[Congressional Record (Bound Edition), Volume 152 (2006), Part 2]
[House]
[Pages 1895-1901]
[From the U.S. 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 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.

[[Page 1896]]

  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, 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

[[Page 1897]]

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 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

[[Page 1898]]

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.
  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.

[[Page 1899]]

  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 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

[[Page 1900]]

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 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.

[[Page 1901]]

  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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