The following statement is written by
Congressman Paul about the pending financial disaster. He will introduce this
statement as a special order and insert it into the Congressional Record next
I have, for the past 35 years, expressed my grave
concern for the future of America. The course we have taken over the past century
has threatened our liberties, security and prosperity. In spite of these
long-held concerns, I have days—growing more frequent all the
time—when I’m convinced the time is now upon us that some Big
Events are about to occur. These fast-approaching events will not go
unnoticed. They will affect all of us. They will not be limited to just some
areas of our country. The world economy and political system will share in
the chaos about to be unleashed.
Though the world has long suffered from the senselessness
of wars that should have been avoided, my greatest fear is that the course on
which we find ourselves will bring even greater conflict and economic
suffering to the innocent people of the world—unless we quickly change
America, with her traditions of free markets and
property rights, led the way toward great wealth and progress throughout the
world as well as at home. Since we have lost our confidence in the principles
of liberty, self reliance, hard work and frugality, and instead took on
empire building, financed through inflation and debt, all this has changed.
This is indeed frightening and an historic event.
we face is not new in history. Authoritarianism has been around a long time.
For centuries, inflation and debt have been used by tyrants to hold power,
promote aggression, and provide “bread and circuses” for the
people. The notion that a country can afford “guns and butter”
with no significant penalty existed even before the 1960s when it became a
popular slogan. It was then, though, we were told the Vietnam War and a
massive expansion of the welfare state were not problems. The seventies
proved that assumption wrong.
Today things are different from even ancient times
or the 1970s. There is something to the argument that we are now a global
economy. The world has more people and is more integrated due to modern
technology, communications, and travel. If modern technology had been used to
promote the ideas of liberty, free markets, sound money and trade, it would have
ushered in a new golden age—a globalism we could accept.
Instead, the wealth and freedom we now enjoy are
shrinking and rest upon a fragile philosophic infrastructure. It is not
unlike the levies and bridges in our own country that our system of war and welfare
has caused us to ignore.
I’m fearful that my concerns have been
legitimate and may even be worse than I first thought. They are now at our
doorstep. Time is short for making a course correction before this grand
experiment in liberty goes into deep hibernation.
There are reasons to believe this coming crisis is
different and bigger than the world has ever experienced. Instead of using
globalism in a positive fashion, it’s been used to globalize all of the
mistakes of the politicians, bureaucrats and central bankers.
Being an unchallenged sole superpower was never
accepted by us with a sense of humility and respect. Our arrogance and
aggressiveness have been used to promote a world empire backed by the most
powerful army of history. This type of globalist intervention creates
problems for all citizens of the world and fails to contribute to the
well-being of the world’s populations. Just think how our personal
liberties have been trashed here at home in the last decade.
The financial crisis, still in its early stages, is
apparent to everyone: gasoline prices over $4 a gallon; skyrocketing
education and medical-care costs; the collapse of the housing bubble; the
bursting of the NASDAQ bubble; stockmarkets plunging; unemployment rising;,
massive underemployment; excessive government debt; and unmanageable personal
debt. Little doubt exists as to whether we’ll get stagflation. The
question that will soon be asked is: When will the stagflation become an
There are various reasons that the world economy has
been globalized and the problems we face are worldwide. We cannot understand
what we’re facing without understanding fiat money and the
long-developing dollar bubble.
There were several stages. From the inception of the
Federal Reserve System in 1913 to 1933, the Central Bank established itself
as the official dollar manager. By 1933, Americans could no longer own gold,
thus removing restraint on the Federal Reserve to inflate for war and
By 1945, further restraints were removed by creating
the Bretton-Woods Monetary System making the dollar the reserve currency of
the world. This system lasted up until 1971. During the period between 1945
and 1971, some restraints on the Fed remained in place. Foreigners, but not
Americans, could convert dollars to gold at $35 an ounce. Due to the
excessive dollars being created, that system came to an end in 1971.
It’s the post Bretton-Woods system that was
responsible for globalizing inflation and markets and for generating a
gigantic worldwide dollar bubble. That bubble is now bursting, and
we’re seeing what it’s like to suffer the consequences of the
many previous economic errors.
Ironically in these past 35 years, we have benefited
from this very flawed system. Because the world accepted dollars as if they
were gold, we only had to counterfeit more dollars, spend them overseas
(indirectly encouraging our jobs to go overseas as well) and enjoy unearned
prosperity. Those who took our dollars and gave us goods and services were
only too anxious to loan those dollars back to us. This allowed us to export
our inflation and delay the consequences we now are starting to see.
But it was never destined to last, and now we have
to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements
are coming due just as the world has become more reluctant to hold dollars.
The consequence of that decision is price inflation in this country—and
that’s what we are witnessing today. Already price inflation overseas
is even higher than here at home as a consequence of foreign central
bank’s willingness to monetize our debt.
