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1998 Ron Paul Chapter 79

Exchange Stabilization Fund

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16 July 1998


1998 Ron Paul 79:1
Mr. PAUL. Mr. Chairman, I move to strike the requisite number of words.

1998 Ron Paul 79:2
Mr. Chairman, I rise to support this amendment. I would have to say this amendment is a very modest approach to a serious problem. I see no reason for the Exchange Stabilization Fund to exist. There is no constitutional authority for it. There is no economic benefit for it. It is detrimental to the people.

1998 Ron Paul 79:3
The reason why we have to support this amendment is it is a modest, just a small step in the direction of openness in government, a little bit of accountability, a little bit of oversight. The idea that we can create a fund in 1934 and have essentially no oversight for all these years, I just wonder how many billions, probably hundreds of billions, of dollars that have come and gone in and out and all the mischief it has caused. It was originally set up to stabilize the dollar. And what does it do, as the gentleman from Alabama mentioned earlier, stabilizes the yen.

1998 Ron Paul 79:4
Where did the money come from? It came from confiscation, not through taxation, but confiscating gold from the American people, revaluing the gold, taking the net profits, putting it into the Exchange Stabilization Fund, as well as the initial financing of the IMF.

1998 Ron Paul 79:5
They tried to reassure us and say, well, this is not an injury to our appropriations process. We do not appropriate money. We do not lose money. Well, that is precisely the problem. We are supposed to have responsibility. It is not the kind of amendment I want.

1998 Ron Paul 79:6
We should be talking about this in terms of a free society. Certainly, if we had a sound currency, under a sound currency we do not have all this kind of mischief going on. And certainly, if we had a lot of respect for the Constitution and actually knew something about the Doctrine of Enumerated Powers, we would say, where do we get this authority to prop up other countries and other currencies at the expense of the American taxpayers?

1998 Ron Paul 79:7
This amendment, if we want to give a lot of foreign aid away, this does not preclude it, it just slows us up a little bit and makes us think about it.

1998 Ron Paul 79:8
Yes, we can get into the currency markets to the tune of billions of dollars. They say, well, there is only 38; they might not be able to do any mischief. But my strong suspicion is that the line of credit to the Federal Reserve is endless in the time of crisis.

1998 Ron Paul 79:9
This is why we need more openness. Because, ultimately, this is a threat to the dollar. The dollar, when it is devalued, it hurts the American taxpayer. It is a hidden tax. When we devalue the dollar, we are spending money indirectly. We take away wealth and purchasing power from the American people. And it is a sinister tax. It is the most sinister of all taxes.

1998 Ron Paul 79:10
That is why the Exchange Stabilization Fund should either be abolished or put on the appropriations process. If we cannot do that or will not do that, we have to at least pass this amendment. Pass this amendment and say, yes.

1998 Ron Paul 79:11
If we are going to give away $250 million per country for propping up a foreign currency or foreign country or propping up some banks that made loans overseas or propping up our competitors to our own industries, we have to at least know about it.

1998 Ron Paul 79:12
I do not think this is much of an amendment. The fact that the President threatens to veto this bill just because we are acting responsibly, this is just a small step in the right direction. I see no reason why we cannot pass this amendment.

1998 Ron Paul 79:13
We talk a lot about supporting the currency. On a day-to-day basis, $1.6 trillion are transferred over the wire service. There is not one reputable economist in this country that I know of that really defends currency intervention as being productive and being able to change the course of events. Because although $38 billion is a lot of money and intervention does cause sudden shocks, causes some bond traders, currency traders to lose money quickly, it has no long-term effect.

1998 Ron Paul 79:14
So the original purpose under fixed exchange rate no longer exists. There is no need to prop up a dollar under floating currencies. This is used precisely to bail out special privileged people who have made loans overseas, special corporations around the country, special countries that are our competitors, and it is a way of getting around the Congress, it is a way of devaluing the dollar, putting more pressure on the dollar and hurting the American people.

1998 Ron Paul 79:15
If for no other reason, if my colleagues disagree with all the economic arguments, there should be nobody that should disagree with the fact that we have a responsibility for open government. That is what this issue is all about, and that is what this amendment makes an attempt to do is try to at least get it back to where we will be responsible for our acts.
Notes:

1998 Ron Paul 79:3 it is a modest, just a small step probably should be it is just a modest, small step.

1998 Ron Paul 79:3 And what does it do, as the gentleman from Alabama mentioned earlier, stabilizes the yen. Here, Ron Paul refers to a statement by The Honorable Spencer Bachus.

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