St. Paul Was in Minneapolis Last Night

“Tonight John McCain will be in St. Paul, but St. Paul will be in Minneapolis.”

Huh?

That was a line spoken yesterday by Doug Wead at a political convention in Minnesota. The first “St. Paul” he mentioned was the city where the G.O.P. is holding its convention; the second one is Ron Paul, leader of the “constitutionalists” who convened in his name yesterday in Minneapolis for a counter-convention.

INSERT DESCRIPTIONPaul as the messiah.

The two gatherings couldn’t have been much more different. The G.O.P. convention, where the candidate has a good chance of winning the Presidency, felt more anxious than triumphant. The Paul convention, meanwhile, felt like a celebration even though its candidate got only a sliver of votes in the Republican primaries and wasn’t even invited to speak at his own party’s convention.

Paul himself was more dour than his supporters. “The American Republic hangs by a thread,” he reminded them, “and a thin one at that.”

The G.O.P. convention has been a tribute to not only “country first” but, primarily, to government itself. The Paul convention, representing “the revolutionary wing of the Republican Party,” was as anti-government as a political convention could be. Arguments were made against nearly every task that government carries out, including taxation (not surprisingly) and regulation (of just about any sort), but also the funding of education.

The Paul convention was upbeat, heartfelt, and a bit on the wild side. If you didn’t know better, you might not have known their candidate had lost.

INSERT DESCRIPTIONGrover Norquist speaking at the Ron Paul convention.

His supporters rallied with a vigor seeming to suggest that they felt their concerns represent the hearts and minds of the majority of Americans — whereas in fact, if they really did, Paul would have gotten an awful lot more votes. Paul supporters see themselves as the true G.O.P., representing the best intentions and true will of the American people; the big-biz G.O.P., meanwhile, seems to see Paul supporters as a lunatic fringe.

What were the biggest applause lines of the day at the two gatherings? At the G.O.P. convention, the delegates responded mightily to 9/11 references, “country first,” the stories about McCain’s captivity in Vietnam, and the protection of unborn children.

The big applause at the Paul convention went to lines about abolishing the Federal Reserve, getting the U.S. out of the U.N., and being left alone by the government. Grover Norquist, president of the Americans for Tax Reform and a board member of the National Rifle Association, summed up the prevailing view succinctly: “Taxes bad, guns good.”

INSERT DESCRIPTIONSite of the G.O.P. convention.

One of the very biggest applause lines of the day, believe it or not, came upon a mention of the Austrian School of economics, which was followed by this line: “And by the way, free markets do not cause housing bubbles and mortgage crises.”

What does?

That’s easy: Government.

[Note: Here’s my discussion of the Paul rally on The Takeaway.]


Jake L.

#149 says:

"In a fixed-monetary-base system (with 0% M-supply inflation), economic growth is DEflationary. It will drive prices down, because increases in productivity, economies of scale, etc, lead to declining marginal costs. With a fixed supply, prices decline."

The point you made is exactly where I was going, so thanks for stating it in better terms than I could have done. Most Keynesian "supply-side" economists that I've met always cite the Great Depression (a.k.a. the Great Contraction) as proof as why deflation is more detrimental to society than inflation. But this argument is simply a false canard because deflation of the type that occurred during the Great Depression/Contraction was induced by the Federal Reserve.

In other words, the Federal Reserve CAUSED the Great Depression/Contraction- even Ben Bernanke admits this. This fact is often overlooked by inflationists and is indeed one more argument against the existence of the Federal Reserve.

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STEVE

The biggest concern for me is Congress. They have a lot of power. In 2006, when the Dems were voted in to stop the war, they didn't. They had enough in the House to withhold funding. I just spoke to an Iraq vet last night, he served in both Afgan and Iraq. He told me that if they wanted to leave Iraq, they could do it in about 72 hours, leaving behind some heavy equipment but not much else. He told me they had troops in Baghdad within hours at the start of the War. As Ron Paul said, we are in a NEW era, whatever veneer of innocence the USA had, is now gone. Sad but true. Get ready for more War and Poverty. Get a degree and start a business of your own. Create an asset, even if it is a Pizza shop. It going to be a rough ride.

