Can someone help clarify Ron Paul's view on unregulated markets?

would have imploded a long time ago, taking quite a few people with it.

the rest of us would have learned from that, and moved on.

with government regulation, the fraud market is allowed to live, under the protected wing of politicians and the government.

people are convinced that the stock market is an honest to goodness way to make money...and the government aids in that deception in profound ways.

more regulation will mean that more suckers will be pulled into that scam.

disclosure: I trade in the stock market with a small bit of cash (set aside from my precious metals and emergency fund)

People become complacent when they think the government ill oversee operations. In reality the government is complacent in creating the corruption on wallstreet. Why would banks want to lend to people with no money if they knew they had legitimate competitors and were not going to get bailed out after doing so?

Learn about Moral Hazards and regulatory failures, it will strengthen your argument so much more. Remember, Enron was an example of government failure moreso than a market failure.

"Greater than the force of mighty armies is the power of an idea whose time has come"
- Victor Hugo

Ok perfect.

Thanks everyone

As if Wall St. isn't corrupted now?

Govt. regulates and causes the small business undue hardship that the larger ones can easily handle. Unfair.

Regulation makes all manner of fraudulent activities legal. Including the fractional reserve system.

If you combine all interpretations/posts below & wrote them into a pretty paper, it would pretty much explain it all in easy, layman's terms! :)

Deregulation doesn't mean legalizing fraud.

People should be allowed to sell anything they want to a voluntary buyer, as long as the seller isn't defrauding the buyer, or vice-versa. Deregulated markets are good because it would open the door to more competition and we all know how competition is a healthy thing to have.

You'll never hear a big company say that they wish for deregulation, because they know that deregulation would bring about other competitors. Big corporations love regulations because they know that they can afford them and stifle any newcomers... Not to mention the big corporations usually write the regulations for the bureaucrats in Washington D.C. so that says a lot...

In a deregulated market, companies would have a great incentive to not defraud others because if they were caught, the government wouldn't bail them out, people would be prosecuted for fraud and the companies would fail. Today, companies that are politically connected and heavily regulated have zero risk of failure.

Government's only role should be to punish fraud or force... That's it.

Sadly enough, those laws are in the books today, but they're not being enforced. We don't need new rules to make it harder for the little guy to compete against the big boys, we just need our government to enforce our anti-fraud laws.

that it is EASY.

Like the posts below...the market would ultimately be unregulated anyhow. Look at how the gov't tries to convince us how it's O.K. to spend & it's a "consumer's market."

Obviously it is not, AND WE KNOW THIS, because if it was a "consumer's market", all these retailers wouldn't be severely downsizing, ergo; WE (as in THE PEOPLE), would believe it and go right on ahead AND SPEND.

Yet - We. Do. Not. Because deep down, we somehow KNOW that the more money the Fed prints, like a daily newspaper, the more Worthless it is.

It is like the Confederate Dollar during the Civil War. The piece of bread you wanted to eat was only as big as the Confederate dollar you had - they cut around the piece of dollar paper. That is how much it was worth.

In addition; even though most of us are Not "Economic Scholars" there is a part of us that KNOWS that randomly printing up dollar bills is wrong and does Nothing to contribute to OUR base economy as we understand it.

For instance - Nothing is valuable unless it is limited & only a handful of people own it. Or, it was worthless, but let go & trashed & years-upon-years-upon-years later, it was unearthed as an archeological artifact.

Ron Paul is "right on the dollar" so to speak. We have to let this catastrophe run it's course & then re-introduce the valued metal standard that is in the Constitution.

Sadly, the Neo-Cons have known all this and have hoarded most gold. Who do you think can afford to run all those commercials you see about "turning in your gold jewelry?" Genius concept.

[Dumbed Down]

In a FREE Market the deals are NOT "UNregulated".
Fraud, Deception and Theft is. a. Crime ! OK ?

A FREE MARKET IS REGULATED BY EXISTING LAWS
More ENFORCEMENT is the Answer.
NOT More Laws.
___________________________________________

In our FAKE Market the deals are "Regulated" :

Appoint an Ex-CEO of Goldman Sachs to the Treasury Dept to give Cash to...Goldman Sachs ('experience' is a must).

