[Congressional Record Volume 152, Number 19 (Wednesday, February 15, 2006)]
[House]
[Pages H318-H324]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE END OF DOLLAR HEGEMONY
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 4, 2005, the gentleman from Texas (Mr. Paul) is recognized for
60 minutes.
Mr. PAUL. Mr. Speaker, my Special Order tonight deals with the
subject, the end of dollar hegemony. Mr. Speaker, 100 years ago it was
called dollar diplomacy; after World War II and especially after the
fall of the Soviet Union in 1989 the policy had all been to dollar
hegemony.
After all of this great success, our dollar dominance is coming to an
end. It has been said, rightly, that he who holds the gold makes the
rules. In earlier times it was readily accepted that fair and honest
trade be required in an exchange of something of real value. First, it
was simply barter of goods, and then it was discovered that gold held a
universal attraction and was a convenient substitute for more
cumbersome barter transactions.
Not only did gold facilitate exchange of goods and services, it
served as a store of value for those who wanted to save for a rainy
day. Though money developed naturally in the marketplace as governments
grew in power, they assumed monopoly control over money. Sometimes
governments succeeded in guaranteeing the quality and purity of gold;
but in time, governments learned to outspend their revenues.
New or higher taxes always incurred the disapproval of the people, so
it was not long before the kings and caesars learned how to inflate
their currencies by reducing the amount of gold in each coin, always
hoping their subjects would not discover the fraud. But the people
always did, and they strenuously objected.
This helped pressure leaders to seek more gold by conquering other
nations. The people became accustomed to living beyond their means and
enjoyed the circuses and bread. Financing extravagances by conquering
foreign lands seemed a logical alternative to working harder and
producing more. Besides, conquering nations not only brought home gold;
they brought home slaves as well. Taxing the people in conquered
territories also provided an incentive to build empires.
This system of government worked well for a while, but the moral
decline of the people led to an unwillingness to produce for
themselves. There was a limit to the number of countries that could be
sacked for their wealth, and this always brought empires to an end.
When gold no longer could be obtained, their military might crumbled.
In those days, those who held the gold truly wrote the rules and lived
well.
That general rule has held fast throughout the ages. When gold was
used and the rules protected honest
[[Page H319]]
commerce, productive nations thrived. Whenever wealthy nations, those
with powerful armies and gold, strived only for empire and easy
fortunes to support welfare at home, those nations failed.
Today, the principles are the same, but the process is quite
different. Gold is no longer a currency of the realm; paper is. The
truth now is he who prints the money makes the rules, at least for the
time being. Although gold is not used, the goals are the same: compel
foreign countries to produce and subsidize the country with military
superiority and control over the monetary printing presses.
Since printing paper money is nothing short of counterfeiting, the
issuer of the international currency must always be the country with
the military might to guarantee control over the system. This
magnificent scheme seems the perfect system for obtaining perpetual
wealth for the country that issues the de facto world currency.
The one problem, however, is that such a system destroys the
character of the counterfeiting nation's people just as was the case
when gold was the currency, and it was obtained by conquering other
nations. This destroys the incentive to save and produce while
encouraging debt and runaway welfare.
The pressure at home to inflate the currency comes from the corporate
welfare recipients, as well as those who demand handouts as
compensation for their needs and perceived injuries by others. In both
cases, personal responsibility for one's actions is rejected.
When paper money is rejected, or when gold runs out, wealth and
political stability are lost. The country then must go from living
beyond its means to living beneath its means until the economic and
political systems adjust to the new rules; rules no longer written by
those who ran the now defunct printing press.
Dollar diplomacy, a policy instituted by William Howard Taft and his
Secretary of State, Philander C. Knox, was designed to enhance U.S.
commercial investments in Latin America and the Far East. McKinley
concocted a war against Spain in 1898 and Teddy Roosevelt's corollary
to the Monroe Doctrine preceded Taft's aggressive approach to using the
U.S. dollar and diplomat influence to secure U.S. investments abroad.
This earned the popular title of ``dollar diplomacy.''
The significance of Roosevelt's change was that our intervention now
could be justified by the mere appearance that a country of interest to
us was politically or fiscally vulnerable to European control. Not only
did we claim a right, but even an official government obligation to
protect our commercial interest from Europeans.
This new policy came on the heels of the gunboat diplomacy of the
late 19th century, and it meant we could buy influence before resorting
to the threat of force. By the time dollar diplomacy of William Howard
Taft was clearly articulated, the seeds of the American empire were
planted, and they were destined to grow in the fertile political soil
of a country that lost its love and respect for the Republic bequeathed
to us by the authors of the Constitution. Indeed they did. It was not
too long before dollar diplomacy became dollar hegemony in the second
half of the 20th century.
