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1999 Ron Paul Chapter 76

Exchange Stabilization Fund

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15 July 1999


1999 Ron Paul 76:1
Mr. PAUL. Mr. Chairman, I move to strike the requisite number of words.

(Mr. PAUL asked and was given permission to revise and extend his remarks.)

1999 Ron Paul 76:2
Mr. PAUL. Mr. Chairman, I rise in support of this amendment, and I thank the gentleman from Vermont (Mr. SANDERS) for bringing this amendment to the floor.

1999 Ron Paul 76:3
I would like to clarify one thing about the original intent of the Exchange Stabilization Fund. It was never meant to be used to support foreign currencies. It should not be so casually accepted that that is the proper function of the Exchange Stabilization Fund.

1999 Ron Paul 76:4
The Exchange Stabilization Fund was set up, I think in error; but it was set up for the purpose of stabilizing the dollar in the Depression. How did that come about? Well, it started with an Executive order. It started with an Executive order to take gold forcefully from the people. And then our President then revalued gold from $20 an ounce to $35 an ounce, and there was a profit and they took this profit and used some of those profits to start the Exchange Stabilization Fund. They set it up with $200 million. It does not seem like a whole lot of money today. How did it come about over these many years that this fund has been allowed to exist without supervision of this Congress, and now has reached to the size of $34 billion and we give it no oversight? It is supposed to send reports to us, very superficial reports to the Congress. We don’t know how they got $34 billion. They earned interest on some of the loans, and all the loans are paid back because the countries who get the loans borrow more money.

1999 Ron Paul 76:5
Mr. Chairman, the Mexico bailout did not solve the Mexico problem. It is ongoing. The peso is in trouble again. They are in more debt than before. We only encourage the financial bubble around the world. This is a dangerous notion that we can take something that was set up to stabilize the dollar, and now we are pretending we can stabilize all the currencies in the world and use it as foreign aid to boot without the congressional approval. There is something seriously flawed with this.

1999 Ron Paul 76:6
It has also been suggested by many who know a lot more about the details of the Exchange Stabilization Fund than I do, and it has been suggested that possibly, quite possibly, what happens is Treasury deals in currencies all the time and there are profits to be made. And when there is a profit, it goes into the Exchange Stabilization Fund. When there is a loss. It is sent over to the Treasury and then recorded as a loss.

1999 Ron Paul 76:7
This is a magnificent thing, but in a free society, in a democracy, in a republic where we are supposed to have the rule of law, we are not supposed to have a slush fund that is run by our Treasury without supervision to be doing things that was never intended. This is a serious problem. And I think economically it is serious because it is contributing to the bubble. It is contributing to a financial bubble.

1999 Ron Paul 76:8
So, yes, we tide Mexico over for a year or two, but what are we going to say next year when there is another peso crisis? Are we going to close our eyes and say we will do whatever we want, it is a major crisis? Our obligation here in the Congress is to have a sound dollar, not to dilute the value of the dollar without our permission and for our President and our Treasury Department and the IMF and the World Bank and the internationalists to destroy the value of the dollar. That is not permissible under the rule of law, and yet we have casually permitted this to happen and we do not even ask the serious questions.

1999 Ron Paul 76:9
We should make it certain that all loans, all use of that is reviewed by the Congress. This is a very, very modest request by the gentleman from Vermont. It should be absolutely approved. But then some day we ought to give a serious study about how we as a Congress allow these kind of things to happen without our supervision.

1999 Ron Paul 76:10
What is the purpose of having a Congress? What is the purpose of the Constitution if we have an obligation to guarantee the value of the dollar and if we permit somebody not under our control to do whatever they want to the dollar under the pretense that we are going to protect the value of all the currencies of Asia?

1999 Ron Paul 76:11
Mr. Chairman, are we going to protect the Euro now? The Euro is getting pretty weak. I guess we are going to bail out the Euro. When it drops down under a dollar, we will expect the Exchange Stabilization Fund to come and bail out the Euro. This has to be looked at. This is the first very modest, very minimal step that we are making tonight. It should be overwhelmingly supported.

1999 Ron Paul 76:12
It is up to us to assume our responsibility to protect the dollar, have the rule of law, make sure that we assume the responsibilities that have been delegated to us and not close our eyes and let this slush fund of $34 billion that has existed for now these many decades and have allowed the Treasury Department to run it without us caring. So I plead with my colleagues, support the amendment.
Note:

1999 Ron Paul 76:2 I thank the gentleman from Vermont (Mr. SANDERS) for bringing this amendment to the floor. Here, Ron Paul thanks The Honorable Bernard V. Sanders.

1999 Ron Paul 76:4 It started with an Executive order to take gold forcefully from the people. And then our President then revalued gold from $20 an ounce to $35 an ounce, Actually, gold was revalued from $20.67 per ounce. For more on the gold confiscation, see http://Goldtheft.com.

1999 Ron Paul 76:7 that was never intended probably should be that were never intended.

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