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Ron Paul’s 2002 Predictions

January 13, 2012January 13, 2012 Joseph Dewey

This entry is part 3 of 40 in the series 2012A

Ruth W writes:
Ron Paul gave these predictions in April 2002. Is he a disciple?

What do you think?

JJ
It depends on how one would define disciple. He is definitely an intelligent man who unwaveringly stands by his beliefs. He sees the genius of the U.S. Constitution and many of the flaws in this country that can be corrected by it. He has taken the initiative to formulate ideas to correct many of our problems and then doggedly proceeded to move forward to plant them in the minds of all who will listen.

Right or wrong he is following the highest he knows with great determination and that is the path all must follow to arrive at true discipleship.

That said, let us take an objective look at the predictions you referenced. I watched the video and found it interesting and wondered about the feedback was on it on the web so I Googled it.

I found it interesting that his predictions were highly praised everywhere I looked, though I must say all this praise seemed to come from strong supporters. On the other hand, there seemed to be a famine of commentators making a critical analysis of his speech. It was either Ron Paul is great and like a prophet – or nothing. It almost made me wonder if non believers are afraid to criticize or analyze Ron Paul.

It therefore appears that I may be one of the few to write a critical objective analysis of Paul’s April 26, 2002 predictions. Keep in mind that the time frame he gave for these was 5-10 years and we are now in the tenth year – 2012. Here goes.

Ron Paul:
Our government intervention in the economy and in the private affairs of citizens, and the internal affairs of foreign countries, leads to uncertainty and many unintended consequences.

JJ
I’m on board with him here. This is certainly true. In fact any action made at any time, anywhere can lead to unintended consequences.

Ron Paul:
Here are some of the consequences about which we should be concerned.

I predict U.S. taxpayers will pay to rebuild Palestine, both the West Bank and the Gaza, as well as Afghanistan. U.S. taxpayers paid to bomb these areas, so we will be expected to rebuild them.

JJ
This was kind of a no-brainer for anytime there is destruction anywhere in the world our tax dollars are sent to help. As the video noted Obama promised $900 Million to rebuild Gaza but can’t find any evidence that the aid materialized. Most of our aid has gone to provide for the necessities of life there.

Of course we spent money rebuilding Afghanistan. We always do this after a conflict ever since World War II.

Ron Paul:
Peace, of sorts, will come to the Middle East, but will be short-lived. There will be big promises of more U.S. money and weapons flowing to Israel and to Arab countries allied with the United States.

JJ
There was no peace. Conflict has never ceased there and of course we continued to support Israel and friendly Arab nations just as we always have.

Ron Paul:
U.S. troops and others will be used to monitor the “peace.”

JJ
The video gives strange “proof” of this statement. They present an article that states that the United States has helped monitor peace there for 30 years. If true Paul was merely stating what was already in existence to some degree. Actually, I do not recall reading of any monitoring that our actual troops have been doing between Israel and Palestine.

Ron Paul:
In time, an oil boycott will be imposed, with oil prices soaring to historic highs.

JJ
No oil boycott so far and it was a no-brainer to predict historic oil prices sometime in the next ten years. I predict we’ll have historic oil prices again within ten years.

Ron Paul:
Current Israeli-United States policies will solidify Arab Muslim nations in their efforts to avenge the humiliation of the Palestinians. That will include those Muslim nations that in the past have fought against each other.

JJ
The Muslim nations are no more unified against us than in 2002.

Ron Paul:
Some of our moderate Arab allies will be overthrown by Islamic fundamentalists.

JJ
We’ve had the Arab Spring with some overthrows but this seemed to come from the people as a whole rather than fundamentalists. The fundamentalists will surely grab for all the power they can. Time will tell on this.

Ron Paul:
The U.N. will continue to condemn, through resolutions, Israeli-U.S. policies in the Middle East, and they will be ignored.

JJ
This is like predicting France will continue to make wine. Of course, this is to be expected.

Ron Paul:
Some European countries will clandestinely support the Muslim countries and their anti-Israel pursuits.

