Is that the line-up come super Tuesday? Will John even have the cash to make a credible showing?

I continue to see a very good possibility that there will be no clear front runner after super Tuesday, though Mitt really is in a commanding position tactically (despite McCain’s plurality in South Carolina). If he wasn’t such a hobbled candidate fundamentally, I’d be thinking he had an air of inevitability. But he is badly damaged goods, between the nature of his campaign’s money and his multiple flip-flops (do I see some super Tuesday ads with video of Mitt imposed into a pancake, saying one thing in his own words, right before a spatula comes out to flip the pancake and Mitt’s position????).

Ron Paul is truly the stalking horse in the race. If McCain’s name recognition keeps him in the race, and the field gets down to just these three, what alternative do real conservatives have? Are they willing to vote for a guy they hate – McCain; or a guy who can be demonstrated to have changed who he is – not just since he was Governor, but several times since Iowa; or will they look for an alternative? Will they pile on the Bloomberg groundswell (God forbid)?

In spite of what the punditry says, Ron Paul’s chances are better today than at any time since he announced his candidacy. There is a lot of work to be done, and I hope he’s seeking out some savvy media folks to help us kick in the next leg of the campaign.

And in the end, if all that happens is we get more exposure but fall short of the goal, we’re in that much better shape to launch a third party bid. I believe Paul when he says he has no intention of running third party. I also know that the pressure will be intense for him to keep it going – with millions of dollars still in the bank and all.

John McCain is broke and out of line with 70% of the party. Mitt Romney is just a broken candidate. What’s gonna happen? Tough to say, but I have every confidence we won’t be inaugurating Mitt or John in January 2009.

Just remember – Ronald Reagan was written off as a vanity candidate who didn’t have a chance to win even after super Tuesday in 1980. WE all know how that worked out.

Ron Paul for President!

Rudy got thoroughly thumped by Ron Paul again…… and I believe that smell is his decomposing corpse somewhere down in the sunshine state.

One has to wonder if this is what has done his campaign in:

It just might be, but I suspect that it might have even more to do with this:

This video certainly isn’t new to the assembled Paul backers, but I simply wanted to have quick access to a URL of the video for easy dissemination.

Whether you love or hate Ron Paul (or still aren’t sure who that is) , every American should be offended at a news organization unilaterally deciding who is a serious candidate and what ideas are worth considering.

For the contextual understanding of those not familiar with this situation, this is from the South Carolina debate held on January 9. The previous week, Fox News held a candidate forum (their euphemism for a debate without lecterns) in New Hampshire, and Ron Paul was not included. That in spite of the fact that he was fresh off a 10% showing in Iowa – resoundingly beating the included Rudy Giuliani (3.5%) – and in New Hampshire was polling well ahead of Da Maya and Fred Thompson (also invited), and close to the Iowa winner Mike Huckabee. Objective criteria could have been cited to limit the debate to just the top 3 (McCain, Romney and Huckabee), but not for the configuration that was invited. Fox didn’t even feign that objective criteria was employed in determining the invitees. They alone decided to invite those they deemed as ‘electable’.

After having it crammed down their throats, Fox invited Paul to the SC debate. Obviously, there was a bad taste in their mouth over the fallout from excluding Paul in the forum. In addition to jeers from Paulites, their competitors repeatedly noted the arrogance of Fox to exclude a candidate who had pulled in 10% of the votes in Iowa based on their own judgment of what constitutes ‘electability’. Even Shepherd Smith and Greta Van Sustern (two of Fox’s bigger names) lobbied for Paul’s inclusion in the forum, to no avail.

For Mr. Cameron and the rest of the motley gang at Fox, I have a better question.

“Mr. Cameron – on the subject of credibility – Do you have any, sir?”

There’s a lot of handicapping of the republican horse race out there, and I’ve decided to throw my two-cents in on the subject.For all intents and purposes, 80% of the ‘front-running’ field is on life support. John McCain has yet to do much, and is anathema to most of what constitutes the ‘base’ of the party. I can’t imagine the scenario that sees him as the party’s nominee.

