The Latest Ron Paul Scandal Exposed! The Aweful Truth About His Odious "Solicitation" Letter!!

[WARNING: This post began as a simple, angry rant against the shameless scandal mongers attempting to take down Ron Paul's Presidential candidacy with scurrilous lies and insinuations. It quickly morphed into a too indepth treatise on economic principles. I would apologize but that would require a subjective judgement on my part as to the relative value of the rant versus the treatise. I'll leave that judgement to you.]

The Ron Paul scandal mongers are at it again. Their latest effort is pathetic!

After his second stint in Congress ended in 1985, Ron Paul published an investment letter. From Wikipedia:

Ron Paul & Associates (RP&A), Inc. was initiated during 1984 by Paul, who served as President. Llewellyn H Rockwell Jr. served as Vice President, Ron Paul's wife Carol served as Secretary and Lori Pyeatt as Treasurer. The corporation was dissolved during 2001.^{[36][37][38][39]} In 1985 Ron Paul & Associates began publishing The Ron Paul Investment Letter^[40] and The Ron Paul Survival Report;^[18][41] it added the more controversial Ron Paul Political Report during 1987.^[42] Many articles lacked a byline, yet often invoked Paul's name or persona. Critics have cited statements in the newsletter that they described as racist, such as the statement that Washington, DC is "anti-white and proud of it," and giving advice on using an unregistered gun to defend against black criminals.^[43] David Weigel said that the extreme statements were probably written by Rockwell.^[44]

Investment letters were extremely popular in the 80's and 90's. It seems every other day I'd receive a "solicitation" letter from a publisher of an investment letter who promised everything from "privileged inside information" to "Ten top secret but effective ways to protect your nest egg!" Most of the publishers were gold bugs.

Harry Browne was my favorite. His "permanent portfolio" recommendation was smart and worked. Plus, he introduced me to Ludwig von Mises and Austrian economics. But there were others. Howard Ruff, Harry Schultz, James Dale Davidson, Jim Blanchard, John Pugsley, Doug Casey and Jim Cook. As I remember, Howard Ruff was the most flamboyant and outrageous. I still receive emails from Cook. I probably even received a solicitation letter or two from Ron Paul. I should have saved them. Obviously, someone did. Here's a pdf of one of Paul's solicitation letters.

All the solicitation letters I received looked pretty much the same and followed more or less the same script. Most forecast the sky is falling. It was good old gloom and doom in the most bombastic terms. Most touted the particular author's special qualifications to either preserve your capital during the coming calamity or profit from the coming crisis big time. Most publishers bragged about their sterling forecasting track record or their unique "insider's" prospective. Most solicitation letters were about six to eight pages long and contained at least two post scripts tagged beneath the signature. For some reason, the text always seemed to be printed in sky blue. Ron Paul's solicitation letter is typical.

Back then I looked forward to receiving these letters and reading them. I was fascinated by their dire predictions and their over-the-top prose. I read them much as a science fiction fan enjoys a good "B" movie on TV. Plus, they were steeped in anti-establishment, contrarian libertarian philosophy and Austrian economics. Like the newsletter authors, I believed government was too big and too powerful. Plus, I knew there was more than a kernel of truth in their economic predictions, so I was interested in their prospective. Austrian economics is the only economics that ever made logical sense to me.

The wonderful thing about Austrian economics is that its logic is never out of date. Certain human actions generate certain reactions which are inevitable, ceteris paribus (all other things being equal). However, the timing of these reactions is almost never predictable with any accuracy. Why? Because all other things in the real world are never equal. The real world is a roiling sea of conflicting, complimentary and cooperative human action. In this sea, it is impossible to isolate any particular action and observe its particular consequence. Its particular consequence is affected or masked by the consequences of other actions. Austrian economics helps us make sense of this roiling mess.

How?

Austrian economics does not utilize the methods of the natural sciences, i.e., the scientific method. Action is human movement with purpose. Empirical observations collected by means of the scientific method can detect the movement, but not the human purpose underlying the movement. The scientific method is suited to understanding why unthinking animals do what they do. It collects data on these animal movements, analyzes this data for distinctive patterns and then induces the instincts and genes that make each species of animal unique. This method can tell us nothing about the actions of thinking human beings. We're driven by purpose, not instinct, properly understood. Each one of us has a unique purpose or goal. Each one of us has our own preferred means of attaining that goal.

