Saturday, July 11, 2009

Commodity-backed currency? It's time to give Mr. Paul the old "heave-ho"!


by David L. Alvord DDS

In the conservative movement, there is one small voice that is making a deafening sound. In one hand, he summons the Constitution and the founding-fathers and speaks of revolution. In the other, he accepts money for his district that is "unconstitutional" but "would be stupid not to take". Ron Paul takes conservatives, warns them of impending doom, and then converts them to a cause that is impossible to achieve politically and impractical to carry out in the real world. His followers find themselves isolated from both the Republican and the Democratic parties. The effect of this isolation is a neutralization of a portion of conservative voting power. The so called "Ron Paul Revolution" may turn out to be a revolution alright, a revolution for the opposition. In elections that are decided by only a few votes, 2-3% may be all that is needed to win.

If Ron Paul were just an idealist, a man "too conservative" for the Republican Party, I'd say: "leave him alone"..."let him speak". But in many cases Ron Paul is just dead wrong.

To name just a few:

1. Ron Paul supports the legalization of illicit drugs.

2. Ron Paul supports the legalization of prostitution.

3. Ron Paul would shrink spending on the military.

4. Ron Paul wants to abolish the Federal Reserve.

5. Ron Paul demands a return to a commodity-backed currency.

When considering the above list, how many main-stream conservatives would go along with this?

I actually take issue with all five of these on the list, but let me just take issue with #5: a commodity-backed currency. I would like to make an example of #5.

Historically, coins were minted that had intrinsic worth. Gold and silver coins were used to trade with because they were made of gold and silver. People liked gold. People liked silver. That's why they were of worth, because people considered gold and silver to be valuable. They were metals that didn't rust easily, and looked pretty...you could make are cool ring out of gold, or a cool belt-buckle. So people used them to trade for other things of worth like food or labor.

But why was gold worth so much? Because people considered it valuable. There could be some aliens come down from "planet gold" and they may think gold is worthless. They could be a lot more impressed with the metal iron that "tarnishes before me very eyes". (Why aliens speak "pirate"...I am not sure).

Nowadays, gold is still valuable. I suppose we still like to make jewelry and some stuff out of gold. And it is scarce. But my point is that gold is valuable because we think it's valuable. There could be a mountain range discovered somewhere made of solid-gold. This would undoubtedly drive the price of gold down to the price of iron or nickel.

And gold also has the risk of waning in popularity with mankind. It's already not as hot as it once was. You used to say such and such is worth "it's weight in gold". Nowadays, I'd rather have something worth it's weight in microchips. Pound for pound, microchips are worth more than gold, diamonds, platinum...or anything. And microchips are made of silicon: one of the most abundant substances on earth.

As mankind advances, we are becoming less and less concerned with where a substance appears on the periodic table of the elements, and more concerned with how those atoms are organized, and what they can do for us.

Mankind's idea of value is evolving. And when it comes down to it, things only have worth because we think they do. We have faith that they have worth...and we can and will change our minds about that. Once, we thought shiny metal was worth a lot. Later, we thought green paper was worth a lot. Maybe in the future it will be numbers in a computer that have value. And maybe, just maybe, someday we'll realize that it wasn't the gold or silver or green paper that we cherish, but rather the memories we made stealing that gold, silver, and green paper...(ahh, me thinks me eyes are a tear'n up).

America once had a big vault with a bunch of gold in it. (I think it was for show). Anyway, the concept was that you could go to the vault with some dollars and say, "I'd like my gold please". It was what Ron Paul thought was so wonderful; gold-backed money. America was still stuck in pirate-mentality. "Ahoy, me hearties, shiver me timbers, avast is me pieces of eight, me treasure...so batten down the hatches ye swabs...don't try to hornswaggle me out of me booty ye landlubber".

But fear not, me hearties! You can still take money and trade it for gold! Uncle Sam doesn't run that vault...but someone will trade you dollars for gold...so what's the big deal?

Ron Paul wants a commodity-based currency. Really? What commodity would you suggest? Gold? I suppose there is still some ancestors of the pirates that still think gold is worth a lot. Okay, so for now, gold is still worth quite a bit and for now is quite scarce. So let's say that you have x amount of Gold sitting somewhere...backing our paper dollars. How much gold do you need? Well, you would need a trillion dollars worth of gold to back our trillion paper dollars that are currently in circulation. Now let me ask you a question; How much of your total money do you have in paper currency? Right now, less than 1% of my money is in paper form (greenback). The rest is "in the bank". That seems to hold true for the rest of the country. In fact, as of 2005, there is 10 trillion dollars in total circulation. If we are going to back our money, we had better back all of it. I want more than 1% of it backed by pirate-booty...I mean gold.

So just picture it: TEN TRILLION in gold sitting there collecting dust. (There's not enough gold in the WORLD...see link and then "disadvantages") Wouldn't that cost us ten trillion dollars to get all that gold? Actually it would cost us quite a bit more to mine all that gold and then melt it and store it somewhere. What would the vault cost to build? Where would we stash all that gold Ron? Couldn't a terrorist hit that vault with a nuke someday? What is RADIOACTIVE GOLD worth?

So what other commodities are there? Well, I mentioned microchips. Maybe we could back our dollars against microchips! Oh, yeah, but wait....they keep coming out with better ones... so in a few years our TEN TRILLION dollars worth of microchips would be worth TEN CENTS...not too many people still use the commadore 64.

How about wheat? Everyone's got to eat right? Okay, so 10 trillion dollars worth of wheat would be a great way to back our dollars. But what about all those weevils? They'll get in there and ruin our country. And then worse, what if some jerk bio-engineer comes out with a new stalk of wheat that has a kernel ten times the size of the old one? Wouldn't that reduce the value of our wheat by ten times?

