Wednesday, November 30, 2011

Ron Paul's statement on latest Fed moves

Statement on the Fed's Continued Euro Bailout
(h/t Zero Hedge)

The Fed's latest actions in cooperating with foreign central banks to undertake liquidity swaps of dollars for foreign currencies is another reason why Congress needs enhanced power to oversee and audit the Fed.  Under current law Congress cannot examine these types of agreements.

Agree. The rest is standard Paul on "sound money."


Dan Kervick said...

Yes, I also agree that we should at least all agree on more transparency. The dollar is our money. The Fed's powers proceed entirely from a delegation of Congress's constitutionally determined power over the monetary system. And Congress's powers are in turn a delegation from "we the people", a manifest presupposition of the Constitution's preamble.

Bob Roddis said...

We Austrians find it amazing that there is such opposition to the Austrian School when there is not a single Keynesian or MMTer who understands even basic Austrian concepts such as “economic calculation” which is essential to prosperity and which is facilitated by “sound money”. Further, creation of funny money out of thin air by either the central bank or the government spending money into existence fatally distorts economic calculation, all for the purpose of trying to solve the problem that doesn’t exist (free market unemployment):

Further, where is the refutation of Ron Paul’s position on what is meant by “constitutional money”?

beowulf said...

"Further, where is the refutation of Ron Paul’s position on what is meant by “constitutional money”?"

The Constitution.
Congress shall have the power to..To borrow money on the credit of the United States... To coin money [and] regulate the value thereof

Since the regulation of the value of money is left to Congress, we've had a fiat money system since our Nation's birth, occasionally Congress has, in its ignorance, used its sovereign power over the value of money to tie the dollar to the price of gold standard but today we live in more enlightened times.
Finally, I've read Veira make the point (sorry I don't have an hour to blow on your video) that gold and silver coinage are the only legal tender the Constitution authorizes. Of course it says no such thing, after all, President Washington's Mint started issuing copper pennies in 1793.

James said...

Gold and silver are government mandated legal tender laws, hardly free market. I'll take Hayek's free banking idea over that.
However the typical Austrian seems rather blind to rent seeking behavior as well. I am glad that they want to attack the money monopoly, but land and mineral monopolies also exist. What is the plan for that? "Sound money" is not a cure all. They used "sound money" in revolutionary France which was plagued by rent seeking and access charges.

Bob Roddis said...

Coining money means making COINS. Nowhere in the Constitution or in any of its antecedents does or did another power exist to "print,” "issue,” "emit,” "make,” "create,” or"declare what shall be" "Money.” The power to emit bills of credit was removed from the list of enumerated Federal powers before the constitution was approved. The "dollar" meant the Spanish milled dollar.

Of course, if such a policy causes depressions and unemployment, who really cares? But it does not.

beowulf said...

Coining money means making COINS. Nowhere in the Constitution or in any...etc etc

That's one interpretation, I can see your logic. The only trouble is we live in a country where the Supreme Court said over a century ago that your interpretation is wrong.
This Court, speaking through the Chief Justice, avowed that it is the constitutional right of Congress to provide a currency for the whole country; that this might be done by coin, or United States
notes, or notes of national banks, and that it cannot be questioned Congress may constitutionally secure the benefit of such a currency to the people by appropriate legislation. It was said there can be no question of the power of this government to emit bills of credit; to make them receivable in payment of debts to itself; to fit them for use by those who see fit to use them in all the transactions of commerce.

Tom Hickey said...

The power “to coin money” and “regulate the value thereof” has been broadly construed to authorize regulation of every phase of the subject of currency.

See relevant SCOTUS citations at Justia, Fiscal and monetary power of Congress

Bob Roddis said...

You are right about the SCOTUS. And the SCOTUS wrote the Dred Scott and Korematsu decisions too.

Now, what about the problem of economic calculation?

Carlos said...

The "problem" is it all goes tits up when monopolies develop and a few individuals start controlling the regulatory processes to further their selfish agenda.

Then it all becomes extremely inefficient with price fixing, corruption and extortionate rent seeking behavior.

heaven for the elites, utter shite for everyone else.

Really...did you have to ask?

Septeus7 said...

Quote: "Further, creation of funny money out of thin air by either the central bank or the government spending money into existence fatally distorts economic calculation, all for the purpose of trying to solve the problem that doesn’t exist (free market unemployment)"

So unemployment wouldn't a problem if we have a government enforced private money scheme?

If the required payment of public debt must be in a legal tender that must be obtained at cost from private gold hoarders how is that "free market"?

