Although many countries are now suffering more than the United States, in time, I am afraid our problems will become much greater.

A world-wide system of fiat money is the root of the crisis. The post-World War II Bretton Woods gold-exchange system was seriously flawed, and free market economists from the start predicted its demise. Twenty-seven years later, on August 15, 1971, it ended with a bang ushering in the turbulent and commodity-driven inflation of the 1970s.

Now, after another twenty-seven years, we are seeing the end of the post-Bretton Woods floating rate system with another bang as the financial asset inflation of the 1980s and 1990s collapses. A new system is now required.

Just as the Bretton Woods system was never repaired due to its flaws, so too will it be impossible to rebuild the floating rate system of the past twenty-seven years. The sooner we admit to its total failure, the better.

We must understand the serious flaw in the current system that is playing havoc with world markets. When license is given to central banks to inflate a currency, they eventually do so. Money can be inflated for only so long until serious problems arise.

That is what we are witnessing today. The world-wide fragile financial system is now collapsing, and tragically the only cry is for more credit inflation because the cause of our dilemma is not understood. An attempt at credit stimulation with interest rates below one percent, is doing nothing for Japan’s economy and for a good reason: It is the wrong treatment for the wrong diagnosis.

If the problem was merely that there were not enough money, then money creation alone could make us all millionaires and no one would have to work. But increasing the money supply does not increase wealth. Only work and savings do that. The deception comes because, for a while for the lucky few, benefits are received when governments inflate the currency and pass it out for political reasons.

But in time the free ride comes to an end. Even the beneficiaries suffer the inevitable consequences of a philosophy that teaches wealth comes from money creation and that central banks are acceptable central economic planners -- even in countries such as the United States where many pay lip service to free markets and free trade.

The tragedy in the end is far more damaging to the innocent than any benefit that was supposed to be delivered to the people as a whole. There is no justifiable trade-off. The costs far exceed the benefits.

A program to prevent this from happening is necessary.

First, the Federal Reserve should be denied the power to fix interest rates and buy government debt. It should not be a central economic planner through manipulation of money and credit.

Second, Congress should legalize the Constitutional principle that gold and silver be legal tender by prohibiting sales and capital gains taxes from being placed on all American legal tender coins.

Third, we must abandon the tradition of bailing out bad debtors, foreign and domestic. No International Monetary Fund and related institution funding to prop up bankrupt countries, and no Federal Reserve-orchestrated bailouts such as Long Term Capital Management LP. Liquidation of bad debt and investments must be permitted.

Fourth, policies must conform to free markets and free trade. Taxes, as well as government spending, should be lowered. Regulations should be greatly reduced, and all voluntary economic transactions in hiring practices should be permitted. No control on wages and prices should be imposed.

Following a policy of this sort could quickly restore growth and stability to any failing economy and soften the blow for all those about to experience the connections that have been put in place by previous years of mischief, mismanagement and monetary inflation.

Nothing but a free market, sound money approach to our economics can guarantee personal liberty or offer greater potential for fiscal rewards.