Response to a Common Query

That looks like a fairly technical battle among economists so as one who has never gone beyond introductory undergraduate economics courses I'll bow out.

With Paul the chief non-technical economic issues appear to be:

1. Should money be based upon something tangible and real, or is it an entirely virtual concept that can be increased without limit as desired by government policy? Clearly modern central banks have settled upon the latter option. Current day fiat currency has no more reality than the virtual "gold pieces" in online FRPs. Perhaps that would be a good choice if central banks could be trusted to increase the money supply at no greater a rate than the real growth in the economy, which would lead to price stability, but they never do that. No government can resist the temptation of "free" money and the current state of Zimbabwe shows us the inevitable result.

2. To what extent is it legitimate to use government to attempt to internalize economic externalities, through taxation and regulation? A separate and independent question is: regardless of its desirability, to what degree does the Constitution allow such regulation? In practice most regulation of externalities gets hung on the commerce clause. Clearly Paul and other people of a strongly libertarian bent place minimal stock in either the desirability or capability of the government to carry out such regulation wisely. Here is where I have my greatest disagreements with Paul but I would agree with him that in practice politicians do a pretty poor job of dealing with externalities in an economically rational fashion.

(Almost forgot) 3. How legitimate are government transfer programs -- i.e., robbing Peter to pay Paul (and get his vote). Such programs are now the biggest part of government, by far. Clearly Ron Paul takes the position that theft doesn't become legitimate just because it's the government that's doing it -- a view with which I concur.