Mike

The real problem is too much control by the federal government over too many aspects of the economy.

There's a problem when:

1 in 100 people in a country is in prison,

all of the banks are regulated by a semi-private, barely accountable, central bank, whose board members are the heads of the largest banks

7 of the 20 richest counties in the US are suburbs near Washington DC

half of senior officials for republican and democratic administrations end up as corporate lobbyists when they leave office

it takes over 65,000 pages to explain the tax code

tax compliance incurs $265 billion on the economy each year

The answer is decentralization. Each state should pursue its own economic policy. Most states are larger and more populous than many United Nations member states, so they are more than large enough to be able to manage an economy independently. The federal government should just be responsible for national security, operating a patent office, and not much else.

Ron Paul has an answer for all this: following the Constitution which enshrines the principles of a limited government.

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rube goldberg

at the 24:45 mark in this video of RP's speech at the Rally for the Republic he refers to the "Remnant".

http://video.google.com/videoplay?docid=2285743412179388725&ei=ote_SNS-EJSirgLvvKiJCQ&q=ron+paul+rally+for+the+republic&hl=en

this Remnant is a reference to Albert Jay Nock's essay Isaiah's Job published in 1936.

http://mises.org/story/2892

"... There is a Remnant there that you know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society; and meanwhile, your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it."

V

In response to #27,

With the greatest respect to ghaws:

"Thankfully, media elites in our society are intelligent enough to realize how dangerous some of Ron Paul’s well-intentioned but ill-conceived ideas actually are."

That is downright preposterous. What need is there for a democracy? We could just let the media elites make all our decisions. Now if only we could find the next available dictator.

Dsylexic

After reading thru the article and most of the comments, know what - The socialists WON. They have captured the hearts and minds of most of you. very nice. i hope in socialist valhalla all you will be taken care of by your governments.all you have to surrender is your selfworth

Jonathan

Joel #53, Did you not read Orwell's other musing on government, 1984? Having big government, in both cases, led to corruption and a much worse society. You complain about "Big" business, but why don't you complain about Big Brother?

Mike

It's absolutely intolerable that people are starving to death, but that gives NO justification for using government coercion to FORCE people to help the poor.

We have the OPPORTUNITY to alleviate suffering through a culture of charity, but we have no moral obligation to those who are needy, and therefore the government has no right to mandate that we our wealth over to welfare programs.

Life expectancy went up 20.9 years from 1900 to 1950. This was a result of the Laissez Faire boom of the late 19th, early 20th century. Life expectancy went up only 8 years from 1950 to 2000. Big government doesn't work. Social Security is a failure. Government funded health care is a failure.

Median wages have barely grown since 1971. For the 25-34 demographic, median wages are lower today than they were in 1971!

It's time to return to peace, freedom and prosperity. No more centralized banking. No more big government military industry complex. No more costly foreign military engagements (Americans are taxed to maintain 700 military bases in over 130 countries). It's time to cut the crap and live life. Go America! Go Ron Paul!

"How soon we forget history... Government is not reason. Government is not eloquence. It is force. And, like fire, it is a dangerous servant and a fearful master."

-George Washington

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Renee

I heard a great saying once: Under libertarianism, the poor and rich alike are free to sleep under bridges.

Thanks for the lists: money, food, health, education, roads, sanitation, health care (in Canada), the child foster system, traffic safety, environmental management, etc... So, let's ask again: do most people really want the government to butt out of those? Otherwise, the libertarian's statement is demonstrably false.

Mike

And one more point:

"How soon we forget history... Government is not reason. Government is not eloquence. It is force. And, like fire, it is a dangerous servant and a fearful master."

George Washington

Oh and another point:

"If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, every thing, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress... Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America."