JJ
This was already happening when Paul made the prediction.

Ron Paul:
China, ironically assisted by American aid, much more openly will sell to militant Muslims the weapons they want, and will align herself with the Arab nations.

JJ
There’s evidence that China has sold weapons to militant Muslims but have used their own money for this – not U.S. aid.

Ron Paul:
The United States, with Tony Blair as head cheerleader, will attack Iraq without proper authority, and a major war, the largest since World War II, will result.

JJ
We did attack Iraq as many expected at the time of the prediction but it was not a major war and not the largest since World War II. Vietnam and the Korean war were much larger. In Vietnam we had over 500,000 troops and lost over 50,000 soldiers. We had about 125,000 in Iraq and only lost about 4,400 troops.

Ron Paul:
Major moves will be made by China, India, Russia, and Pakistan in Central Asia to take advantage of the chaos for the purpose of grabbing land, resources, and strategic advantages sought after for years.

JJ
Haven’t seen any of these major moves. China has attempted to purchase additional oil and commodities though. Haven’t seen land grabs.

Ron Paul:
The Karzai government will fail, and U.S. military presence will end in Afghanistan.

JJ
Not happened yet.

Ron Paul:
An international dollar crisis will dramatically boost interest rates in the United States.

JJ
Didn’t happen. Interest rates have been very low over the past 10 years.

Ron Paul:
Price inflation, with a major economic downturn, will decimate U.S. Federal Government finances, with exploding deficits and uncontrolled spending.

JJ
We all knew that “exploding deficits and uncontrolled spending” would continue. I’ll bet even Ron Paul is surprised at how much Obama has spent.

We’ve definitely had an economic downturn but inflation has continued about the normal rate. There’s always some inflation.

Ron Paul:
Federal Reserve policy will continue at an expanding rate, with massive credit expansion, which will make the dollar crisis worse. Gold will be seen as an alternative to paper money as it returns to its historic role as money.

JJ
Credit is tighter now than when the prediction was made. Gold is seen as a good investment but it is not an alternative to money and has not returned to use as money except maybe for a handful of private transactions.

Ron Paul:
Erosion of civil liberties here at home will continue as our government responds to political fear in dealing with the terrorist threat by making generous use of the powers obtained with the Patriot Act.

JJ
I haven’t seen any “generous use of the powers obtained with the Patriot Act” though every time Congress is in session our liberties are at risk.

Ron Paul:
The draft will be reinstated, causing domestic turmoil and resentment.

JJ
This definitely didn’t happen.

Ron Paul:
Many American military personnel and civilians will be killed in the coming conflict.

JJ
If he’s talking about Iraq the loss of military personnel was very low compared with wars of the past.

Ron Paul:
The leaders of whichever side loses the war will be hauled into and tried before the International Criminal Court for war crimes.

JJ
There was no International Criminal Court set up for Iraq war crimes.

Ron Paul:
The United States will not officially lose the war, but neither will we win. Our military and political leaders will not be tried by the International Criminal Court.

JJ
We did win the war in a couple weeks. Keeping the peace was the hard part. Our military and political leaders were not tried. No one of substance expected they would be.

Ron Paul:
The Congress and the President will shift radically toward expanding the size and scope of the Federal Government. This will satisfy both the liberals and the conservatives.

JJ
All thinkers at the time saw that indeed saw the government was expanding, though the radical part didn’t come in until Obama was president. He was right that this brought satisfaction to liberals but wrong on conservatives. I do not know one conservative who is happy about the overall radical expansion, especially the most radical part of all – Obamacare.

Ron Paul:
Military and police powers will grow, satisfying the conservatives. The welfare state, both domestic and international, will expand, satisfying the liberals. Both sides will endorse military adventurism overseas.

JJ
The video references The National Defense Authorization Act which gives the President power to detain U.S. citizens without a trial if they are suspected of terrorism. This fine-tunes legislation (AUMF) that was passed Sept 14, 2011 so this power was already in place.

The national welfare state expanded in the U.S. but it was forced to contract in numerous other nations facing a financial meltdown. We have had a below average amount of military adventurism since the Iraq war began.

