A financial crisis is griping the world. It may yet prove to be the worst in all of history, but the source of the problem is not a mystery. It is a currency induced crisis.

Although taxes, spending, regulatory policies, and special interest cronyism compounds the problems, all nations of the world operate with a fiat monetary system and it has allowed the financial bubble to develop. Easy credit and artificially low interest rates starts a chain reaction that by its very nature guarantees a future correction. The later bad consequences of inflating a currency are certain, no matter how beneficial the earlier ones may seem.

Beneficiaries of easy credit demand the policy continue. Creating money and credit out of thin air is perfect counterfeiting, legal and appearing helpful to all. It accommodates deficit spending on extravagant welfare programs and unwarranted international militarism. It seems everyone likes it until the artificial nature of the financial bubble becomes apparent, as it is now.

The current crisis signals an end of an era and it does not bode well for anyone.

The near anarchy in Russia, the food riots in Indonesia, and the growing recession in Japan are signs of conditions spreading across the globe. And unfortunately, there is no sign that correct policy will soon be instituted - anywhere.

Markets inevitably devalue currencies that have been inflated by the monetary authorities. The degree depends on the amount of previous monetary inflation and political perceptions but, on the short run, countries frequently accelerate the devaluation in a competitive fashion in an effort to compete with their trading partners.

Our concerns in the Congress should be for the dollar. We should not use dollars to prop up other currencies or economies, as bail-outs compound the problems and encourage others to mismanage their economies while expecting more cash from Uncle Sam. But most importantly, it actually undermines the value of the dollar.

Foreign Central Banks for years have been willing holders of our dollars, helping to finance our big-spending ways, by buying more dollars than our own central bank. Foreign central banks, however, have begun dumping American dollars, and as this accelerates, pressure will increase on our economy.

What can we expect from our Federal Reserve? Just as difficult as it is for an addict to cut back on drugs, economic planners refuse to cut back the credit creation to which they have become addicted. Long life may be dependent on sound medical advice and drug abstinence, but feeling good on the short run drives the addict. Likewise, an economy feels good by perpetuating for as long as possible the easy credit that brought good times, while the long life of the currency, the economy and the political system gets little concern.

Let there be no doubt about it. The good times came with generous credit creation and low interest rates and the Fed will yield to the politicians' pressure to continue the process. Turning off the money spigot, and allowing the market to work will never be seriously considered.

But eventually, the markets will rule. Credit creation may lower rates for a time, but when confidence is undermined, an inflation premium will emerge and rates will rise regardless.

It's time to consider the fundamentals underlying our financial and economic system. The welfare state is unsustainable, as are our world-wide commitments to bail out everyone and to intervene in every fight.

A limited government designed to protect liberty and provide a national offense is one that could easily be managed with minimal taxes, but it would also require that we follow the advise of the Founders who explicitly admonished us not "to emit bills of credit" that is, paper money and use only silver and gold as legal tender. We need to lay plans for our future because we are rapidly approaching a time of crisis and chaos.

We surely do not want to leave the solution to presidential executive orders.

Congress has an explicit responsibility in the area of money and finance and we must assume this responsibility. Manipulating the money supply with the pretense of helping ourselves is unacceptable and destructive. Before our economy is lost, we should work diligently to restore soundness to our monetary policy.