Please explain why Austrian seems to think that "fiat" issuance of private statements of debt via Common Stock or Bank Notes should be unlimited and left to the market and used as means of exchange and somehow that doesn't effect economic calculation but when an institution of the state does the same with public debt then well the ability to do "economic calculation" suddenly and magically disappears causing the "crowding out" effect?

We understand the Austrian school better than you do because we recognized its internal contradictions.

As regarding the Constitution and Gold Standard one simply has to read the Constitution to find that it most certainly does not support a privatized public currency.

Congress shall have the power to regulate the value thereof. Not the Market, and not the private cartels of gold sellers and hoarders under a gold standard that by definition would limit Congress in its power to regulate value under a gold standard.

The statement on the payment of debt by State in Gold and Silver are under the section entitle" Limitations of the powers of the States."

It is not a restriction on the powers of the Federal Government but on the States to use something other than the Federal currency.

Remember the purpose the Constitution was to expand the powers of the Federal government especially in regards to public financing and taxation.

The Articles of Confederation lacks a central taxing authority and therefore a centralized means of financing the Federal Government for projects such Naval shipyards and other vital improvements that Hamilton and allies thought where necessary united the States and protect the young nation from the British Empire from retaking the country by using such internal conflicts to weaken us.

The restriction for gold and silver for the State debt was to keep the individuals States from competing with each via separate currency standard and instead unite us under a common currency regime.

Everything in the Constitution proper was about increasing the power of the Federal Government something which Libertarian apparently missed in elementary school level American history.

I'm with a popular poster at Naked Capitalism and other places called F.Beard the only true libertarian currency standard is a MMT functional fiat but without the tender laws because taxes are enough and private sector debts should be kept out the public sector.

Getting rid of the tender laws would prove once and for all that MMT is correct about taxation as the basis for the public currency and rest of the Libertarian lies about our Republic would slowly disappear.

"Render until Ceasar that which is Ceasar's and unto God that which is God's"

Jesus Christ Chartalist economist (along with Plato, Aristotle, Augustine and every other great thinker in human history).

It's time to drive the Gold
changers from the temple of our Civilization.

Tom Hickey said...

@ Bob

What about the liberal paradox?

Bob Roddis said...

1. What about the “Statist Paradox”? If Bob and Alice are too dumb to figure out what movie to see, how are they ever going to be smart enough to know which governmental overseer to elect who, backed by SWAT teams and the threat of prison or fines, will optimize their movie choices? How will they know that their overseer won’t hang them from the nearest lamp post once he has attained power over Bob and Alice? Genocide, murder, rape and conquest are the main problems of mankind, not “lack of aggregate demand” in a free society, a.k.a. “the problem that doesn’t exist”.

2. I’ve solved the movie paradox by becoming an aficionado of chick flicks. And by only going to movies that Alice allows me to see.

Further, chick flicks are informative by often stressing that human wants and desires arise mysteriously and are not necessarily logical, rational or even reasonable. Private property is a bright line defense to the inherent irrationality and aggressiveness of human beings. Keynesian-style policies obliterate that bright line defense in order to allegedly solve the problem that doesn’t exist.

Tom Hickey said...

What about the Red/Blue paradox?

When you compare the 50 laboratories of democracy after sorting them based on how their citizens voted in November 2008, only 10 Democratic-voting states are net recipients of federal subsidies, as opposed to 22 Republican states. Only one red state (Texas) is a net payer of federal taxes, as opposed to 16 blue states. One blue state (Rhode Island) pays as much as it gets.
Political scientists have been wrestling with this apparent paradox for years. One explanation sometimes offered is that the red states, on average, have smaller populations. In “Political Determinants of Federal Expenditure at the State Level,” published by the journal Public Choice in 2005, two University of Alabama at Tuscaloosa economists, Gary Hoover and Paul Pecorino, note that residents of low-population states have more per capita representation in Congress, since every state, regardless of population, has two senators. That edge, Hoover and Pecorino argue, translates into more federal handouts. The results are conspicuous in the case of homeland security grants, where small, rural, relatively low-risk states get much more money per capita than urban states that face bigger terrorist threats.

Why would voters in red states elect lawmakers who promise them small government when they benefit disproportionately from federal handouts? Why would voters in blue states elect lawmakers who support policies that redistribute their income to red states?

Bob Roddis said...

I can't explain red state fascism. I suppose it's caused by ignorance, hate and stupidity.

Hell, I'm the one who said "Republican's hate the troops".