Kerostasis

Does anybody know how much money the Federal reserve actually prints each year? My recollection is that its pretty damn close to the replacement rate for cash being destroyed.

**does a little research**

According to the department of the treasury, 95% of cash printed is used to replace older bills that are destroyed.

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xTYBALTx

When people refer to the government "printing money" for spending purposes, they typically refer to interest rate manipulation, no?

And what's that other 5% for?

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Switchcraft

Since the law referenced in the original post says in, part

I don't know what you're looking for that you can't find. That's the proposed law. One of the "sections stricken" is:

Thus Ron Paul has proposed that any past conviction for fraudulantly making or using fake US coins be "null and void."

That's not a straw man, that is the stated text of the bill.

As to "trusted" currency, you're right that without trust it would be worthless, but nothing in either law referenced in the petition linked at the beginning of the post makes a provision for making people back any new currency they choose to make or use.

The "straw man" here is that the Federal Reserve is the problem with inflation. As the petition linked states, but then ignores, the United States Government pays bills with money that it doesn't actually have. That's not a problem of the reserve, or of what currency we're using to pay for our groceries. This bill is an obvious attack on the Unites States monetary system, yes, but it doesn't do anything to stop Congress from borrowing money to pay debts...

Say, that sounds familiar, doens't it, guys? Oh yeah!

Someone REALLY interested in quashing excess spending might propose an amendment that would address that, but instead, we have a guy proposing we forgive everyone who has made or used counterfeit coins as part of a way to combat inflation.

Switchcraft

And, just wondering... Ron Paul uses Article I, Section 8 to say Congress has "the sole auhtority" to regulate international trade. Ron Paul uses Article I, Section 8 to say Congress has the "sole authority" to declare war. How come the power to coin money, granted in the same section, doesn't get the same deference?

Buck Fush

Now see? That's what I get for not reading the FULL text. You are right. This proposal would legalize counterfeiting. Hmmm.

Doktor Goku

Nope, I never said that, or anything like that.

What I said was that I don't like congressmen who make legislation to make a statement instead of making actual legislation.

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FatCobra

I really don't know much about this, but maybe the other 5% is for all the people who are either born in America or come to America. Since as the population grows, the amount of money needed to sustain the Economy does as well? If we had the same amount of money that we did in the 1940's that we do now, there wouldn't be enough to go around since our Population has skyrocketed since then.

Kerostasis

Absolutely. An expanding economy requires an expanding money supply. The tricky question is how fast the money supply should expand...and Ron Paul and crew think the Fed is expanding it way too fast.

Whats odd is not the accusation but the proposed solution. Allowing everyone to print money instead of just the Fed seems like a really poor way of limiting money supply expansion. The Fed is probably the most politically independant group in the government today, so if they can't be trusted to use Economic sense to guide their decisions, I don't know who exactly Ron Paul thinks we should trust.

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Switchcraft

I think it's pretty obvious the answer to that is "Counterfeiters."

ScratchMonkey

Thanks to Switchcraft for pointing out the part of Article 1 Section 8 enabling borrowing. I agree, that's definitely the thing to attack.

I don't buy the need for expanding money to match population. Somewhere in the distant past we invented this nifty idea of "fractions" to deal with problems like that. If there's more people than money, divide the money into smaller bits. There's no reason today's penny coudn't have the value of a dollar (had it not been inflated into worthlessness), and we could have new denominations representing fractions of a cent. Today's penny should have at least the value of its weight in copper.

Note that everybody does have the ability to print "money" now, in the form of various lending notes. They're widely traded. But the government's notes are mandated for trade. You can't refuse them because they're going to drop in value. (And you know they will drop in value!)

Alas, our government loves to interfere in free trade, and one way they do that is to mandate what forms of payment must be accepted and how. During the last gas crunch, many gas stations offered different prices to cash and credit customers, to compensate for the hefty fee imposed on credit transactions. Credit card users objected, and laws were passed to require that both transactions use the same price, giving a free ride to credit users on the backs of the cash customers.

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Switchcraft

There's a lot to respond to there, but I'm going to try in brief and maybe we could talk about some of the various topics in different threads?

It also says Congress has the power to coin money. I don't understand why the Ron Paul supporters think that this isn't a "sole power" like all of the other items listed in I-8.

A few thoughts: Whether you buy a burger for what is called a dollar or what is called a millipenny, you're still getting a burger. But let's say we took your idea, and a long time ago there was 1 million dollars in circulation, and we had one million people. We never added a dollar to it, and now there are 300 million people in the country.

