2001 Ron Paul 22:1
Mr. PAUL. Mr. Speaker, today the
Federal Reserve lowered interest rates
by a half a percentage point. They have
been asked to lower this interest rates
by just about everybody in the country.
Whether they are investors or politicians,
everybody literally has been
screaming at the Fed and Alan Greenspan
to lower the interest rates, lower
the interest rates.
2001 Ron Paul 22:2
It was anticipated that he would, and
he did. He lowered the interest rates by
50 basis points. The stock market
promptly went down 236 points. So obviously
just lowering interest rates is
not the solution to the problems we
face. As a matter of fact, I believe it is
the problem.
2001 Ron Paul 22:3
Interest rates have been manipulated
by the Federal Reserve as long as I can
remember, especially in the last 30
years since we have had a total fiat
monetary system. So it is the manipulation
of interest rates that causes a
problem.
2001 Ron Paul 22:4
In a free market economy, you do not
have a central bank pretending it has
knowledge it does not have, that it
knows exactly what the money supply
should be and what interest rate should
be. That is a prescription for disaster;
and it leads to booms and busts, speculations
in the stock markets, crashes
in the stock markets. This is a well-known
phenomenon. It has been with
us since 1913, since we have had the
Federal Reserve. We have seen it in the
speculation in the 1920s and the depression
of the 1930s. It is ongoing.
2001 Ron Paul 22:5
We have a responsibility here in the
Congress to deal with this. We have a
responsibility to maintain the integrity
of the money. Yet we up that responsibility
to a secretive body that
works on its own, deliberating and deciding
how much money supply we
should have.
2001 Ron Paul 22:6
To lower interest rates, a central
bank has to increase the money. That
is debasement. That is devaluing the
money deliberately. In the old days,
when the king would do this, they
would clip coins. Literally coin
debasement, stealing value from coinage
in the old days was a capital crime.
Today, though, it is accepted practice
in all economies of the world. We have
had no linkage of any currency of the
world in the last 30 years to anything
of real value.
2001 Ron Paul 22:7
The economies have functioned relatively
well. But just in the last 6
years, we have had eight financial
international crises, all patched together
by more inflation, more printing
of more money. Let me tell my colleagues,
I am convinced it will not last,
it will not continue.
2001 Ron Paul 22:8
Take a look at what is happening in
Japan today. Japan lowered their interest
rates, too. They have been doing
this for a long time. They are down to
0 percent, and nothing seems to be happening.
Their stock market is at a
level it was 16 years ago. We have to
decide whether or not we may be moving
into a similar situation. I think it
is a very serious problem.
2001 Ron Paul 22:9
We talk about interest rates. We talk
about stimulating the economy. But
we really do not talk about the problem,
and that is the monetary system
and the nature of the dollar.
2001 Ron Paul 22:10
The money supply right now is currently
rising at the rate of 20 percent,
as measured by MZN. This is horrendous
inflation. This is inflation. Everybody
says no, there are reassurances.
The Federal Reserve and all the statisticians
say there is no inflation. The
CPI is okay and the PPI is okay. But
there is inflation. Because if one increases
the supply of money, one is creating
inflation.
2001 Ron Paul 22:11
The most important aspect of that is
the instability it creates in the marketplace.
It does not always lead to a
CPI increasing at 10 or 15 percent. Our
CPI is rising significantly. We have
other prices going up significantly,
like education costs and medical care
costs, housing costs. So there is a lot of
inflation even when one measures it by
prices.
2001 Ron Paul 22:12
But the real problem with the inflation
when one allows a central bank to
destroy its money is twofold. One, it
creates an overcapacity or overinvestment,
excessive debt that always has
to be wiped out and cleaned out of the
situation, or economic growth cannot
be resumed. Japan has not permitted
this to happen, and economic growth
has not resumed. That is the most important
aspect because that causes the
unemployment and that causes the
harm to so many people.
2001 Ron Paul 22:13
Now, there is another aspect of inflation,
that is the monetary debasement
that I have great concern about. That
is, when it goes to extremes, it inevitably
wipes out the middle class. It destroys
the middle class. We are just
starting to see that happening in this
country.
2001 Ron Paul 22:14
Low middle-income earners, individuals
who are still not on the dole but
willing to work, they are having a
tough time paying their bills. That is
the early stages of what happens when
a currency is destroyed.
2001 Ron Paul 22:15
Last year, for the first time in our
history of keeping this record since
1945, in 55 years, the wealth of the
American people went down 2 percent.
