Tuesday, March 9, 2010

Is Ron Paul Crazy? Part III

The Federal Reserve is a Central Bank. A Central Bank provides a government with its currency. Because of legal tender laws making it illegal for citizens of the US to use any other currency other than Federal Reserve Notes (USDs), the Federal Reserve is the sole producer of the nation's money supply. This is also known as a monopoly.

The Federal Reserve is made up of 12 regional banks. Directing the actions of these banks are what is known as the Board of Governors and the Federal Open Market Committee. Both of these are federal agencies. When a government agency has official control of a monopolized good (in this case money) that is socialism (or fascism, but that is a whole other topic!). Every country in the world has socialized money.

Wednesday, March 3, 2010

Is Ron Paul Crazy? Part II

In the previous post I focused my attention to an analysis of the gold standard and how gold came to be used as money. This post will focus on another of Ron Paul's "crazy" policy platforms; End the Fed. Discovering and understanding the nature of the Fed must begin with a discussion of inflation and fractional-reserve banking.

Despite what you hear on the news or read in the Wall St Journal, Economist, or NY Times, inflation is not an increase in the price level. Inflation is an increase in the money supply. While it is true that inflation tends to lead to an overall increase in prices, it does not necessarily have to be so. It is perfectly possible that the price level can decrease after an increase in the money supply.

While most people have heard of the term inflation, few have no idea whatsoever as to to what fractional-reserve banking is. By law, banks are only required to keep a certain percentage of their cash obligations on hand. For example, say the US requires that all banks must keep 25% of the cash on hand that it owes to owners of checking accounts. Now I go to my bank and deposit $1000. Because, by law, the bank only needs to keep 25% of this $1000, $750 (called bank credit) are available to be loaned out by the banker. While my check balance shows that I have $1000 in the bank in reality there is only $250.

Now this math may not seem to add up to most people. That's because it does not. You may also think that it sounds an awful lot like a pyramid, Ponzi, and now Madoff scheme. That's because it is.

Monday, March 1, 2010

Defining Evil

In order to not do evil it is necessary to first define what evil is.

I believe there are two categories of evil; fraud and violence. Fraud consists in deceptive acts such as cheating and lying. Violence involves the use of force to steal, murder, or injure someone's person or property. The threat of force, coercion, is also considered an act of violence and to be considered evil also.

Unfortunately in this world there are people that, for whatever reason, engage in antisocial acts of behavior and often resort to the various methods of evil listed above. Therefore men must inevitably resort to corresponding acts of violence to protect their person or property.

At this point it becomes necessary to separate acts of aggression versus act of defense. The acts above are commonly referred to as acts of aggression when initiated by an aggressor. Aggressive acts can never be justified if one is to commit oneself to doing no evil. Defending oneself from acts of aggression, however, is justified.

In future posts I will discuss whether or not governments are the most adequate method for defending against aggression (I obviously believe they are not) but for now I just wish to clarify my position on what constitutes evil and draw a distinction between aggression and defense.

I will also, using the definitions above, show how many people engage in evil without knowing it.

For a good read on libertarian legal philosophy with regards to aggression and property rights please read Murray Rothbard's essay on Law, Property Rights, and Air Pollution.