Ron Paul:
In due course, the Constitution will continue to be steadily undermined and the American Republic further weakened.

JJ
This has been going on for 200 years with a temporary reversals or slowdowns occurring now and then.

Ron Paul:
During the next decade, the American people will become poorer and less free, while they become more dependent on the government for economic security.

JJ
Perhaps his most accurate statement so far.

Ron Paul:
The war will prove to be divisive, with emotions and hatred growing between the various factions and special interests that drive our policies in the Middle East.

JJ
All wars are divisive, except those which are a life and death struggle for survival and even these are somewhat divisive.

Ron Paul:
Agitation from more class warfare will succeed in dividing us domestically, and believe it or not, I expect lobbyists will thrive more than ever during the dangerous period of chaos.

JJ
This was a pretty accurate description of what has happened. He ends his predictions with a successful one.

Conclusion:
I do not understand the awe that Ron Paul followers have about his prophetic abilities as the majority of his predictions here were either incorrect or can be argued to be so. I’d say that the average political savvy person could be just as accurate if he were to make predictions for the next ten years.

Although not impressed with his prophetic abilities I do give him credit for raising a warning voice of various real dangers that confronted us in 2002 and still apply to us today. Most people in our Congress just want to get along and do not want to ruffle any feathers but this does not stop Mr. Paul from speaking his mind. We need more representatives who are willing to speak up against government encroachment.

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A Flawed Money System

June 20, 2011July 20, 2017 Joseph Dewey

This entry is part 25 of 31 in the series 2011B

Objection 2
Just look at the fiat money system we have now. It just doesn’t work. Every year the dollar is worth less than it was the year before and there are recessions and boom and bust cycles.

Answer: The money system that we now have is far from perfect and is not the one I advocate. There are three major problems with it.

First, all money placed into circulation is through loans at interest. If one borrows $100 and pays back $100 plus $10 in interest then $110 is taken out of circulation. To maintain the status quo the banks have to then loan out not $100 but $110. This system of creating money through interest bearing loans and then destroying it when the loans are paid forces the banking system to always be seeking new ways to create more money making for an unstable system that is difficult to control and predict.

Secondly, there are no controls placed on the amount of money that will be placed into circulation. If the money supply contracts, as it did with the Great Depression, then there is deflation. Money is not available for expansion and the people suffer greatly. If there is too much money added to the system there is inflation and the savings of the people lose value. Then there is always the possibility of hyperinflation that could destroy the value of money completely.

Thirdly, the money supply is controlled by the privately owned Federal Reserve, which loans money to our government at interest. Currently, interest from all sources amounts to around a half trillion dollars. It would make a lot more sense to merely create our own money with no interest. Then, if desired, we could use that half trillion to send every man, woman and child a rebate check of over $1500 a year. I say this as something that could be done not something I would recommend.

The current money system does bear a lot of responsibility for the inflation we have had but it is far from being the only factor in our various financial problems. Even with the best possible money system the economy can be challenged by speculators and outright crooks. There is a lot more to creating a stable economy than having a good money base.

Let me give just one example.
In September 1869 Jay Gould and Jim Fisk had a plan to make a killing on the gold market. Here’s how it went. They figured out that the amount of actual gold that was available in the whole country for investors to purchase was only about $5 million even though much more than that was traded on paper and also stored at Fort Knox. If they could buy a good portion of that circulating gold and hold on to it, creating a demand for more gold than would be available, they could drive its price up to $1000 or more an ounce. They moved ahead with their plan by buying large amounts of gold and holding on to it. Within weeks they drove the price of gold from $120 an ounce to $165.50.

There was just one potential problem and that was President Grant. As the price rose he could dip into the $100 billion worth of gold at Fort Knox and put it in circulation. They had people on the inside influencing Grant to not do this so they thought they had their bases covered. Grant, however, caught on to their scheme and decided to put $4 million worth of gold into immediate circulation. This move by Grant created what is called “Black Friday” (Sept 24th, 1869) when the price of gold dropped from $165.50 to $135 in one day. Since many people were buying on a margin they lost everything they had and many brokers went out of business.

