# This One's for The Obama Loyalists, Pay Attention. **URL:** \ **Category:** Great Debates\ **Created:** [August 19, 2010, 8:08pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784 "2010-08-19T20:08:42Z")\ **Posts on this page:** 20\ **Page:** 10
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 20, 2010, 10:01pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/181 "2010-08-20T22:01:07Z")
> [@jrodefeld](#): > > Wow, you may have “skimmed” the OP, but you certainly didn’t absorb the wisdom it contained. I care deeply about the unemployed and the growing income gap. The policies you support have created these conditions. Think about this: > > The reason we have a growing income gap is due to the monetary system that enriches the business class through subsidies and bailouts and robs the poor and middle class of their savings and purchasing power of their money. Subsidies are often ineffective over time. However, please show much we are spending on subsidies, and how that has robbed anyone in any significant way. As for bailouts, please describe what you think would have happened if we let additional banks fail. You are aware that the bailout money is being paid back, right? I think they should have been tied to increased regulation, but I doubt you do. > [@](#): > > In countries that follow on the course of central banking and fiat money, the middle class is destroyed. There are only the very rich and the very poor. This is the hallmark of many third world nations. If we had Sound Money and a commodity backing to our money, we would have more equal distribution of money. Not from a socialistic redistribution, but through the natural regulation of the Marketplace, which limits the cronyism and government intervention. Please show us a country with a strong middle class without fiat banking. The Soviet Union? Saudi Arabia? Please give evidence that when the US was on the gold standard with “sound money” income distribution was more equal than, say, the '60s. Your contention that monopolies do not occur in a market-driven economy has already been refuted. > [@](#): > > Who every said I supported tax cuts for the rich? I don’t think I said anything of the sort. I certainly don’t think Bush’s Tax Cuts will create jobs. Neither will government stimulus and bailouts for the rich. We need to reduce regulations, cut subsidies, restore confidence in the dollar and allow small business and entrepreneurs to lead us out of this mess. Please describe what you think caused the recent financial crisis. Do you understand what the impact of a strong dollar is on economic trade? The market is voting for a strong US economy despite the deficit by T-bill purchases and low interest rates. Why are you denying the voice of the market when it is inconvenient? Do you understand the current demand problem? If you were a small businessman, why would you expand in the face of low demand and existing over-capacity? It seems to me that you don’t really understand this stuff, and can’t apply it to the questions and issues that have been raised. You talk of hyperinflation, but cannot point to any evidence of it. You talk of the wonders of strong money, but can’t respond to questions about the impact of this in the past. (And you have not presented datapoint one.) You are aware that there were many panics when there was strong money and no central bank, right? Do you understand the danger of deflation on growth, as people refrain from borrowing for expansion for fear that they will have to repay cheaper money with dearer money? Now, you should respond to **ITRChampion** ’s excellent questions before mine, because they were first and in a larger font. But telling people to read stuff by people generally considered to be kooks by mainstream economists is not a response. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:03pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/182 "2010-08-20T22:03:36Z")
> [@Honesty](#): > > > [@jrodefeld](#): > > > > 1. I want a system that insures monetary restraint, so that deficits are under control, government spending is limited and the savings of the people are preserved. > > Humor me for a moment. Let’s pretend that you’ve been elected President of the United States and you quickly push through legislation to end the Federal Reserve. Now what? What system do you put to replace Federal Reserve? First of all, let me thank you. You are one of the few people to actually engage in a meaningful way on an issue I raised. A change of the monetary system could not be accomplished overnight. And we cannot pretend that there won’t be pain associated with the attempt to dig ourselves out of the hole we have dug for ourselves. Ideally, we would have a Gold Standard, a tangible stable asset of limited quantity that is backing the currency. Then the treasury the paper “certificates”, which denominate a certain amount of gold (or silver or whatever is backing the money). If a person does not trust the government, they can simply exchange their certificates for the value in gold. This ensures that the government is kept in check by the people. Fractional Reserve Banking is outlawed. Banks are required to keep 100% reserves. “Growth” is slowed to a degree because there is a limit on the loans they can give. Wealth is not created through a printing press. True wealth develops slowly after hard work and entreprenuerialism. True wealth is manufacturing jobs, goods and services, industry and capital accumulation. People first save their money, then invest in a new enterprise. The “lifeblood” of the economy is not borrowing and lending, but savings and production. Once wealth is created, it is permanent. It is not subject to booms and busts which wipe out the phony “wealth”. People are not making money playing the stock market like a casino. Without a central bank and fiat money, complex financial instruments like derivatives would not exist. For people to get wealthy they would have to create something of value and sell it to willing buyers. This system of cronyism and corporatism and bailouts would not exist. It is not likely that we will be able to change this system before a collapse, so it is a non issue. If they destroy the money, there will be chaos. We should eliminate legal tender laws and allow people to circulate competing currencies. Then people could protect themselves from inflation. Read this article on the subject: > **[Ron Paul's Competing Currencies - LewRockwell](https://www.lewrockwell.com/2008/01/peter-brimelow/ron-pauls-competing-currencies/)** > > DIGG THIS OK, I admit it: I tend to be early. The idea of private money – often referred to as "competing currencies" – has always fascinated me. I persuaded Jim Michaels, the late, great editor of Forbes Magazine, to let me translate the... ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:19pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/183 "2010-08-20T22:19:36Z")
> [@begbert2](#): > > > [@jrodefeld](#): > > > > The libertarians and many conservatives as well were very critical of Bush and the Republican party for many years. I believed (and still believe) that Bush was the worst President in modern history. Give me proof that the motivating factor in these protests is race. > > That’s easy - all those libertarians and many conservatives you mention _didn’t protest_ under Bush. Or Clinton either, for that matter. Or anyone. So even if they were unhappy about those other guys, there is obviously and provably something _different_ about this one, that inspires them to take to the streets. > > Oh gee, what could it be. Give me a fucking break. People did protest. There were many that were furious at the spending of Bush, Clinton, Reagan, and others. I was. Libertarians always were angry about this spending. As far as people being motivated to take to the streets now, perhaps its because people are losing their homes, anger about TARP, and we are moving into a Depression? Maybe? Compare the level of prosperity (or perceived prosperity) in 1996, 2006, and 2010. What is different about those years? If you have any still functioning brain cells left in your head you should be able to see that the economic conditions are the primary thing that is creating anger against Washington. I am not saying that there aren’t some racists out there. If you are a racist, you probably are unhappy that a black man is in office. But let me ask you the following questions: 1. If its all about race, why is there so much anger directed toward BOTH parties and Congress? 2. Why do the vast number of rallies shun and kick out anyone who displays a racist sign or offensive material? 3. If its all about race, then the anger and the rallies should not get more intense as the economy gets worse. If there is a correlation between the economic conditions and intensity of the anger and number of rallies, it completely discredits your point. There are many ways to criticize people. But to condemn a large group of people you have never met by labeling them racist is the lowest form of ignorance. Lets debate the issues, considering I, nor anyone I know are angry at Washington based on race. ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [August 20, 2010, 10:21pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/184 "2010-08-20T22:21:45Z")
> [@jrodefeld](#): > > Fractional Reserve Banking is outlawed. Banks are required to keep 100% reserves. > > “Growth” is slowed to a degree because there is a limit on the loans they can give. Wealth is not created through a printing press. True wealth develops slowly after hard work and entreprenuerialism. True wealth is manufacturing jobs, goods and services, industry and capital accumulation. People first save their money, then invest in a new enterprise. The “lifeblood” of the economy is not borrowing and lending, but savings and production. _100%_ reserves? “a limit on the loans”? No kidding there’d be a limit; 100% reserves means _they can’t loan anything at all_. A bank only has money to loan because they can ‘pilfer’ it from the reserves. You stop that, you stop bank lending completely. So no more bank loans or mortgages. You want a house? You save up the money and buy it full price. Or find a rich unregulated private individual to sponsor you, and if you’re slow in paying him back, he sends his goons out to break your legs. Progress! Back to the banks. In eliminating reserve banking, you’ve also eliminated all interest-bearing accounts; why should the banks pay you to let them hold your money for you, if you’re not letting them use it as a lending base? So none of that. In fact there’s no reason for anybody to be in the banking business at all; their only remaining income is on fees. So welcome to having to _pay_ to get a zero-interest account that will let you support a debit card. Not that this will bother you; you probably want everyone to have little piles of their gold stuffed in their mattresses. Home robberies are certainly going to go up! Yay freedom! Of course this notion of everyone hunkering down in their basements with shotguns probably appeals. It’s the Wild West! Very american. > [@jrodefeld](#): > > We should eliminate legal tender laws and allow people to circulate competing currencies. Then people could protect themselves from inflation. You do realize that these would be _fiat_ currencies, right? That or miscellaneous generic gold coins, which are valued on the spot by weight. Just like in the old west. > [@jrodefeld](#): > > Read this article on the subject: > [Ron Paul's Competing Currencies - LewRockwell](http://www.lewrockwell.com/orig/brimelow3.html) No, I categorically assume that you will already have summarized anything of value in any link you post. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 20, 2010, 10:22pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/185 "2010-08-20T22:22:39Z")
