2001 Ron Paul 30:1
Mr. PAUL. Mr. Speaker, almost on a daily
basis, government officials reassure us there
is no inflation to worry about. But, today’s definition
of inflation of rising prices as measured
by an artificial CPI and PPI is seriously flawed.
Rising prices are but one of the many consequences
of true inflation — which is an increase
in the supply of money and credit.
2001 Ron Paul 30:2
To understand the perversities of inflation
one must look to the money supply. The
money supply, as measured by M3, rose an
astounding $42 billion last week and is up a
whopping $210 billion in the past ten weeks.
MZM, another important measure of inflation,
is rising at the rate of 27%. Now that’s monetary
debasement!
2001 Ron Paul 30:3
But rising prices, a reflection of monetary inflation,
should not be dismissed as so many
government economists have done. The current
first quarter GDP report shows a 3.3%
rise in the personal consumption price index,
well above the 1.9% recorded in last year’s
fourth quarter.
2001 Ron Paul 30:4
And what about the record prices for gasoline?
To pretend that gasoline prices pose little
threat to American consumers is naive — not to
mention the skyrocketing electricity bills they
also face.
2001 Ron Paul 30:5
The most serious economic myth that Federal
Reserve economists perpetuate is that a
booming economy causes prices to rise and a
slowing economy will hold “inflation” in check.
Ever since 1971, when the fiat dollar was established,
records show that during each of
our economic slumps, prices rose even faster
than they did during periods of economic
growth, supporting the argument that rising
prices are a consequence of monetary policy.
2001 Ron Paul 30:6
Although the economy is now slowing, and
fuel prices are skyrocketing for the airlines,
Delta pilots are receiving salary increases of
between 24 and 34%. Other evidence of labor
cost increases is now available even with the
large and growing number of announced layoffs.
Wage prices pressure is more often than
not a consequence of monetary policy, not a
tight labor market.
2001 Ron Paul 30:7
Rising prices and the economic slowdown
must be laid at the feet of the Federal Reserve.
Likewise, the existing financial bubble is
a consequence of the same policy of monetary
expansion and artifically low interest
rates. Although the NASDAQ bubble has already
partially deflated, the entire world financial
system suffers from the same distortion;
and a lot more adjustment is required. Merely
re-inflating with monetary expansion and manipulating
interest rates will not solve the problems
of debt, mal-investment and overcapacity
that plague the system.
2001 Ron Paul 30:8
Mismanaging world fiat currencies and
working to iron out the trade imbalances that
result, through a worldwide managed trade organization,
will not suffice. We must one day
address the subject of sound money and free
market interest rates, where interest rates are
not set by the central banks of the world.
2001 Ron Paul 30:9
A sad consequence of today’s conditions is
that monetary policy encourages transfer of
wealth and power to the undeserving. The victims
of bad monetary policy then blame capitalism
for the inequities. The leftist demonstrators
at recent WTO, IMF, and World Bank
meetings make a legitimate point that the current
system has resulted in accumulation of
wealth and power in the hands of some at the
expense of others.
2001 Ron Paul 30:10
But this is an expected consequence of
monetary debasement, which generally leads
to social unrest. But, blaming capitalism and
freedom for the harm done by inflationism,
special interest corporatism, and interventionism
presents a danger to us all, since the
case for commodity money and individual liberty
is lost in the shouting. Unless this message
is heard and distinguished from the current
system, freedom and prosperity will be
lost. Leaders of the current worldwide system
that has evolved since the collapse of the Soviet
empire pay lip service to free trade and
free markets, but tragically they are moving us
toward a fascist system of partnerships with
government, big businesss, and international
banking at the expense of the middle class
and the poor.