Ironically, one guy who came out on top was Jay Gould who caught wind of Grant’s move and sold at around $165. This wasn’t the $1000 per ounce or more he had hoped for if Grant cooperated but he was happy to come out ahead in the end. His partner Fisk, and most gold investors, were not so lucky and lost everything.

If gold, the most stable of all metals, can be so easily manipulated by just two guys – with a great disaster only being prevented through the creation of a lesser disaster – then where is the hope of a stable economy with any currency?

Our current economic system is far from perfect. Almost everyone is not happy with it and has criticized it. Gold standard advocates are its harshest critics but they are far from being alone.

Where few have looked objectively is in comparing the current system to the systems of the past. Let’s take a brief look with an attempt to be objective.

The largest change in the money system occurred in 1913 with the creation of the Federal Reserve. For many this is seen as the year of infamy where the economic devil became incarnate.

Now the Federal Reserve System is not something I would create or endorse but neither am I that excited about returning to any system we had before 1913.
As I write this it has been 98 years after the creation of the Fed. 98 years before the Fed takes us back to 1815.

It is true that we made a lot of progress and innovation between 1815-1913 – more than at any time in the history of the world.

On the other hand, the progress since 1913 has been much more dynamic still, again more than anytime in the history of the world. Just compare life in 1869 with 98 years later to 1967 or 1913 to 2011. They are two different worlds indeed and the latter, despite the imperfections, would be picked by the vast majority as most desirable.

True we’ve had inflation, but there have been adjustments to inflation. There’s also been deflation as well as inflation.

In 1913 a dollar was worth $22.82 of 2011 dollars. This value stayed fairly stable until World War I. Then it went down in value to $11.30 by 1920. In other words, the dollar lost half of its value. This effect on currency is pretty normal during war.

After 1920 instead of inflation we had deflation and the dollar increased in value. It was 1947, or 27 years later, before inflation could sink the value of the dollar below the 1920 value. That’s a stretch of time rarely equaled by the gold standard of history. Since then we have had a fairly steady rate of inflation until the dollar is now worth about 4.4% of what it was in 1913, or 8.8% of the 1920 dollar.

The average wage in 1914 was $627.00. That equals $14,167 in 2011. But the 2011 the median household income is around $50,000, which means we have achieved over three and a half times the income we had in 1914 through this imperfect Federal Reserve fiat system. If we go back to 1861 the contrast is even more pronounced. The income at that time was only $140 per year. That would buy about seven ounces of gold. In 2011 where gold is at an all time high of over $1500 per ounce seven ounces only equals $10,500. In 2001 you could buy seven ounces of gold for a mere $1897.

It is interesting to note other quality of life improvements. The average lifespan in 1913 was only 52.5 years. Now it is 77 years. Maybe they worked themselves to death – the average workweek was over 55 hours for much less money than is made today.

Over 60 times the number of babies died at birth and the hospitals were so bad that people were afraid to go there.

The three leading causes of death were: pneumonia and influenza, tuberculosis and diarrhea. These are now way down the list and have been replaced by heart disease, cancer and strokes.

Yes, our journey of progress has not been perfect but few would want to go back to the good old days.

If we have made such progress as improved standard of living, sending men to the moon, developing sophisticated computers, the internet and many time saving advances with a very flawed financial system just imagine what we could have done with a really good one.

Perhaps the major flaw blamed on the current money system is inflation, but most of our inflation has not been caused by the fiat system, but by government borrowing. If our Congress had the common sense of the average family they would stay within a budget and there would be little or no inflation.

“But,” says the fundamentalist, “if we were on the gold standard Congress would not be able to borrow like they do with fiat money.”

Bad argument. As soon as there was any major problem when on the gold standard they threw it out the window and borrowed bundles of money. This happened during the Civil war and World War I. The are also so many ways to create simulated money today that no possible gold standard could keep us out of debt. The only way to control our debt is to control Congress. If we have a perfect money system mixed with a drunken spending Congress there will be deficits.

