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Saturday, June 9, 2007

Ron Paul for President!

There's been a lot of discussion about Ron Paul's campaign on the Internet, even though the mainstream media has been surprisingly silent.

It's hard to tell exactly, because on the Internet one dedicated person can appear to be thousands of people. Also, knowledgeable Internet users aren't representative of the population as a whole. For example, Ron Paul leads all candidates in YouTube subscriptions with 15,000 subscriptions, but that's still only 15,000 votes.

I think that it really is 15,000 unique people and not one person pretending to be 15,000 people. It'll still be an uphill battle for his Internet popularity to translate into recognition by mainstream media, which probably still is necessary for him to win.

He advocates two things that I strongly agree with:

  1. Abolition of the Federal Reserve
  2. Abolition of the income tax
I didn't realize how bad the Federal Reserve and income tax are until I started thinking about them carefully.

The Federal Reserve is bad because it's a price-fixing cartel that keeps interest rates at an artificially low level. Interest rates should be determined by the free market, just like the price of everything else. However, the Federal Reserve has been around for so long that it couldn't be instantly abolished without adversely affecting the economy. The interest rate subsidy would have to be gradually phased out and non-debt-based money introduced into circulation.

The income tax is bad because it creates a demand for dollars. If you wanted to boycott dollars and switch to using gold or a barter system, the income tax prevents this. A barter transaction is considered to be taxable income based on the dollar-equivalent value of the transaction. You could make a barter transaction, but you'd still need to pay income taxes in dollars. Even though a dollar is intrinsically worthless, you need dollars to pay income taxes.

The income tax is self-increasing. As the money supply is inflated, prices rise, and the amount you need to pay in taxes increases.

There's a "Ron Paul Grassroots Supporter's Wiki", and I put some of the content I'm later planning for this blog there:

My contributions primarily are in the "issues" section, for the Federal Reserve, Income Tax, and Gold Standard sections.

Since the content on those pages is 100% mine, I'm going to reproduce them here later.

However, there is one thing that disturbs me about Ron Paul. He has said that he would abolish the Federal Reserve and IRS. He has not mentioned his substitute plan. The Federal Reserve and IRS have been around for so long that they would have to be abolished gradually. An abrupt closure would lead to economic chaos.

Abruptly eliminating the Federal Reserve would cause interest rates to skyrocket. All the money would drain out of the economy as more loans were repaid than issued. There would be another depression. There would need to be a mechanism for stabilizing interest rates as the Federal Reserve is abolished. New money would need to be printed and spent into circulation, either by repurchasing government debt, issuing loans, direct spending, or tax rebates.

Abruptly eliminating the IRS would case the value of a dollar to drop to zero. Right now, there is a demand for dollars because the government demands them as payment whenever any economic activity occurs. Without this collection mechanism, there'd be no demand for dollars. As people start switching to barter, there would be hyperinflation. The people who converted their dollars to gold and silver first would benefit tremendously. The income tax needs to be gradually phased out as the value of a dollar is stabilized by other means.

I still think Ron Paul is a good candidate. I'd like to see him clarify how exactly he would go about abolishing or reforming the Federal Reserve and the IRS.


Mike said...

Hey friend, I wanted to tell you that I changed the wiki location a bit. It is now at will redirect you to the front page, but your links to specifics won't work unless you update them. :)

FSK said...

Only the link to the main wiki needed to be updated. The links to specific pages appear to still work.

I'm going to republish most of that content here later, anyway.

Anonymous said...

In this interview RP alludes to a transition period when moving to the gold standard:

FSK said...

The actual mechanics for returning to a gold standard are quite simple.

The problem is that most of the people who secretly control our government and monetary system are not interested in a return to a fair monetary system.

Currently, real interest rates are negative. M2 is growing by more than 6% and interest rates are 5.25%. With a gold standard, you can't have negative real interest rates. People would just hold onto their physical gold.

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