[Congressional Record (Bound Edition), Volume 147 (2001), Part 3]
[House]
[Page 3427]
[From the U.S. Government Publishing Office, www.gpo.gov]



                 THE BEGINNING OF THE END OF FIAT MONEY

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. Mr. Speaker, the golden new era of the 1990s has been 
welcomed and praised by many observers, but I am afraid a different 
type of new era is arriving, a dangerous one, heralding the end of 30 
years of fiat money. If so, it is a serious matter that deserves close 
attention by Congress.
  There is nothing to fear from globalism, free trade and a single 
worldwide currency, but a globalism where free trade is competitively 
subsidized by each nation, a continuous trade war is dictated by the 
WTO, and the single currency is pure fiat, fear is justified. That type 
of globalism is destined to collapse into economic despair, 
inflationism and protectionism and managed by resurgent militant 
nationalism.
  Efforts to achieve globalist goals are quickly abandoned when the 
standard of living drops, unemployment rises, stock markets crash and 
artificially high wages are challenged by markets forces.
  When tight budgets threaten spending cuts, cries for expanding the 
welfare state drown out any expression of concern for rising deficits.
  The effort in recent decades to unify government surveillance over 
all world trade and international financial transaction through the UN, 
the IMF, the World Bank, the WTO, the ICC, the OECD and the Bank of 
International Settlements can never substitute for a peaceful world 
based on true free trade, freedom of movement, a single but sound 
market currency and voluntary contracts with property private rights.
  Mr. Speaker, great emphasis in the last 6 years has been placed on 
so-called productivity increases that gave us the new-era economy. Its 
defenders proclaimed that a new paradigm had arrived. Though 
productivity increases have surely helped our economy, many astute 
observers have challenged the extent to which improvements in 
productivity have actually given us a distinctly new era. A case can be 
made that the great surge in new technology of the 1920s far surpassed 
the current age of fast computers, and we all know what happened in 
spite of it, after 1929.
  A truly new era may well be upon us, but one quite different than 
what is generally accepted today. The biggest era in interrupting 
today's events is the totally ignoring of how monetary policy in a fiat 
system affects the entire economy.
  Politicians and economists are very familiar with business cycles 
with most assuming that slumps erupt as a natural consequence of 
capitalism, an act of God, or as a result of Fed-driven high interest 
rates. That is to say the Fed did not engage in enough monetary 
debasement becomes the most common complaint by Wall Street pundits and 
politicians.
  But today's economy is unlike anything the world has ever known. The 
world economy is more integrated than ever before. Indeed, the effort 
by international agencies to expand world trade has had results, some 
good. Labor costs have been held in check, industrial producers have 
moved to less regulated low costs, low tax countries while world 
mobility has aided these trends with all being helped with advances in 
computer technology.
  But the artificial nature of today's world trade and finance being 
systematically managed by the IMF, the World Bank and the WTO and 
driven by a worldwide fiat monetary system has produced imbalances that 
have already prompted many sudden adjustments.
  There have been eight major crises in the last 6 years requiring a 
worldwide effort, led by the Fed, to keep the system afloat, all being 
done with more monetary inflation and bailouts.
  The linchpin to the outstanding growth of the 1990s has been the U.S. 
dollar. Although it, too, is totally fiat, its special status has 
permitted a bigger bonus to the United States while it has been used to 
prop up other world economies.
  The gift bequeathed to us by owning the world reserve currency allows 
us to create dollars at will.

                              {time}  1845

  Alan Greenspan has not hesitated to accommodate everyone, despite his 
reputation as an inflation fighter. This has dramatically raised our 
standard of living and significantly contributed to the new-era 
psychology that has been welcomed by so many naive enough to believe 
that perpetual prosperity had arrived and the bills would never have to 
be paid.
  One day it will become known that technological advances and 
improvements in productivity also have a downside. This technology hid 
the ill effects of the monetary mischief the Fed had enthusiastically 
engaged in the past decades. Technological improvements while keeping 
the CPI and the PPI prices in check, led many, including Greenspan, to 
victoriously declare that no inflation existed and that a new era had, 
indeed, arrived. Finally it is declared that the day has arrived that 
printing money is equivalent to producing wealth, and without a 
downside. Counterfeit works.
  But the excess credit created by the Fed found its way into the stock 
market, especially the NASDAQ, and was ignored. This set the stage for 
the stock market collapse now ongoing. Likewise ignored has been the 
excess capacity, mal-investment and debt that permeates the world 
economy.

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