-James Madison (the father of the Constitution).

It's an objective fact that the Constitution is being violated by having the federal government involved in such things as education.

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Mike

Stephen Dubner, WRONG AGAIN,

----------His supporters rallied with a vigor seeming to suggest that they felt their concerns represent the hearts and minds of the majority of Americans — whereas in fact, if they really did, Paul would have gotten an awful lot more votes. Paul supporters see themselves as the true G.O.P., representing the best intentions and true will of the American people; the big-biz G.O.P., meanwhile, seems to see Paul supporters as a lunatic fringe.

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Way to inject your own bias in this. The only reason Ron Paul didn't get more votes is that he was given far less attention by a media that DID NOT WANT HIM TO WIN.

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"For a variety of reasons, some of them are obvious and some of them are mysterious, Ron Paul gets less coverage than he does raise money, and he gets less coverage than he gets votes. We can go on and on about this. There is no doubt, it’s an objective fact, that the press has decided Ron Paul is not a viable candidate."

-Tom Rosenstiel of the Project for Excellence in Journalism

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It is an objective fact that the media gave Ron Paul less attention than his support warranted.

It's also an objective fact that Ron Paul was criticized by both the Republican Jewish Coalition and the National Jewish Democratic Council for his refusal to shape US foreign policy positions around Israel's needs and his refusal to speak to AIPAC, the way Obama ( "Jerusalem will be the undivided capital of Isreal!" ) and McCain ( "We must stop the Iranian threat!" ) do.

It's also an objective fact that Jewish sources contribute approximately 50% of political donations in the United States.

It's also an objective fact that Ron Paul received more donations from active duty military than any other candidate.

It's also an objective fact that Larry King didn't air the interview he did with Ron Paul on the night of the big Iowa Caucus:

http://www.youtube.com/watch?v=s08RJ2_o_MM

This interview could have catapulted him to a win in the big Iowa Caucus.

It's also an objective fact that the current economic system is destroying the lives of young men:

Since 1971, the year the US went off the gold standard (the event that spurred Ron Paul to run for office), the economy has been devastated, and young people's lives, particularly young mens', have gotten worse:

http://www.newsweek.com/id/156372

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Since 1971, annual salaries for males 25 to 34 with full-time jobs have plummeted almost 20 percent, according to the Center for Labor Market Studies at Northeastern University. At the same time, women have crashed just about all the old male haunts, and are showing some signs of outpacing their husbands and boyfriends as breadwinners and heads of family, at least in urban centers. Last year, researchers at Queens College in New York determined that women between 21 and 30 in at least five major cities, including Dallas, Chicago and New York, have not only made up the wage gap since 1970—they now earn upwards of 15 percent more than their male counterparts. As a result, many men feel redundant.

Today's guys are perhaps the first downwardly mobile—and endlessly adolescent—generation of men in U.S. history. They're also among the most distraught—men between the ages of 16 and 26 have the highest suicide rate for any group except men above 70—and socially isolated, despite their image as a band of backslapping buddies. According to the General Social Survey, a highly regarded decadeslong University of Chicago project to map changes in American culture, twentysomething guys are bowling alone when compared with the rest of society. They are less likely to read a newspaper, attend church, vote for president or believe that people are basically trustworthy, helpful and fair.

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The average young man earns less, is more desperate, is more immature, and more likely to commit suicide than in any time in the last 40 years, despite massive technological advances since the 60's.

It's also an objective fact that government officials make more money now than ever before:

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Washington is all about the money, he writes. In 2005, the Census Bureau listed seven suburban counties around the capital as among the 20 richest in the country. And it’s not just Republicans cashing in on their service. “Upon leaving office,” he notes, “more than half of the senior officials in the Clinton administration became corporate lobbyists.”

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Why is the Federal Reserve privately owned? Who is Bernanke? Why does he get to control a $200 billion + a year industry? Since when does the United States believing in giving one man control over a facet of the economy through government appointment? I thought business men who create their own business were supposed to control the economy, not government managers. Since when did the United States become the USSR?