You can stick a fork in Thompson and Giulliani – they are both cash starved, riding on name recognition and praying that McCain and Romney have stage lights fall on them at the next debate. Huckabee is in a little better shape financially, but in my opinion isn’t electable as a republican and cannot get the nomination. Of course, many huckabuddys say the same thing about my guy (We might both be right). At least Huckabee has some real, live, breathing supporters out there in the grassroots. He has that much in common with Ron Paul, though Paul has more of the truly energized, boots on the ground volunteers.

There is really only one candidate (besides Paul) who I believe can ride this thing out all the way without some huge watershed event. Mitt Romney. Mitt has the enviable assets of cash on hand and media acquiesence, and the advantage of these cannot be overestimated. Of course, he also has some hinderances.

One hindrance is that all of his cash came from two places that are ripe for demagoguing; If it didn’t come from PACs or lobbyists, it came directly out of his pocket.

Does a self-financed campaign have a single thing to do with his position on the issues, or whether he’d make a good president? No. Can a decent ad campaign make his self-financed run look like vanity from a spoiled little rich kid who has decided he can buy his way into the white house? Yeppers. This one isn’t that hard to demagogue. Throw in that the rest of his money comes from the seediest places possible in the minds of the electorate, and there is an excellent angle to take Mr. Romney down.

And then there is the Mormon thing. In spite of the odious nature of ruling him out because of his religion (in my worldview, it is odious anyway), it is going to be a deal-breaker for some of the most hard-core Christian Conservatives. You know – the one’s who aren’t much for listening about policy, but care greatly that their candidate works the name of Jesus into every possible nook and cranny at every single stump speech. I say that as a self-professed Christian and conservative. I think most of these folks are on the Huckabee train for now.

So let’s say that Thompson vanishes after South Carolina, and Rudy after Florida; We’re down to a 4-man race (a 3-man race if you’re watching the race on Fox). At that point, McCain and Huckabee will in all probability be even worse off than they are now on cash, and there might be intense pressure for one of the two to get out of the race. If Huckabee is still in the race at that point (and I fully assume he will be), I expect that he’ll fold up the tent and endorse McCain.

McCain badly needs some sort of draw to fundamentalist Christians, and announcing that Huckabee is his first choice for VP is a strategy I see as probable to try and co-opt those supporters. Huckabee lacks the foreign policy and national stage experience that most voters find important, and a stint as McCain’s VP might be appealing enough to get Huck out earlier than he might have otherwise been willing to do. It doesn’t directly help their cash position, though it might bring in a little more money.

Leaving a 3-way race heading into super Tuesday: Romney, the daddy-warbucks candidate; McCain, the most-hated republican candidate; and Paul, the fringe-kook-rascist-unelectable-(insert adjective of derision here) candidate. Would any of the Huckabee voters have a problem with McCain, even with Huck on the undercard? You bet they would. Is Romney, a *gasp* – Mormon cultist – a better alternative? I can forsee many Huckabee voters – maybe even the majority – joining on the Paul bandwagon by default. I mean, hey – he’s a Baptist too! And what of the Thompson voters? If they weren’t voting for him because they loved ‘Law and Order’, then odds are Paul will be the truest reflection of their worldview, though the jingoists among them may find McCain a better option. At any rate, Paul get some of that vote. The Giulliani vote probably wouldn’t shift much to Paul. Simultaneously, Paul will certainly pick up some current supporters from McCain and Romney as voters actually hear his name and learn a little about him. He’s still smarting from the name recognition deficit, but his piles of cash and soon to be diminishing field can’t do anything but help that.

I’d be hard-pressed to argue any scenario where Paul is the favorite, and won’t try to do it. I can see the scenario playing out as I’ve delineated to this point. From there, Paul needs a watershed of his own to break through in a three way field. I think the tools are there, if fate simply falls our way. The most likely threat to this scenario is a Romney surge that has him moving into Super Tuesday with a groundswell of momentum. Barring that, I’d say Paul’s chances aren’t dead, in spite of the media’s death knell chorus that played as soon as they announced his candidacy.