Conclusion: Yes, the Federal Reserve fiat banking system is far from perfect, but neither has it been as bad as believed by many. It has served us as well as money systems in the past which also were far from perfect.

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Giving Away Our Power

April 29, 2011July 19, 2017 Joseph Dewey

This entry is part 11 of 31 in the series 2011B

Now we come to the final possible action that could restore us on the path of prosperity.

(10) Restoring the power to create money to our elected representatives, as specified in the Constitution, instead of farming this out to private enterprise.

Throughout most of history, from the time of the ancient goldsmiths to the bankers and now the privately owned Federal Reserve it has been the practice of kings, emperors and presidents to borrow money from those that lend and burden their people with the high interest on the loans that ever accumulates until the collapse of the kingdom.

The United States has proved to be no exception to this practice. As of this writing we have borrowed over $14 trillion and pay around $450 billion yearly in interest. At the rate the interest is increasing it will not be long before every dollar collected through federal income tax will be owed to interest and do nothing to reduce the principle.

One has to wonder why we allowed ourselves to get into this situation when the Constitution (Section Eight) provides us with a brilliant way to escape debt and interest. It says Congress has the power “to coin money, and regulate the value thereof.”

Since Congress has Constitutional power to coin (create) money this is one of the jobs our representatives have taken upon themselves to do – right?

Not quite. It is true that the taxpayers do bear the expense of minting coins and printing paper money. The only reason the government has retained this power to themselves is because it is a costly process and bankers do not want to do it.

Only about 3% of the money supply is composed of paper or coins. Economic writer Ellen H. Brown tells us this:

“The other 97 percent exists only as data entries on computer screens, and all of this money was created by banks in the form of loans.

“The money that banks lend is not recycled from pre-existing deposits. It is new money, which did not exist until it was lent.

Thirty percent of the money created by banks with accounting entries is invested for their own accounts.”
Web of Debt by Ellen H. Brown, 2008, Page 3

So it looks like all the new money put into circulation comes from three sources.

(1) 30% of it comes from banks investing in their own pet projects.

(2) Loans to businesses and individuals.

(3) Loans to our government.

When loans are repaid the money is virtually destroyed (withdrawn from the system) and must be replaced by new loans. This is one reason that the Fed likes to make loans to the government. The money is never paid back. We only pay on the interest and leave the principle untouched.

Many people who are concerned about overspending complain that the government just prints up money that is created out of thin air, but this is a misconception. Except for a small amount of hard cash the new money the government puts into circulation is not printed or created by it but by the Federal Reserve, and, as mentioned previously, this is a private company, not owned by the people.

Here’s the situation. Our Congress, which has been granted power to create money by the Constitution, has yielded that power to a private corporation. This corporation does not even have the expense of printing money but merely enters the loans on a computer database and charges us the interest from that point on.

It is difficult to imagine an individual giving away his power in such an outrageous manner but if he did it would go something like this.

Don has a bountiful cherry tree in his back yard. Anytime he wants some cherries all he has to do is walk outside, go up to the tree and pick all he needs. Better yet he has a kid that loves to pick cherries so all Don has to do is ask the kid to go pick him some and he has all he needs.

The neighbor notices the kid picking cherries and comes up with an idea to make a profit. He approaches Don and says, “I’ll tell you what. I’ll manage your kid’s cherry picking to make sure he doesn’t pick too many or not enough. All the cherries I will have your kid deliver to you will be considered a loan and I’ll only charge you 5% of the value of the cherries until you pay the cherries back. Sometimes the rate could be more or less but we’ll settle on this amount for now. But rest assured, I’ll make sure you have cherries whenever you need them.”

Now Don’s wife hit him on the head with a frying pan that morning so he wasn’t thinking too clearly. In an extremely fussy state of mind he said, “Yes, that sounds okay, I guess.”

All of Don’s friends and family thought Don was stark raving mad but he made an agreement and decided to honor it. It wasn’t long before the problem became worse than anyone foresaw. Don was unable to make any payment on the borrowed cherries – cherries from his own backyard – so as he used additional cherries the cherry debt became greater and the interest payment became huge.

