Is Ron Paul Crazy? Part I

I certainly used to think so.

I admired him during the debates for the Republican nomination for President in the summer of 2007 because of his strong commitment to limited government, the Constitution, and bringing troops not out of just Iraq, but from all over the world. But then he would go on rants about returning to the gold standard and how Federal Reserve policy was going to lead to a financial disaster.

Let's start with an analysis of the gold standard.

Is Ron Paul Crazy? Part IV

After a nearly 15 month hiatus I am finally ready to conclude my series on Ron Paul. I felt the break was necessary so I could take the time to fully understand Austrian Business Cycle Theory.

Parts I - III dealt with the gold standard, fractional-reserve, and central banking. I will now conclude the analysis of Ron Paul's policies by laying out Austrian Business Cycle Theory. This is important as it is relevant to current affairs, more specifically, the recent rise in food and oil prices.

Austrian Business Cycle Theory tells us that any increase in credit money will lead to a boom that must be followed by a bust as the credit money is contracted, so long as the credit money is invested in capital goods. The increase in credit money, or inflation, leads to many investments during the boom that are later revealed to be malinvestments during the bust. The theory is clear; if we wish to avoid the bust, we must not allow the boom.