It may be that Paul can assemble a team of adept marketers who can capitalize on the Anti-Paul media bias and make that our watershed event. Everyone likes to root for the underdog, and everyone likes to feel like they possess some secret knowledge eschewed by conventional wisdom. If Paul can effectively tap into those sentiments and add in a few friendly cart-path bounces (to borrow a golf euphemism) along the way, we could see the unthinkable happen. I wonder what Brit, Carl, Shawn and the rest of the disgraceful excuse for a newsroom over at Fox would have to say……

I’ve been inspired to reacquaint myself with the cathartic art of blogging after blowing off some steam the last few months skimming the net for Ron Paul slams and fighting the good fight. As part of this quasi-hobby, I stumbled across a local Texas site that I originally characterized as something along the lines of “an inbred, half-assed blog site”. Me and my incendiary ad hominems.

I stumbled upon the site again through the magic of Google News, and this time the discourse from both sides was more measured. There was some interesting discussion, and I’ve ducked in every now and again to see what’s new DeepindaheartaTexas. The last couple days there were a few posts that dipped into one of my favorite subjects – economics – and I really enjoyed the discourse. I wanted to chronicle the discussion here for posterity, so here goes.

The first post was ostensibly about the positions of the Republican Presidential candidates relative to economic policy by a writer handled “Big Jolly”. In spite of his status as a Huckaboomer, it was friendly to Paul and avoided the hyperbole and name-calling that most non-paulites descend into when discussing Paul’s positions. It may have something to do with a clandestine attempt to defend Huckabee (who also notes the economy’s decided downturn of late), but it was basically just a verbatim quote of Paul’s words from the debate with a little non-derisive running commentary.

My first notes on Big Jolly’s post were:

BigJolly – are you pushing Ron Paul now (dare I dream????)?

You are correct, of course, that the economy is in recession and has been in recession since Q3. With the reclassification of Fed documents that took place soon after Bernanke took over the reigns at the Fed, it is more difficult for a layman to determine statistically whether we are in fact in a recession or not. After the various restatements of Q3 data, it became apparent that the private sector economy contracted in Q3 for the first time in over 5 years. Q4 was officially recessive without the restatements and revisions, which will certainly be downward revisions. The outlook is anything but rosy.

Whatever you want to say about Ron Paul, his prognostications on the economic front have been prescient. He was telling us that 10%+ inflation (monetary inflation – which is different than the official price inflation) was a fact long before government statistics began to show that relative prices are in fact increasing.

The government statistics of ‘core’ inflation are basically useless because they allow the Fed to arbtrarily substitute one similar commodity for another in determining what constitutes the index, and they don’t include the supply of the money commodity as a part of the calculation. That would be like letting me decide how many inches equals a foot each month and arbitrarily change the objective length of a foot in an exercise where I am compensated by the foot!

Ron Paul has been warning for nearly 10 years that the Fed’s policy of inflating was leading to malinvestment, and has specifically cited the housing bubble going back as far as 1998. Ron Paul is not my saviour, but he is my candidate. He happens to be the only candidate who possesses at least a cursory understanding of economics, and is in fact quite respected among many mainline economists in spite of the different philosophical orientation that he represents.

Most economists, at least those serving the Federal Government, are Keynesians, meaning they support the monetary policies promulgated by John Maynard Keynes. Keynes advocated state intervention into the economy to attempt to limit the boom/bust/recession/depression phenomenon. Keynesian theory is opposed by the Austrian School economists, of which Paul is an advocate.

The Austrian School view advocates restraining the government from intervening in economic matters and eschews the concept of central planning. Began as the intellectual progeny of Ludwig Von Mises, the Austrian position notes (properly) that central planning can never allocate resources more efficiently than free markets, and as such is the decided enemy of consumers. It teaches that government attempts to control the economy and avoid the boom/bust business cycle (an Austrian concept that has gained wide approval) exacerbates the cycle and actually intensifies the horrors it seeks to limit.

Alright. That’s too much for one post. I cede the floor, after thanking Big Jolly for the Ron-Paul-friendly post.

Big Jolly responded that he still couldn’t support Paul because of some of his other positions, to which I replied:

Big Jolly, If we could get some other candidate to take a responsible position in relation to spending and on the subject of civil liberties, I might be willing to overlook Paul. I just can’t bring myself to vote for someone who doesn’t think our country has a fiscal crisis (China and Arab States bailing out our banking system, for cripes sake) but does think we have too many civil liberties. If I had an alternative, I would consider it. I don’t, so I’m out working my precinct for Dr. Paul. I do appreciate your thoughts on this. At least you’re paying attention enough to see the disease (economic problems), even if we don’t see eye-to-eye on what the prescription is.

