Paul-onomics vs. Obama-nomics: The Battle is On

Campaign 2012 is racing forth at full throttle.

Although Newt Gingrich and Mitt Romney appear to lead as front runners in the race towards the Republican nomination, it's the “crazy-ole-nut” – Ron Paul – who's currently one of Obama's most challenging opponents when it comes to reviving the economy.

It's no secret that Paul aims to end the Fed with a desire to return to the gold standard. He has even won-over quite a few loyal fans with his trillion-dollar-budget-cut plan.

The surprise is, latest observations and data show that his allegedly “crazy” ideas are now catching on with other Republicans. Gingrich recently announced that he has adopted some of Paul's ideas regarding “economic libertarianism.” If America elects Gingrich as president, he has promised to "look at the whole concept of how do we get back to hard money." 

Now, it truly seems plausible that the gold standard could realistically come back into existence if either one of these Republicans takes Obama's position in the White House.

And now, more than ever, focusing on monetary reform may be exactly what needs to be done in order to obtain the popular vote.

As demonstrated this past year by Occupy Wall Street protesters, citizens of this country are pissed off. They are pissed off at Wall Street and they are pissed off with the Fed for bailing out big-banks. Taxpayers want their bail-out money returned to them.

According to MSN Money:

All are tired of the Fed's monetary policy experiments, its bouts of quantitative easing, a monetary base that has gone from $800 billion to nearly $2.8 trillion in the past few years, and the bouts of inflation in commodities such as gas and food that result from all this. Many realize that it was the Fed's mistaken obsession with the risk of deflation -- falling prices -- and its overconfidence in its own abilities that incubated the housing bubble, starting in 2003, and led it to deny anything was wrong as the bubble started to burst in 2007.

The response of the American people has welcomed the idea of making some dramatic changes to the government and monetary standards. 

History proves that a true gold standard can work and can even keep the value of the dollar steady. This was true in the years 1834-1914 (except during the Civil War years).

Nonetheless, the technical changes to hard money would be no simple feat...but, they are feasible.

These goals, while satisfied by the gold standard, are also satisfied by a rule-based approach Taylor created that has since been dubbed the "Taylor Rule." It's an equation that targets a specific interest rate based on inflation and how quickly the economy is growing relative to its potential, which acts as a speed limit. Go too fast, you get inflation. Go too slow, you get unemployment.

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The time for action is now. Meltzer warned me that it's not just Ron Paul-types who are angry at the dilettantes playing with the dollar. Over the past few months, some $85 billion worth of U.S. Treasury debt has been sold by investors in the Chinese and Japanese governments. While the overall amount is a pittance compared with the $15.2 trillion in government debt outstanding, it represents a sea change.

The theme here seems to be that the American people have caught on to the danger associated with ignoring this issue and the related dangers of following through with a third does of Quantitative Easing instead. That issue alone creates a sense of urgency that may be enough to get someone like Paul into office...