This transition only could have occurred with a dramatic change in
monetary policy and the nature of the dollar itself. Congress created
the Federal Reserve system in 1913. Between then and 1971, the
principle of sound money was systematically undermined. Between 1913
and 1971, the Federal Reserve found it much easier to expand the money
supply at will for financing war or manipulating an economy with little
resistance from Congress while benefiting the special interests that
influence Congress.
Dollar dominance got a huge boost after World War II. We were spared
the destruction that so many other nations suffered, and our coffers
were filled with the world's gold. But the world chose not to return to
the discipline of the gold standard, and the politicians applauded.
Printing money to pay the bills was a lot more popular than taxing or
restraining or unnecessary spending. In spite of the short-term
benefits, imbalances were institutionalized for decades to come.
The 1944 Bretton Woods agreement solidified the dollar as the
preeminent world reserve currency, replacing the British pound. Due to
our political and military muscle, and because we had a huge amount of
physical gold, the world readily accepted our dollar, defined as 1/35
of an ounce of gold as the world's reserve currency.
The dollar was said to be as good as gold and convertible to all
foreign banks at that rate. For American citizens, however, it remained
illegal to own. This was a gold exchange standard that from inception
was doomed to fail.
The U.S. did exactly what many predicted she would do: she printed
more dollars for which there was no gold backing. But the world was
content to accept these dollars for more than 25 years with little
question, until the French and others in the late 1960s demanded we
fulfill our promise to pay 1 ounce of gold for each $35 they delivered
to the U.S. Treasury. This resulted in a huge gold drain that brought
an end to a very poorly devised pseudo-gold standard.
It all ended on August 15, 1971, when Nixon closed the gold window
and refused to pay out any of our remaining 280 million ounces of gold.
In essence, we declared our insolvency, and everyone recognized that
some other monetary system had to be devised in order to bring
stability to the markets. Amazingly, a new system was devised which
allowed the U.S. to operate the printing presses for the world reserve
currency, with no restraints placed on it, not even a presence of gold
convertibility, none whatsoever.
Though the new policy was even more deeply flawed, it nevertheless
opened the door for dollar hegemony to spread. Realizing the world was
embarking on something new and mind-boggling, elite money managers with
especially strong support from U.S. authorities struck an agreement
with OPEC to price oil in U.S. dollars exclusively for all worldwide
transactions.
This gave the dollar a special place among world currencies, in
essence backed the dollar with oil. In return, the U.S. promised to
protect the various oil-rich kingdoms in the Persian Gulf against
threat or invasion or domestic coup. This arrangement helped ignite the
radical Islamic movement among those who resented our influence in the
region.
The arrangement gave the dollar artificial strength with tremendous
financial benefits for the United States. It allowed us to export our
monetary inflation by buying oil and other goods at a great discount as
dollar influence flourished.
This post-Bretton Woods system was much more fragile than the system
that existed between 1945 and 1971. Though the dollar-oil arrangement
was helpful, it was not nearly as stable as the pseudo-gold standard
under Bretton Woods. It certainly was less stable than the gold
standard of the late 19th century.
During the 1970s, the dollar nearly collapsed as oil prices surged
and gold skyrocketed to $800 an ounce. By 1979, interest rates of 21
percent were required to rescue the system. The pressure on the dollar
in the 1970s, in spite of the benefits accrued to it, reflected
reckless budget deficits and monetary inflation during the 1960s. The
markets were not fooled by LBJ's claim that we could afford both guns
and butter.
Once again, the dollar was rescued, and this ushered in the age of
true dollar hegemony, lasting from the early 1980s to the present. With
tremendous cooperation coming from the central banks and international
commercial banks, the dollar was accepted as if it were gold.
Federal Chairman Alan Greenspan, on several occasions before the
House Banking Committee, answered my challenges to him about his
previously held favorable views on gold by claiming that he and other
central bankers had gotten paper money, that is the dollar system, to
respond as if it were gold. Each time I strongly disagreed and pointed
out that if they had achieved such a feat they would have defied
centuries of economic history regarding the need for money to be
something of real value. He smugly and confidently concurred with this.
In recent years, central banks and various financial institutions,
all with vested interest in maintaining a workable fiat dollar
standard, were not secretive about selling and maintaining large
amounts of gold to the market,
[[Page H320]]
even while decreasing gold prices raised serious questions about the
wisdom of such a policy. They never admitted to gold price fixing, but
the evidence is abundant that they believed that if the gold price
fell, it would convey a sense of confidence to the market, confidence
that they, indeed, had achieved amazing success in turning paper into
gold.