Another poster, Headshaker, joined the discussion, arguing that only a few economic sectors are in trouble, but that the broader economy is doing great. I had to jump in there……

What about the trillions in derivative that are based on the mortgage-backed CDO’s – but with leverage as high as 200-1, and financed by the biggest names in commercial and financial banking? What about the fact that most of these big banks are so deep in this paper themselves – on top of the loans to others who used the money to buy this junk – that they are functionally insolvent across the board. They’re begging from sovereign funds and various Asian central banks just to stay liquid enough to operate. The Fed just ignores reserve requirements because there is no other choice.

The only way out of the mess is to sit on the ball and pray that the most probable scenarios don’t play out. The deflationary spiral that could be set in motion by a full credit collapse is just hinted at in the housing market implosion. It’s not just subprime – the entire inventory of paper that allows further financing of mortgages can’t be moved.

If there Fed hadn’t agreed to buy some of the junk, there would be no market for even AAA bonds backed by mortgages – and that means no new money to keep the ‘virtuous’ circle going. If the Fed doesn’t keep up the current course of lower and lower interest rates, then there will be no loan markets of any consequence for any sector serving the American markets. Bonds backed by commercial real estate are following residential real estate into the abyss. And the derivatives with them as the underlying asset are just as levered up as their residential peers. Universalizing a personal experience to make broad inferences about the national economy isn’t a valid approach to gauging national economic health. We’ve got serious problems in America on the economic front.

In addition to the spending and currency problems, the credit crisis that is not over and will prove to be a grave contagion, we’ve got to deal with a political class that sees the treasury not as a sacred trust to be dealt with as fiduciaries, but instead as an endless supply of wealth from which they can play at utopian social schemes. If I were handling money appropriated from people without their will out in plain sight, I’d surely have a very reverential and solemn attitude about how I spent it. I wouldn’t want to rub the thievery in their collective faces, for fear they might get a little pissed. These clowns love to spend the loot (our money, dammit), and spend billions more every year than what we have and finance it. They don’t understand the implications or they don’t care, and they certainly don’t even feign sheepish about spending the ill-gotten gains. Thus my position voting for Paul – He may not be able to stop the problems imminently ahead. But he does understand the basic nature of the problem, and realizes that there is one.

Headshaker fired back, asking why there wasn’t absolute panic among the ‘Big Money’ if my characterization were true. I, of course, had a response:

The smart money are the ones who facilitated the specific problems that have lead to this crisis. If the debt obligations had to be marked to their market value, every single major commercial and investment banker has massively negative book values. In layman terms, the smart money is in the tall grass, and is in no position to do a thing to extricate themselves from the predicament. That is what this is about – the utter collapse of the American smart money and the end of the American dominated global financial architecture.

The smart money now are the Asian and Middle Eastern nations that are only knee deep in the manure. They are buying our assets for a relative song. The only possible scenario to avoid armageddon is to NOT panic.

Right this moment, the credit markets are seized up. Nothing is moving in the open markets – zip, zilch, nada. For it to move, there would have to be a wholesale repricing of assets. That would also entail marking the assets on the books of every major financial institution – not just banks, but insurance companies, manufacturers, pension funds, etc – to the market price, making many of them bankrupt in a flash.

The waiting game is ongoing. The hope is that the Fed can come up with some way to orchestrate a slower unwinding than a panicked selloff. They inject liquidity by buying the underlying junk – at least a small market for the crap – to avoid any bank falling into absolute default and being unable to service continuing operation obligations.

They have employed foreign sources of capital who are willing to go along with the plan for selfish reasons. First, a sizable of their own wealth is in dollar-denominated assets, and they don’t wish to see that wealth go *poof*. Second, they stand to have a very handsome payoff if the waiting game ends favorably. Third, the US economy collapsing wouldn’t spare the rest of the world. Though we would bear the worst of it, it would cause a deflationary cycle in all global markets.

The current strategy is to convince the markets that they intend to continue to have a very loose financial policy as it relates to the currency issue; not only have they slashed rates precipitously, they are clearly signaling that there will not be a change of sentiment in the near future.

