How Ron Paul as President Would Affect the US Dollar

Submitted by Bill St. Clair on Thu, 02 Aug 2007 10:18:40 GMT  <== Politics ==> 

Jessic Hupp at CurrencyTrading.net - there will likely be some bumps in the road back to a gold-backed dollar, but it will be worth it. [email]

Paul purports that the real value behind our dollar is "the military might we enjoy," and that creates a world in which other countries "have little choice but to accept the dollars we declare as today's 'gold.'" He further argues that this military-money system is the reason why we push regime change in countries like Iraq, Iran and Venezuela: because they have challenged the system. Paul supports "the economic law that honest exchange demands only things of real value as currency," and wants to "return to a money of real value."

The effects of what is perhaps Dr. Paul's most novel policy on forex markets is complex. Reverting to a commodity-backed currency would, in the short term, require a massive revaluation of the US Dollar as the federal government began to amass enough gold to back the dollar. If this stockpiling was not handled properly it might lead to a run on the dollar which would cause a massive devaluation. Furthermore, the amount of gold necessary to fully back the US Dollar would likely put immense pressure on global gold supplies and thus might limit the ability of the US government to continue to print money at any level which would cause deflation. On the other hand, if an accumulation of gold sufficient to back the Dollar was carefully accomplished, it would over time lead to a far more stable currency as lenders would be assured that they can receive something of real value back for their dollar.

...

In his essay on "free market medicine," Paul lauds a rural Tennessee doctor who runs a cash practice. Paul points out that by eliminating insurance and bureaucracy, this doctor is able to lower his overhead and charge lower prices. He supports a policy to "unravel the HMO web rooted old laws, and change the tax code to allow individual Americans to fully deduct all health care costs from their taxes." He does not support the "collusion between organized medicine, politicians, and drug companies, in an effort to move America toward 'free' universal health care." Rather, he proposes that we move back to a system that we had 40 years ago, when patients paid cash for ordinary services and had inexpensive catastrophic insurance for serious injuries or illnesses."

Add comment Edit post Add post