Life expectancy went up 20.9 years from 1900 to 1950. This was a result of the Laissez Faire boom of the late 19th, early 20th century. Life expectancy went up only 8 years from 1950 to 2000. Big government doesn't work. Social Security is a failure. Government funded health care is a failure.

Median wages have barely grown since 1971. For the 25-34 demographic, median wages are lower today than they were in 1971!

It's time to return to peace, freedom and prosperity. No more centralized banking. No more big government military industry complex. No more costly foreign military engagements (Americans are taxed to maintain 700 military bases in over 130 countries). It's time to cut the crap and live life. Go America! Go Ron Paul!

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PaulF.

Wow. I'm to tired to read all these post but I think the Ron Paul Revolution is working. Less government! Yes less, less, less. So much better now.

Jake L.

Ghaws #139:

There is no need to yell. In all honesty, I appreciate a discussion of monetary theory with someone who has at least a cursory understanding of economic terminology. Let me briefly try to explain my points in a different way and perhaps ask you a few questions in turn.

First of all, your disdain for Austrian Economics aside, it is commonly accepted in many economic circles (Free Market economists, Chicago School economists, etc.) that the root cause of the housing bust is directly related to rapid credit expansion during the Greenspan years in the early 2000s.

As you surely know, Greenspan though that there would be a few bubbles in some overheated markets, but he didn't think that all housing was overheated. Well, it turns out he was wrong (the UK and Spain also have similar country-wide cooling down of housing markets). The bubble must deflate as the fundamentals do not support the price increases.

I would probably concede the point that there are other factors involved in the housing bust (to be specific, the mandated Community Reinvestment Act that strong-armed lenders to make loans to individuals that otherwise would not have qualified for them). We can also blame lax regulation on the part of mortgage originators as well as structured investment vehicles and CDOs that failed to adequately assess risk. But the fact remains that without significant monetary expansion (M3), bubbles cannot occur to the degree that we are seeing now. And my point is that the Federal Reserve AND the congressional deficit spending (the two are complicit, but the Fed enables a spend-crazy congress) contribute to the bubbles by expanding the money supply.

You sound somewhat like a Friedman monetarist in your approach in that a government fiat currency can work so long as it is managed appropriately. Friedman always felt that steady inflation rate was advisable, but that the important thing is that it was predictable. You mentioned in one of your posts that inflation above 2% was undesirable and I have to ask, why 2%? Why not 3% or 4%? If workers and business derive some psychological benefits from inflation (and I hold that there are no social benefits that occur by the mere increase of a monetary unit), why not run the route of Zimbabwe or the Weimar Republic? I do not ascribe to the notion that economic growth is ipso facto inflationary.

Your assertion that the US dollar has enjoyed special status as reserve currency is due to the fact that we were on a pseudo-gold standard up until Nixon closed the gold window and rebuffed on the Breton-Woods agreement. The confidence that gained as the world's reserve currency was partly due to our economic prowess and partly due to our restraint in monetary expansion.

Warren Buffet sort of explains the implicit trust that foreign creditors have had in dollar denominated assets such as treasuries when he states that many lenders would graciously lend to Berkshire Hathaway based on his past performance, but once debt accumulates to such a degree (here is where I agree with your analysis on balance of trade and federal deficit), the lenders ability to repay obligations is called into question. This would cause a run on the dollar.

"It’s that same insatiable demand for commodities in China and elsewhere that is stoking inflation — you can’t blame inflation on only one dimension of the economy (the money supply)." Actually, there is only one true cause of inflation and that is increasing the money supply. Increasing monetary units does not in any way increase the sum total of goods and services. It is important not to confuse aggregate demand increase (such as more raw materials being demanded by manufacturing countries , such as China) with inflation. Aggregate demand increase simply means that one good or service has become more desirable relative to all other goods and services, but it does not mean that there has been inflation in the traditional sense. Inflation is not necessarily "rising prices" (although rising prices is one side effect of inflation); inflation is an expansion of the money supply.