Which brings us to the dollar’s precipitous decline that is threatening to become full out collapse. The exact policies that can combat the credit crunch (lowered interest rates and the inherent creation of more digital dollars to meet the increased demand as the cost rises) are the cause of the dollars cratering of late. This is the cause of the increases in the price of gold, and contrary to what you hear in the short bus media, the price of oil. Almost all commodities are being affected, and the result is that prices across the board are rising and will continue to rise.

We ‘win’ if they can convince the markets that they intend to inject enough liquidity to keep the system solvent until the problems can be worked through, but not so loose that they will abandon protecting the dollar. It’s a ridiculously precipitous task, and Bernanke isn’t responsible for the problems himself – he inherited the bubbles. He actually began the process of trying to take a little air out in an orderly fashion as soon as he became Fed chairman, but had to reverse course when the credit crisis surfaced violently this summer.

In a nutshell, you’ve got both inflationary and deflationary barbarians at the gate. To turn to fight one is to leave your flank exposed to the other. And lest some bright respondent retort that they will cancel one another out – think again. We are facing a fiscal crisis unparalleled in our history, with the possible exception (and I mean only possibly) of the great depression. They went the deflationary route – Fortunately (yikes!), the rest of the world decided to go about the business of destroying themselves in the late 30’s, and we were able to climb to the top of the international financial heap.

We instituted our own financial system on the world (Bretton Woods), and it survived many a crisis. It finally completely collapsed in the early 70’s when Nixon took us off the last vestiges of an objective value peg for the dollar.

A person who’d been listening to the predictions and principles of Austrian economics might have made a mint by making levered bets against the dollar. If I’m right and the Fed continues down the road it is on, there are still fortunes to be made. I’ve done absolutely GREAT on the short side of the dollar trade, but that doesn’t mean a thing in relation to my neighbors. Actually, it does. My windfall represents the actual wealth losses of 200 of my fellow citizens (relative to the amount of my portfolio) who denominate their wealth and get their paychecks in dollars (I trade dollars at 200-1 leverage).

If you’d listening to Austrian economists, you’d have been buying gold the last 3-4 years too (as a very conservative, wealth preservation strategy). I’ve been buying it on high leverage for about 12 months, and again, am doing great. But enough of my personal ruminations. The writing is on the wall. We are facing a very tough patch ahead. Whether we skirt the absolute worst possible scenarios is anyone’s guess. I am certain that we will not come out the other side as relatively wealthy as we entered it.

If we do come through relatively intact, there will have been an incredible transfer of wealth from the United States to our creditor nations – that is water under the bridge. The question is whether we wait for it to play out before we start to plan for picking up the pieces.

Another poster then asked a question about a sizable stock of dollars they were holding, looking for a little insight into what they should do:

If it were me, I’d be out of dollars for a long-term position. There have been and will be corrective bounces, but the prevailing trendline is decidedly downward. Given that we are in uncharted territory (the dollar has never been lower), there is no real technical support levels that have to be respected. The slide probably will gain steam, as some very intelligent currency specialists are predicting (actually, some are suggesting it to help us out of the credit mess)the dollar index to settle in around 40. 80 had been critical support that was last tested in the late 70’s (the malaise days). We’re currently a little over 75 on the index, meaning we’re down close to 10% just since July. See the link for the last 2.5 years here http://quotes.ino.com/chart/?s=NYBOT_DX&v=dmax . This is what Dr. Paul is talking about when he talks about the destruction of our currency. Throughout all of history, it has been the most sure way to destroy the middle and lower classes of society, and ultimately bringing about the collapse of many a great empire. The other thought is that you can put a hedge on that protects the relative value of your wealth. If you’re dollar holdings are at 100,000 USD, you can run a 50-1 levered position short the USD versus the NZD that completely makes you immune to the USD degradation for just $2000. You are completely hedged unless the dollar corrects at such a rate to eat up your levered position before further loses occurred (very VERY unlikely, in my estimate).

The next day, Big Jolly stayed on the theme, giving a shout out to yours truly

Well. As with everything else in this election cycle, it boiled down to Thompson supporters saying he is correct and Paul supporters saying he is correct (one Paul supporter, mty, made very detailed arguments for his guy). And the usual take that all of my sources were liberal rags that can’t be trusted to present accurate information. Nothing surprising there but I must admit to being surprised at the dismissal of Chairman Benanke’s concerns.

