Throughout the book, Paul mentions Objectivism and the philosophy of Rand. I don't know what those are so I decided to check them out. What is objectivism? Well, from my understanding, objectivism is the idea that one can know reality through their sense perceptions. The reality that exists around us is independent of peoples’ minds and can be known and understood only through their senses, logic, rationale, and thought out deductions. (If you saw “Inception”, it is the opposite of that. Idealism is the philosophy that asserts mind-dependence)
To extend this to politics, objectivism is usually linked with laissez-faire; capitalism's confidant and business partner. Ayn Rand explained that the true moral society will have people who believe solely in objectivism. Ron Paul argues that having people utilize a true free market economy and use their own money to invest how they see fit, will maintain a healthy market that in turn benefits everyone. He asserts that a free market economy will favor strong businesses that favor the consumers because the informed consumer will only invest their money with a good company. The opposite will fail, but that is capitalism. He explains that this is the most fundamental of tenets for a strong economy and basically congress, the government, and mostly the Fed get it wrong. We see the failings and bad decisions all over.
The path to a stable economy is found through strong money. Strong money can't be sustained in a fiat system that allows mediocracy, and in some instances, prolonged and proven failure. Again, economics seem to mirror the process of natural selection, where those that are most fit progress, while those that are not, fail and go extinct. The only difference between the theories is temporal; Evolution takes millions of years and the market can respond within days.
Paul documents some dialogues he has had with the 2 chairmen of the Fed and highlights their views about the role of a central government in the stability of our economy. What is neat about Greenspan is that he changed his view while in the Fed; he took a pragmatic approach to the US economy when he began the chairman gig, but held an idealized view when he was just an economist. In his article “Gold and Economic Freedom” (1966), Greenspan said, “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.” Then he said in 2004, “Once you decide that a commodity standard such as the gold standard is, for whatever reasons, not acceptable in a society and you go to a fiat currency, then the question is automatically, unless you have a government endeavoring to determine the supply of the currency, it is very difficult to create what effectively the gold standard did.”
To me, it seems that Greenspan has given up on what is best (solid money) for what “works”. (“Fiat money” is basically what a government replaces for a valuable object; like paper for gold (or in this case, what they say the paper is worth)) Here is what Greenspan says about the power of the Fed: “We have statutorily gone into a fiat money standard, and as a consequence of that it is inevitable authority, which is the producer of the money supply will have inordinate power...(we) are fully aware of the responsibility that the congress has given us, and I trust that we adhere to the principles of the Constitution of the US more so than one would ordinarily do.” (2/11/1004)
Uncle Ben said that “with great power comes great responsibility”. The workings of the most powerful nation’s economy is a large job that is determined by one agency. In a retelling of the classic Spiderman mythos, Spiderman Noir, which is told in the 1930s, Uncle Ben’s quote is adjusted to fit the time and purpose: “If those in power can’t be trusted, its the responsibility of the people to remove them.” I think this latter quote is what Ron Paul is trying to argue, among other things. It is the duty of the people to create the change that they want to see.
In the book, Paul argues more for Greenspan’s inability as chairman, citing times that he blamed the computer models for not being designed correctly which subsequently lead to an inability to forecast this turn of events. Greenspan explains that “the only reason there was an expansion of debt is that there was excessive demand for debt.” Who demands to be in debt? I think he is saying that everyone had their hand out and felt entitled because they didn’t want to take responsibility. This is typical politician-speak and basically shuffling the blame onto someone or something else. Honestly, I think he tried his best, but maybe managing the Nation’s money is just too important of a job for one person or one agency. Paul wants to argue that the free market is the solution. People have to be responsible for their economic decisions and the consequence of such actions. What a world we would have if people took responsibility for what they do!
Paul also had exchanges with Bernanke and basically says about him that he believes “...that government spending is a source of economic growth”, which Ron Paul retorts that basically means: “superstition of the old-line Keynesians that you can rob some people and give to other people and somehow magically create prosperity.” So Bernanke is inept too. Paul argues that superficially keeping interest rates low, as Bernanke has done, just shuffles the inevitable problem down the road, as in natural selection. Paul ends with a quote from the Wall Street Journal: “There never would have been a sub-prime mortgage crisis if the Fed had been alert...In general, it’s easier for a central bank to be accommodative, to be loose, to be promoting conditions that make everybody feel that things are going well.”
Keynesian economics argued that private sectors are inadequate for creating jobs and maintaining an economy. It instead proclaimed that the public sector is the entity that can create prosperity in a society and will create jobs. Keynes said it is the duty of the government to create jobs because that is the only way to maintain an economy. I wonder if Greece thinks that way still? (Keynes is the opposite philosophy of the Austrian economists.)
In LA there is a big scandal in the the city of Bell. Basically, there was a bunch of city officials that used a ballot measure to give themselves raises. For example, the city manager was earning $787,637! In Bell, yeah the shithole, Bell. (He is a fat slop that was arrested for DUI, the epitome of the term “fat cat”.) This incident shows what extreme, out of control governments can do its citizens. So the question is; when certain political groups blame economic disasters on run away capitalism, one can also claim that run away governments instill harm on citizens too.
Since it is now proven that big, central government causes problems and extreme capitalism (the monopolies of Rockefeller and the meat packing debacle are some instances) also cause problems, what is one to do? What side should you be on and who is to blame? I think there is no clear answer except that it is our duty as citizens to remain informed and hold our elected officials accountable. There has not been much compromise in government; everything is catered to one side or the other, no body wants to do what is right.
From the earliest history, Hamilton and Jefferson were polar opposites. Hamilton was a Federalist, who wanted big government and favored more centralized control. Meanwhile, Jefferson was an Anti-federalist, who wanted limited government and favored the state’s control of government. these are diametrically opposed ideas, but they compromised (not willingly or joyfully), but compromise nonetheless. It was successful, now they (the government) don’t compromise and they are unsuccessful.
Basically I think that Ron Paul is arguing that wealth that is generated from a printing press is not wealth at all and is unsustainable. It seems very obvious that this it true. Why don’t people see this or understand it?
