This entry illustrates two view points of getting out of a recession and a debt crisis.

One assumption, or viewpoint, is that in order to pay off debt and getting out of a recession is by increasing taxes on the upper class to pay off expenditures. This would indeed increase the revenue created and would allow for the government to continue expanding.

The clear downside to this is that the highest earners tend to be the job creators or corporations. By increasing taxes, you either chase companies offshore or allow the company to lay off more workers to deal with the increased strain (and overall slightly lower incentive for business).

The main problem I see with the scenario even more problematic than adding a strain on the job creating class is that it encourages the government to continue dumping it’s errors on the tax payer.

The government shouldn’t be trying to expand every time it takes money from the country. Departments like the Department of Energy should be privatized and regulated by the free market. Education should always be on a state level especially in today’s environment where children have an alarmingly small attention span due to video games and the internet. By allowing state and local governments to try new forms of education instead of a one size fits all education by the DOE, it would allow states to learn from other successful states and come up with a real answer to proper education that properly fits their state’s environment. I guess you can call that allowing the states to regulate themselves.

Apart from taxation, the government sends out stimulus that operates by  “bubble up” economics. This would create a pseudo scenario of the consumer increasing their spending that, as you can see during Obama’s term, is a temporary solution to a bigger problem.

This type of philosophy gives leeway to expanding government, weaker corporations, and a pseudo powerful middle class.

Now let’s go over the viewpoint held by most modern conservative politicians. This revolves around lowering taxes on the upper class and companies in order for them to operate easier and increase profit. This does work to a certain extent although it makes the gap between the rich and poor wider. It also does not address the problem of the government solving it’s problems by taking more money from the people. It allows  government to increase business profit by lowering the tax rate, but at the same time they can continue to expand since they’re simply taking a smaller percentage of a bigger number.

As for government spending the most you’ll get is cutting proposed increases. That means they won’t decrease our current spending but they’ll decrease spending that they meant to increase either way.

That would mean an expanding government, higher profit corporations, and weaker middle class.

Clearly in my opinion, I see both viewpoints with their own respective flaws. Let’s see what Ron Paul takes from each to make an interesting (and constitutional) philosophy on our economy which addresses expanding government, higher profit corporations, and a stronger middle class.

Ron Paul intends to cut 5 government departments and instill the philosophy of government being a problematic situation during his time in the White House. He’d also lower corporate tax considerably, and get rid of income tax.

This philosophy combines both trickle down and bubble up economics. The consumer would have a lot more money to spend, and business would be less regulated and strained allowing them to be more globally competitive. That would allow the booming marketplace to address the jobs crisis without government intervention. The government would be forced to reduce itself and privatize more of it’s owned jobs.

Overall Ron Paul’s ideology aims for smaller government, high profit corporations, and a powerful middle class.

Normally this should come to us easily but we’ve moved so far away from constitutional limits that the idea of going back to the proper philosophy of government seems laughable.

Presidential hopeful Ron Paul is consistently criticized for his support of the gold standard. This stems mainly from the apparent success from leaving the gold standard and allowing the federal reserve print money on que. Since leaving the gold standard meant an increase in the circulation of money, everyone assumed that the “gold standard failed” while in reality, and as usual, it was government interventionism that was to blame. It’s sort of like taking vitamins when you’re sick and replacing them with antibiotics. Sure antibiotics will work for a while and cure short term illness – but don’t blame the vitamins as the source of the problem.

Let’s go over why printing money without backing can be useful.

When the fed prints more money, it can send the money into banks which in turn can loan the money for the creation of business and employment. This paper money can also be used for bailing out various companies that would otherwise be forced to close their business and dissolve a multitude of workers.

Now, what are the downsides of being able to print money endlessly?

The obvious answer would be the inflation and the buying power of the dollar. But has the dollar really been inflating like everyone has been crying it would? Surprisingly, it hasn’t. While it has fallen in comparison to more stable currencies, the truth is you don’t have to bring a wheelbarrow of dollar bills to your local deli for a  bit of grub.

But isn’t it common sense that when you print money without backing, the value would fall? That would be the case if the US dollar was not the world’s reserve currency. The amount of foreign trust and investment is keeping the dollar afloat regardless of the consistent printing of the dollar.

So could we just rely on the US being the world reserve currency forever? Naturally, that’s one option – unless of course we plunge into an extreme amount of national debt (*cough* *cough*).

When too much money is introduced without an increase of the GDP, it allows for the government to create loan programs that would for example cause the housing bubble. The constitutional gold standard was written in order to put a strangle hold on the dollar and the government.

Finally one may ask, how will people get money without printing if our population is rising so fast?

When money isn’t printed freely, and the dollar relies on a standard other than foreign influence, the USD increases in it’s value. That means less money is in circulation, but that money has a lot more buying power.

Now people tend to ask why gold? Why not copper or any other metal?

Well let’s say we switch to copper. Then we’d be asking, why not gold, why copper? Gold is convenient and traditional and tends to be held internationally as a precious metal due to it having a high amount of value in even small amounts of density.

At the end of the day, printing money can work based on trust, but it’s more of a temporary solution (aka bubble). The Gold standard has proven to be the long term solution which provides for a more consistent, healthy, and constitutional economy.