Throughout this thread, I tended to reprint the specific quote to which I was responding, so I’ll only post my comments sequentially.

“The best thing that any of them can do is as little as possible. Economic cycles have been happening for 1000’s of years. Trying to stop or control them is like trying to affect the weather.” You do realize that those sentiments embody a rejection of Keynesian economics and the basic premise for having a central bank – right? I’m on my blackberry, so no sermon on economics. Just refer to BJ’s thread from yesterday – my sentiments are the same.

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A tempest in a teapot. While I am certainly in favor of cutting spending, let’s not get wrapped around the axle. They can eat gold dust in place of pepper if they’ll do something about our ridiculous burden related to military spending and unfunded entitlement obligations…. While it might leave a bad taste in your mouth, from a practical standpoint it’s not even worth the time it would take to read the article. Trimming waste will not right this ship. We must redefine our premise about what we can afford to do, or the World Bank/IMF will define it for us as part of an austerity plan after we default on our debt obligations.

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I agree that it symbolic of the flippant attitude towards the fiduciary responsibilities of our legislators, and as such should move us to “throw the bums out”. Unfortunately, bringing in a new set of eyes whose only goal is to trim ‘waste’ will be tilting at windmills. A structural deficiency requires a structural fix. I’ll purposefully avoid launching into a diatribe about the basic immorality of taxation in concept. Even a simplistic utilitarian argument that considers only expedients and exigencies (as opposed to philosophical or ideological arguments) illustrates the untennable nature of the fiscal track we’re on.

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It took me longer to repudiate the neocon global occupation agenda than it did to figure out that “compassionate conservatism” was just a euphimism for socialism foisted upon us by self-proclaimed conservatives. But not much longer. Both are morally and functionally bankrupt, and we’d be wise to repudiate both. Our global empire will collapse under it’s own weight, just as the soviets collapsed under a crushing international slate of deployments. Wouldn’t it be better to reign it in willingly, and to redeploy our forces in a manner consistent with defending our own borders from foreign invaders? I’m just askin’.

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#69 “Why then is it so difficult for RP and his supporters to repudiate the support of the American Nazis (National Socialists) here in this country?” We reject the premise that we have to go around rejecting people who profess support for our agenda. Were these ‘National Socialists’ claiming that Paul supported their agenda, it might be a reason to repudiate what they say. Only a willful idiot believes that Ron Paul supports what the neo-nazis support – and even they don’t make such a claim. Does Huckabee need to point out that while Eric Lynn Rudolph and he might share a similar objection to abortion, he repudiates any implied support for Rudolph and his methodology? Sharing a common viewpoint on a single issue cannot be intellectually interpreted to imply commonality on other, non-related issues. Just because these Hitler-afficianados share Paul’s viewpoint on the subject of Federal power doesn’t mean it logically follows that he supports their agenda. The opponents of Ron Paul would love for him to run around repudiating everyone who they’ve found to fail the political orthodoxy test. It’s simply a technique intended to smear his good name, and to give any merit to the tactic would be a disaster. #70 “What do you suggest that the government do about the price of milk and eggs in a market economy???” While the question wasn’t lobbed at me, I’ll take a stab at the fallacious grounds supporting your nested assertions. It is true we have a market economy, but it is not a free market. By virtue of undertaking the task of intervening in the free market, the government decidedly bears the responsibility for the problems that arise. I’m not implying that they regulate the production of milk per se (though I can make a very compelling argument for just that) – but they alone regulate the supply of the commodity that is traded for milk. The main thing to understand is that the basic economic constructs that would cause the price of milk in a free market – increased demand/decreased supply – are not factors in the rise over the last 2 years or so vis a vis milk. So why the increase? Because the relative value of our wealth and purchasing power – that being measured in US dollars has been ravaged by both increasing supply and falling demand. The price of milk goes up not because the milk became intrinsically more valuable, but because the commodity for which you propose to trade has become less valuable. The most basic problem with most people’s understanding of rudimentary economics is that they fail to view money as a commodity, assigning to it some peculiar role. This specialized role is the direct result of intervention in the free market, and as such is properly lain at the feet of the government.

