking. Etc. "Later we'll work on things where we need to bring Congress along." Monetary policy for example.

I'm not an economist, so pardon the simple questions.

Could one of you Paul supporters explain two questions that come to mind?

First - Several people have noted that Paul doesnt want to return to a gold standard, just allow for competing currencies. Including, I would presume, a gold-backed currency.
But how would that be any different than people simply buying, and trading, gold? Can't we do that anyway?

Second - the the supporters of the gold standard. If my history is correct, it seems that the pre-Fed economic history of this country was no smooth and easy ride. We had recurrent panics, recessions and depressions, and prices inflated as well. I hear a lot of people pointing to today's problems and blaming them on our current currency, but why should anyone believe, based on history, that a gold standard wouldn't be worse?

@JoeCitizen, would that be any different than people simply buying, and trading, gold? Can't we do that anyway?

We can, but any creditor (in the broad sense of the word, anyone who is owed anything) can be forced to accept Fed notes by the courts due to legal tender laws. Other than ordinary transaction costs, taxes keep the creditor from being able to efficiently transfer Fed notes into another currency or commodity. Due to Gresham's Law, less-valued currencies mandated by law tend to circulate, while more valued currencies (say, gold) are horded.

I hear a lot of people pointing to today's problems and blaming them on our current currency, but why should anyone believe, based on history, that a gold standard wouldn't be worse?

Well, we had a bimetallic standard back then, which was really a terrible idea. We also never really had what Paul is proposing, which is free banking, and letting the market pick a currency.

"any creditor (in the broad sense of the word, anyone who is owed anything) can be forced to accept Fed notes by the courts due to legal tender laws"

Well, would Paul do away with that? I mean, if you have competing currencies, what happens if you as a consumer choose to use Paul dollars, and I, as a business, choose to only sell in exchange for some other currency, like Fed dollars? Would everyone be obliged to accept any currency that is out there? That doesnt seem very workable. So would there have to be some set of (government)-approved currencies - such that people could have some confidence that there really was some backing for the money? How could you control what would seem to be an open invitation to fraudsters creating currencies that were actually worthless?

As for the gold standard:
Isn't gold simply another commodity? If there were a big gold strike found somewhere, wouldn't the value of gold, and hence the value of your money, go down - without any reference to anything else going on in the economy?

Thanks for your patience with these question!

"Yes that happened, but it affected only those involved in risky interactions."

Is that really true? I mean, a bank panic, a recession or depression - and inflation? I suspect that these phenomena affected everyone in society, no?

Don't get me wrong here. I have no problem questioning the relevance of institutions, no matter how long they have been around. But institutions are established in the first place in order to solve some problem. If you do away with the institution, the first thing that needs to be assessed is whether you are simply going to get back the original problem. I havent studied the gold standard argument exhaustivly, but I havent ever heard people addressing this issue.

Where were "most economists" when Easy Al was dropping the fed funds rate to 1% and unleashing a credit bubble for the ages? They were clinging to their defunct Keynesian, monetarist and supply side theories and sucking up to the Fed. (Even Milton Friedman endorsed the Great Greenspan before he passed on.) Ron Paul and his fellow-Austrians warned repeatedly of the inevitable bust. As this movie unfolds, Ron Paul's credibility only goes higher. Meanwhile, "most economists" are like deer in headlights, completely blindsided by the great credit unwind that is still in the early stages of unfolding.

Oh, one more thing regarding this question:

Is that really true? I mean, a bank panic, a recession or depression - and inflation? I suspect that these phenomena affected everyone in society, no?

Indirectly, of course yes. But I, if I were not involved in the mess to begin with, would have never been *forced* to pay for fixing the mess. I would have interest in promoting not causing the mess, but I would not have been required to fix it.

With that said, when such panics happened and negatively affected the economy for everyone, does this mean we should institutionalize injustice by forcing everyone to fix the problem as is essentially what the Fed does?

Also there is this very well done video on the Fed.

The world was on the most strongly run international gold standard ever when WW I began.
Did not do much to halt it.

Well, recall that the US was the only nation in the West that could have chosen not to enter the war. If it were not for Wilson wanting to go to Versailles and have a piece of the cake, the US would have robustly stayed out of it. It as the gold standard (among other things) that did allow the US this luxury that the US would not go to war.