[QUOTE=jrodefeld] A change of the monetary system could not be accomplished overnight. And we cannot pretend that there won’t be pain associated with the attempt to dig ourselves out of the hole we have dug for ourselves. Ideally, we would have a Gold Standard, a tangible stable asset of limited quantity that is backing the currency. Then the treasury the paper “certificates”, which denominate a certain amount of gold (or silver or whatever is backing the money). If a person does not trust the government, they can simply exchange their certificates for the value in gold. This ensures that the government is kept in check by the people. Fractional Reserve Banking is outlawed. Banks are required to keep 100% reserves. “Growth” is slowed to a degree because there is a limit on the loans they can give. Wealth is not created through a printing press. True wealth develops slowly after hard work and entreprenuerialism. True wealth is manufacturing jobs, goods and services, industry and capital accumulation. People first save their money, then invest in a new enterprise. The “lifeblood” of the economy is not borrowing and lending, but savings and production. [/QUOTE] Good grief…that’s…well, completely insane. I wouldn’t even know where to start on something this loony. -XT ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:27pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/186 "2010-08-20T22:27:43Z")
> [@xtisme](#): > > [QUOTE=jrodefeld] > > 1. The Federal Reserve is an inherently immoral institution that enriches bankers and destroys the value of our money. To go along with Honesty’s query, why is the FR ‘inherently immoral’? What does ‘immoral’ even mean in this context, and why is morality an issue in any case? How has it enriched bankers and destroyed the value of our money? What do you base this assertion on? And, as with Honesty’s question, what do you propose to replace it? -XT [/QUOTE] Inflation is the destruction of money. The Federal Reserve as an institution is designed to create more inflation. When they inflate the currency they are stealing wealth and purchasing power from the poor and middle class. The cost of living goes up for these people. Meanwhile there is no oversight. The Fed can bailout people in secret, make deals with other countries and monetize the debt, creating no incentive for politicians to be frugal. Since 1913 the value of the dollar has dropped 96%. The monetary base has expanded exponentially. Fiat currencies don’t last very long. We have only had a truly fiat currency since 1971. Inevitably, the currency is destroyed when the politicians and special interests cannot control themselves and create new money endlessly to fund various projects. This is what can happen: > **[Hyperinflation in the Weimar Republic](https://en.wikipedia.org/wiki/Inflation_in_the_Weimar_Republic)** > > Hyperinflation affected the German Papiermark, the currency of the Weimar Republic, between 1921 and 1923, primarily in 1923. The German currency had seen significant inflation during the First World War due to the way in which the German government funded its war effort through borrowing, with debts of 156 billion marks by 1918. This national debt was substantially increased by 50 billion marks of reparations payable in cash and in-kind (e.g., with coal and timber) under the May 1921 London S... > **[Hyperinflation in Zimbabwe](https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe)** > > Hyperinflation in Zimbabwe is an ongoing period of currency instability in Zimbabwe which, using Cagan's definition of hyperinflation, began in February 2007. During the height of inflation from 2008 to 2009, it was difficult to measure Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent month-on-month, 89.7 sextillion ( > > > > 8.97 > × > ... We are already experiencing very high inflation in this country. Hyperinflation can set in very quickly as confidence is lost in the dollar. The crises we are now in is caused by Alan Greenspan and the Federal Reserve. People are losing the homes and hurting from no fault of their own. That is why I call the Federal Reserve an immoral institution. ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [August 20, 2010, 10:35pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/187 "2010-08-20T22:35:02Z")
> [@jrodefeld](#): > > > [@begbert2](#): > > > > That’s easy - all those libertarians and many conservatives you mention _didn’t protest_ under Bush. Or Clinton either, for that matter. Or anyone. So even if they were unhappy about those other guys, there is obviously and provably something _different_ about this one, that inspires them to take to the streets. > > > > Oh gee, what could it be. > > Give me a fucking break. People did protest. There were many that were furious at the spending of Bush, Clinton, Reagan, and others. I was. Libertarians always were angry about this spending. The number of people that actually protested (not whined or complained; _protested_) was essentially zero, if not _actually_ zero. And then Obama entered the picture and the numbers swelled tenthousandfold. The claim that the current tea party movement was active before the race component entered the picture is provably unmitigated bullshit. Give me a fucking break indeed. > [@jrodefeld](#): > > If you have any still functioning brain cells left in your head you should be able to see that the economic conditions are the primary thing that is creating anger against Washington. The timing proves otherwise. Or at least that’s what the _brain cells_ say. > [@jrodefeld](#): > > 1. If its all about race, why is there so much anger directed toward BOTH parties and Congress? I don’t believe that the anger is directed equally. > [@jrodefeld](#): > > 1. Why do the vast number of rallies shun and kick out anyone who displays a racist sign or offensive material? I don’t believe that the vast number of rallies do