HON. RON PAUL
OF TEXAS
IN THE HOUSE OF REPRESENTATIVES
Friday, October 9, 1998
1998 Ron Paul 117:1
Mr. PAUL.
Global leaders are scurrying
around to put together, as quickly as possible,
a new plan to solve the international financial
crisis.
1998 Ron Paul 117:2
The world economies have been built on
generous credit expansion with each country
inflating their currencies at different rates. Additionally,
each country has had different political,
tax, and regulatory policies leading to various
degrees of trust and stability. Economies
that have “enjoyed” inflationary booms, by
their very nature, must undergo a market correction. The market demands deflation of all
excesses, while the politicians and special interests
agitate for continued credit inflation. Under these circumstances, financial assets
may deflate in price but monetary inflation
continues and the currency is further depreciated
thus putting serious pressure on the
dollar; as in the case of the United States.
1998 Ron Paul 117:3
Fluctuating fiat currencies, no matter how inefficient
as compared to a world commodity
monetary standard, function solely because
exchange rates are allowed to fluctuate and
currency movements across borders are freely
permitted as capital seeks the most efficient
market. This process provides an indication
when host countries need to improve monetary
and fiscal policy.
1998 Ron Paul 117:4
A gold standard solves capital flow problems
automatically and avoids all currency
speculation. Gold prevents excesses from developing
to any dangerous level.
1998 Ron Paul 117:5
Decades ago, the gold standard was abandoned
and now our global planners want to
take another step to regulate all capital flows
throughout the world thus removing the only
good indicator left to warn of dangers ahead
and the need for sound reform. The rapid
transfer of capital around the world is the messenger
and not the cause. Killing the messenger
will only hide and increase distortions
while prolonging the economic pain.
1998 Ron Paul 117:6
The proposal of the Group of 22 to regulate
capital flows through a new “World Central
Bank” prevents any effort to restore efficient
market mechanisms and prevents any serious
discussion for using gold as the money of
choice.
1998 Ron Paul 117:7
All money managers in major countries
decry currency controls by any individual
country yet are now about to embark on a
new world-wide approach to regulating all capital
flows — a global economic plan to socialize
all world credit. But, it won’t work because the
plan is deeply and inherently flawed.
1998 Ron Paul 117:8
First, the plan demands additional appropriations
to transfer wealth from the richer to
the poorer nations through increased funding
of the International Monetary Fund, World
Bank, Development Bank, and direct foreign
aid programs.
1998 Ron Paul 117:9
Second, it calls for more credit expansion by
the richer nations, more loan guarantees, and
export-import bank credits and, indirectly, by
providing credit to the Exchange Stabilization
Fund and possibly to the Bank International
Settlements.
1998 Ron Paul 117:10
Third this plan calls for an international government
agreement to strictly control capital
flows and mandate debt forgiveness in contrast
to allowing countries to default. Controlling
swift movements of capital is impossible
and any attempt only encourages world government
through planning by a world fiat monetary
system. Any temporary “benefit” can
only be achieved through an authoritarian approach
to managing the world economy, all
done with the pretense of preserving financial
stability at the expense of national sovereignty
and personal liberty.
1998 Ron Paul 117:11
Let there be no doubt, the current chaos is
being used to promote a new world fiat monetary
system while giving political powers to its
managers.
1998 Ron Paul 117:12
Instead, we should be talking about abandoning
the paper money system we have lived
with for 27 years. It has, after all, brought us
the current world-wide financial mess.
1998 Ron Paul 117:13
Free markets and stable money should be
our goal, not further institutionalizing of world
economic planning and fiat money at the sacrifice
of personal liberty. Indeed, we need a
serious discussion of the current crisis but so
far no one should be encouraged by the direction
in which the Group of 22 is going. Our responsibility
here in the Congress is to protect
the dollar, not to sit idly by as it’s being deliberately
devalued.
Notes:
1998 Ron Paul 117:9 export-import bank probably should have been capitalized: Export-Import Bank.
Bank International Settlements probably should be Bank for International Settlements.
1998 Ron Paul 117:10 Third this plan probably should have a comma: Third, this plan.