I'll attempt to address one of your objections to returning to a gold standard (for the record, I'm not opposed to returning to a commodity backed money). The implication that a gold standard would curtail student loans or hamper business loans is just not accurate. The housing bust that is currently going on doesn't mean that no banks will ever lend to homeowners again, it simply means the quality of those loans will change (no more 0% down loans to people with poor cash flow). Loans were certainly made pre-1913 when we were on the gold standard. In all fairness, I suspect that the loan terms might be somewhat different than they are now (it would be much harder to finance a $150K liberal arts degree with a $40k earning potential after graduation). Besides much of higher education lending is effectively subsidized by the federal government which distorts the market anyway. Lenders are currently cutting way back on higher education lending in the current market, despite government attempts to "inject liquidity" in to the system, so this essentially proves my point that the true cost of many student loans are artificially low.

Finally, I'll agree with you that governments that attempt to "print their way out of debt" are bad. But I submit that governments that "inflate their way out of debt" are far worse. Of course our debt and unfunded obligations (social security and medicare) are staggering, but nominally growing the money supply to reduce the impact of these programs can hardly be viewed as a solution. My point is that hard money is check on fiscal policy. Hard money ensures that politicians can't give out hand-outs to corporations and entitlements as if they were candy.

My question to you is this: is deflation bad, and if so, why?

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Greg Worrel

Several posters have made the claim that libertarians are selfish. I believe that the libertarian position is usually the least selfish.

A recent ballot initiative in the Detroit area was a vote for or against a property tax increase to fund the Detroit Zoo. Who doesn't like a zoo? Think of the children. Of course it passed with high margins.

I think zoos are great. I've been to the Detroit Zoo many times and always enjoyed it. As a libertarian, I voted against the tax increase. Not because I am against the zoo or unwilling to pay for the zoo. I have no problem paying at the gate. If someone called me and asked for a donation to keep the doors open I would probably freely donate.

I am unwilling to force those who do not ever go to the zoo, those who do not have children, those who may have trouble paying their tax bills, and those who do not want to pay for a zoo for whatever reason to pay for it anyway. I am unwilling to force those people to pay for something that I want.

Those that vote for tax increases or vote for politicians who repeatedly raise taxes are the selfish ones. They want someone else to pay for their wants, needs, and expectations.

Of course you might say "It is not for me. It is for a good cause. It is for the poor people, It is for the children. It will benefit everybody. It is a really good cause and I think it is important."

It is still selfish even if it is for a good cause. It is your good cause. It may not be mine. I'll make you a deal. You pay for your good causes and I will pay for mine.

If you see a problem that needs fixing, get out your own wallet. You can certainly ask me to dip into mine. You may convince me to join you. Do not enlist the force of government to take my money to make your good deed a reality then call me selfish when I oppose you.

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Chris T.

#147 says:

" I do not ascribe to the notion that economic growth is ipso facto inflationary."

His whole point is correct, but let's come out and state an actual matter of fact:

In a fixed-monetary-base system (with 0% M-supply inflation), economic growth is DEflationary. It will drive prices down, because increases in productivity, economies of scale, etc, lead to declining marginal costs. With a fixed supply, prices decline.

And THAT is a good thing, anyone who does not agree, must have a private agenda.

BTW, that is also why housing decline is not jsut terrible, it is the way housing can once again become affordable.

And isn't THAT what all the do gooders in Congress seem to want for the "poor"?

An added benefit will be the reduction of revenue to the mostly bloated local governments due to declining property tax revenue, which will finally force them to relearn the thrift of yore.

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ghaws

Chris T. # 141:

Exactly... what? All I see is a non-sequiteur. What is the conclusion you are trying to draw from the affirmation of the ratification of the Humphrey-Hawkins Full Employment Act?