this. > [@jrodefeld](#): > > 1. If its all about race, then the anger and the rallies should not get more intense as the economy gets worse. If there is a correlation between the economic conditions and intensity of the anger and number of rallies, it completely discredits your point. I never said it was **all** about race. I merely proved that the timing proves that racism is the difference between when protesting wasn’t happening and when it was. Suppose you need an outrage level of 100 to protest. Suppose the economy gave the teabaggers 30 outrage points 5 years ago, which has increased linearly up to 60 at the present. The election of obama gave them 100 putrage points (jumping them from around 25 to around 125 at the moment of Obama’s election). This model would match the observed reality, and the economy _is_ generating increased outrage. But it’s not the reason why most of these people are protesting, and it’s certainly not the reason they suddenly started protesting when they did. > [@jrodefeld](#): > > There are many ways to criticize people. But to condemn a large group of people you have never met by labeling them racist is the lowest form of ignorance. It’s only ignorance if it’s untrue or uninformed. > [@jrodefeld](#): > > Lets debate the issues, considering I, nor anyone I know are angry at Washington based on race. Let’s debate the issues too, of course. In fact I’d rather focus on that. But I don’t intend to deny reality either. And it’s possible that you and your friends aren’t racist - you may have indeed have been holding tea party rallies when Reagan was president, for all I know. But if so you are _decidedly_ in the minorty of tea partiers. Provably. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 20, 2010, 10:38pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/188 "2010-08-20T22:38:20Z")
> [@jrodefeld](#): > > We are already experiencing very high inflation in this country. What? Got a cite for that? > [@](#): > > The crises we are now in is caused by Alan Greenspan and the Federal Reserve. People are losing the homes and hurting from no fault of their own. That is why I call the Federal Reserve an immoral institution. People are losing their homes because the value of those homes are deflating. And you really need to stop lecturing us: > [@](#): > > Wow, you may have “skimmed” the OP, but you certainly didn’t absorb the wisdom it contained. You’re not going to get people to debate with you if you take that attitude. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:38pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/189 "2010-08-20T22:38:52Z")
> [@pedescribe](#): > > > [@jrodefeld](#): > > > > I am a libertarian. I have ALWAYS been about less spending and deficit reduction. > > I agree with you. The question is, how to do it? In my (somewhat uninformed opinion), I would: > > –Pull the military out Iraq and Afghanistan > –Reduce the defense budget > –Reform Social Security > –Reform Healthcare (yeah…again. :sigh: ) > –Raise taxes > > Those all sound like fairly progressive things to do, eh? I agree with everything you said. The FIRST place to cut is the defense budget and ending these wars. See, this is the debate we need to have. There are things some democrats would agree we need to cut. There are obviously some things republicans want to cut. Some democrats want to cut the military budget and end the wars, end corporate welfare and the war on drugs. Some republicans want to reduce the welfare state, reform social security and medicare, and end meaningless bureaucracy. A compromise would be to cut a little of each. Instead the “bipartisanship” we usually get is to increase funding for the wars (which Republicans want) and increase government control of medicine (which the Democrats want). Meanwhile the deficit explodes and we are plunged deeper into debt. As far as increasing taxes, I would support it temporarily. There are negative economic effects of high taxes and I like people to be able to keep their own money. However, tax cuts without massive spending cuts, like the Republicans push, is suicidal. I think we need to cut spending to the point where we can afford tax cuts. ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [August 20, 2010, 10:40pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/190 "2010-08-20T22:40:22Z")
> [@jrodefeld](#): > > The Federal Reserve as an institution is designed to create more inflation. Patent nonsense. Prove it. No blog or speculation will work either - you need to find something in the government rulings that created the Fed that says, in plain english, “This new institution is created with the specific primary intent of creating more inflation.” Good luck with that. > [@jrodefeld](#): > > We are already experiencing very high inflation in this country. You are grossly misinformed, or posting from an alternate universe. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:49pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/191 "2010-08-20T22:49:50Z")
> [@Spectre\_of\_Pithecanthropus](#): > > > [@jrodefeld](#): > > > > Page 3/3 > > > > Think about this: > > > > \*\*From the Revolution to 1913, the value of the dollar went _up_ 7%. > > > > From 1913 to now, the value of the dollar went down 96%!