Ron Paul's Economic Policy

[TheNiche]

probably a lot of truth to that. I think a lot of it also has to do with something as mundane as money-- any company that can fund the construction of a large skyscraper is almost always a company that is ruled by the bottom line, and the bottom line is that stone and decoration cost money, and don't necessarily guarantee a return. Bean counters rule the world. And investors that lend the huge sums of money necessary to build large buildings want that money back FAST. The ever increasing devaluation of the dollar doesn't help either-- a dollar now is worth about 4 cents compared to what it was worth around 1900. I think it follows that if you use monopoly money to fund buildings you get monopoly money skyscrapers-- throwaway designs created solely for the blackening of the bottom line.

You a Ron Paul supporter, eh? That guy really needs to get a better grasp of monetary economics, especially issues with respect to real vs. nominal inflation, how consumer baskets are calculated and change over time, and the mechanisms by which different currencies have floating relative values. He's not the only one, I'm sure, just the only one honest enough to expose his ignorance by making it a key policy issue.

Developers aren't going to build something if they can't make money, and consumers aren't going to live somewhere that they can't (or don't want to) afford. That's really where the bottom line is. They do care about particulars such as housing price appreciation and construction costs, but the overall inflation numbers that you're citing are all but ignored by developers.

[liammclaren]

You a Ron Paul supporter, eh? That guy really needs to get a better grasp of monetary economics, especially issues with respect to real vs. nominal inflation, how consumer baskets are calculated and change over time, and the mechanisms by which different currencies have floating relative values. He's not the only one, I'm sure, just the only one honest enough to expose his ignorance by making it a key policy issue.

Ah yes, yet another "expert"of the Keynesian persuasion ready to school Ron Paul on economics. You're here to tell us that massive inflation is good, a weak dollar is good, rising cost of living is good, falling standard of living is good, trade deficits are good, working three jobs to pay the bills is good, borrowing money from China is good, boom and bust is good, everything's just great, no problems here. Sorry, we've all heard it before. I'm sure you probably have a degree in economics. Hey, that's great, and I admit I'm no expert on economics. But next time you debate Ben Bernanke to his face and reduce him to silence, you be sure and let me know...

[TheNiche]

Ah yes, yet another "expert"of the Keynesian persuasion ready to school Ron Paul on economics. You're here to tell us that massive inflation is good, a weak dollar is good, rising cost of living is good, falling standard of living is good, trade deficits are good, working three jobs to pay the bills is good, borrowing money from China is good, boom and bust is good, everything's just great, no problems here. Sorry, we've all heard it before. I'm sure you probably have a degree in economics. Hey, that's great, and I admit I'm no expert on economics. But next time you debate Ben Bernanke to his face and reduce him to silence, you be sure and let me know...

You're right. I do have a degree in economics. But I'm not a very good Keynesian. I doubt I'll be debating Bernanke anytime soon, however if I were to have such an opportunity, I'd expect him to be very tight-lipped, to obfuscate every other thing he says, or perhaps even just to say what he believes the market needs to hear. That is, unfortunately, the best manner in which he can fulfill his duties. If I had my say, he wouldn't have nearly as many duties and the powers of the Fed would be severely curtailed or altogether eliminated...but I don't have that say.

A tiny bit of inflation is probably optimal, a weak dollar has plusses and minuses in the moment but is basically irrelevant in the long term (ask some seasoned Japanese real estate investors about that), and a rising cost of living is not necessarily bad if coupled with a rising standard of living such that the consumption basket changes for the better, as it has. Trade deficits in this case are misleading because China's monetary policy results in them essentially giving us discounted goods and services--which is very favorable for us--and trade deficits with countries with currencies not pegged to the dollar will be corrected in a matter of years by increased exports. In fact, it is this increase in exports that has caused such a high GDP growth rate in the last six months and that has gone a long way towards staving off the possibility of a recession from the housing bust.

Borrowing money from China (or any country) is good if the terms are acceptable. Debt, generally, is a critical tool furthering economic expansion, whether you're talking about a household, a firm, a government, or owners of capital. The American Revolution would not have been possible without the issuance of massive foreign debt. If you are to be critical of anything, it ought to be how government debt is put to use or whether government policies distort capital markets...there I'm sure you'd have quite a few very legitimate concerns.

Booms and busts, btw, are exceptionally difficult to avoid, pretty much regardless of government or Fed policy. There are only a few forms of government that could eliminate business cycles, but they have a nasty tendency to be replaced with cyclical political upheaval, which in turn has severe adverse long-term consequences on such a nation's economy.

[bachanon]

this looks like a better spot.