I acknowledge that the whole "priming the pump" thing is an oversimplification, but the idea of having some sort of lender of last resort isn't entirely discredited at all, I don't believe. I strongly do believe that government power is necessary to regulate the financial services sector to keep it from running wild on the playground with your pension fund as a chew toy. That's something we failed to do with regard to the recent "innovation" in the financial markets that has been so successful at artificially inflating housing prices (you see, monetary policy is just one small piece of that messy little puzzle -- other countries' lax montary policies are also equally to blame, and lax accounting rules regarding captial provisions against securitization, SIVs, conduits, etc. are probably the largest single contributing factor).

That may be fine and well that the US did fine a century ago under the gold standard, but remember that we live in a world today where traders can take huge positions in certain assets with a single keystroke. What happened to Bear Stearns could plausibly happen to the entire economy -- or, better yet, recall the lesson learned from George Soros' "breaking the bank of England". The US, with its looming unfunded social security liabilities and large twin deficits, is currently in no position to adopt a fixed exchange rate regime. Why? Because, long-term, that regime would be untenable unless we undertake austerity measures now - we would be a devaluation story waiting to happen. Better to let exchange rates float and allow the inevitable devaluation to happen gradually, which has been a long time in coming and is ultimately necessary if the rest of the world keeps growing at a faster rate than the US. It's that same insatiable demand for commodities in China and elsewhere that is stoking inflation -- you can't blame inflation on only one dimension of the economy (the money supply).

Look, this whole idea that a gold standard will somehow solve all our problems is just wishful thinking. You can't just snap your fingers, declare your currency to be convertible into a commodity at a fixed peg, and expect that your Pinto suddenly turns into a Porsche.

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Arne

I prefer to be considered an independent.

Irregardless of the party affiliation, its the quality of a persons credentials to hold a particular office as my representative.

I look for honesty first within myself.

That I in truth examine the rationality and qualifications for a particular candidate.

As for Palin.

I a m concerned.

1: Palin attempts to fire a state police officer by instructing the chief of state police to fire this state trooper.

When the chief refuses, Palin fires him. Why did he refuse; because this particular trooper was performing up to standards of conduct and efficiency.

Thomas Brownback

#1 wrote, way up there at the top of the thread, "Based on my own experience, when you really get the chance to speak to people, they tend to be more libertarian than numbers show."

That strikes me as an oversimplification. I find most people are libertarian towards policies they don't like, and rather statist towards policies they do.

People's preference ranking for government is more like:

1) Enact the policies I like.

2) Do nothing.

3) Enact the policies the other guy likes.

Maybe government is as large as it is merely because preference ranking is hard in elections, while a winner-take-all two-party system is easy.

Chris T.

ghaws:

you say:

"...the Fed having “failed” its mission — it’s actually done fairly well, on the balance — seeing as though inflation has usually been kept fairly low..."

And this is the crux, where we disagree.

-a 40-50% loss in value since 1980, or

- a 95+% loss in value since 1913

can hardly be called "fairly well".

Inflation, as def. by CPI, has not really been fairly low at all, other than by the use of the BLS's large bag of tricks.

John Williams states this much more succinclty and in a proven fashion, but the real CPI numbers just since 1980 are substantially worse than officially acknowledged.

The FED also did a terrible job on its mission from 1920-1930, and from 1970-1980.

We all think Paul Volcker was a savior type maverick, and someone like him certainly would have no chance today, nor would his policies (imagine paying the interest on our 10 trillion debt at 16+%, or the horrendous extra costs to the TIPS, or the Social Security inflation adjustments at 16%), but perhaps his mission was really to save the FED itself, no matter what?

But Volcker's actions are NON-REPEATABLE in any case.

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Shawn

It is absolutly amazing to be with groups of people that are asking questions that everyone has hered but no one has answeres for. with out these people where would we be. I don't even have to drop famous names through out history but they all stud up for somthing that at the time the majority thought was extreame. The Ron Paul movment is amazing.