\*\* > > > > When the dollar goes down, prices go up and the people become poorer. Like I said earlier, wealth is transferred from the poor to the wealthy. > > This is far from convincing. Where do I begin? Just once, I’d like to see someone talk about the aggregate inflation affecting the dollar, over nearly a century, AND acknowledge that every other national currency in the developed world also underwent similar if not worse inflation. Around the time when FDR devalued the dollar to 1/35 of an ounce of gold, the UK devalued sterling by nearly half. Traditionally, a pound had been worth about $5, but now it was only worth about $2.75. This wasn’t just an American thing. > > And overall from 1914 on we have not been sliding into poverty, but wages and salaries have more than kept pace with inflation. Of course I don’t mean during recessions and depressions, like right now, but over the long term it’s true. What, do you think a hot dog vendor in 1920 got $8 an hour, or $64 a day? Of course not, because that would have been equivalent to three ounces of gold and worth a fortune. Nobody made $64 a day, in those times, except for CEO fat cats and others who for some reason could command such a salary, like celebrity actors and entertainers. Why not have an economy that grows with no inflation? The argument that other countries had inflation as well does not make it right. Also, the argument that wages have keep up with inflation so there are no negative aspects to it is complete nonsense. In the last fifty years it has been increasingly difficult to make ends meet in America. In the fifties a man could graduate high school, no college, go work for a good company, buy a house and provide for a family on one income and retire before old age. This is impossible today. Families require two to three incomes. People are working later and retirement is not an option for many people. For a detailed look at the negative effects of inflation, consider these passages from an article by libertarian and Austrian scholar Murray Rothbard: > [@](#): > > To gauge the economic effects of inflation, let us see what happens when a group of counterfeiters set about their work. Suppose the economy has a supply of 10,000 gold ounces, and counterfeiters, so cunning that they cannot be detected, pump in 2000 “ounces” more. What will be the consequences? First, there will be a clear gain to the counterfeiters. They take the newly-created money and use it to buy goods and services. In the words of the famous New Yorker cartoon, showing a group of counterfeiters in sober contemplation of their handiwork: “Retail spending is about to get a needed shot in the arm.” Precisely. Local spending, indeed, does get a shot in the arm. The new money works its way, step by step, throughout the economic system. As the new money spreads, it bids prices up–as we have seen, new money can only dilute the effectiveness of each dollar. But this dilution takes time and is therefore uneven; in the meantime, some people gain and other people lose. In short, the counterfeiters and their local retailers have found their incomes increased before any rise in the prices of the things they buy. But, on the other hand, people in remote areas of the economy, who have not yet received the new money, find their buying prices rising before their incomes. Retailers at the other end of the country, for example, will suffer losses. The first receivers of the new money gain most, and at the expense of the latest receivers. > > Inflation, then, confers no general social benefit; instead, it redistributes the wealth in favor of the first-comers and at the expense of the laggards in the race. And inflation is, in effect, a race–to see who can get the new money earliest. The latecomers–the ones stuck with the loss–are often called the “fixed income groups.” Ministers, teachers, people on salaries, lag notoriously behind other groups in acquiring the new money. Particular sufferers will be those depending on fixed money contracts–contracts made in the days before the inflationary rise in prices. Life insurance beneficiaries and annuitants, retired persons living off pensions, landlords with long term leases, bondholders and other creditors, those holding cash, all will bear the brunt of the inflation. They will be the ones who are “taxed.” [2] > > Inflation has other disastrous effects. It distorts that keystone of our economy: business calculation. Since prices do not all change uniformly and at the same speed, it becomes very difficult for business to separate the lasting from the transitional, and gauge truly the demands of consumers or the cost of their operations. For example, accounting practice enters the “cost” of an asset at the amount the business has paid for it. But if inflation intervenes, the cost of replacing the asset when it wears out will be far greater than that recorded on the books. As a result, business accounting will seriously overstate their profits during inflation–and may even consume capital while presumably increasing their investments. [3] Similarly, stock holders and real estate holders will acquire capital gains during an inflation that are not really “gains” at all. But they may spend part of these gains without realizing that they are thereby consuming their original capital. > > By creating illusory profits and distorting economic calculation, inflation will suspend the free market’s penalizing of inefficient, and rewarding of efficient, firms. Almost all firms will seemingly prosper. The general atmosphere of a “sellers’ market” will lead to a decline in the quality of goods and of service to consumers, since consumers often resist price increases less when they occur in the form of downgrading of quality. [4] The quality of work will decline in an inflation for a more subtle reason: people become enamored of “get-rich-quick” schemes, seemingly within their grasp in an era of ever-rising prices, and often scorn sober effort. Inflation also penalizes thrift and encourages debt, for any sum of money loaned will be repaid in dollars of lower purchasing power than when originally received. The incentive, then, is to borrow and repay later rather than save and lend. Inflation, therefore, lowers the general standard of living in the very course of creating a tinsel atmosphere of “prosperity.” > > Fortunately, inflation cannot go on forever. For eventually people wake up to this form of taxation; they wake up to the continual shrinkage in the purchasing power of their dollar. > > At first, when prices rise, people say: “Well, this is abnormal, the product of some emergency. I