In order for the economy to continue, deflation would incredibly extreme. In order for the economy to expand at all you'd probably have to take a pay cut every year, and eventually every payday. But even if you didn't, imagine if I lent you a dollar one day to buy that hamburger, and when you paid me back that dollar's value had increased so much you could buy a house with it. Now imagine I asked for interest! Deflation is no better for the economy as a system as inflation, and can sometimes be far more damaging than a lot of people realize.

If tomorrow the current purchasing power of the dollar were to double, it would basically take twice as much Yen, Euros, Australian Dollars, Dinar, etc to purchase anything from the United States. Tourism would grind to a halt, and so would our ability to export many of our goods. This would be bad bad bad for our economy. But whether it takes one day or one year for such deflation to happen, in order for our economy to expand on your system, we would HAVE to experience massive deflation all the time.

This has happened before, and it's been bad. If you know today your dollar will purchase less than it purchases tomorrow, then you stop spending because you're practically giving yourself interest just by holding on to your money. You stop making purchases, less money flows, more deflation happens, and you hold to even more money. When the ride stops, everyone gets screwed.

You have two competing ideas here: one that the "value" of the dollar would increase over time, and we would have to keep printing newer and newer types of currency to keep up with it (and how does one decide how much money is going to be in the supply anyway? Where is the cutoff?) and the other is that the value of the money has to be linked to something else, like a metal. This doesn't make sense...if the value of the penny was based on copper, and then the millipenny gained the purchasing power of today's dollar, then the value of copper will have skyrocketed compared to other goods. So now I can buy a hamburger with my millipenny, but buy a new car or house with a spool of copper wire? People wouldn't be able to afford cat-5 cable!

The original post in this topic was about being able to print your own money to compete with the dollar. But now you're talking about not being able to print new money for any reason...these are completely opposing ideas.

That last bit doesn't make sense: it doesn't give a "free ride" to credit users...they still have to pay the same amount as the cash user, but they will also probably pay interest and other fees for the convenience of having fraud protection, not having to carry large amounts of cash to conduct mundane transations, and a host of other things that people love credit cards for.

The company selling gas is not being penalized either;nobody is FORCED to take credit cards, and those machines aren't free:the retailer has contracted with a company to pay for the privilege of handling credit card payments knowing that many more purchases every day will be the result. Not only do people tend to prefer paying at the pump, but the added effiency of the transactions mean many more purchases per day can happen, at the resulting cost of a negotiated price with the merchant's processing company.

How could either of those things possiblybe "on the backs" of cash customers? The cash customer is getting the same price as the credit customer, so neither customer is being fleeced. The retailer is choosing how to spend his money, and he has chosen to make a contract with credit card companies that forbid the charging of excess prices. Freedom to contract is pretty important to me, so I'd like to see those contracts enforced.

And while you are right that in a system with inflation you know that the dollars you have are going to decrease in value, you also know this means that every debt you pay back costs you a little less in real purchasing power than it otherwise might have. Inflation causes prices to rise, yes, but it causes the prices of your assets to rise, too. The house you bought that you're going to sell again, the inventory you used to stock your store.

So today prices rise a little bit. The stores profit. The stores expand. They increase wages. You have more money to spend, so you're able to buy more items than you could have last week. So you do. So the stores see demand go up. They raise prices a little bit, and it corrects mostly for the inflation, but they still gain a profit, so they increase wages...and so on.

Not all inflation is "bad" inflation.

Buck Fush

This is kinda related. Last I heard the penny is still legal tender, so how can someone be punished for using them?

http://www.wfsb.com/education/15472249/detail.html

ikonic

Something that is related:
http://www.washingtontimes.com/apps/...146647005/1001
http://www.guardian.co.uk/business/2...ubprimecrisis1

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xTYBALTx

Interesting indeed.

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GhostintheShell

US currency in circulation.
Dec 31, 1995 = $360b
Dec 31, 2007 = $1.02t

US National Debt
Dec 31, 1995 =4.92t
Dec 31, 2007 = 8.95t

An almost 3x increase of currency in circulation over a twelve year period and an almost 2x increase in the US debt in the same period?

The US dollar is a fiat currency. It's value is based on the viability of the economy and the ability of it's citizens to manage and pay off the public debt.

There is no doubt in my mind why the dollar is sinking.

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