Increasing gold prices historically are viewed as an indicator of
distrust in paper currency. This recent effort was not a whole lot
different than the U.S. Treasury selling gold at $35 an ounce in the
1960s in an attempt to convince the world the dollar was as sound and
as good as gold.
Even during the Depression, one of Roosevelt's first acts was to
remove free-market pricing as an indication of a flawed monetary system
by making it illegal for American citizens to own gold. Economic law
eventually limited that effort, as it did in the early 1970s, when our
Treasury and the IMF tried to fix the price of gold by dumping tons
into the market to dampen the enthusiasm of those seeking a safe haven
for a falling dollar after gold ownership was relegalized.
Once again, the effort between 1980 and 2000 to fool the market as to
the true value of the dollar proved unsuccessful. In the past 5 years,
the dollar has been devalued in terms of gold by more than 50 percent.
You just cannot fool all the people all the time, even with the power
of the mighty printing press and the money-creating system of the
Federal Reserve.
{time} 2145
Even with all the shortcomings of the fiat monetary system, dollar
influence thrived. The results seemed beneficial, but gross distortions
built into the system remained. And true to form, Washington
politicians are only too anxious to solve the problems cropping up with
window dressing while failing to understand and deal with the
underlying flawed policy. Protectionism, fixing exchange rates,
punitive tariffs, politically motivated sanctions, corporate subsidies,
international trade management, price controls, interest rate and wage
controls, super-nationalist sentiments, threat of force, and even war
are resorted to, all to solve the problems artificially created by a
deeply flawed monetary and economic system.
In the short run, the issuer of a fiat reserve currency can accrue
great economic benefits. In the long run, it poses a threat to the
country issuing the world currency. In this case, that is the United
States. As long as foreign countries take our dollars in return for
real goods, we come out ahead. This is a benefit many in Congress fail
to recognize as they bash China for maintaining a positive trade
balance with us. But this leads to a loss of manufacturing jobs to
overseas markets as we become more dependent on others and less self-
sufficient. Foreign countries accumulate our dollars due to their high
savings rates and graciously lend them back to us at low interest rates
to finance our excessive consumption and our wars.
It sounds like a great deal for everyone, except the time will come
when our dollars, due to their depreciation, will be received less
enthusiastically or even be rejected by foreign countries. That could
create a whole new ball game and force us to pay a price for living
beyond our means and our production. The shift in sentiment regarding
the dollar has already started, but the worst is yet to come.
The agreement with OPEC in the 1970s to price oil in dollars has
provided tremendous artificial strength to the dollar as the preeminent
reserve currency. This has created a universal demand for the dollar
and soaks up the huge number of new dollars generated each year. Last
year alone, M3 increased by over $700 billion. The artificial demand
for our dollar, along with our military might, places us in the unique
position to ``rule'' the world without productive work or savings and
without limits on consumer spending or deficits. The problem is it
cannot last.
Price inflation is raising its ugly head, and the NASDAQ bubble,
generated by easy money, has burst. The housing bubble likewise created
is deflating. Gold prices have doubled, and Federal spending is out of
sight, with zero political will to rein it in. The trade deficit last
year was over $728 billion. A $2 trillion war is raging, and plans are
being laid to expand the war into Iran and possibly Syria. The only
restraining force will be the world's rejection of the dollar. It is
bound to come and create conditions worse than 1979-1980, which
required 21 percent interest rates to correct. But everything possible
will be done to protect the dollar in the meantime. We have a shared
interest with those who hold our dollars to keep the whole charade
going.
Greenspan, in his first speech after leaving the Fed, said that gold
prices were up because of concern about terrorism and not because of
monetary concerns or because he created too many dollars during his
tenure. Gold has to be discredited and the dollar propped up. Even when
the dollar comes under serious attack by market forces, the central
banks and the IMF will surely do everything conceivable to soak up the
dollars in hope of restoring stability. Eventually, they will fail.
Most importantly, the dollar/oil relationship has to be maintained to
keep the dollar as the preeminent currency. Any attack on this
relationship will be forcefully challenged, as it already has been.
In November, 2000, Saddam Hussein demanded euros for his oil. His
arrogance was a threat to the dollar; his lack of any military might
was never a threat. At the first Cabinet meeting with the new
administration in 2001, as reported by Treasury Secretary Paul O'Neill,
the major topic was how we could get rid of Saddam Hussein though there
was no evidence whatsoever he posed a threat to us. This deep concern
for Saddam Hussein surprised and shocked O'Neill.