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#62 “Hmmm. I thought that is exactly what they were doing.” No, at least not anything I’ve read publicly. “Oh, and I’m not sure I heard you. You, the big libertarian Ron Paul supporter actually think that the government should regulate the production of milk?” God forbid – you certainly didn’t hear that from me. My comment meant that I can make a compelling case that they do intervene in the production process, causing maldistribution and thwarting the free market. “I’m pretty sure a big contributor to the price of milk is the cost of the corn which the cows are fed with. That, my friend, basically means that it costs more to produce milk, and that increased cost is an artifical situation created by misguided government policies that state that food should be used as fuel for automobiles.” True enough. It is a contributor. Just as increased access to US food commodities through the auspices of NAFTA are a contributor. The overwhelming majority is caused by the relative decline of the dollar relative to other currencies. Were the price to be mandated to stay at the current level, we would soon see shortages as farmers shipped more product to our neighbors where they could get a better relative price in another currency. Another illustration of how intervention in the free markets cause malinvestment, distortion of market forces and a just a lot of general unintended consequences. “So there is more to supply/demand at work, and I admit that government is contributing to the cost of many foods, but I’m not sure your argument that I don’t understand some basic economic principles washes very well. So I answered my own question better than you did, and I’m not at all sure my initial assertion was all that fallacious” Logic is not a subjective exercise. If you require, I can pull up some historical data for the US, Canada and Mexico in relation to milk prices and easily demonstrate that the relative price inflation is much greater in the US than either of our neighbors. What I called fallacious was your assertion that we have a ‘market economy’, and by implication, a free market economy (the implication is clear when you feign incredulity that the government might have some responsibility in the increased price). If you truly believe we have a free market economy – even on the limited basis as it applies to only milk production – I can easily demonstrate that precept to be fallacious if you would like.

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“Can Ron Paul induce a turnaround in the auto industry that will bring US manufacturing jobs in the auto sector back?” No, nor should it be his role. He is to conduct the affairs of state as delineated by our Constitution. The government can create an atmosphere where we might begin to manufacture things here once again by radically changing our thinking about intervening in the economy and punishing producers for success. The auto industry isn’t on the skids because the government didn’t do enough. A compelling case can be made that the opposite is in fact the case.

“Can Ron Paul induce a turnaround in the auto industry that will bring US manufacturing jobs in the auto sector back?” No, nor should it be his role. He is to conduct the affairs of state as delineated by our Constitution. The government can create an atmosphere where we might begin to manufacture things here once again by radically changing our thinking about intervening in the economy and punishing producers for success. The auto industry isn’t on the skids because the government didn’t do enough. A compelling case can be made that the opposite is in fact the case.

“Oh, and the “white nationalists” quite clearly support Ron Paul because they strongly believe he will further their interests.” Exactly my point. No candidate should ever fill his day looking for people who support him to repudiate. That is an asinine concept. Does Hillary need to repudiate scientology because Tom Cruise is a campaign contributor? Does that in any way suggest that she’s waiting for L Ron to come back on the Mothership too? This is a ridiculous concept that should be clearly illogical to any dispassionate and reasonably intelligent person. I’m not suggesting a lack of intelligence on your part, but do see a clear agenda. “I’ve read statements from those who actually think he believes as they do but just can’t come out and say it for political reasons.” And I’ve read headlines while waiting inline at the grocery store that say Hillary is an alien. Does she need to clear this matter up publicly? Doesn’t she then have to address every article that makes a ridiculous claim, lest she appear to tacitly admit it’s accuracy since she didn’t repudiate ‘this one’ as she has the others. If that’s what you want in a candidate…. fine. It isn’t however, a reasonable standard.

