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Re: Ron Paul to Run for President
Quote:
Originally Posted by SirClintonPortis
The U.S's inflation rate has been quite tame ever since it Greenspan implemented a policy of transparency into the Fed.
Deflation MUST NOT occur if you actually want the economy to keep on chugging. When deflation occurs, people WILL NOT spend their money because they want to hold out until the can get even MORE bang for their buck. While people hold on to their "money", the companies still have to pay their expenses (operating and interest, etc). This can't last forever since the companies don't have unlimited sources of funds. Their source of funds are the consumers who are holding onto cash. Real GDP is just output, and if companies don't have income coming in, well, THEY AREN'T going to produce anything.
As for the Fed, I would rather have a lender of last resort and a moral hazard problem over banks becoming INSOLVENT(and yes, it has happened before, that's why the Fed even exists) and some [signifcant] group of people or organizations can't get their money.
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How does Ron Paul's policy solve these problems? And do they create problems of their own?
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