It is now common knowledge that the immediate reaction of the
administration after 9/11 revolved around how they could connect Saddam
Hussein to the attacks to justify an invasion and overthrow of his
government. Even with no evidence of any connection to 9/11 or evidence
of weapons of mass destruction, public and congressional support was
generated through distortions and flat-out misrepresentations of the
facts to justify overthrowing Saddam Hussein.
There was no public talk of removing Saddam Hussein because of his
attack on the integrity of the dollar as a reserve currency by selling
his oil in euros, yet many believe this was the reason for our
obsession with Iraq. I doubt it was the only reason, but it may well
have played a significant role in our motivation to wage war. Within a
very short period after the military victory in Iraq, all Iraqi oil
sales were carried out in dollars. The euro was immediately abandoned.
In 2001, Venezuela's ambassador to Russia spoke of Venezuela's
switching to the euro for all their oil sales. Within a year, there was
a coup attempt against Chavez, reportedly with assistance from our CIA.
After these attempts to nudge the euro toward replacing the dollar as
the world's reserve currency were met with resistance, the sharp fall
of the dollar against the euro was reversed. These events may well have
played a significant role in maintaining dollar dominance.
It has become clear the U.S. administration was sympathetic to those
who plotted the overthrow of Chavez and was embarrassed by its failure.
The fact that Chavez was democratically elected had little influence on
which side we supported. Now a new attempt is being made against the
petrodollar system. Iran, another member of the ``Axis of Evil,'' has
announced her plans to initiate an oil bourse in March of this year.
Guess what? The oil sales will be priced in euros, not dollars.
Most Americans forgot how our policies have systematically and
needlessly antagonized the Iranians over the years. In 1953, the CIA
helped overthrow a democratically elected Mohammed Mossadegh and
installed the authoritarian Shah, who was friendly to the U.S. The
Iranians were still fuming over this when the hostages were seized in
1979. Our alliance with Saddam Hussein in his invasion of Iran in the
early 1980s did not help matters and obviously did not do much for our
relationship with Saddam Hussein. The administration's announcement in
2001 that Iran was part of the Axis of Evil did not improve the
diplomatic relationship between our two countries.
Recent threats over nuclear power, while ignoring the fact that they
are
[[Page H321]]
surrounded by countries with nuclear weapons, does not seem to register
with those who continue to provoke Iran. With what most Muslims
perceive as our war against Islam and this recent history, there is
little wonder why Iran might choose to harm America by undermining the
dollar. Iran, like Iraq, has zero capability to attack us, but that did
not stop us from turning Saddam Hussein into a modern-day Hitler ready
to take over the world. Now Iran, especially since she has made plans
for pricing oil in euros, has been on the receiving end of a propaganda
war not unlike that waged against Iraq before our invasion.
It is not likely that maintaining dollar supremacy was the only
motivating factor for the war against Iraq nor for agitating against
Iran. Though the real reasons for going to war are complex, we now know
the reasons given before the war started, like the presence of weapons
of mass destruction and Saddam's connection to 9/11, were false.
The dollar's importance is obvious, but this does not diminish the
influence of the distinct plans laid out years ago by the
neoconservatives to remake the Middle East. Israel's influence as well
as that of the Christian Zionists likewise played a role in prosecuting
this war. Protecting our oil supplies has influenced our Middle East
policy for decades.
But the truth is that paying the bills for this aggressive
intervention is impossible the old-fashioned way, with more taxes, more
savings, and more production by the American people. Much of the
expense of the Persian Gulf War in 1991 was shouldered by many of our
willing allies. That is not so today. Now more than ever, the dollar
hegemony, its dominance as the world's reserve currency, is required to
finance our huge war expenditures. This $2 trillion never-ending war
must be paid for one way or another. Dollar hegemony provides the
vehicle to do just that.
For the most part, the true victims are not aware of how they pay the
bills. The license to create money out of thin air allows the bills to
be paid through price inflation. American citizens as well as average
citizens of Japan and China and other countries suffer from price
inflation, which represents the tax that pays the bills for our
military adventures. That is, until the fraud is discovered and the
foreign producers decide not to take dollars nor hold them very long in
payment for those goods. Everything possible is done to prevent the
fraud of the monetary system from being exposed to the masses who
suffer from it. If oil markets replace dollars with euros, it would in
time curtail our ability to continue to print, without restraint, the
world's reserve currency.
It is an unbelievable benefit to us to import valuable goods and
export depreciating dollars. The exporting countries have become
addicted to our purchases for their economic growth. This dependency
makes them allies in continuing the fraud, and their participation
keeps the dollar's value artificially high. If this system were
workable long term, American citizens would never have to work again.
We, too, could enjoy ``bread and circuses'' just as the Romans did, but
their gold finally ran out and the inability of Rome to continue to
plunder conquered nations brought an end to her empire.