will postpone my purchases and wait until prices go back down.” This is the common attitude during the first phase of an inflation. This notion moderates the price rise itself, and conceals the inflation further, since the demand for money is thereby increased. But, as inflation proceeds, people begin to realize that prices are going up perpetually as a result of perpetual inflation. Now people will say: “I will buy now, though prices are `high,’ because if I wait, prices will go up still further.” As a result, the demand for money now falls and prices go up more, proportionately, than the increase in the money supply. At this point, the government is often called upon to “relieve the money shortage” caused by the accelerated price rise, and it inflates even faster. Soon, the country reaches the stage of the “crack-up boom,” when people say: “I must buy anything now–anything to get rid of money which depreciates on my hands.” The supply of money skyrockets, the demand plummets, and prices rise astronomically. Production falls sharply, as people spend more and more of their time finding ways to get rid of their money. The monetary system has, in effect, broken down completely, and the economy reverts to other moneys, if they are attainable–other metal, foreign currencies if this is a one-country inflation, or even a return to barter conditions. The monetary system has broken down under the impact of inflation. > > This condition of hyper-inflation is familiar historically in the assignats of the French Revolution, the Continentals of the American Revolution, and especially the German crisis of 1923, and the Chinese and other currencies after World War II. [5] > > A final indictment of inflation is that whenever the newly issued money is first used as loans to business, inflation causes the dread “business cycle.” This silent but deadly process, undetected for generations, works as follows: new money is issued by the banking system, under the aegis of government, and loaned to business. To businessmen, the new funds seem to be genuine investments, but these funds do not, like free market investments, arise from voluntary savings. The new money is invested by businessmen in various projects, and paid out to workers and other factors as higher wages and prices. As the new money filters down to the whole economy, and the people tend to reestablish their old voluntary consumption/saving proportions. In short, if people wish to save and invest about 20% of their incomes and consume the rest, new bank money loaned to business at first makes the saving proportion look higher. When the new money seeps down to the public, it reestablishes its old 20-80 proportion, and many investments are now revealed to be wasteful. Liquidation of the wasteful investments of the inflationary boom constitutes the depression phase of the business cycle. [6] > > [2] It has become fashionable to scoff at the concern displayed by “conservatives” for the “widows and orphans” hurt by inflation. And yet this is precisely one of the chief problems that must be faced. Is it really “progressive” to rob widows and orphans and to use the proceeds to subsidize farmers and armament workers? ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:55pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/192 "2010-08-20T22:55:38Z")
> [@Procrustus](#): > > > [@jrodefeld](#): > > > > Let me ask you this. Hypothetically, if we experience hyperinflation and our currency is destroyed, will you repent and admit that perhaps Ron Paul was right? > > If we don’t, will you admit that perhaps Ron Paul (and you) were wrong? Absolutely. But it will happen. The end stages of the Bretton Woods II agreement are here. This monetary system will have to be replaced. Just as Ron Paul spent his entire political career warning about. We have not yet experienced massive hyperinflation but if we continue on this course the day of reckoning will be here within the next decade, perhaps in the next five years. I don’t have to wait for hyperinflation to know that Ron Paul has been right. All his prediction about current economic conditions, the wars overseas and the failure of Keynesian theories has been spot on. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 10:59pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/193 "2010-08-20T22:59:36Z")
> [@Little\_Nemo](#): > > The problem I have with everyone who defends the good intentions of the Tea Party protestors is where were they from 2000 to 2008? Why weren’t they marching when George Bush set record deficits, vastly expanded government powers, and started (and bungled) two wars? None of that set them off but within a couple of weeks of Barack Obama taking the oath of office they were marching in the streets. That is a very fair and valid criticism as I have said many times. But like I have said, sometimes it takes a crisis to motivate people to get off their couches and do something. However, the libertarians, Ron Paul, and others have been consistent on this. I can’t speak for anyone else. I am just glad they are on my side now. ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [August 20, 2010, 11:01pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/194 "2010-08-20T23:01:53Z")
> [@jrodefeld](#): > > Why not have an economy that grows with no inflation? Because whenever prices rise, inflation occurs. This occurs _whenever_ the money supply grows - including when it does so due to good old-fashioned morally upright manufacturing of real value. To stem inflation, you need to not only fix the size of the money supply, but _also_ kill the growth of the economy and personal wealth completely. ---
