HON. RON PAUL
OF TEXAS
IN THE HOUSE OF REPRESENTATIVES
Friday, October 16, 1998
1998 Ron Paul 120:1
Mr. PAUL.
Mr. Speaker, a world-wide financial
crisis is now upon us.
1998 Ron Paul 120:2
For 2 years, I have called attention to this
predictable event hoping the Congress would
deal with it in a serious manner.
1998 Ron Paul 120:3
Although many countries are now suffering
more than the United States, in time, I am
sure 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 its turbulent
and commodity-driven inflation of the 1970’s.
1998 Ron Paul 120:4
Now, after another 27 years, we are seeing
the end of the post-Bretton Woods floating
rate system with another bang as the financial
asset inflation of the 1980’s and 1990’s collapses.
1998 Ron Paul 120:6
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 27 years. The sooner we
admit to its total failure, and start planning for
sound money, the better.
1998 Ron Paul 120:7
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 (debase) a currency, they
eventually do so. Politicians love the central
bank’s role as lender of last resort and their
power to monetize the steady stream of public
debt generated by the largesse that guarantees
the politician’s reelection.
1998 Ron Paul 120:8
The constitutional or credit restraint of a
commodity standard of money offers stability
and non-inflationary growth but does not accommodate
the special interests that demand
benefits bigger and faster than normal markets
permit. The only problem is the financial havoc
that results when the unsound system is
forced into a major correction which are inherent
to all fiat systems.
1998 Ron Paul 120:9
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. Attempts at credit
stimulation with interest rates below 1 percent
is doing nothing for Japan’s economy and for
good reasons. it is the wrong treatment for the
wrong diagnosis.
1998 Ron Paul 120:10
If the problem were 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 luck few, benefits
are received when government inflate the currency
and pass it out for political reasons.
1998 Ron Paul 120:11
But in time — and that time is now — it 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.
1998 Ron Paul 120:12
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. In addition, the
economic chaos leads too frequently to a loss
of personal liberty.
1998 Ron Paul 120:14
First, the Federal Reserve should be denied
the power to fix interest rates and buy government
debt. It should not be central economic
planner through manipulation of money and
credit.
1998 Ron Paul 120:15
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.
1998 Ron Paul 120:16
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.
1998 Ron Paul 120:17
Fourth, policy elsewhere 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.
1998 Ron Paul 120:18
Following a policy of this sort could quickly
restore growth and stability to any filing 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.
1998 Ron Paul 120:19
Short of a free market, sound money approach
will guarantee a sustained attack on
personal liberty as governments grow more
authoritarian and militaristic.
1998 Ron Paul Chapter 120
The text of this chapter was inserted in the section of CongressionalRecord entitled “Extensions of Remarks” and was not spoken on the House floor.
1998 Ron Paul 120:8 The constitutional or credit restraint Here, both constitutional
and credit modify restraint.
1998 Ron Paul 120:9 it is the wrong treatment is at the beginning of a sentence and should start with a capital letter:
It is the wrong treatment.
1998 Ron Paul 120:10 for the luck few probably should have been for the lucky few.
when government inflate the currency and pass it out probably should be either
when governments inflate the currency and pass it out or
when the government inflates the currency and passes it out.
1998 Ron Paul 120:18 filing economy probably should be failing economy.