The same thing will happen to us if we do not change our ways. Though
we do not occupy foreign countries to directly plunder, we nevertheless
have spread our troops across 130 nations of the world. Our intense
effort to spread our power in the oil-rich Middle East is not a
coincidence. But, unlike the old days, we do not declare direct
ownership of the natural resources. We just insist that we can buy what
we want and pay for it with our paper money. Any country that
challenges our authority does so at great risk.
Once again, Congress has bought into the war propaganda against Iran
just as it did against Iraq. Arguments are now made for attacking Iran
economically and militarily if necessary. These arguments are based on
the same false reasons given for the ill-fated and costly occupation of
Iraq.
Our whole economic system depends on continuing the current monetary
arrangement, which means recycling the dollar is crucial. Currently, we
borrow over $700 billion every year from our gracious benefactors, who
work hard and take our paper for their goods. Then we borrow all the
money we need to secure the empire, which includes the entire DOD
budget of $450 billion, plus more. The military might we enjoy becomes
the backing of our currency. There are no other countries that can
challenge our military superiority, and therefore they have little
choice but to accept the dollars we declare are today's ``gold.'' This
is why countries that challenge the system, like Iraq, Iran, and
Venezuela, become targets of our plans for regime change.
Ironically, dollar superiority depends on our strong military, and
our strong military depends on the dollar. As long as foreign
recipients take our dollars for real goods and are willing to finance
our extravagant consumption and militarism, the status quo will
continue, regardless of how huge our foreign debt and current account
deficit become.
But real threats come from our political adversaries who are capable
of confronting us militarily yet are not bashful about confronting us
economically. That is why we see the new challenge from Iran being
taken so seriously. The urgent arguments about Iran's posing a military
threat to the security of the United States are no more plausible than
the false charges levied against Iraq. Yet there is no effort to resist
this march to confrontation by those who grandstand for political
reasons against the Iraq War.
It seems that the people and Congress are easily persuaded by the
jingoism of the preemptive war promoters. It is only after the cost of
human life and dollars are tallied up that the people object to unwise
militarism.
The strange thing is that the failure in Iraq is now apparent to a
large number of Americans, yet they and Congress are acquiescing to the
call for a needless and dangerous confrontation with Iran.
But then again our failure to find Osama bin Laden and destroy his
network did not dissuade us from taking on Iraqis in a war totally
unrelated to 9/11. Concern for pricing oil only in dollars helps
explain our willingness to drop everything and teach Saddam Hussein a
lesson for his defiance in demanding euros for oil.
{time} 2200
Once again, there is the urgent call for sanctions and threats of
force against Iran at the precise time Iran is opening a new oil
exchange with all transactions in Euros.
Using force to compel people to accept money without real value can
only work for a short time. It ultimately leads to economic
dislocation, both domestic and international, and always ends with a
price to be paid. The economic law that honest exchange demands only
things of real value as currency cannot be repealed. The chaos that one
day will ensue from our 35-year experiment with worldwide fiat money
will require a return to money of real value. We will know that day is
approaching when oil-producing countries demand gold or its equivalent
for their oil rather than dollars or Euros. The sooner the better.
Need For Reform In Light of Lobbying Scandal
Mr. Speaker, I would like to now switch topics and address another
subject, and this is regarding the need for reform in light of the
recent lobbying scandal.
Mr. Speaker, the Abramoff scandal has been described as the biggest
Washington scandal ever, bigger than Watergate, bigger than ABSCAM,
bigger than Koreagate, bigger than the House banking scandal, bigger
than Teapot Dome. Possibly so. It is certainly serious and significant.
It has prompted urgent proposals of suggested reforms to deal with
the mess. If only we had more rules and regulations, more reporting
requirements and stricter enforcement of laws, the American people will
be assured we mean business. Ethics and character will return to the
Halls of Congress. It is argued that new champions of reform should be
elected to leadership positions to show how serious we are about
dealing with the crisis of confidence generated by the Abramoff affair.
Then all will be well.
But it is not so simple. Maybe what we have seen so far is just the
tip of the iceberg and the insidious crisis staring us in the face that
we refuse to properly identify and deal with.
[[Page H322]]
It has been suggested we need to change course and correct the way
Congress is run. A good idea, but if we merely tinker with current
attitudes about what role the Federal Government ought to play in our
lives, it won't do much to solve the ethics crisis.
True reform is impossible without addressing the immorality of wealth
redistribution. Merely electing new leaders and writing more rules to
regulate those who petition Congress will achieve nothing.