Finally, the day came that the interest on the cherries amounted to a greater value than the cherries available to pick. It was at this point that Don finally awoke to his terrible situation, but, alas, it was too late. The neighbor laid claim to full ownership of the tree but made this nice little offer. “If you come work in my back yard and take care of my garden I’ll let you have a few cherries now and then.”

Sounds silly, doesn’t it? Most of us would not consider such a raw deal even if we got whacked in the head with a frying pan. But the amazing thing that is We The People have made a similar deal with our neighbor, the Federal Reserve.

Instead of creating our own money interest free we not only let someone else do this for us but we pay them interest on what should be our own money just as Don pays interest on his own cherries.

Is it any wonder our country is in trouble when our representatives are no smarter than Don?

Now we clearly see the problem the question is this: Is there anything we can do about it?

The answer, fortunately, is yes, for there is no problem that doesn’t have a solution and there is no hole that is so deep that one cannot climb out into the fresh air and sunlight of a better life.

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The Fed and Common Sense

March 21, 2011July 19, 2017 Joseph Dewey

This entry is part 5 of 31 in the series 2011B

We have spent a lot of time covering the gold standard for a good reason. Most people who want a return to some type of gold standard are reasonably informed and are thinkers. They understand the importance of having a sound monetary system, of not overspending and the genius incorporated into the original Constitution. Having one of these on your side is more potent than a dozen of those who formulate their views from media soundbites.

Therefore, I have presented what I consider to be logical information on what will and will not work as far as gold as a standard goes. I will add a few more things as we continue. For instance, the market value of gold could be used as a standard to formulate the value of a dollar to increase the stability of the current or future fiat system.

We’ll discuss more later about how the dollar could be backed but for now we’ll continue on the ten points that are under consideration to create a sound money system. The gold standard was merely the first consideration. Let’s take a look at the second.

(2) Eliminate the Federal Reserve.

A great number of books, articles and treatises have been written on this subject. Since I am trying to present ideas and information that may be new to readers I will only cover this briefly as a simple Google search will bring up a plethora of material.

A good deal of the information is either from conspiracy theorists or from those just who loath the organization and want it abolished.

It didn’t help that it was created during the progressive era of Woodrow Wilson and passed in 1913, the same year that instituted the Income Tax. Then it was supposed to create enough malleability with currency so a depression could not happen again yet it was powerless to either prevent or cut short the greatest depression in our history.

In addition, there is something about its name that really get’s its critics blood boiling. It is called The Federal Reserve. They say it is called such to deceive us into thinking that it is an arm of the government, but they maintain this is a big lie because it is a private corporation ran by greedy bankers. Some believe the insiders make an unfathomable amount of wealth that is hidden from the public and this is why it has never been audited.

Ron Paul has always been suspicious of the Federal Reserve and has introduced H.R. 1207, The Federal Reserve Transparency Act, which would require it to be audited and force it to operate in the light rather than the dark.

Some critics give a distorted view of the Fed when they stress that it is a private business, as if it were entirely divorced from the government and keeping all the profits. It might more accurately be called a quasi governmental organization for all members of the Federal Reserve Board, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also sets the salaries of the system’s highest-level employees. This doesn’t happen with a purely private business.

In addition the U.S. Government receives all of the Fed’s annual profits, after a statutory dividend of 6% on member banks’ capital investment is paid. The Federal Reserve returned $78.4 billion to the U.S. Treasury in 2010. This was an increase of $31 billion over 2009 because of earnings on stocks that they bought up to pump up the market.

Congress has oversight with them and can change the rules at any time, but overall the Fed has, at present, pretty much unrestrained freedom in dictating the rules for America’s currency and banking systems.

So if the Fed must return profits to the U.S. Treasury, and their salaries are controlled by Congress, why do conspiracy theorists paint the Fed as a sinister entity that is stealing America’s prosperity with insider bankers becoming wealthy beyond the imagination?

