The Book of Ron Paul
1997 Ron Paul Chapter 16
9 April 1997
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Congressional Record Cached
The SPEAKER pro tempore. Under a previous order of the House, the gentleman from Texas [Mr. PAUL] is recognized for 5 minutes.
1997 Ron Paul 16:1
Mr. PAUL. Mr. Speaker, the business cycle has not yet been repealed, but if we did the right thing in the Congress, I believe we could do a lot to alleviate the great harm done by the business cycle.
1997 Ron Paul 16:2
Mr. Speaker, artificially low interest rates are the culprit in the Government created boom bust cycle. Federal regulated low rates cause bad business decisions, confuse consumers and encourage debt. These distortions prompt market corrections which bring on our slumps.
1997 Ron Paul 16:3
In recent years the artificially low interest rates that banks pay on savings have served to reduce savings. In the 1970s savings were low because it was perceived that the money was rapidly losing its purchasing power. It was better to spend than to save. As money leaves savings accounts it frequently goes into stocks and bonds adding fuel to the financial bubble which has been developing now for over 15 years. Domestic and foreign central bank purchases of our treasury debt further serves to distort and drive interest rates below the market level.
1997 Ron Paul 16:4
Our soaring trade deficit is something that cannot be ignored. In January there was a negative trade deficit in goods of more than $19 billion, the highest in our history. Our deficit has now been running over $100 billion for several years, and the artificially strong dollar has encouraged this imbalance. Temporarily a negative trade balance is a benefit to American consumers by holding down price inflation here at home and allowing foreigners to finance our extravagance. These trends will end once confidence is shattered and the dollar starts to lose value on the international exchange markets.
1997 Ron Paul 16:5
The tragedy is that there are very few in Congress interested in this issue. Even on the Committee on Banking and Financial Services I hear very little concern expressed about the long term weakness of the dollar, yet economic law dictates that persistent negative trade imbalances eventually have to be corrected; it is only a matter of time.
1997 Ron Paul 16:6
I suspect in the next several years Congress will be truly challenged. The high level of frustration in this body comes from the fact that the large majority are not yet willing to give up the principles upon which the welfare state exists. Eventually an economic crisis will force all Americans, including Congress, to face up to the serious problems that we have generated for ourselves over the past 50 years.
1997 Ron Paul 16:7
I expect deficits to explode and not come down. I suspect the economy is much weaker than is currently claimed. In the not too distant future we will be in a serious recession. Under these circumstances the demand for spending will override all other concerns. In spite of current dollar euphoria, dollar weakness will become the economic event of the late 1990s. Consumers and entitlement recipients will face the problem of stagflation, probably worse than we saw in the 1970s. I expect very few in Congress to see the monetary side of this problem.
1997 Ron Paul 16:8
The welfare state will be threatened, and yet the consensus will remain that what is needed is more revenues to help alleviate the suffering, more Federal Reserve monetary stimulus to the economy, more price controls, which we already have in medicine, higher taxes and protectionism.
1997 Ron Paul 16:9
Soon it will be realized that NAFTA and GATT were not free trade treaties, but only an international effort at trade management for the benefit of special interests. Ask any home builder how protectionist sentiment adds several thousands of dollars to the cost of a home by keeping out cheaper Canadian lumber in spite of NAFTAs pretense at free trade.
1997 Ron Paul 16:10
The solution to this mess is not complex. It is however politically difficult to overcome the status quo and the conventional wisdom of our intellectual leaders and the media. What we need is a limited government designed for the protection of liberty. We need minimal control over our Nations wealth, not the more than 50-percent of government control that we currently have. Regulatory control in minutia, as we have today, must end. Voluntary contracts need to be honored once again. None of this will work unless we have a currency that cannot be debased and a tax system that does not tax income, savings, capital gains estates or success.
1997 Ron Paul 16:11
Although it will be difficult to go from one form of government to another, there will be much less suffering if we go rapidly in the direction of more freedom rather than a protracted effort to save the welfare state. Perestroika and glasnost did not save communism. Block grants, a line item veto and a balanced budget amendment will not save the welfare state.
1997 Ron Paul 16:12
I yield back the balance of my time.
1997 Ron Paul 16:5
Ron Paul says, Banking Committee and Congressional Record misquotes him as saying Committee on Banking and Financial Services. See the C-Span video, at 14:10:31 local time.
1997 Ron Paul 16:12
This verse does not appear in Congressional Record.