**Author:** ![Algorithm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/algorithm/32/12204_2.png) [@Algorithm](https://boards.straightdope.com/u/Algorithm)\ **Post date:** [August 20, 2010, 11:05pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/195 "2010-08-20T23:05:08Z")
> [@jrodefeld](#): > > I don’t have to wait for hyperinflation to know that Ron Paul has been right. All his prediction about current economic conditions, the wars overseas and the failure of Keynesian theories has been spot on. We went over this before, Ron Paul’s predictions have most certainly **not** been “spot on”. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [August 20, 2010, 11:06pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/196 "2010-08-20T23:06:54Z")
> [@](#): > > A change of the monetary system could not be accomplished overnight. And we cannot pretend that there won’t be pain associated with the attempt to dig ourselves out of the hole we have dug for ourselves. Ideally, we would have a Gold Standard, a tangible stable asset of limited quantity that is backing the currency. Then the treasury the paper “certificates”, which denominate a certain amount of gold (or silver or whatever is backing the money). If a person does not trust the government, they can simply exchange their certificates for the value in gold. Again, with the current system, people can already simply exchange their certificates for their value in gold. Just walk into any precious metal dealer, and buy it. No government intervention necessary. What we have now is the free-market solution; what you’re proposing instead is for the government to fix the price of a commodity by fiat. > [@](#): > > We should eliminate legal tender laws and allow people to circulate competing currencies. Then people could protect themselves from inflation. We already have competing currencies, too, and folks are free to decide which ones they want to accept. All that legal tender laws mean is that people can’t refuse one particular currency in payment of a debt. They don’t mean that they can’t accept others. They can even refuse legal tender, if there’s no debt involved. Credit card points, airline miles, and coupons are all perfectly legitimate currencies, and some merchants choose to accept them. ---
**Author:** ![Inigo\_Montoya](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/inigo_montoya/32/124_2.png) [@Inigo\_Montoya](https://boards.straightdope.com/u/Inigo_Montoya)\ **Post date:** [August 20, 2010, 11:09pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/197 "2010-08-20T23:09:10Z")
> [@jrodefeld](#): > > My view is, if you cannot persuasively have a debate and debunk these views, you forfeit your right to be critical about Obama’s political foes. No I don’t. I don’t need to know jack shit about Prasident Obama to express my unbridled disgust with Obama’s warmongering, constitution-shredding, false-dichotomy posing, strawman-building foes. Same as I don’t need to have any knowlege about particle physics to explain how to make a decent chocolate chip cookie above 5,000 ft. The two are, for all practical purposes, completely unrelated. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 11:10pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/198 "2010-08-20T23:10:37Z")
> [@DMC](#): > > > [@jrodefeld](#): > > > > I don’t know any of you personally, but I will wager that most have never attended a Tea Party rally. You likely have never even talked to a participant. To make such blanket statements and accusations against so many people is beyond irresponsible. You should know by now that the media’s portrayal of reality is frequently not accurate. I have made a point to attend a few rallies and protests to gauge for sure the tenor of the political climate in 2010. I live in California and yes there are Tea Party protests in California. A few things that I noticed: > > > > 1. One protest was at least 15% African American. Another rally I witnessed many Hispanic voters in the ranks. Yet another was filled with many college age protesters signifying a significant youth demographic. > > Dude, seriously? [This video](http://www.cbsatlanta.com/video/23168078/index.html) is from the big Tea Party Tax Day protest in Atlanta, where over half of the population is black (57% or so in the city). I did see one black guy looking at all the crazy white people, and there are probably a few black journalists that I didn’t see, as we have a ton of them, but black **protesters** are harder to find than Waldo in this. If you saw 15% in California, this video should look like an NAACP convention. It doesn’t. What does that prove? I went to a different rally in a different state and my experience is different. There are rallies that are connected to the GOP and those that are independent. The independent rallies and protests tend to be more diverse. The GOP is attempting to portray an image and hijack the narrative. I actually hate how when we look at groups of people we don’t address the ideas being raised we immediately look to the race of the participants. If there aren’t enough black people or Hispanic people present we don’t pay attention to what they are saying because they are not sufficiently “diverse” for our politically correct sensibilities. I will maintain that, from my experience, the people who are upset at Obama are much more diverse that the media would let on. But I don’t think that is important. I think we need to focus on the issues. By the way, do you seriously expect me to believe that all non whites in the country support Washington and are unabashed fans of this administration? There is plenty of anti incumbent feelings from people who are not members of the Tea Party. The unemployment numbers are close to 16% among African Americans. You think that if Obama’s policies don’t start changing this situation around, they won’t start looking for alternatives by 2012? ---
