The SPEAKER pro tempore (Mr.
EVERETT). Under a previous order of
the House, the gentleman from Texas
(Mr. PAUL) is recognized for 5 minutes.
1998 Ron Paul 104:1
Mr. PAUL.
Mr. Speaker, the world financial
markets have been in chaos
now for nearly a year and a half. The
problem surrounding long-term capital
investment is only one more item to
add to the list. The entire process represents
the unwinding of speculative
investments encouraged by years of
easy credit. By the way, Long Term
Credit Management is not even an
American corporation. It is registered
in the Cayman Islands, I am sure for
tax purposes.
1998 Ron Paul 104:2
The mess we are witnessing in the
world today was a predictable event. Artificially low interest rates and easy
credit causes malinvestment, overcapacity,
excessive borrowing and uncontrolled
speculation.
1998 Ron Paul 104:3
We have had now for 27 years a world
saturated with fiat currencies and not
one has had a definable unit of account.
1998 Ron Paul 104:4
There have been no restraints on the
world monetary managers to expand
their money supplies, fix short-term interest
rates or deliberately debase their currencies. Although short-term benefits were enjoyed, it
is clear now they were not worth the
resulting chaos. We need not look for
the cause which puts the dollar, our
economy and our financial markets at
risk. The previous boom supported by
the illusion of wealth coming from
money creation is the cause of current
world events, and it guarantees further
unwinding of the speculative orgy of
the past decades.
1998 Ron Paul 104:5
This cannot be prevented. All that we
can hope for is to not prolong the
agony, as our monetary and fiscal policies
did in the U.S. in the 1930s and as
they are currently doing in Japan and
elsewhere in the world.
1998 Ron Paul 104:6
More Federal Reserve fixing of interest
rates and credit expansion can
hardly solve our problems when this
has been precisely the cause of the
mess in which we currently find ourselves.
1998 Ron Paul 104:7
Price fixing of interest rates contradicts
the basic tenets of capitalism. Let it no more be said that today’s
mess with financial markets is a result
of capitalism’s shortcomings. Nothing
is further from the truth. Allowing the
market to operate even under today’s
dangerous conditions is still the best
option for dealing with hedge fund’s
gambling mistakes, both current and
future.
1998 Ron Paul 104:8
A Federal Reserve orchestrated and
arm-twisting bailout of LTCM associated
with less than a coincidentally announced
credit expansion only puts
long-term pressure on the dollar. All
Americans suffer when the dollar is debased. Congress’s responsibility is to
the dollar and not foreign currencies,
not foreign economies or international
hedge funds which get in over their
heads.
1998 Ron Paul 104:9
No amount of regulation could have
prevented or in the future prevent the
inevitable mistakes made in an economy
that is misled by rigged interest
rates or a money supply dictated by
central planners in a fiat money system.
1998 Ron Paul 104:10
Hedge fund operations, because
they are international in scope, are impossible
to regulate and for the current
ongoing crisis it is too late anyway.
1998 Ron Paul 104:11
Credit conditions that allow a company
with less than $1 billion in capital
to buy $100 billion worth of stock with
borrowed money and manage $1.2 trillion
worth of derivatives is about as
classic an example as one could ever
find of speculative excess brought on
by easy credit. As long as capital is
thought to come from a computer at
the Federal Reserve and not from savings,
the financial problems the world
faces today will persist.
1998 Ron Paul 104:12
Our problems today should not be
used to justify a worldwide central
bank, as has been proposed. What we
need is sound money without the central
planning efforts of a Federal Reserve
system fixing interest rates and
regulating the money supply. Let us
give freedom a chance.
Notes:
1998 Ron Paul Chapter 104
The C-Span coverage of this speech has no audio.
1998 Ron Paul 104:1 Long Term Credit Management
perhaps the same company referred to as Long-Term Capital Management in
1998 Ron Paul 102:2
and as Long Term Capital Management LP in
1998 Ron Paul 120:16.
1998 Ron Paul 104:2 Artificially low interest rates and easy credit causes malinvestment probably should be
Artificially low interest rates and easy credit cause malinvestment.
1998 Ron Paul 104:4 Although. probably belongs at the beginning of the next verse, to make it read,
Although short-term benefits were enjoyed, it is clear now they were not worth the resulting chaos.
1998 Ron Paul 104:8 hedge fund’s gambling mistakes probably should have an article and be:
a hedge fund’s gambling mistakes.
1998 Ron Paul 104:9 A Federal Reserve orchestrated probably should be hyphenated: A Federal Reserve-orchestrated.
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