Could it be that we are all looking in the wrong places for our
solution to a recurring, constant, and pervasive corruption in
government? Perhaps some of us in Congress are mistaken about the true
problem. Perhaps others deliberately distract us from exposing the
truth about how miserably corrupt the budget process in Congress is.
Others simply are in a State of denial. But the denial will come to
an end as the Abramoff scandal reveals more and more. It eventually
will expose the scandal of the ages, how and to what degree the
American people have become indebted by the totally irresponsible
spending habits of the U.S. Congress as encouraged by successive
administrations, condoned by our courts, and enjoyed by the recipients
of the largesse.
This system of government is coming to an end, a fact that
significantly contributes to the growing anxiety of most Americans,
especially those who pay the bills and receive little in return from
the corrupt system that has evolved over the decades.
Believe me, if everybody benefited equally, there would be scant
outcry over a little bribery and influence peddling. As our country
grows poorer and more indebted, fewer people benefit. The beneficiaries
are not the hard-working, honest people who pay the taxes. The groups
that master the system of lobbying and special interest legislation are
the ones who truly benefit.
The steady erosion of real wealth in this country and the dependency
on government generated by welfare-ism and warfare-ism presents itself
as the crisis of the ages. Lobbying scandals and the need for new
leadership are mere symptoms of a much, much deeper problem.
There are quite a few reasons a relatively free country allows itself
to fall into such an ethical and financial mess. One major contributing
factor for the past 100 years is our serious misunderstanding of the
dangers of pure democracy.
The Founders detested democracy and avoided the use of the word in
all the early documents. Today, most Americans accept without question
a policy of sacrificing life, property and dollars to force democracy
on a country 6,000 miles away. This tells us how little opposition
there is to democracy. No one questions the principle that a majority
electorate should be allowed to rule the country, dictate rights, and
redistribute wealth. Our system of democracy has come to mean
worshiping the notion that a majority vote for the distribution of
government largesse, loot confiscated from the American people through
an immoral tax system, is morally and constitutionally acceptable.
Under these circumstances, it is no wonder a system of runaway
lobbying and special interests has developed. Add this to the military
industrial complex that developed over the decades due to a foreign
policy of perpetual war and foreign military intervention, and we
shouldn't wonder why there is such a powerful motivation to learn the
tricks of the lobbying trade and why former Members of Congress and
their aides become such high-priced commodities.
Buying influence is much more lucrative than working and producing
for a living. The trouble is in the process; the process invites moral
corruption. The dollars involved grow larger and larger because of the
deficit financing and inflation that pure democracy always generates.
Dealing with lobbying scandals while ignoring the scandal of
unconstitutional runaway government will solve nothing. If people truly
believe that reform is the solution through regulating lobbyists and
increasing congressional reporting requirements, the real problem will
be ignored and never identified. This reform only makes things worse.
Greater regulation of lobbyists is a dangerous and unnecessary
proposition. If one expects to solve a problem without correctly
identifying its source, the problem persists. The first amendment
clearly states ``Congress shall make no laws respecting the right of
the people to petition the government for a redress of grievances.''
That means no law.
The problem of special interest government that breeds corruption
comes from our lack of respect for the Constitution in the first place.
So what do we do? We further violate the Constitution, rather than
examine it for guidance as to the proper role of the Federal
Government.
Laws addressing bribery, theft, and fraud already on the books are
adequate to deal with the criminal activities associated with lobbying.
New laws and regulations are unnecessary.
The theft that the Federal Government commits against its citizens
and the power that Congress has assumed illegally are the real crimes
that need to be dealt with. In this regard, we truly need a
new direction: get rid of the evil tax system, the fraudulent monetary
system and the power of the government to run our lives, the economy
and the world, and the Abramoff types would be exposed for the mere
gnats they are. There would be a lot less of them since the incentive
to buy politicians would be removed.
Even under today's flawed system of democratic government, which is
dedicated to redistributing property by force, a lot could be
accomplished if government attracted men and women of good will and
character. Members could just refuse to yield to the temptations of
office and reject the path to a lobbying career.
But it seems once government adopts the rules of immorality, some of
the participants in the process yield to the temptation as well,
succumbing to the belief that the new moral standards are acceptable.
Today, though, any new rules designed to restrain special interest
favoritism will only push the money further under the table.
Too much is at stake. Corporations, bureaucrats, lobbyists and
politicians have grown accustomed to the system and have learned to
work within it to survive. Only when the trough is empty will the
country wake up. Eliminating earmarks in the budget will not solve the
problem.
