Topic: Monetary Policy
Bob Barr, What is the Cost of Money? Because Ron Paul and I think you Don't Know (PART 4/6) A Ron Paul Revolutionary asks Bob Barr if he knows how much a Steel Penny is worth.by Jake, the Champion of the Constitution
(Libertarian)
Friday, June 6, 2008
Dear Bob Barr,
In my review of your websites, what is noticeably missing is any stance on Monetary Policy. In the next few articles, let me try to educate you. If I fail, please call Ron Paul, I bet you have his cell number set to quick-dial. I am sure he will share his thoughts with you. The first question is: What is the Cost of Money? See below.
The Cost of Money
Currency------------Real Value* (¢)-------Face Value (¢)------% Higher/(Lower) than Face Value
Dollar Bill ** -------Worthless-------------------100------------------------- Worthless
* Real cost is defined as the worth of JUST the coin's metal, as calculated from the metal spot price (Zinc, Copper, Nickel, Silver, Gold) on June 4, 2008 and the mass of the coin (links above). Would not mind at all if someone wants to doublecheck my mat skils, although the above changes daily with the metal market.
** Note even a $100 Bill will also be worthless - it is just pretty toiletpaper - the printing costs are basically the same no matter what the denomination is
What does this mean? Besides asking for your change in Nickels? Or if you bartend for a rich drunk guy/gal keep any Silver or Gold Eagles they give you? Well, sort of. Paper is backed by nothing, and the coins are almost all still undervalued. And don't get smart and decide to buy and melt nickels, according to this in 2006, Congress passed laws on how many Nickels you can hold on your person at one time, export, and made it illegal to melt them.
Although the metal spot prices of Zinc, Copper, and Nickel change daily and have gone through recent spikes, this article with the bill text of HR 5512 claims that the total Coining cost of a Penny is 1.26 cents and of a Nickel, 7.7 cents.
So basically the American coin currency is starting to become worth less and less compared to the melt value of the coins. At any rate, on May 9th the House passed HR 5512 bill delegating the right to determine the coin composition to the Treasury Department (this is unconstitutional too, give me a moment) but specifying that the Penny should be "produced primarily of steel." The bill is still in progress, but as soon as next year we could all be using almost worthless Pennies again once more.
The last time America coined the Steel Penny was during WWII since we needed more Copper for the war. (There is some irony here as I am writing this on the anniversary of D-Day) Today, the reason is more complicated but if you study the Global War on Terror, the Federal Reserve, China and other ravenous metal-consuming economies, and global currencies' shifting Purchasing Power, you just might discover the reason for yourself. It is nowhere near as simple as the HR 5512 claim that "International demand along with market speculation for commodity metals has, over the past several years, increased the cost of producing circulating coins in the United States."
Worth a digression is an excellent article on an imaginary currency, the Gold Dime, and how Gold has resisted Inflation. Here are the most important words I may write in this article. Repeat after me, Bob.
In simplest terms, Inflation is NOT Rising Prices. Rising Prices is just a Symptom. Inflation is the Disease and it is caused by Increasing the Money Supply, aka 'Printing More Money.'
The fact that the coins are becoming worth more than the face value should be of concern as this is a warning signal that something is wrong. We are blind to it - most people are ignorant - not stupid! Don't call them 'Idiots' like you do on your radio show! - of monetary policy, and investors are in the dark a little too, as the private bank that is the Federal Reserve infamously stopped reporting M3, or the total money supply in March 2006, allegedly to conceal an explosion in the money supply. Research and extrapolations by shadowstats.com and others of the current M3 are pretty sobering that indeed an explosion of easy credit has already occurred (reference Housing Crisis, Banking Crisis, Credit Card Crisis, and the soon-to-be-famous Derivatives Crisis). What happens after the explosion? Contraction. And from my research, this Contraction has the potential to dwarf the Great Depression's. My name for this potential Black Hole is the Great Calamity. More on that later.
Increase the Money Supply makes Prices Rise (Inflation). That is the abbreviated but correct answer why Gas, Bread, Eggs all Cost More.
This Inflation Tax' is described in Ron Paul's book, The Revolution: A Manifesto. Bob, have you been a good little Revolutionary, and read this book?
Questions 2 and 3: What is Money according to the Constitution? What is legal tender according to the Constitution?
Is it the metals in the current Penny, Nickel, Dime, or Quarter? No. The answers are also not the worthless, crappy Paper and Electronic Money issued by the private bank called the Federal Reserve - Motto: 'We're About as Federal as FedEx.'
Per the Constitution, Article 1, Section 8, Clause 5, states that only Congress shall have the power "to coin Money, regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and Measures"
Art. 1, Section 10, Clause 1, prohibits the following: "No State shall coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt."
Wow, hey, for a 200+ year old document that language is pretty simple and clear compared to the USA PATRIOT Act you helped write and approve. If you did not understand my explanation, you can read this excellent article from HonestMoney.com.
Take Care, Mr. Barr. My thinking is, Honest Money will eventually shove aside the worthless Paper. Add Honest Money per the Constitution to your platform. Please.
For Honest Money, my Freedom, and the Constitution,
The views expressed in this
article are those of Jake, the Champion of the Constitution only and do not represent
the views of Nolan Chart, LLC or its affiliates. Jake, the Champion of the Constitution is
solely responsible for the contents of this article and is not an
employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
I'm not sure what your purpose with this series of articles is, but some of your tactics are questionable.
