Revising Ron Paul: Libertarianism Meets Environmentalism

If there's one thing any libertarian knows, it's that there's a strong pull in libertarian circles to abandon the current model of monetary exchange. Take, for example, the libertarian Republican Presidential hopeful, Ron Paul: he has literally written a book arguing "The Case for Gold". Most people focus on the 'pro's and the 'con's of such arguments. This entry, however, hopes to offer up a new perspective altogether on the issue.

There are a number of myths and misunderstandings surrounding this -- as one would expect from something coming out of the John Birch Society -- but rather than go too far out on a limb here, this author will allow better speakers -- more respected in libertarian circles, most definitely, and in the world in general, one would hope -- to speak for him.

First, Ron Paul himself, circa Feb 15, 2006. From his speech, "The End of Dollar Hegemony":

Since printing paper money is nothing short of counterfeiting, the issuer of the international currency must always be the country with the military might to guarantee control over the system.

There's a deep misunderstanding here, which Milton Friedman's ideas themselves expose. But before going any further, it is necessary to note further, from that same speech:

Most Americans forget how our policies have systematically and needlessly antagonized the Iranians over the years. In 1953 the CIA helped overthrow a democratically elected president, Mohammed Mossadeqh, and install the authoritarian Shah, who was friendly to the U.S.

[...]

“Dollar Diplomacy,” a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox, was designed to enhance U.S. commercial investments in Latin America and the Far East.[...]This new policy came on the heels of the “gunboat” diplomacy of the late 19th century, and it meant we could buy influence before resorting to the threat of force. [...] It wasn’t too long before dollar “diplomacy” became dollar “hegemony” in the second half of the 20th century.

I include these selections not necessarily because they apply here but rather because it is necessary to demonstrate I understand the ideas and ideology of this politician, given the amount of controversy which surrounds him.

Back to the idea that printing paper money is "nothing short of counterfeiting", and why Friedman disagrees with him. From "Friesian.com":

As Milton Friedman says in Money Mischief [HBJ, 1992], anything can be money: stones, iron, gold, tobacco, silver, shells, cigarettes, copper, paper, nickel, etc. What makes these things money is not what they are, but what they are used for. They may have value in themselves, like gold ("commodity" money), or they may not ("credit" money, which means banknotes, bank deposits, tokens, markers, etc.); but their value as money is separate from their intrinsic value. What gives money value as such is that it is, or can be, used for exchange, replacing the original human system of trade, which was barter. The value of money is thus the value people attribute to what they want to exchange, no more, no less. As a medium of exchange, all money is in effect "credit" money: credit on an incomplete barter, like an IOU. An IOU can also be anything, as long as it is recognized as a contractual obligation on an incomplete exchange. Commodity money was originally the most natural money, but the value of money is not always the same as its value as a commodity. The intrinsic value of commodity money and its value as money can actually interfere with each other.[2] As a medium of exchange, money also establishes a standard of value (e.g. items A and B may both be worth $5, £5, ¥5, etc.), and as money is held in between exchanges, money becomes a store of value.

And there you have it: Not only does it not matter if money is of "commodity" or "credit" nature -- as effectively all money is credit money; you can only get with money what someone will take that amount of money for, as opposed to how much of the commodity it redeems for -- but moreover, having commodity backed money can sometimes interfere with the value of the money itself. This is further documented when one considers that one of the main battle-axes ground by most "commodity standard"-bearers (pun intended), is that commodity standards prevent inflation. However, as Friedman himself again noted:

Inflation is where the aggregate level of prices goes up and deflation where the aggregate level of prices goes down. Inflation will occur if V and T remain constant but M goes up, i.e. the supply of money increases without any other changes. Inflation can also occur if V goes up (people spend money more quickly) or T declines (the economy shrinks), as the other variables are constant. Most inflations, however, occur because of independent increases in the money supply. That can happen either with commodity money or credit money.

For reiteration's sake: That can happen either with commodity money or credit money.

When doing the (cursory) research for this article originally, this author had intended to move on at this point to the arguments for and against the Fed -- however, as with all things, a "Black Swan" inspiration hit -- and thus essentially took over the article.

One of the greatest areas of failure for the libertarian movement as a whole has been in "reaching" the political left. Quite a number of people view libertarians as "Republicans but moreso." Take Dr. Paul's declaration of being "The only Real Conservative" despite having been the 1988 presidential candidate for the Libertarian Party. Now, Paul's conservative credentials are hard-won and real: He's anti-abortion, anti-taxation, anti-immigration, and an evangelical christian. Doesn't get more "conservative" than that in politics.

But where does his conservatism, and all this hubbub about commodities and currencies get us with political outreach to the political left? It is a matter of what we choose as the commodity -- what we back our monies with. Rather than demanding gold or silver, perhaps we ought to go the next step and actually look towards the future, rather than the past, for our solutions: energy. In a manner of speaking, that's what our "virtual" currency already is -- a measure of purchasing power or energy: but making the association might do the libertarian movement more good than the current way of going about things. That this also appeals to my transhumanist ideology is just plain icing on the cake, at this point: but before we go any further, I realize that I must document how, precisely, demanding an energy-backed currency would result in a stronger tie between the political left and the libertarian movement as a whole. And, as it turns out, that's simple enough: All it takes is one google search for the following term: energy backed currency. Today, we libertarians are seen as "pro-capitalist, anti-environment" by the environmental left. Converting our current, 'principled' demands for gold- or silver- backed currency for an energy- backed currency would go infinite lengths towards accomplishing a greater solidarity, and might just help infuse a little more "Market-Think" into the environmentalist movement as a whole -- which desperately needs it. That energy is already turning into the central commodity around which the world turns is painfully obvious already: "No Blood for Oil" ring any bells? It's certainly no less principled to demand energy be the commodity rather than gold -- so why not?

And yes, I'd buy this for a kW/H.

Read More:
-- Defcon -- Agorism vs. The Bush Admin. Redux
-- The New Axis of Evil: Russia, Canada, Israel, and Denmark?
-- Ron Paul: Libertarian's Best Choice for *Republican* President
-- Singularitarianism: The True Religion?
-- Can the Environment Survive the Environmentalists?
-- Libertarianism vs. Libertarians
-- The League of the South; The Achilles Heel of Ron Paul & Libertarianism.
-- Global Warming & The Scientific Process
-- A Hidden Truth
-- Ron Paul, Evolution, and the Electoral Process
-- The Untold Cost Of Foreign Intervention
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