“But we’ve gotten away from my original question: What can Ron Paul do as president that will lower the price of commodities such as milk? I assert that he can do little or nothing.” The argument over whether a president can (or should) have any effect on milk prices misses the nature of what Ron Paul’s message is about. He doesn’t claim to even want to bring prices down. What he offers is a plan to strengthen our currency (reduce spending and turn off the magic dollar machine) and legalize an objective storage unit of value. If we can stabilize the currency, prices will necessarily stabilize, affected by only one dynamic data-set (the collective market pressures of supply/demand for milk ) rather than two (the additional dynamic data-set for the value of a dollar). We’re using an elastic ruler (the dollar) to measure the relative value of a commodity (in this case milk). That means a change in the relative metric of the ‘ruler’ will be just as likely to impact the value as a change in the market supply/demand for that commodity. Complete price stability can never be achieved because markets are dynamic. We can however limit the swings by using an objective ruler that doesn’t vacillate. 99 – “there comes a point where a politician has to come out and say “I stand against these things”. Comparing Tom Cruise’s support of Clinton is pretty weak. It is easy to dismiss Scientologists. Paul didn’t have to scour the planet looking for these racists, they came to him.” “Repudiating the support of child molesters and racists who advocate for the extermination of non-white races, that is well worth a candidate’s time.” Surely you’re not serious. You haven’t heard Paul say countless times that he doesn’t support what they stand for, and that they don’t do him any good? Here you go….. http://www.youtube.com/watch?v=G7FwULXnM_E&feature=related What it comes down to is that you simply don’t believe him when he says it. That is your prerogative, but just be honest about it.

At that point, the site admin took me to task for his understanding of Paul’s position on currency – specifically, the errant notion that Paul’s platform includes a return to the gold standard (it doesn’t but that really isn’t critical to this conversation).

Matt Bramanti says: The problem, though, is that Paul wants to establish the non-vacillating dollar on the foundation of the value of an ounce of gold, which itself vacillates. Gold, in itself, isn’t really *inherently* valuable. Its value is determined like the value of other commodities: some of the value is in industrial uses (conductors etc) some is in decorative uses (jewelry, etc.) and the rest is its perceived value as an inflation hedge. In fact, its practical utility is less than other commodities — you can’t eat it (pork bellies, corn), build stuff with it (wood, steel) or burn it for fuel (oil, natural gas). Damn near all of gold’s value is in the notion that it’s pretty and there’s not a lot of it. I see no reason that “Ooooh…shiny” should be the basis of the world economy. There’s nothing magical about gold that should make it The Standard. We might as well use lead or helium.

My retort:

What we should use is what the market demands. Paul’s platform doesn’t call for the illegitimacy of the federal reserve note necessarily; it does however call for the legalization and facilitation of currencies made of gold and silver. Why should the government have anything to fear? (that’s rhetorical, unless you wanna take a stab) A lead-based currency? Seems ridiculous given it’s low relative value and high weight to mass ratio….. not to mention the health hazards. Helium has a similar problem in that it requires a bulky device to transport it, plus the mechanics of transferring it to make a purchase seem awful clumsy. But hey – I’m glad your thinkin! Don’t you suspect that the market might dictate that certain commodities would serve a more suitable vehicle for holding wealth? Maybe some pretty, rare metals that are maleable to aesthetically pleasing shapes? You of course would retain your right to trade with whatever medium of exchange you choose, but good luck finding someone to take your helium. Gold has become a standard historical medium of exchange because it fulfills the desired roles for a commodity to serve as a medium of exchange perfectly. Of course, people would be able to – and probably would – use federal reserve notes for every day transactions. But if you want to store your wealth or make larger purchases, gold coins or reserve notes would be perfectly acceptable. Or silver. Or copper. Or even helium.

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Your basic premise is partly right, in that gold only has value because we agree it has value. But it is an objective yardstick against which to measure transactions, with some intrinsic value (however ephemeral) – not based on a promise of good tidings & happy tomorrows (full faith and credit) or because we said (compulsory monopoly currency). What is the good faith and credit of the US worth? Bolivia? Argentina? If it is that great, wouldn’t that be as good as gold? Why should consumers be prevented from having a choice? The underlying evil at the heart of most gold bugs’ (I am not one – but do advocate allowing competing issues if the government refuses to produce a suitable commodity money) concerns is the dangerous power you give to those with the power to print fiat money. Letting me be the banker in life’s Monopoly game is a sure fire way to make sure I end up with all the property. We have a government forced monopoly over the production of currency, in the hand of private bankers.

Now see…. that’s my idea of a good time. And it has lured me back to blogging (Sorry about the bad formatting – no paragraph breaks and such – from the quoted portions. If it is too much, click the links to the original posts). Hopefully I can round up some of the old gang so I’m not just talking to myself.