It is worth noting that the British ended the convertibility of Bank of England notes to gold in 1914 to fund military operations during WWI. They had to end the gold standard to fight the war.

JoeCitizen- Sure, my pleasure. Regarding:

And you havent really answered my question. In my business, do I post a list of banks whose notes I am willing to accept - and if your favorite bank isnt on the list, then we dont do business? Or am I too be obliged to accept whatever currency you decide to use?

Remember that banks are businesses too! They want to make money. One way to do so is allow for dealing with various currencies issued by different banks. With modern day technologies, computers, and the Internet, dealing in all the various currencies would be quite automatic I imagine.

But remember that adopting a gold standard does not mean getting rid of a single currency system (the USD). It only says that the USD's value will be tied to a commodity (say, gold). Having multiple currencies is a different question, though it would not be as scary as it may sound.

A currency's popularity is really about trust and what it can buy. The US dollar became the world's reserve currency because it was trusted to have reasonably low inflation, and could buy US goods. No one is going to use untrustworthy currencies any more than they are going to try to spend casino chips at McDonalds. Besides, few businesses would even bother accepting fraudulent currencies.

And of course there is value to have common mediums of exchange; no one denies this (least of all Austrians). The issue isn't whether or not we use a common currency, but how it is selected. Standard weights and measures aren't standard because the government forces engineers to use them, they are standard because they are useful things to have standard. Similarly, common currencies are often not forced upon bankers.

The market selects a currency based on use: The more trusted and widely-accepted a currency is, the more widely it tends to be accepted. The government sets a standard currency by passing laws telling people they must use that currency.

The entire purpose behind legislative monopolies on currency is so that the government can do those things you find fraudulent. Specifically, legal tender laws were adopted in America to help the government print up tons of money to finance wars. If the currency was not being used fraudulently, legal tender laws would not be necissary (and prior to the civil war, they weren't).

You say that in the real world, money works pretty well. And for the most part it does. But take the recent housing bubble; Austrians would say that was a classic example of the Hayekian business cycle caused by distorted prices (specifically, the price of borrowing money, or the rate of interest). The cause of these distorted prices was the creating of new money by the Federal Reserve.

Second - the the supporters of the gold standard. If my history is correct, it seems that the pre-Fed economic history of this country was no smooth and easy ride. We had recurrent panics, recessions and depressions, and prices inflated as well. I hear a lot of people pointing to today's problems and blaming them on our current currency, but why should anyone believe, based on history, that a gold standard wouldn't be worse?

Try reading this, it answers your questions.

Mr Cowen,

I'm not certain you'll make it this far down into the comments. Were I you I might give up after the 10th or 15th bashing you've taken.

I am an economist, Masters from the McCombs school at UT. I realize this blog post was not meant to be a dissertation, but you really should put more effort into your musings before you expose them to the public.

You posit that most economists, even "market oriented ones"(as if there were another type, did you mean sociologists?), don't agree with Paul's monetary policy.

I recommend you get out more.

To my knowledge, only market traders and financial instutions are even moderately confident in the management of the FED, and the reason being they are bought and paid for.

I would venture to say no fit academic economist would echo your musings unless they stood to gain from it. Reason could not lead them there.

It is my wish that you revist this nonsense and attempt to put forward a more rational opinion.

I'd recommend starting with a premise based on an economic axiom instead of something you saw on CNBC.

So I read the referred pieces, maybe others can add critiques:

From the second piece: "In 1800, real per-capita GDP was $1200 or thereabouts; at the turn of the 20th century, it was a little less than $5,000, a roughly fourfold increase. By comparison, between 1900 and 2000 real per-capita GDP went from $4,921 to $34,775, a sevenfold increase."

So, first of all, "fourfold" and "sevenfold" absolute multiples are interesting ways to talk about something that grows in a compounded fashion. Funky things happen to compound numbers over, say, 100 years. Small changes make big differences. I've also never seen per capita GDP. So I did a little digging.

Better yet, if you go to here and put in 1800 to 2000, you can get per capita figures. Copy and past special / text into Excel. Divide each year by the previous one and you can chart the per capita real GDP year-over-year growth. It's interesting. It doesn't change much. It hovers around 1.1% but with INCREASED volatility after the Civil War until about the end of WWII. Then it settles back down to around 1.1% or so. Think about that, you are probably around 1.1% more productive than you were last year. Kind of depressing, but I digress.