So Austrian economics disregards the aggregate jumble of all observable human movement and focuses on individual purpose. Austrian economics is an analytical science, similar to mathematics. It starts from the assumption that each man moves with purpose, i.e., each individual human chooses from the means available to him and strives to attain his particular sought after end. From this premise the Austrian economist simply follows the logic. If each man chooses various means, he deduces that each means is in demand to a varying degree. He deduces that the available supply of these means affects individual "choice." He deduces that individual "choice" implies that each individual has alternative means available to him, some of which he subjectively "values" more than others. From this insight, he deduces the interplay of supply and demand in a "market." He deduces the concept of "price" and the "laws" of supply and demand.

Bear in mind that these insights are analytically deduced from a single premise, just as the laws of geometry are deduced analytically from a single premise. The Austrian economist applies his deduced knowledge to the jumble of human action and, as a result, is able to make sense of it, just as the engineer is able to apply mathematics and geometry to the jumble of conflicting and complimentary forces in nature and make sense of it. The engineer says to an individual: If you want to build a bridge that will not collapse, then you must heed my deduced calculations. The Austrian economist says to an individual: If you want to produce a good or service most efficiently, then you must heed the economic laws I've deduced.

Like the laws of physics, the laws of economics do not dictate ends, but means. Individual men may choose to heed these dictates or ignore them. However, the consequences of either course of action are perfectly predictable and certain. The laws of physics and economics are brutal that way. They cannot be rescinded to suit the convenience of an individual actor.

For example, economic law teaches us that, all else being equal, establishing a legally enforced minimum wage above the market wage which would otherwise prevail, will inexorably create unemployment. I won't elaborate in this post on the reasoning which allows economists to know this. Suffice to say the reasoning is all very tight, accurate and irrefutable.

Now, suppose government sets and enforces a minimum wage above the market wage rate but unemployment doesn't show up in the government's statistics immediately after the minimum wage rate is set. Imagine unemployment doesn't show up in the statistics for an entire year after the minimum rate is set. Does this mean the laws of economics with regard to wage price controls are mistaken? No, it merely means that the observable real world effects of these laws are not conducive to study by means of the scientific method.

The real world is not a laboratory test tube wherein all variables are controlled. Human beings are not lab rats that react in exactly the same way to a given stimulus. After doing an exhaustive "field study" and gathering and analyzing tons of "social data," all the empirical economist can say in the aftermath of the passage of a minimum wage law is that the number of unemployed persons he counted has not increased from his last count. He can induce no law from the data which explains why the count has not increased. For all he knows, workers in a particular wage range became unemployed but simply packed up and moved to another locality where jobs were available.

But I digress! Back to Paul's odious solicitation letter!

Ron Paul's solicitation letter makes dire economic and political predictions. Honest critics would separate his economic predictions, which were largely based on his knowledge of Austrian economics, from his political predictions, which were based on his libertarian philosophy. The economic predictions were reasonable, given the nature of the actions taken by the US government at the time.

Until 1971 gold was money. When Nixon ended the official, government backed link between gold and the dollar, a good Austrian economist -- and Ron Paul was acquainted with many, like Murray Rothbard and Hans Sennholz -- knew exactly what the economic consequences must be, assuming the link between gold and money was not re-established at a later date and that the government began printing fiat money: price inflation.

Let me explain.

Gold, as a physical commodity, cannot be produced from thin air. Gold must be mined, smelted and minted. How much gold is supplied to the market is determined by the laws of economics, supply and demand. Mining gold requires labor and capital investment. These investments must compete in the market place with alternative uses for this labor and capital. The supply of gold used as money is determined by the demand for money. There are competing, alternative demands for gold, industrial and jewelry uses, for instance. So, in essence, the value of gold and the value of money are both determined by the market. In effect, the limited supply of gold and market forces determine and cap the amount of gold money in circulation at any particular time.

Fiat currency is completely different. Made simply of printed paper and, nowadays, electronic computer entries, fiat currency can almost literally be created out of thin air. When honest governments create fiat money from thin air, they account for this money creation as debt, which acts as somewhat of a limiting factor. However, when dishonest governments create fiat money, they simply circulate it. Either way, the quantity of money is increased or inflated.

Usually the circulation of the newly printed money starts with the banks or with government spending. As the new money enters the market and the total supply of money is inflated, the newly created fiat money is spent by those individuals who receive it. As it works its way through the market, gradually and selectively, the prices of selective goods and services are bid up. The prices of all goods and services are not bid up simultaneously or at the same rate. However, the inevitable and inexorable end result is price inflation.

When Nixon decoupled gold from money in 1971, the price of gold was $40.62 per ounce. Today, the price is about $1,600 per ounce, a 40-fold increase.

