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Ron Paul on Bitcoins: If I can’t put it in my pocket, I have some reservations about that

With Bitcoins getting a lot of attention over the past month, after an explosive move higher followed by a good old fashioned crash, www.goldmadesimple.com have put together all you need to know about the digital decentralised currency here, and have also pulled together this infographic on the topic.

On the topic of Bitcoins, Ron Paul was out this week discussing its creation in a Bloomberg interview.

Firstly he was asked about gold’s recent drop:

 ‘I am concerned about the erraticness of the dollar. The dollar is up, the dollar is down. We print a lot of dollars. The dollar gets devalued. That is really the concern. If people think the gold price up and down is a reflection of something wrong with gold, no, I say it is something wrong with the dollar. People have been expressing concerns over the past couple of months about gold, but compared to what? Compared to where gold went from when the Fed took over where it was $20 per ounce compared to what has happened in the past?…I remember in the 1970’s when they finally allow people to own gold and it went from $35 to $200 rather rapidly, and then it lost 50%. Then it went up to $800. To compare a couple of months or a couple of weeks and forget about a bull market in gold price in relationship to the dollar for 12 years.

‘I would say the comparison is not an authentic comparison. What you have to look at is the inflation. Inflation is an increased supply of money. Since 2008 they have quadrupled the supply of Federal Reserve credit and are buying $85 billion per month of treasury bills. At the same time last week they bought $60 billion. That is the inflation. That is the distortion of the market and that’s why we’re not getting economic growth‘.

He was then asked about the inflation in the US:

‘It depends on how you define it. Inflation is when you increase the supply of money. Bond prices go up. Stocks are going up. Housing prices are starting to go back up again. Education costs are going up, but the gross distortion is the effect that the inflation of the money does on the price of money and interest rates and how it causes economic problems and why you don’t get economic growth. You have to look at the malinvestment and destruction that occurs when you mess around with the price of money. It’s not just the CPI because the CPI is not reliable. The government fudges that as well. They change the way they measure it. Free-market economists say it is going up about 8%. A lot of deception going on out there. I was just talking to someone on getting social security, they’re not happy with the purchasing power of the dollar and you can’t tell me there is no inflation’.

And what is the value of gold?

‘No one knows it other than what is happening at that moment. The Supply and demand of gold is very important. That is why it is money, because gold is used elsewhere and it is commodity. The supply and money of paper is the culprit. That is the one that is causing all the trouble. People ignore the supply and demand of paper. Yes, paper goes up and goes down, but look at the long term purchasing power of the dollar. It has been devastating. At the rate they are printing the money, you will see a continual devastation of the value of the dollar. You will not see economic growth until you liquidate the debt and liquidate the malinvestment out there. Sure, you will see housing go up again, but you will see more bubble formation because prices go up does not mean there is economic growth.

Ron Paul goes on to talk about what we’ve been saying for the past few years. Namely that this financial crisis will not be over until the debt is liquidated:

We are a long way from the correction, mainly because they ignore the definition of inflation and ignore the need to liquidate debt and the need to liquidate and get rid of all the malinvestment. One good comparison is look at the price of stocks and gold. Although in the past couple of weeks it has changed a bit. The price of the stock market has crashed, because you used to be able to buy the Dow with 44 ounces of gold. Now it is under 10 ounces of gold. It will probably go a lot lower’.

‘I think the way gold is acting it acts like a market does. You get ahead of itself, there has to be a correction. The amazing thing is not the correction, the amazing thing is the biggest bull market of the century when one commodity went up for 12 years straight. You cannot ignore that. To say, well there has to be an adjustment because prices are subjectively decided by many factors so you cannot predict exactly where the money will go. Unfortunately right now the money that the Fed creates goes into reserves, further distorting the markets and pumping up prices of bonds, further building a bubble that will burst because our economic growth is not there and we are in every bit as much trouble of Europe and Greece. Someday there will be a lack of confidence in our dollar and you will see the correction in the paper a lot more severe than you see the correction in the dollar-gold ratio’.

And Ron Paul had some very interesting things to say about Bitcoins:

To tell you the truth, it’s little bit too complicated. If I can’t put it in my pocket, I have some reservations about that. But it has been designed in the free market. If it is a means of exchange, it would not ever be illegal. You shouldn’t regulate it in the free market, but I do not think it fits the definition of money, which has been around for 6000 years. People want to see something they can know what it is, they can define it, touch it and put in their pocket. If you do not have a computer and someone running the computer and calculations, you don’t have it. I am not a big supporter of that, but I am not opposed to it. I admit, I do not fully understand what is going on with it’.

 

Link to this article: : http://www.goldmadesimplenews.com/interviews/ron-paul-on-bitcoins-if-i-cant-put-it-in-my-pocket-i-have-some-reservations-about-that-2-10613/

Posted by on Apr 26 2013. Filed under Interviews. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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