Then, just chart the per capita GDP versus the year. You will see a hyperbolic rise that is pretty constant, minus some bumps for the depression and WWII. This would seem to indicate the slow and steady improvements in worker productivity as technology advances rather than any exogenous effects on the economy. There is definitely an acceleration after WWII. Maybe because we destroyed a lot of the rest of the worlds competitive capacity. But I'm not an economist.

It seems that real national GDP may have more to do with population growth than the gold standard or omnicient policymakers.

So, if I determine the average rate of compounding for $1200 to reach 5000 over 100 years I get ~1.43%. If I calculate the average rate of compounding for $1200 to reach 5000 over 100 years I get ~1.9. Yes, an average increase of slightly less than 0.5% per capita real GDP growth.

However, considering the two charts definitely don't appear to have inflection points directly related to any of the "gold" milestones, I think to blame the poor little yellow metal for a slightly slower rate of GDP growth 100 years ago is confusing correlation with causation.

When you post something referring to people like myself as "whack job"s, right after I put forth some real analysis, (again, it may be infantile analysis in the eyes of real economists, but at least I used numbers) it seems you are straining your own credibility.

"Libertarians are wrong because they are "whack jobs."" Insightful.

Ad hominems may work on other sites, but I don't think they are going to cut it on one devoted to critical thinking.

If it was just an experiment. It was dumb. The internet following is well known.

Well, would Paul do away with that? I mean, if you have competing currencies, what happens if you as a consumer choose to use Paul dollars, and I, as a business, choose to only sell in exchange for some other currency, like Fed dollars?

Then you would have to convert your Paul dollars to Fed dollars to do business with him.

Would everyone be obliged to accept any currency that is out there? That doesn't seem very workable.

No one would be forced to accept any currency. Basically, those with goods or services to sell would determine what currencies they would accept (just as, for example, no one would accept a McDonald's gift certificate as payment at the Olive Garden). In practice, this would make it the responsibility of the issuers of currency to build retailer trust in their currency.

All that "competing currencies" would mean is that a person could not be forced to accept Federal Reserve Notes as payment of a debt if he specified that he wanted payment in gold, silver, or something else.

So would there have to be some set of (government)-approved currencies - such that people could have some confidence that there really was some backing for the money?

Probably some independent board would be formed (like Underwriter's Laboratories) that determined which currencies were trustworthy and would publish a list.

How could you control what would seem to be an open invitation to fraudsters creating currencies that were actually worthless?

By the fact that no one is required to accept any particular currency as payment. Therefore, a fraudster can print out as much of his own brand of "money" as he would like, but he won't be able to get anyone to take it.

Why Paul is making an issue of the Fed at this time:

Because it's popular.

Tucker Carlson writes: "Hoping for some context, I went outside and found a Paul staffer. He didn't sound surprised when I told him about the speech. 'It's our biggest applause line,' he said"

This at least corroborates what I said earlier. Ron Paul isn't making a big deal about his views on the Fed. His views are old news. They are a known. Take them or leave 'em. They are a one-liner at his speaking events. The people are making a big deal about them. And now critics are making a big deal about them.

Here is a mainstream commentator (albeit a Ron Paul sympathizer) giving an honest appraisal of Paul's motivation for talking about monetary policy which agrees with my best assessment I posted BEFORE I read this.

Yesterday I posted "In his speeches, he makes a one-liner about the Fed and "honest money" much like an old band plays their first big hit that made them popular to fire up the fans. From what I've seen, it is the people criticizing Paul for his monetary positions making a big deal about it more than the man himself, which necessitates a philosophical response from his supporters, which then snowballs for future commentators into being a key plank for the man."

Pretty accurate and straight-forward if I do say so myself. Dare I say helpful and informative? The only "whack jobs" here are the critics. That's not an attack. That's a plea for real debate.


Thanks for the real discussion. I'm only into economics through the intersection of politics and investing, so I'm not up on what's popular among academic economists.

As Peter Lynch said, if you spend 15 minutes studying economics, you just wasted 10 minutes. ;) But I enjoy it.

As an investor, I have a an appreciation for contrarian views. As a libertarian I'm used to being in the minority.