Comparing the current scandal to the big one, the Abramoff types are
petty thieves. The government deals in trillions of dollars, the
Abramoffs in mere millions. Take a look at the undeclared war we are
bogged down in 6,000 miles from our shore. We have spent $300 billion
already, but Nobel Prize winner Joseph Stiglitz argues that the war
will actually cost between $1 trillion and $2 trillion when it is all
over. That is trillions, not billions. Even that figure is
unpredictable, because we may be in Iraq for another year or 10. Who
knows.
Considering the war had nothing to do with our national security, we
are talking big bucks being wasted in lining the pockets of well-
connected American corporations. Waste, fraud, stupidity, and no-bid
contracts characterize the process; and it is all done in the name of
patriotism and national security. Dissenters are accused of supporting
the enemy. Now, this is a ripoff that a little tinkering with House
rules and restraints on lobbyists won't do much to solve.
Think of how this undeclared war has contributed to our national
deficit, undermined military preparedness, antagonized our allies, and
exposed us to an even greater threat from those who resent our
destructive occupation. Claiming we have no interest in the oil of the
entire Middle East hardly helps our credibility throughout the world.
The system of special interest government that has evolved over the
last several decades has given us a national debt of over $8 trillion,
a debt that now expands by over $600 billion every year. Our total
obligations are estimated to be between $15 trillion and $20 trillion.
Most people realize that the Social Security system, the Medicare
system and the new prescription drug program are unfunded. Thousands of
private pension funds are now being dumped on the U.S. Government and
American taxpayers. We are borrowing over $700 billion each year from
foreigners to finance this extravagance, and we now
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qualify as the greatest international debtor Nation in history.
Excessive consumption using borrowed money is hardly the way to
secure a sound economy. Instead of reining in government spending,
Congress remains oblivious to the financial dangers and panders to
special interests by offering no resistance whatsoever to every request
for new spending. Congress spends $2.7 trillion annually in an attempt
to satisfy everyone's demands. The system has generated over $200
trillion in derivatives.
These problems can't be addressed with token leadership changes and
tinkering with the budget. A new and dramatic direction is required.
As current policy further erodes the budget, special interests and
Members of Congress become even more aggressive in their efforts to
capture a piece of the dwindling economic pie. That success is the
measure of effectiveness that guarantees a Member's reelection.
The biggest ripoff of all, the paper money system that is morally and
economically equivalent to counterfeiting, is never questioned. It is
the deceptive tool for transferring billions from the unsuspecting poor
and middle class to the special-interest rich, and in the process the
deficit-propelled budget process supports the spending demands of all
the special interests, left and right, welfare and warfare, while
delaying payment to another day and sometimes even to another
generation.
The enormous sums spent each year to support the influential special
interests expand exponentially and no one really asks how it is
accomplished. Raising taxes to balance the budget is out of the
question, and rightfully so. Foreigners have been generous in their
willingness to loan us most of what we need, but even that generosity
is limited and may well diminish in the future.
But if the Federal Reserve did not pick up the slack and create huge
amounts of new credit and money out of thin air, interest rates would
rise and call a halt to the charade. The people who suffer from a
depreciated dollar don't understand why they suffer, while the people
who benefit promote the corrupt system. The wealthy clean up on Wall
Street and the unsophisticated buy in at the market tops. Wealth is
transferred from one group to another, and it is all related to the
system that allows politicians and the central banks to create money
out of thin air. It is literally legalized counterfeiting.
Is it any wonder jobs go overseas? True capital only comes from
savings, and Americans save nothing. We only borrow and consume. A
counterfeiter has no incentive to take his newly created money and
build factories. The incentive for Americans is to buy consumers goods
from other countries whose people are willing to save and invest in
their factories and jobs. The only way we can continue this charade is
to borrow excess dollars back from the foreign governments who sell us
goods and perpetuate the pretense of wealth that we enjoy.
The system of money contributes significantly to the problems of
illegal immigration. On the surface, immigrants escaping poverty in
Mexico and Central America come here for the economic opportunity that
our economy offers. However, the social services they receive,
including education and medical benefits, as well as the jobs they get,
are dependent on our perpetual indebtedness to foreign countries. When
the burden of debt becomes excessive, this incentive to seek prosperity
here in the United States will change.
The prime beneficiaries of a paper money system are those who use the
money early, governments, politicians, bankers, international
corporations and the military industrial complex. Those who suffer most
are the ones at the end of the money chain, the people forced to use
depreciated dollars to buy urgently needed goods and services to
survive. And guess what? By then, their money is worth less, prices
soar, and their standard of living goes down.
{time} 2215
The consequences of this system, fully in place for the past 34
years, are astronomical and impossible to accurately measure.
Industries go offshore, and the jobs follow. Price inflation eats away
at the middle class and deficits soar, while spending escalates rapidly
as Congress hopes to keep up with the problems it created.
