[Congressional Record Volume 148, Number 72 (Wednesday, June 5, 2002)]
[House]
[Page H3205]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         BEWARE DOLLAR WEAKNESS

  The SPEAKER pro tempore (Mr. Schrock). Under a previous order of the 
House, the gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Mr. Speaker, I have for several years come to the House 
floor to express my concern for the value of the dollar. It has been, 
and is, my concern that we in the Congress have not met our 
responsibility in this regard. The constitutional mandate for Congress 
should only permit silver and gold to be used as legal tender and has 
been ignored for decades and has caused much economic pain for many 
innocent Americans. Instead of maintaining a sound dollar, Congress has 
by both default and deliberate action promoted a policy that 
systematically depreciates the dollar. The financial markets are keenly 
aware of the minute-by-minute fluctuations of all the fiat currencies 
and look to these swings in value for an investment advantage. This 
type of anticipation and speculation does not exist in a sound monetary 
system. But Congress should be interested in the dollar fluctuation not 
as an investment but because of our responsibility for maintaining a 
sound and stable currency, a requirement for sustained economic growth.
  The consensus now is that the dollar is weakening and the hope is 
that the drop in its value will be neither too much nor occur too 
quickly; but no matter what the spin is, a depreciating currency, one 
that is losing its value against goods, services, other currencies and 
gold, cannot be beneficial and may well be dangerous. A sharply 
dropping dollar, especially since it is the reserve currency of the 
world, can play havoc with the entire world economy.
  Gold is history's oldest and most stable currency. Central bankers 
and politicians hate gold because it restrains spending and denies them 
the power to create money and credit out of thin air. Those who promote 
big government, whether to wage war and promote foreign expansionism or 
to finance the welfare state here at home, cherish this power.
  History and economic law are on the side of the gold. Paper money 
always fails. Unfortunately, though, this occurs only after many 
innocent people have suffered the consequences of the fraud that paper 
money represents. Monetary inflation is a hidden tax levied more on the 
poor and those on fixed incomes than the wealthy, the bankers, or the 
corporations.
  In the past 2 years, gold has been the strongest currency throughout 
the world in spite of persistent central banks selling designed to 
suppress the gold price in hopes of hiding the evil caused by the 
inflationary policies that all central bankers follow. This type of 
depreciation only works for short periods; economic law always rules 
over the astounding power and influence of central bankers.
  That is what is starting to happen, and trust in the dollar is being 
lost. The value of the dollar this year is down 18 percent compared to 
gold. This drop in value should not be ignored by Congress. We should 
never have permitted this policy that was deliberately designed to 
undermine the value of the currency.
  There are a lot of reasons the market is pushing down the value of 
the dollar at this time. But only one is foremost. Current world 
economic and political conditions lead to less trust in the dollar's 
value. Economic strength here at home is questionable and causes 
concerns. Our huge foreign debt is more than $2 trillion, and our 
current account deficit is now 4 percent of GDP and growing. Financing 
this debt requires borrowing $1.3 billion per day from overseas. But 
these problems are ancillary to the real reason that the dollar must go 
down in value. For nearly 7 years the U.S. has had the privilege of 
creating unlimited amounts of dollars with foreigners only too eager to 
accept them to satisfy our ravenous appetite for consumer items. The 
markets have yet to discount most of this monetary inflation. But they 
are doing so now; and for us to ignore what is happening, we do so at 
the Nation's peril. Price inflation and much higher interest rates are 
around the corner.
  Misplaced confidence in a currency can lead money managers and 
investors astray, but eventually the piper must be paid. Last year's 
record interest rate drop by the Federal Reserve was like pouring 
gasoline on a fire. Now the policy of the past decade is being 
recognized as being weak for the dollar; and trust and confidence in it 
is justifiably being questioned.
  Trust in paper is difficult to measure and anticipate, but long-term 
value in gold is dependable and more reliably assessed. Printing money 
and creating artificial credit may temporarily lower interest rates, 
but it also causes the distortions of malinvestment, overcapacity, 
excessive debt and speculation. These conditions cause instability, and 
market forces eventually overrule the intentions of the central 
bankers. That is when the apparent benefits of the easy money 
disappear, such as we dramatically have seen with the crash of the dot-
coms and the Enrons and many other stocks.
  It is back to reality. This is serious business, and the correction 
that must come to adjust for the Federal Reserve's mischief of the past 
30 years has only begun. Congress must soon consider significant 
changes in our monetary system.
  Congress must soon consider significant changes in our monetary 
system if we hope to preserve a system of sound growth and wealth 
preservation. Paper money managed by the Federal Reserve System cannot 
accomplish this. In fact, it does the opposite.

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