Question? Is Money master video saying Ron Paul is wrong?
I've watched half of the money master video so far. They made two points that sounded counter to ron paul. Can someone explain?
1) Gold standard was a tool used by the Bank of England to control America's money supply. By using a gold standard the money supply had to contract and Europe had all the gold at the time. The host seems to advocate either silver or just paper money like lincoln's greenbacks printed by the US govt since those are more plentiful supplies of money.
2) Recessions or Depressions were brought on by the central banks reducing money supply and calling in money. If that is the case than Bernake is doing the right thing and increasing money supply. My impression from the host is that we need a steady free supply of money. Gold, silver, cow dung whatever.... that includes paper - fiat currency.
I'm confused. Maybe I need to watch the rest of the video. Can someone clarify?
If the quantity of money is fixed
And the amount of goods and services available in the economy increase - prices will drop (purchasing power increases) and everyone benefits (especially the poor and those on fixed incomes).
Also, money can take many forms. I read an article where there were Africans using cell-phone minutes as a medium of exchange because no one had a bank account but cell phones were prevalent. This was actually working out quite well for them. I'll post if I can find a link.
The quantity of money is what must be protected from artificial manipulation. The best way to do this is to allow for competing private currencies.
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"Let the good heart speak words of true peace, not inciting others to further war." -- B.I.S.
But that is deflation
That is deflation and I heard deflation is bad for the economy because.... I don't know why deflation is bad, but supposedly it is. I'm getting even more confused. Why doesn't Ron Paul ever talk about deflation?
Moneymasters was created by
Moneymasters was created by people that agree with the Chicago school of economics, Milton Friedman etc while Ron Paul is opposed to them and agrees with the Austrian School, Mises, Rothbard etc. They still believe in paper money, they just want the central bank controlled by the govt directly. It's true that contracting the money supply would cause recessions, but that doesnt mean you need to print money to prevent it. The recession happens because of the boom or the easy credit. Thats where the Austrians and the Chicago School disagree. The Austrians riducule the boom caused by easy credit and the fixing of interests rates by the Fed. The Chicago school sees nothing wrong with the boom and thinks its the govts job to print money to sustain it. In other words Money Masters is right to criticize the fed but terribly wrong with their solution. My advice is visit Mises.org read some Rothbard and watch Money, Banking, and the Federal Reserve documentary by the Mises Institute. I was confused just as you are when I watched Money Masters.
Thanks
I'll look into Mises.org. Although I'm starting to think that they make a good point about Gold standards. Is it not too limited a supply to be used as an easy exchange of goods? Maybe this is why JFK chose an executive order to mint silver coins and not gold before he was shot?
Read this Mises.org article
Read this Mises.org article it answers exactly what your asking. Your questions are logical, but once you read up on it and see these ideas you'll realize the Austrian position is correct.
http://mises.org/story/797
The Constitution specifically says
only gold OR silver are legal tender.
Supply has nothing to do with it
It has to do with monetary value. G. Edward Griffin has an excellent analogy in his book "The Creature from Jekyll Island" regarding gold supply.
"Greater than the force of mighty armies is the power of an idea whose time has come"
- Victor Hugo
"Greater than the force of mighty armies is the power of an idea whose time has come"
- Victor Hugo
and what is that analogy???
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Page 141 in "The Creature from Jekyll Island"
This isn't the analogy but here is an excerpt ""If the supply of gold in relation to the supply of available goods is so small that a one-ounce coin would be too valuable for minor transactions, people simply would use half-ounce coins or tenth-ounce coins. The amount of gold in the world does not affect its ability to serve as money, it only affect the quantity that will be used to measure any given transaction."
Therefor if the amount of paper in circulation is too large to fix gold to then you simply reduce the denominations in the economy and fix it to that until the money supply evens out.
This is 1/3 of Griffins analogies I am posting this one from page 142 because it is the shortest (although I like his monopoly one better) :)
"If Santa Claus were to visit everyone on Earth next Christmas and leave in our stocking an amount of money exactly equal to the amount of wealth we already had, there is no doubt that many would rejoice over the sudden increase in wealth. By New Year's day, however, prices would have doubled for everything, and the net result on the world's standard of living would be exactly zero." (This is because the production rate has not increased relative to the expansion in the money supply which causes inflation).
"Greater than the force of mighty armies is the power of an idea whose time has come"
- Victor Hugo
"Greater than the force of mighty armies is the power of an idea whose time has come"
- Victor Hugo
Thanks Jman and Futureinmind
Thanks Jman and Futureinmind for the suggestions. I now have a new website to visit (mises.org) and I really do need to get the creature from jekyll island.