Today it requires $5.51 to buy the same amount of goods and services that could be purchased for $1 in 1971, according to our best estimate. Looking at it another way, one dollar in 1971 is worth only $0.18 today!

Moreover, just a few days ago US public debt has reached 100% of GDP! The quantity of fiat dollars in circulation has ballooned fantastically since 1971.

I won't trouble you with more boring statistics, but you get the picture. The value of the 1971 dollar has fallen drastically due to monetary and price inflation. This is exactly what Ron Paul predicted. Of course, it's taken 40 years, so the dire urgency communicated in his solicitation letter was extreme hyperbole, probably aimed more at selling newsletters than an accurate description of reality.

Nevertheless, Ron Paul knew full well in 1971 and he knows now that the economic consequences of certain actions are predictable. However, knowing when these consequences will occur is a total crap shoot. His solicitation letter admits as much. "You may not have much time left," Paul writes. "Next year, or next month, the New Money could wipe you out — destroy everything you’ve worked and saved for — and leave your family destitute. It could happen any time." [emphasis mine]

Economic predictions are one thing; political predictions are another. When in his letter Paul speaks about Washington's "financial tyrannies," when he predicts the coercive dissemination of "New Money," the "Hitlerite malarkey" of the War on Drugs, "exchange controls," the "Trilateral Commission" conspiracy, the "FEMA plan to suspend the Constitution," the "coming race war in big cities," the "federal-homosexual coverup on AIDS," the Israeli lobby playing Congress like a "cheap harmonica," the national ID "Soviet-style 'smartcard,'" and all the rest, these are not economic predictions. They are political predictions base on his experience in the federal government and his libertarian philosophy. Paul also made these predictions based on his personal observations of our culture and its changing social mores and political philosophy.

Progressivism emphasizes collective social action, centralized authority and egalitarianism. Libertarianism emphasizes individual freedom, localized authority and social differentiation based on merit. Coming from a libertarian point of view, Paul observed the changes taking place in the United States and the growing acceptance of progressivism. His social predictions arose from those observations. But it is important to understand that these predictions are not certain and logical implications of libertarianism. They are strictly Paul's considered opinion.

That being said, Paul's fears that America was devolving into a restrictive, controlled, Orwellian society are not completely off the mark. Reading the solicitation letter which I assume was written in the mid-to-late 80's, I think many of Paul's predictions have proved remarkably prescient.

How about this? "We have a duty to our country, to our families, and ourselves to preserve our liberty and our assets from the government wolves...Washington, D.C. — HUD, Barney Frank, the IRS, the whole bunch — is our declared enemy in this." 

Most observers put the lion's share of blame on Barney Frank, Fannie Mae and Freddie Mac and the Community Investment Act for precipitating the 2008 financial crisis.

Or how about this? "I fear there will be welfare riots in the big cities. Massive unemployment. The destruction of wealth. The erosion of personal liberties."

The past few months gangs of transients -- a mystifying mixture of progressives, socialists, hippies, libertarian anarchists, ideologues and street rabble -- have been "occupying" our major cities masquerading as a political movement, breaking windows, burning buildings, raping and murdering. Massive arrests have taken place. We all know Paul was right about the unemployment and the destruction of our wealth and assets resulting from the recent Great Recession. Anyone who flies knows that the 4th Amendment has been commandeered by the imperious TSA.

Privacy is threatened in this country. There have been serious attempts in the Congress to establish a biometric national Id card and database. ObamaCare institutes a national healthcare database.

Our money has been changed (though not to the extent Paul predicted), ostensibly to prevent counterfeiting. The feds now embed optical threads and chips in our new, colorful, "pinkish" fiat money. Moreover, there are real sentiments in the financial community to do away with paper fiat currency completely and institute a cashless society.

Perhaps because Paul's predictions are not coming true overnight, we Americans tend to accept them in stride, with a diffidence which is almost an Orwellian shrug of the shoulders. We accept being told what kind of light bulb we may burn and how we may celebrate holidays. Even the words "Merry Christmas" are enforced by the denizens of political correctness.

My point is this. The latest, manufactured Ron Paul scandal is reminiscent of the long forgotten (by now) take down of Herman Cain's candidacy by the mainstream media, aided and abetted by Democrats and Republicans bent on Cain's destruction. The innuendo is hot and heavy; the facts are few and far between or non-existent. Political enemies with their own axes to grind (gay activism, Zionism, progressivism, collectivism, racialism, internationalism) cannot destroy Paul's message by means of rational argument, so they attack him personally with lies, rumor and ridicule.