Part of the reason is that some critics do not fully understand the linkage between the government and the Fed. But for those that do the problem is the Feds’ secrecy. Yes it is true that a set amount of profits go to the government and their salaries are set by them but because they can operate under the radar with so much secrecy it is suspected that insiders have giant expense accounts and channel funds in directions that will enrich them.

The Fed also plays the stock market to assist the economy and who knows how many employees trade with insider knowledge.

If the Fed were fully audited on a regular basis and all its dealings were available to the public then we could know the truth and we could lay the basis for a more honest and stable economy.

Another problem is that the Constitution gives Congress the authority to create money. Many feel that it is wrong for them to have given away this power to a secretive semi private organization. Thus there are many calls for the elimination of the Federal Reserve and to ether give the power to create money back to Congress or directly to the people. We’ll talk more about this later on.

(3) The third suggestion to strengthen our economy is a balanced budget amendment.

This sounds like it should be a no-brainer, but is it? Why hasn’t Congress ever taken this seriously?

There is a great mystery surrounding the fact that Congress just cannot balance their budget or even come close to living within their means. They are like a teenager who has been given a large credit card and then he decides to blow the whole thing on everything that feels good to him. Then when the limit is reached he comes home to Daddy (the taxpayer) and pleads for more money.

The mystery is this. The people we elect are the among the best and brightest of us, yet they act like stupid teenagers in their job performance, especially as far as spending money goes.

These people are not stupid as rocks so why are they fulfilling their jobs with the competency of drug addicts higher than a kite waiting for their next fix?

It appears that our representatives are either out of their minds or just plain hate America and all taxpayers.

We know that this is not literally true, but we also know there has to be a reason for such self-destructive behavior, but what that is seems elusive. It is amusing to see Joe Q. Public of average intelligence watch these screwups and exclaim in exasperation, “What’s the matter with these guys? They are spending millions on golf videos for the Irish, elevator attendants to push buttons for lazy congresspeople, research to see if volunteering is helpful, millions for unneeded golf courses for military brass when we are short changing the brave soldiers who are risking their lives for us, bridges to nowhere projects and the biggest boondoggle of them all – a nearly trillion dollar stimulus that was used for political payback costing $228,000 for each job created and causing untold misery for many others who lost jobs. Are these guys out of their minds?” asks Mr. Average? “I know better than to waste money like this. Why do they not know?”

There are two reasons for this apparent stupidity. The first was mentioned previously in chapter three and that is our President and Congress see, as part of their job description, that they are supposed to spend money to please voters. Since every employee wants to do a good job then our elected officials feel they have to spend lots of money to receive praise from their employers, the taxpayers. Unfortunately, this illusionary job description is reinforced when they bring home the bacon to their home state and the few who are on the receiving end give lavish praise whereas the ones paying the bills are too busy working to protest much. Representatives therefore receive the lopsided idea that they are performing well by sinking us into unprecedented debt.

The second reason for the stupidity is addiction. Now if a person is not exposed much or has little access to smoking or drug use the chances are that he will not become addicted. But if everyone around him is a user then it becomes difficult to resist and most will join the crowd.

Spending money can be an addiction like drugs. There are many shopaholics that just cannot resist spending more money than they can afford.

Congress is a club where most members are spendaholics and when a person who is not an addict arrives he is met with two major temptations. First he is given trillions of dollars to spend. Maybe in the past the most he has blown has been a couple grand, but now we’re not only talking millions, but thousands of millions and even millions of millions – or trillions.

If spending money created a high for him in the past then being a member of Congress will blow his mind.

The second problem that sucks him into addition is he is surrounded by spending addicts who gleefully spend money like they are little gods with unlimited power.

Anyone with a weak will who goes to Congress doesn’t have a chance. He will become addicted.

Will he vote for a balanced budget or term limits? Not likely. He may talk a good game but when it comes down to taking action the true addicts will side with keeping their power to spend intact.

And what would happen if we did pass a balanced budget amendment? Does a mere law prevent an addict from getting his fix?

Not really.

Did the constitutionally mandated gold and silver standard prevent us from throwing it out the window and then spending money we didn’t have?