Maybe Hashish (weed) could be the standard. But then again, if it becomes legal, it'll be worthless. DUDE!

There is no commodity that is timeless in its value. Maybe that's why Jesus said: "Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where theives break through and steal."

So Mr. Paul: What commodity will we base our currency on? A treasure on earth? Or perhaps it is in God in whom we can trust.

I am far more concerned that America keep the commandments of God, than whether we back our money.

This is just one example of Ron Paul, sounding constitutional, sounding founding-fatherish...but proposing something completely impractical and politically impossible.

And so, my conservative friends that support Ron Paul, will you continue to isolate yourself and your vote from the rest of the conservative movement? Will you continue to listen to the man who would have you back your currency with "pirate booty"? Or, will you unite with the rest of the conservatives? If so, it's time to give Ron Paul the old "heave-ho"!

21 comments:

Anonymous said...

Hi, Dave. Good to hear from you. I'm a bit disappointed, though, that you would use a straw man argument to this length. Ron Paul does not demand a return to a commodity-backed currency. He does not want our paper dollars to be backed by gold.

I suggest you and your readers take time to read Ron Paul's real positions on sound money at http://www.campaignforliberty.com/edu/sound-money.php.

David Alvord said...

Yes he does!

Anonymous said...

As I mentioned in my email reply, a better term for Ron Paul to have used in that Glenn Beck article than "commodity-backed" to describe his case would have been "commodity-based".

For what it's worth, in the early 1980s President Ronald Reagan appointed Congressman Ron Paul to a Gold Commission to look into returning the US to a gold standard. Reagan said "no great nation ever went off the gold standard".

David Alvord said...

Now I am confused, Ron Paul is not for the gold standard? But he was when Reagan asked him to look into it? What did he find when he looked into it? That it's not practical?

Ron Paul has been on this kick for thirty years? Maybe he's not the most effective leader our nation's ever seen.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

Here's some of the description of the book The Case for Gold:

"In 1982, Ron Paul served on the U.S. Gold Commission to evaluate the role of gold in the monetary system. In fact, the Commission was his idea. It was carrying forth a promise made in the Republican platform.

Ron couldn't pick the members, so from the beginning, the deck was stacked. The majority was dominated by monetarists, who saw gold as too scarce and paper as just fine. Ron Paul's team was ready, however, with this marvelous minority report...

The result was The Case for Gold, and it was the greatest result of the commission. It covers the history of gold in the United States, explains that its breakdown was caused by governments, and explains the merit of having sound money: prices reflect market realities, government stays in check, and the people retain their freedom."

David Alvord said...

Now you are making the case for gold? Is Ron Paul for the return of the gold standard or not? If so, please refer to my article. There's not enough gold in the world! Politically, this is about as high a priority as a return to the manifest destiny! The American people simply don't care about this issue. If we could all simply unite around a viable candidate like Mitt, we'd actually see something get done!

Anonymous said...

Ron Paul is not for the return of the "gold standard" as described in your blog post and that Wikipedia article (backing our current fiat paper currency with gold). He is for using gold and silver coins as money like it says in the Constitution, and for allowing competing currencies.

I would rather unite around a candidate like Gary Johnson than a candidate like Mitt Romney.

David Alvord said...

Thank you for this coversation! You're welcome anytime to give your 2 cents...wherher those coins be fiat or commodity based...they're all accepted here!

Anonymous said...

Haha, good one, Dave! :-) You're welcome, and thank you.

Justchris said...

Regardless of what you choose to back it in, money should be backed by something. If not gold, silver, commodities then it should be backed by something else (oil/energy, real estate, food?, guns, anything "real and solid"), otherwise it has no underlying value and is worthless. This worthless will inevitably lead to inflation and in panics, potentially hyperinflation. See the case of Zimababwe recently where now they no longer even have a national currency because no one will accept it. This is the nature of fiat currencies. What happened in Zimababwe can happen anywhere that has a fiat currency.

People accept these currencies because it is an ingrained habit, but in the long run people will wake up and realize that the money system is in fact a giant lie. Money is a PROMISE TO PAY. They were called promisary notes, but if they promise to pay nothing then they are precisely worth nothing. Are not fiat currencies perhaps the greatest scam of all time? I will take any commodity in existence over the long term value of any fiat paper/electronic credit. Perhaps it can all be held together for longer than many expect, but eventually fiat money will be replaced by money that is backed in real wealth. Its only a matter of time.

Good blog article, I enjoyed reading it.

Justchris said...

Regardless of what you choose to back it in, money should be backed by something. If not gold, silver, commodities then it should be backed by something else (oil/energy, real estate, food?, guns, anything "real and solid"), otherwise it has no underlying value and is worthless. This worthless will inevitably lead to inflation and in panics, potentially hyperinflation. See the case of Zimababwe recently where now they no longer even have a national currency because no one will accept it. This is the nature of fiat currencies. What happened in Zimababwe can happen anywhere that has a fiat currency.

People accept these currencies because it is an ingrained habit, but in the long run people will wake up and realize that the money system is in fact a giant lie. Money is a PROMISE TO PAY. They were called promisary notes, but if they promise to pay nothing then they are precisely worth nothing. Are not fiat currencies perhaps the greatest scam of all time? I will take any commodity in existence over the long term value of any fiat paper/electronic credit. Perhaps it can all be held together for longer than many expect, but eventually fiat money will be replaced by money that is backed in real wealth. Its only a matter of time.

Good blog article, I enjoyed reading it.

Anonymous said...

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Carl said...

ron paul is the only republican with the least bit of sense. fuck republicans, fuck democrats, vote libertarian. vote for freedom and the constitution!

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