The remaining wealth that we struggle to hold on to is based on debt,
future tax revenues, and our ability to manufacture new tax dollars
without restraint.
There is only one problem. It all depends on trust in the dollar,
especially by foreign holders and purchasers. This trust will end, and
signs of the beginning of the end are already appearing.
During this administration, the dollar has suffered severely as a
consequence of the policy of inflating the currency to pay our bills.
The dollar price of gold has more than doubled. This means the dollar
has depreciated in terms of gold, the time-honored and reliable
measurement of a nation's currency, by an astounding 55 percent. The
long-term economic health of a nation is measured by the soundness of
its currency. Once Rome converted from a republic to an empire, she
depreciated her currency to pay the bills. This eventually led to
Rome's downfall. That is exactly what America is facing unless we
change our ways.
Now, this is a real scandal worth worrying about. Since it is not yet
on Washington's radar screen, no attempt at addressing the problem is
being made. Instead, we will be sure to make those the Constitution
terms petitioners to redress their grievances fill out more forms. We
will make government officials attend more ethics courses so they can
learn how to be more ethical.
A free nation as it moves towards authoritarianism tolerates and
hides a lot of the abuse in the system. The human impulse for wealth
creation is hard to destroy, but in the end it will happen here if true
reform of our economic, monetary, and political system is not
accomplished.
Whether government programs are promoted for good causes, helping the
poor, or bad causes, permitting a military industrial complex to
capitalize on war profits, the principles of the market are undermined.
Eventually, nearly everyone becomes dependent on the system of
deficits, borrowing, printing press money, and the special interest
budget process that distributes the loot by majority vote.
Today, most business interests and the poor are dependent on
government handouts. Education and medical care is almost completely
controlled and regulated by an overpowering central government. We have
come to accept our role as world policeman and nation builder with
little question despite the bad results and inability to pay the bills.
The question is, what will it take to bring about the changes in
policy needed to reverse this dangerous trend? The answer is, quite a
lot; and, unfortunately, it is not on the horizon. It probably will not
come until there is a rejection of the dollar as the safest and
strongest world currency and a return to commodity money like gold and
silver to return confidence.
The Abramoff-type scandals come and go in Washington, patched over
with grandiose schemes and reform that amount to nothing more than
government and congressional mischief. But our efforts should be
directed toward eliminating the greatest of all frauds, printing press
money that creates the political conditions breeding the vultures and
leaches who feed off the corrupt system.
Counterfeiting money never creates wealth. It only steals wealth from
the unsuspecting. The Federal Reserve creation of money is exactly the
same. Increasing the dollars in circulation can only diminish the value
of each existing dollar. Only production and jobs can make a country
wealthy in the long run. Today, it is obvious our country is becoming
poorer and more uneasy as our jobs and capital go overseas.
The Abramoff scandal can serve a useful purpose if we put it in the
context of the entire system that encourages corruption. If it is seen
as an isolated case of individual corruption and not an expected
consequence of big government run amok, little good will come of it. If
we understand how our system of government intervenes in our personal
lives, the entire economy and the internal affairs of other nations
around the world, we can understand how it generates the conditions
where lobbyists thrive.
Only then will some good come of it. Only then will we understand
that undermining the first amendment right of
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people to petition the government is hardly a solution to this much
more serious and pervasive problem.
If we are inclined to improve conditions we should give serious
consideration to the following policy reforms, reforms the American
people who cherish liberty would enthusiastically support. Let us have
no more No Child Left Behind legislation. Let us have no more
prescription drugs programs. No more undeclared wars. No more nation
building. No more acting as the world policeman. No more deficits. No
more excessive spending everywhere. No more political and partisan
resolutions designed to embarrass those who may well have legitimate
and honest disagreements with current policy. No inferences that
disagreeing with policy is unpatriotic or disloyal to the country. No
more pretense of budget reforms while ignoring off-budget spending in
the ever-growing 14 appropriations bills.
Cut funding for corporate welfare, foreign aid, international NGOs,
defense contractors, the military industrial complex, and rich
corporate farmers before cutting welfare for the poor at home. No more
unconstitutional intrusions into the privacy of law-abiding American
citizens. Reconsider the hysterical demands for security over liberty
by curtailing the ever-expanding oppressive wars on drugs, tax
violators and gun ownership.
Finally, why not try something novel like having Congress act as an
independent and equal branch of government? Restore the principle of
the separation of powers so that we can perform our duty to provide
checks and balances on an executive branch and an accommodating
judiciary that spies on Americans, glorifies the welfare state, fights
undeclared wars, and enormously increases the national debt.
Congress was not meant to be a rubber stamp. It is time for a new
direction.
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