First of all, Ron Paul has recently stated publicaly that he considers Barr an ally, and that their relationship is "very cordial" The link is here: http://www.newsweek.com/id/139448
So your use of Ron Pauls's name to disparage is disengenous if you were aware of Paul's statements, I assume you were not aware.
Additionally, you are demanding fealty to a very obscure economic philosophy, and while I'm glad that you have taken the time to learn a thing or two about Austrian economics, to suggest that the the Barr campaign make a lecture on Austrian econ the first thing out of the box is somewhat unrealistic, but your implied suggestion that Barr does not share Pauls's views on the Fed shows a lack of homework. Check here : http://www.glennbeck.com/content/articles/article/196/10360/
Finally, you suggest that Barr wrote and approved of the PATRIOT act, as written. That statement is false. He negotiated for, and got, sunsets included in the act-an act he would otherwise have not voted for. And worked with your man Ron Paul to achieve such, check here: http://www.spectator.org/dsp_article.asp?art_id=13262
I assume the word of former Paul staffer, other than Dondero, should be alright?
The above link to the Beck interview has a discussion of this as well.
Jake, in closing, I'm not sure of your purpose, but you are damaging your credibility by making inflamatory statements not supported by documentation, and facts. Additionally, the veiled innuendo and implied conclusions are more fitting to TNR and Kircheck than here.
You are better than this. Disagree with facts, on facts. Not murky suppositions and clouded conclusions.
Your articles read like doomsday prophecies - and your tone makes it sound like you know all the answers. I can't follow your reasoning very far because you leave me with some underlying questions.
>Is inflation bad? Why?
>What alternative do you propose to an independent national bank?
>What's wrong with increasing the money supply? Isn't it a bigger problem that this country is burning money on an unsuccessful war and other fruitless policies that don't promote the American Ideal of Freedom?
Posted By: Jake, the champion of the constitution
Date: 2008-06-25 09:31:01
Dear Mike Stahl,
Thanks for your comment and links, I really found them helpful to learn about Barr in a far better light then I have been writing about him, especially the Glenn Beck interview.
Purpose to what I have been writing? Well, first I guess to learn more about Barr, and to evolve my views - thanks again for the feedback on this, I really did find them all helpful, and I am not being in any way sarcastic.
The point you should probably take is to look at it from my point of view. I want to learn about the guy, I go to his presidential website and find a bunch of baloney, which I documented throughout this chain, and can't find any stance on monetary policy. I sent them and email, but there has been no change - try Articles, Iraq War or Articles, Foreign Policy - doesnt seem right now like its Barr's top stuff. How about add his Glenn Beck Fed comment under Articles Monetary Policy?
From some of the stuff I've read since these articles, and your links, it seems my real gripe is not with Barr's principles -- just that his presidential website is not doing a very great at representing them.
Posted By: Jake, the champion of the constitution
Date: 2008-06-25 10:11:06
Dear Mr Baumann,
I will try to avoid more doomsday prophecies in the future, I do admit to feeling a bit like Bastiat in France. At least on monetary policy, if I was really smart and had it figured out I would have already made a fortune and perhaps would be spending more time contemplating my navel on a beach. I will let you know if this ever happens.
>Is inflation bad? Why?
In my opinion - Bad is just relative to the point of view and its degree. If its a government in debt (USA), in one way its good because it will decrease the total purchasing power of debt, and makes it easier to pay off. However, if it skyrockets out of control (hyperinflation) like Zimbabwe today or the Weimar regime in the 1930s, if the government really cares for its people and is "Of the People" its bad. If not, this may not be a wholly bad thing as it will wipe out the national debt.
If you are a Saver, you loan your money to a bank for a certain time and are paid interest 5%, and inflation is say 3%, you might not care as you still outgrow inflation. However, if inflation is high -say10%, how much was that same loaf of bread or gallon of gas a year ago? - and your interest is very low, say 3%, I think you would agree for this hypothetical individual Saver, Inflation is very bad as it robs purchasing power and real wealth. Furthermore, inflation in this case, drives the Saver to Change to a Spender, as they understand their money will be worth less and less. You could say I am sympathetic to this Saver, as I am in love with the idealistic notion that if you Save money, it should maintain its strength or purchasing power over time. Inflation kills the dreams of this Saver.
Likewise with your Salary increases, etc. Higher than inflation, good -- if lower, bad. Why not just try to eliminate it or reduce it?
>What alternative do you propose to an independent national bank?
Ultimately none. Here is the Bob Barr comment I just read (and support, but he should still change his webpage!) after just reading it from Mike Stahl's link : "If I could wave a magic wand and the Federal Reserve Bank would disappear tomorrow, I would do so. It's a group of unelected governors that are not answerable to or accountable to the people of this country and yet they wield considerable influence over the economy by basically setting rates at which banks and other financial institutions can loan money. And they have built up, you know, huge reserves themselves that they can then dole out as they're doing -- as they did recently with Bear Stearns to prop up as failing, what they see as failing investment houses, for example."
>What's wrong with increasing the money supply? Isn't it a bigger problem that this country is burning money on an unsuccessful war and other fruitless policies that don't promote the American Ideal of Freedom?
The problem with your questions, in my opinion, is that they are interwined. Increased money supply helped enable the Iraq and Afghanistan wars. Take a closer look at the 'Guns And Butter' Model days of the 1970s - these were not pleasant economic times. Or will this time will we pay for our Guns without sacrificing any Butter?
What is that thing you called the constitution? I recall hearing something about that in my early school years, but I'm not sure. Isn't that an antique piece of paper, that if you can get lucky and find one, it's worth alot of worthless money? That might be why they call it worthless. dawgone
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