In politics, you want to run with the crowd, if winning is your top priority. In investing you want to run against the crowd, and even more importantly, you have to be right. Anyway, I'll add the book you cited to my reading list. Not at the top, but I'll get to it eventually :)

Folks, you have to remember who you're dealing with here: Cowen was once an Austrian, but he dropped those views to advance his career. OF COURSE it drives him nuts to see someone publicly stating the truth he denies!

"Cowen was once an Austrian"

I thought that as well...but why did he write this?

I don't doubt Paul's sincerity, but I would like to know his theory of why most economists -- even market-oriented ones -- don't agree with him on monetary policy. I suspect he thinks he knows some secret that others do not.

You would expect other reaction from an economist who knows austrian economy but has his reasons not to agree with it. It seems to me similar to Giuliani's 'that's the most absurd explanation [for 9/19] I have ever heard'. You may not agree with Paul's position on certain issues, but these reaction reveal ignorance of the critic instead of absurdity of Paul's position.

Barkley, Eichengreen seems to talk about gold standard in his book, while Ron Paul seems to want gold money (or, alternatively, free market money). I seem to think that these are two distinct concepts and refusal of one doesn't necesarilly refuse the other, especially regarding trust in the monetary authority.

Anyway, Rothbard's main point is that cheating on the rules of gold standard caused great depression - while most 'opposing' books say that adherance to the gold standard since 1929 caused the Great depression without discussing whether the gold standard rules were followed before that. I believe that without addressing this Rothbard's objection, the critique of gold standard is refuted by Rothbard's argument. Can you check Rothbard's book against Eichengreen and find out who is right? Did the Fed strictly adhere to gold standard during the 20's or did they cheat? (rothbard has a lot of Fed's data in his book)


I do not find Rothbard's argument convincing at all. wasn't in the introduction, but in one of his paper and he quoted Mundell to boot :-// oops....
Anyway, according to rothbard between 1921-1929 gold reservers rose something like 10%, while money supply was rising on average something like 6% a year.
I think that many austrians would agree that trying deflationary policy and trying to defend some unrealistic price of gold does not help, but that still doesn't address the fact that in the 20's the money supply rose way faster then supply of gold, thus the money=gold (which is basically what Paul proposes) didn't hold, thus you cannot blame gold money for what happened.

You can blame the 'gold standard' (which was not 100% backing of gold) for the problem. But that doesn't address neither Rothabrd's nor Paul's idea of monetary system.

I'm tickled by the notion that the value of an economic idea is measured by the number of economists who subscribe to it. Keynesianism, anyone?

Getting a little testy are we CJS? As far as your position that in the context of a political election, a candidate needs to appeal to the average voter, BS I say! Were you perhaps on another planet during the last election fiasco? People were fired up during that one too and not because everyone wanted another go round with George W. Poor minorities lined up for hours in pouring rain to vote Georgie in again??? I'm pretty sure that wasn't the case. What I am certain of however; is that electronic voting has pretty much ensured that your vote will not be counted if you vote for someone other than a corporately owned and media endorsed desirable. Perhaps you still believe in the Easter Bunny too but that doesn't make him real. The system is CORRUPT!!! Period. And this Frothy (and even downright FROSTY at this point) conspiracy theorist is getting a little tired of the labels bandied about by the very same people that drag the rest of us down. Wake up, time's a wastin'. BTW, still waiting for an answer...Who owns the federal reserve? Maybe if you took some time to find out, all this discussion on our present system of currency wouldn't be necessary, and then you'd have to find another site where you can do little else but...


CJS, sorry, it was Erich who made the comment about Whack Jobs. My mistake.

I am no conspiracist. Not because I don`t believe that THEY hackasouldn`t want to conspire. Why on earth wouldn`t THEY? That seems naive to me to think that the rich and powerful would all of a sudden lose their rational self-interestedness.

No, I just don`t believe they have the skills. A government that gives us the Katrina fiasco and the 2000 election debacle and bubble after economic bubble is not one running a smooth grease job. No conspiracy or corruption required for the natural trend of the government to grow.

But does Hilary or Obama or Rudy constantly get asked about disavowing a few socialist party members or Chinese spies or corrupt cops who glom to their campaign? Sometimes, but usually only when they directly reflect on their policies or character or influence. How exactly are the "whack jobs" you speak of influencing Ron Paul? I

CJS- Yes, I agree with you. That is why RP supporters should discuss the gold standard only when others (non RP supporters) inquire. HE much better and easier sold on things like the Iraq war, civil liberties, taxes, education and the return to the constitution.