Printing dollars over long periods of time may not
immediately push prices up–yet in time it always does. Now we’re
seeing catch-up for past inflating of the monetary supply. As bad as it is
today with $4 a gallon gasoline, this is just the beginning. It’s a
gross distraction to hound away at “drill, drill, drill” as a
solution to the dollar crisis and high gasoline prices. Its okay to let the
market increase supplies and drill, but that issue is a gross distraction
from the sins of deficits and Federal Reserve monetary shenanigans.
This bubble is different and bigger for another
reason. The central banks of the world secretly collude to centrally plan the
world economy. I’m convinced that agreements among central banks to
“monetize” U.S. debt these past 15 years have existed, although
secretly and out of the reach of any oversight of anyone—especially the
U.S. Congress that doesn’t care, or just flat doesn’t understand.
As this “gift” to us comes to an end, our problems worsen. The
central banks and the various governments are very powerful, but eventually
the markets overwhelm when the people who get stuck holding the bag (of bad
dollars) catch on and spend the dollars into the economy with emotional zeal,
thus igniting inflationary fever.
This time—since there are so many dollars and
so many countries involved—the Fed has been able to “paper”
over every approaching crisis for the past 15 years, especially with Alan
Greenspan as Chairman of the Federal Reserve Board, which has allowed the
bubble to become history’s greatest.
The mistakes made with excessive credit at
artificially low rates are huge, and the market is demanding a correction.
This involves excessive debt, misdirected investments, over-investments, and
all the other problems caused by the government when spending the money they
should never have had. Foreign militarism, welfare handouts and $80 trillion
entitlement promises are all coming to an end. We don’t have the money
or the wealth-creating capacity to catch up and care for all the needs that
now exist because we rejected the market economy, sound money, self reliance
and the principles of liberty.
Since the correction of all this misallocation of
resources is necessary and must come, one can look for some good that may
come as this “Big Even” unfolds.
There are two choices that people can make. The one
choice that is unavailable to us is to limp along with the status quo and
prop up the system with more debt, inflation and lies. That won’t
One of the two choices, and the one chosen so often
by government in the past is that of rejecting the principles of liberty and
resorting to even bigger and more authoritarian government. Some argue that
giving dictatorial powers to the President, just as we have allowed him to
run the American empire, is what we should do. That’s the great danger,
and in this post-911 atmosphere, too many Americans are seeking safety over
freedom. We have already lost too many of our personal liberties already.
Real fear of economic collapse could prompt central planners to act to such a
degree that the New Deal of the 30’s might look like Jefferson’s
Declaration of Independence.
The more the government is allowed to do in taking
over and running the economy, the deeper the depression gets and the longer
it lasts. That was the story of the 30ss and the early 40s, and the same
mistakes are likely to be made again if we do not wake up.
But the good news is that it need not be so bad if
we do the right thing. I saw “Something Big” happening in the
past 18 months on the campaign trail. I was encouraged that we are capable of
waking up and doing the right thing. I have literally met thousands of high
school and college kids who are quite willing to accept the challenge and
responsibility of a free society and reject the cradle-to-grave welfare that
is promised them by so many do-good politicians.
If more hear the message of liberty, more will join
in this effort. The failure of our foreign policy, welfare system, and
monetary policies and virtually all government solutions are so readily
apparent, it doesn’t take that much convincing. But the positive
message of how freedom works and why it’s possible is what is urgently
One of the best parts of accepting self reliance in
a free society is that true personal satisfaction with one’s own life
can be achieved. This doesn’t happen when the government assumes the
role of guardian, parent or provider, because it eliminates a sense of pride.
But the real problem is the government can’t provide the safety and
economic security that it claims. The so-called good that government claims
it can deliver is always achieved at the expense of someone else’s
freedom. It’s a failed system and the young people know it.
Restoring a free society doesn’t eliminate the
need to get our house in order and to pay for the extravagant spending. But
the pain would not be long-lasting if we did the right things, and best of
all the empire would have to end for financial reasons. Our wars would stop,
the attack on civil liberties would cease, and prosperity would return. The
choices are clear: it shouldn’t be difficult, but the big event now
unfolding gives us a great opportunity to reverse the tide and resume the
truly great American Revolution started in 1776. Opportunity knocks in spite
of the urgency and the dangers we face.
Let’s make “Something Big is
Happening” be the discovery that freedom works and is popular and the
big economic and political event we’re witnessing is a blessing in
Congressman Ron Paul
enjoys a national reputation as the premier advocate for liberty in politics
today. Dr. Paul is the leading
spokesman in Washington for limited constitutional government, low taxes,
free markets, and a return to sound monetary policies based on
commodity-backed currency. For more information click on the Project Freedom website.
Published with the authorization of Dr. Paul.
Copyright Dr. Ron Paul