**Author:** ![Algorithm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/algorithm/32/12204_2.png) [@Algorithm](https://boards.straightdope.com/u/Algorithm)\ **Post date:** [August 20, 2010, 11:17pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/199 "2010-08-20T23:17:25Z")
> [@Algorithm](#): > > > [@jrodefeld](#): > > > > I don’t have to wait for hyperinflation to know that Ron Paul has been right. All his prediction about current economic conditions, the wars overseas and the failure of Keynesian theories has been spot on. > > We went over this before, Ron Paul’s predictions have most certainly **not** been “spot on”. Missed the edit window. I went over how some of those predictions had absolutely not come true, [here](http://boards.straightdope.com/sdmb/showpost.php?p=12420165&postcount=246) and [here](http://boards.straightdope.com/sdmb/showpost.php?p=12420782&postcount=268). Your dodging the reality of Ron Paul’s objective incorrectness after I pointed it out indicates to me you have no interest in facts. ---
**Author:** ![jrodefeld](https://avatars.discourse-cdn.com/v4/letter/j/59ef9b/32.png) [@jrodefeld](https://boards.straightdope.com/u/jrodefeld)\ **Post date:** [August 20, 2010, 11:38pm UTC](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784/200 "2010-08-20T23:38:09Z")
> [@begbert2](#): > > > [@jrodefeld](#): > > > > You believe that the thought of ending Social Security and Medicare is unthinkable and cruel. > > I’m curious how you think this is _not_ the case. > > As with the fed, the question becomes “what would you replace it with”? Suppose for a moment that Ron Paul is elected Emperor and with a wave of his hand dismisses Social Security and Medicare. People relying on a check? Poof: no check. People heading to the hospital? Poof: no hospital. Okay, that’s done. Now, what does he do with these people instead? > > If the answer is “The free market will provide”, then the reaction of people not in your religion is “Like hell it will”. People who have at least a high-school level of understanding about the free market know full well that it is _perfectly_ happy to cut the lower end of the population loose with nothing. The market is amoral and the market is merciless - especially to those people who have fallen on hard times, much less those who are _perpetually_ on hard times. > > So. Let us reiterate: “The free market will provide” is _exactly synonymous_ with “let them starve and die in their ovn filth while I sit in my ivory tower and laugh at their fate.” I think a relatively strong case can be made that this qualifies as “unthinkable and cruel”. > > If you do _not_ propose “The free market will provide” as your answer to the disbanding of Social Security and Medicare, what do you intend to put in their place instead? If you think that, you seriously need to study economics. You have bough into the worst kind of socialist propaganda. I believe we **need** to provide for everyone who is relying on Social Security and Medicare. But we have to admit that both are completely bankrupt. If we don’t reform them, with the aging population, they will self destruct and everyone will be out on the streets. Those that are receiving benefits now should be protected. First, we need to massively cut spending on overseas militarism, cut the deficit and fund these programs for now. Secondly, we need to allow young people to opt out of Social Security and announce that beyond a certain date Medicare will no longer be given out benefits. This allows time to take care of people who rely on these programs and cuts down on the obligations by reducing the number of people who will be getting these benefits down the road. Third, we have no choice but to, after a decade or two transition, completely privatize our entitlement system. WE DO NOT HAVE A CHOICE. These entitlements will destroy our budget and impoverish all of us if we don’t do this. Do you agree with the following statement or not?: **The best society is one which is wealthy enough that people don’t need to rely on government assistance.** I want our country to be wealthy. I don’t want people to need government handouts. In my system of government we would have: 1. No public debt. 2. No inflation 3. Healthy, vibrant markets 4. Poverty would be almost non existent. You have an abysmal understanding of what a “Free” market is. A free market is not some abstract thing or entity. It is not the big corporations. It you and me. It is everyones ability to engage with one another economically. It is a charities ability to exist without government regulation. It is an entrepreneurs ability to enter a market without interference. It is peoples ability to keep the money they earn and do with it what they like. The more wealth that is created in a society, the less poor there are. The wealthier people are, the greater their ability to take care of the less fortunate. You would know this if you truly understood Austrian theory and Free Enterprise. But the bottom line is, our entitlement system has an unfunded liabilities in excess of one hundred trillion dollars. ONE HUNDRED TRILLION! You don’t need a degree in economics to see that this is nonviable. A problem with the liberal ideology is that they fail to see that the ideology they promote is actually creating more poor people. Then the point and say “look at all the poor people. They need our help (“our” meaning the government).” And these policies of deficits and over regulation of the marketplace create more poor people due to their impoverishing effects. If we follow the current course, we will all be poor and the government won’t be able to take care of anyone. Given reality, why don’t we bite the bullet, reform our entitlement system, balance the budget, start over with a very small government and sound money and try freedom for a change. You might even find out that all those scary stories you were told in school about the horrors of the “free” economy were nothing more than propaganda agitating for a government power grab. [Previous page](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784.md?page=9) [Next page](https://boards.straightdope.com/t/this-ones-for-the-obama-loyalists-pay-attention/550784.md?page=11)