It demonstrates just how morally corrupt America has become, that few, not even libertarians, are interested in justifying competitive currencies on the pure basis of ethics. Instead we mostly see bickering about whether or not it would benefit this stakeholder or that special interest. What is so refreshing about Ron Paul is that he is at least willing to say that the current fiat system is wrong because it breaks the rules established by the Constitution -- and that rules matter. That isn't a position based on any clear enunciation of ethics and political economy either, but it is one small step in the right direction.


I will give you the benefit of the doubt and assume it's technical difficulties that affected your post.

However, what you need to keep in mind when reviewing conspiracy theories is that each individual's best interest rarely aligns with any other's for very long.


He will be a tough sell overall - I think a focus on individual liberty will serve him best, but you can never tell what that will do to soccer moms. Iraq is looking up at the moment. I fear we're going to be saddled with President Obama because, on the Democrat side, Hillary was never inevitable but her campaign has never offered anything else, and on the Republican side they're going to be sunk by the association with Bush (as far as the media is concerned, Bush is and has been the Republican party for the past 8 years), particularly if there is an economic downturn, which looks more likely each day.

Or at least inconsistent.

The name of John De Camp's book is The Franklin Coverup.

This is a good site for anyone interested in the governments involvement in the current educational system The information comes from John Taylor Gatto, former New York State's 'teacher of the year'.


Paul is a federalist. He would leave the issue of abortion to the states, so blue-staters don't really have anything to fear. He is a federalist not just with respect to rights he doesn't care for, but also ones right-libertarians are gaga over. Here he says that the Supreme Court should not have heard Kelo vs New London because the 5 amendment only applies to the federal government and the Connecticut constitution was the relevant law. His pro-life beliefs are not hypocritical because he believes in the non-initiation of force and views abortion to fall under the category of aggression. You can call him mistaken for believing that abortion is murder, but it's not fundamentally non-libertarian.

How anyone could completely dismiss a candidate based on their (not the candidate's) erroneous view of a single issue is exasperating to me.

First off, yes, Ron Paul would leave the issue to the states. I don't want to be rude, but it's amazing how hard we have to work to constantly correct the Ron Paul positions that aren't. With Wikipedia out there folks, there's really no excuse. Google The political positions of Ron Paul and Wikipedia

Secondly, he makes clear that his personal views are NOT the same as those he would enact as President. After so many years of not seeing true federalism in action, I can understand how most people could not comprehend that while Ron Paul as Governor might want to oppose abortions in his particular state, Ron Paul the President would not make that a priority, if he would pursue it at all.

Third, again I'm surprised on this site I have to return to another basic tenet of economics, that of considering the alternatives. By tossing out all consideration of Ron Paul based on a single solitary issue, you know what you are doing? You are accepting all the alternatives. The candidates who will not turn away from attacking Iran, potentially causing many more deaths than abortions will cause. The candidates who will continue the domestic spying programs, invading the right to privacy more than any government ever has.

So, if abortion is absolutely the only issue you care about, and you think that under Federalism and Constitutional law (Roe v. Wade is pretty well accepted as bad law, despite its supporters out of pragmatism), and you think that even allowing one state to ban abortions would be some kind of travesty, then okay, but I can hardly believe that of any rational person.

Lastly, what I am really tired of is having non-libertarians tell me what libertarianism is.

Here's just a hint. The libertarian philosophy is based on the non-aggression principle. It's not too much of a stretch to understand how some people could consider an abortion as an act of aggression. And, I bet I could even convince you that a baby 10 minutes before a potential natural birth at 8.5 months probably shouldn't be aborted. So, no, Paul is not hypocritical. He just has a different interpretation of when a fetus becomes a life worthy of protection than some, maybe even most libertarians. Philosophical consistency is not based on how many people who think they know the name of your philosophy agree with you.


Your posts are thoughtful, analytical and very rational. Don't you find it interesting that you have to keep defending yourself against the word 'conspiracy'? As though it's a dirty little word that shouldn't be uttered lest the person who speaks it agrees to be considered crazy or a nut. I for one, am sick and tired of having to defend my right to question. Period. Too many conspiracy theories have proven true for me to ever want to throw them out simply because of a label. I would even go so far as to say that the system is set up in such a way as to isolate the person that does not always stick to the pack as far as beliefs go. This indoctrination begins in school and as I posted earlier, there is an excellent site where you can explore the truth. Please check out This site deals with Economics as well. There seems to be a lot of TRUTH out there, not in the main stream media perhaps, but it does exist in other places, but one has to look for it.