Even so, unless we cure the addiction of Congress and the Presidency they will find a way around any terms of a balanced budget amendment just as they have other limitations that have been there in the past.

In a health emergency it may be necessary for a non addict to take some drugs. Even so, during a war or national emergency it may be necessary to spend extra money. Because of this and the willingness of the addicts to break their own laws a balanced budget amendment may cause as many problems as it solves.

One thing we agree on is that our elected officials must run this country as efficiently and with as much common sense as a wise family. They may borrow money now and then but they operate their budget on common sense principles. Government must do the same and we the people must be the last line of defense in making sure they comply.

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Creating Sound Money

January 9, 2011July 19, 2017 Joseph Dewey

This entry is part 8 of 50 in the series 2011A

Part 2 in this Series

An increasing number of people, including economists, politicians, pundits, bloggers etc are coming to the realization that something needs done to create a sounder dollar and money system.

Here are some of the steps that are put forward.

(1) Put us back on the gold standard. Those who support this are far from being united as there are several camps on this:

(A) A purist gold standard with no fiat money.

This was the standard through parts of ancient history, the Dark Ages and attempts were made toward this goal on and off up to about 100 years ago.

(B) A gold standard with fiat money, but with redemption. This usually consists of fiat money created on a 10:1 basis. That is for every once of gold on deposit there would be ten ounces worth of money in circulation. Under this system the consumer can redeem his money for gold, unless there is a run on the system that depletes the gold supply.

(C) A gold standard with fiat money, but with no redemption. This is basically what we had from FDR to Nixon. The value of the dollar was set at an arbitrary value assigned to gold which was $35 an ounce, but a citizen could not possess monetary gold with the exception of rare coins. Other nations and some banks were allowed to exchange money for gold.

(2) Eliminate the Federal Reserve. These advocates may or may not want a return to the gold standard.

(3) A balanced budget amendment. This sounds like it should be a no-brainer, but is it? Why hasn’t Congress ever taken this seriously?

(4) If we do not have a balanced budget amendment then something needs put in place where borrowing and spending is kept within reasonable boundaries.

(5) Grow the economy through low taxes and business incentives. A healthy economy strengthens the dollar.

(6) Reduce the trade deficit. We have had a trade deficit since 1975. Should we be worried? Some are more concerned than others.

(7) Secure energy independence. This is another no-brainer but the problem occurs in execution. The Left and the Right have conflicting ideas of how to achieve this.

(8) Expand alternative currencies. These are already in play to a degree. Examples are Time Dollars and Ithaca Hours which are community currencies. Then companies are issuing their own form of monetary credits that are used like money. Many want the monetary laws changed to allow for the creation of private currencies that directly compete with the dollar. The belief is this would strengthen our currency as a whole.

(9) Barter. Barter has been sold as an alternative to authorized currency. Some claim barter strengthens the financial position of the individual. Barter companies became popular in the Sixties and Seventies. One reason for this was that many were under the illusion that they didn’t have to pay taxes on items gained through Barter. However, the IRS had different ideas and went after many of them and now there are few bartering companies left.

Here is the IRS rule on Barter: “Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter–barter for another’s products or services–you will have to report the fair market value of the products or services you received on your tax return.”

http://www.irs.gov/businesses/small/article/0,,id=187920,00.html

If you have to treat gain through barter as regular income then one might as well deal with cash and get more leverage with currency.

Even so Barter is far from dead thanks to Crag’s list and other internet sources. Many are now doing barter on a one-to-one basis through classified ads. Participants must be warned, however, that they are still not beyond the reach of the taxman as they comb through internet sources to find barterers who may be trying to escape taxes and do go after them.

Even though small businesses and individuals are limited today in their use of barter big business and even countries are using it on grand scale. These two entities exchange goods and services on a scale of which the average person is completely unaware.

(10) Restoring the power to create money to our elected representatives, as specified in the Constitution, instead of farming this out to private enterprise.

Next we’ll expand on some of these points and see if any of them offer hope to take us out of this financial malaise.

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