These vicious and underhanded critics feign shock and dismay at Paul's 25 year old prediction that a "race war" is coming to our big cities. They take this prediction as evidence that Paul is a wild-eyed racist. Really? Are these critics so logically illiterate they can't distinguish a reasoned prediction from ideological racism?

If you're looking for ideological racism, consider the words and actions of Al Sharpton, Jesse Jackson, Van Jones, Jeremiah Wright and Louis Farrakhan. If you're interested in the consequences of ideological racism, consider racial mini-riots that occurred recently in Milwaukee, Philadelphia, Tennessee, and elsewhere. If you're interested in proving to yourself that Ron Paul's prediction was a reasoned extrapolation of the American social and cultural condition, rely on no less an expert than Barack Obama, who in November of 2008 gave a telling speech expounding on this country's "racial divide." In that speech Mr. Obama said:

The fact that so many people are surprised to hear that anger in some of Reverend Wright's sermons simply reminds us of the old truism that the most segregated hour in American life occurs on Sunday morning. That anger is not always productive; indeed, all too often it distracts attention from solving real problems; it keeps us from squarely facing our own complicity in our condition, and prevents the African-American community from forging the alliances it needs to bring about real change. But the anger is real; it is powerful; and to simply wish it away, to condemn it without understanding its roots, only serves to widen the chasm of misunderstanding that exists between the races. [emphasis mine]

Anyone living in America today knows that noxious epithets like "racist" and "anti-Semite" and "homophobe" and "corporatist" and "right wing extremist" are hurled casually and thoughtlessly at virtually anyone who disagrees, whether civilly or not, with the politics of the hurler. These hateful sobriquets substitute for reasoned argument. They are meant to classify and destroy, not persuade. They serve the same odious purpose as those hateful slurs hurled in days gone by, like "nigger lover" and "Jew-baiter." 

One scandal monger, who detests Ron Paul's opposition to the politicization of homosexuality and AIDS, offers supposed evidence of Paul's rabid homophobia. This well-known gay activist quotes a passage dredged up from Paul's 90's newsletter. He says Paul's newsletter "warns that 'the AIDS patient' should not be allowed to eat in restaurants because 'AIDS can be transmitted by saliva.'" The activist then critically opines that this is "a strange claim for a physician to make."

Strange? In the context of the 80's and 90's when the AIDS epidemic was in full bloom and AIDS science was in its infancy? Consider this article in the NY Times from 1984. Or this 1994 article from the Columbia Gay Health Advocacy Alliance. Even today on the website of the CDC, we find this statement: "In some persons living with HIV, the virus has been detected in saliva, but in extremely low quantities."

Strange? Does this statement prove the CDC is rabidly homophobic? PLEASE!

Paul is criticized for warning prospective newsletter subscribers that "Trouble is coming, and you must be prepared." Is such a warning so outlandish and extreme when it is considered within the context of Paul's prescient predictions outlined above?

Consider the following predictions from Paul's solicitation letter that haven't yet come true:

I have exposed the war on cash, and what it means for honest Americans. The little-known law, rushed through Congress, that lets the feds declare bank holidays nationwide, or just in your town, and freeze your accounts indefinitely. The “money laundering” laws that can wash away our freedoms. And the international bankers’ pipeline into your wallet. ...I have unmasked the plot for world government, world money, and world central banking. Planned exchange controls to hold you hostage… ...The FEMA plan to suspend the Constitution in a “national emergency.”

Schemes to force pension plans to “invest” in federal debt, with coerced rollovers and more debt in lieu of interest...The nightmare of a “cashless society...,” the Establishment assault on hard assets that will make us nostalgic for FDR...

...The exaltation of envy. The suppression of privacy. Authoritarian clamp-downs. Bank and S&L closings on a massive scale. A world dollar crisis as the greenback...is rejected for almost any non-paper alternative.

Maybe the “recovery,” which the politicians are always trumpeting, is permanent. Maybe Bush and company will give us the balanced budget, sound money, and drastic spending and tax cuts we need. Maybe they’ll curb the IRS and the Fed. Maybe lasting prosperity is around the corner. Maybe there’s a tooth fairy. But i don’t believe it.

Now, ask yourself if Paul's exhortation to be prepared is foolish or wise? Keep in mind that these predictions were made a quarter of a century ago. Now, ask yourself if these predictions seem crazy and impossible in today's climate of political and financial turmoil, or if they are simply ammo being used by pathetic scandalmongers to discredit Paul?

Now ask yourself one more question: Am I prepared to cast a vote to elect the only true Washington outsider, the thoughtful and prescient Ron Paul, as President of the United States?