As for the abortion issue, it seems that while some have chosen, or more likely let others choose for them, to focus on one issue as an excuse to 'throw the baby out with the bath water'. In light of the atrocities currently being perpetrated on the citizens of America at the hands of this corrupt, tyrannical, power hungry government; I would have to count the abortion issue as being very low on the list of immediate concerns. Now that's not to say it's not important, it is. Life is important but the FREEDOM to live your life without the intervention of the government at every turn seems to be the real issue that RP is addressing. I would like to see RP as president because he addresses the REAL issues. He is consistent. He is HONEST. When is the last time any of us were confronted with an honest politician? I would have to say...not in my lifetime. Was I wary? Of course! I've been lied to too many times not to be wary. But I did my homework and I'm satisfied that RP is really the ONLY choice. Otherwise, the situation will continue to worsen, we will continue to be at war, our rights will continue to be violated, etc.

Perhaps Ron Paul is too busy to engage in idiotic debates of sophistry and for that reason strikes you as 'anti-intellectual'. Granted I havent listened too closely to him and I'm not certain what it is you consider anti-intellectual. There are TRUE anti intellectuals that populate the halls of corporate america and our society, or put on a pedestal the mantras of the some of the think tanks that have intent and self interest. Likewise some big wallets are using many of these think tanks for their mask that argues in the public domain. So we see the Hegelian dialectic, and perhaps Ron Paul prefers sometimes to remain above that while you are churned in the maw of that (intellectual) establishment- (anti intellectual) counter establishment which is merely the other side of that same coin.

I'm a big fan of Tyler Cowen & Ron Paul. I think Paul is the best thing to happen to American politics in a long time... but monetary policy is not the reason.

The idea that we should ban fractional reserve banking is socialist and idiotic. Hopefully (as commented above) Ron doesn't believe this... but many people in the Rothbard camp do, and this is crank economics.

Having said that -- I hope Ron Paul stays in the race for as long as possible and brings the message of small government to a wider audience.

"I'll put the main point yet another way: with a commodity standard the money supply is often pro-cyclical, shrinking during business downturns. Who wants to risk that?"

Not to butt into a long-running thread, but... the quote above is a common misunderstanding due to our history of "managing" commodity-backed money in an environment of fractional reserve banking. When the banking system is corrupt, NOTHING works.

... you can have "commodity backed money", but if banks are lending out more money than they have on deposit for the purpose, you'll still have an unstable system with booms and busts.

We don't need another "gold standard". We need honest banking, and the option to use Constitutional money. That's all Ron Paul is saying.

The definitive (yet easy to read) book on the topic is What Has the Government Done With Our Money, by Murray Rothbard (available at

BJ Lawson

Barkley and others - please try to keep in mind that there is a huge difference between a Gold standard based on fractional reserves and one based on 100% reserves.

Liquidity crises would completely disappear in a system based on 100% reserves. Economic cycles would also largely disappear.

Past crises from gold standards came about as the result of fractional reserves, and would never have happened with a 100% reserve standard.

Bold statements, for sure. To back them up, one only has to read 800+ pages of de Soto's masterpiece, linked to below, summarizing thousands of years of legal thought on money, hundreds of years of monetary theory, the refutation of large portions of Keynesian and Monetarist macroeconomic policies, and the true Austrian take on Money, Bank Credit, and Economic Cycles (the title of the book):

Anti Intellectual demeanor? That's a new one.

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Very nice article! Thanks for this!
good job. thanks for all

Really? I know I'm a little late to this, but as usual Cowen is hilarious unintentionally on purpose. For a man who believes in techno-utopias and the Fed's ability to omnisciently manipulate the MS and interest rates, it shouldn't surprise me that Paul's position would seem "Anti-intellectual" him, but his criticism also begs the question: which candidate's monetary policy does Cowen like? Once you ask this question you realize that he's just smearing Ron Paul for his own agenda. He will one day work for the Federal Government at Treasury, directly for a president, or at the Fed. Res. Rest assured, he knows where the bread is buttered, and he apparently wants butter.

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