Peace will come to earth when the people
have more to do with each other
and governments less.

Via PAUL: One year to go – Washington Times (and twitterer @tomjdalton):

I firmly believe the American people are serious about cutting spending and fixing our debt crisis now. Those struggling to make ends meet and provide for their families while also trying to save for the future know we must change course immediately.

I’m not running for president merely to trim a little here and there from our bloated federal budget. Instead, I have offered the boldest, most specific and most comprehensive solutions in the history of American politics to restore our economy and once again make America the most innovative, competitive and prosperous nation in the world.

We face no problem that cannot be solved by reaffirming our trust in the fundamental principles of freedom, limited constitutional government and individual responsibility.

I recommend the rest of the article: for example, “I will move to abolish all corporate subsidies and end all bailouts.”

The question is not whether these are the right arguments, but how to win these arguments in the UK.

Tuesday will see the USA hold midterm elections. According to The Telegraph:

Tea Party candidates are poised to storm Washington in the midterm elections, when the conservative movement should win enough seats to form a powerful minority able to push its political agenda.

The key elements of the Tea Party programme are, we are told, balanced budgets, smaller government and free markets. According to one US citizen I spoke to over the weekend, a typical Tea Party meeting comprises ordinary men and women who have simply had enough of their government over-promising, over-taxing and failing to deliver.

A quick glance across the internet suggests people are surprised by the speed with which the movement has grown. Not me. Anyone who has been following Ron Paul and the Campaign for Liberty will know this movement has been growing for years.

Is it teatime? I hope so, but in the meantime, here’s a contribution from the Campaign towards fighting evil this Halloween:

Ron Paul’s manifesto, The Revolution, is a remarkable read, not least for his account of Alan Greenspan:

Few Americans during his tenure knew that Greenspan had once been an outspoken advocate of the gold standard as the only monetary system that a free society should consider. Not long after my return to Congress in the election of 1996, I spoke with Greenspan at a special event that took place just before he was to speak in front of the House Banking Committee. At this event congressmen had a chance to meet and have their pictures taken with the Fed chairman. I decided to bring along my original copy of his 1966 article from the Objectivist Newsletter called “Gold and Economic Freedom”, an outstanding piece in which he laid out the economic and moral case for a commodity-based monetary system as against a fiat paper system. He graciously agreed to sign it for me. As he was doing so, I asked if he wanted to write a disclaimer on the article. He replied good-naturedly that he had recently reread the piece and that he would not change a word of it. I found that fascinating: could it be that, in his heart of hearts, Greenspan still believed in the bulletproof logic of that classic article?

Congressman Paul goes on to write that Greenspan expressed a different view before a later committee but that his views are ultimately unimportant: it is the system that matters. It appears Greenspan agreed:

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

Greenspan goes on to blame the Great Depression on the Fed’s creation of excess credit: a bitter irony.

Greenspan’s article may be found here. Quite what we are to make today of his advocacy of gold is a matter for further study, particularly as Gordon Brown sold half our reserves, without Bank of England advice, at the bottom of the market.

Reflecting on the demise of Lehman Brothers and on Bank of America’s purchase of Merrill Lynch, I revisited an article by recent US presidential candidate Ron Paul, posted on mises.org:

Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism!

It’s hard to agree with Paul on the requirement for a gold or other commodity-based currency: another great believer in freedom, Friedman, dismisses the idea convincingly in Capitalism and Freedom, before asking:

If we can achieve our objectives neither by relying on the working of a fully automatic gold standard, nor by giving wide discretion to independent authorities, how else can we establish a monetary system free from irresponsible governmental tinkering, a system which will provide the necessary monetary framework for a free enterprise economy yet be incapable of being used as a source of power to threaten economic and political freedom?

We need some fine minds on this problem, minds that can find a sound alternative to the present system that will enable the restoration of competitive, free market capitalism and the prospect of avoiding boom and bust.

I see the European Commission is pressing ahead with legislation to “beef up” bank supervision: let’s hope they get it right.

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From “Challenge to America: A Current Assessment of Our Republic” by Ron Paul:

Third Way compromise, or bipartisan cooperation, can never reconcile the differences between those who produce and those who live off others. It will only make it worse. Theft is theft, and forced redistribution of wealth is just that. The Third Way, though, can deceive and perpetuate an unworkable system when both major factions endorse the principle.

Further:

It’s important to understand how we got ourselves into this mess. The blind faith that wealth and capital can be created by the central bank’s creating money and credit out of thin air, using government debt as its collateral, along with fixing short-term interest rates, is a myth that must one day be dispelled. All the hopes of productivity increases in a dreamed-about new-era economy cannot repeal eternal economic laws.

I do recommend the article, particularly if you believe Gordon Brown can steer us through this downturn.