Fill the SEC (the "Regulators") with Ex CEO's and Board members of top Financial groups to watch...uhmm the top Financial groups ?

Who wants MORE of that "Regulation" ?
__________________________________

The Corporations. Are. Running. Our. Government.
It's like CEO of Haliburton Dick Cheney as Vice President.

[Rick Santori shrug]

This is pretty simple. Leverage (i.e. easy credit, lots of "money" in circulation) causes bubbles. When credit is easy, malinvestment is relatively low risk, as there is always more money where the money that was lost came from. The socialists & corporatists would argue that we need easy credit and lots of "money" in circulation to stimulate "growth".

They would then also argue that it is regulation that should prevent the naturally resulting aberrations such as derivatives, and should smooth out the boom & bust cycles. However, if you simply have sound money, i.e. no interest being paid to the Federal Reserve for every penny that exists, and no fractional reserve, then the problem could not exist in the first place. When a banker cannot just create credit out of thin air, and can only loan out what he actually physically has, he will naturally be much more careful about making sure that his investments are sound, as losses will have a far greater and immediate impact on him.

Some, who understand the problem a little better, might argue that you would have to create regulations to prevent fractional reserve and to get rid of the interest payments to the Federal Reserve. I would remind them that normally no one of sound mind would accept counterfeiting (which is what the Federal Reserve does) or a person loaning out something he does not posses in the first place (which is what banks do). It is regulation that forces us to accept a fraud that we would not otherwise accept. It is this regulation that is fundamentally at fault and needs to be eliminated. Anything else is an exercise in futility.

I am reminded of Frederic Bastiat's excellent dissection of government regulation: That Which is Seen and That Which is Not Seen, at http://bastiat.org/en/twisatwins.html

The simplest way I try to explain it is that this happened because banks lent an enormous amount of money, but the key is what allowed this situation to occur. Without govt interference the amount of credit available to lend and interest rates are driven by a countries savings. High savings would mean low interest rates, low savings would mean high interest rates. Interest rates basically represent the price of money, if theirs high savings money is cheaper. When the bubble was forming in the early 00's Americans were not saving, but we still had historically low interest rates. The only reason this occurred is because it is the govt through the Federal Reserve that artificially lowered the interest rate at which banks can lend to each other. We should have had high rates but the govt artificially lowered them. In other words the Fed spiked the punch bowl and Wall St. went wild. In a free market with a commodity backed currency the market would regulate itself, the govt has subsidized risk taking with their easy monetary policy.

You are right, Wall Street corruption would be rampant. It's rampant right now too. Hell, The SEC is probably in on every one of these deals. When the free market is finally allowed to work everyone will stop playing their dirty game. They'll have to cleanup their act or be out of business.
It's already happening, I've already turned some of their paper into real money and plan on continuing to do so. The whole point is: The government regulations don't and won't work, and never will.
Over-regulation is equivalent to a government-granted-monopoly. Try opening a bank, you may need 500 lawyers, 100 accountants and a couple of ex-congressman on the payroll, good luck. That's a lot of salaries for people who's sole purpose is to negotiate with the government. Under the current over-regulated system we are forced to deal mainly with the Wall Street bankers, they're the only one's who can afford these guys. They have a bank on every corner in every neighborhood.
Bank failures and runs-runs-on-the-banks serve a very important free-market function. They form a check on the system. People are going to demand transparency in order to deposit their money there. But with bailouts, FDIC and SIPC nobody fears that they'll lose their deposits, and that just delays the inevitable and increases its severity by having it all collapse together.
Over-regulation got us into this mess and it won't get us out. They keep telling us it was a lack of regulation just so they can get more control.

Am I wrong?

Yes, I definitely believe so.

I'm thinking that in a true free market economy we wouldn't have worthless FRN's, but instead a gold/silver backed economy.

No FRN's. Not sure if gold/silver would be money tho.


If I were you Adam, I would ask the other person which specific regulations they would like the government to enforce. It would be interesting to see if they could answer....when most people call for more regulations they are repeating some vague slogan...