[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[House]
[Pages 3860-3861]
[From the U.S. Government Publishing Office, www.gpo.gov]




                         CHINA SEEKS GUARANTEE

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Indiana (Mr. Burton) is recognized for 5 minutes.

[[Page 3861]]


  Mr. BURTON of Indiana. China yesterday said that they held $682 
billion of our debt and that they were very concerned about the 
``reckless policies'' of our spending. And they were concerned so much 
that they contacted our new Secretary of the Treasury and said, We want 
some kind of a guarantee that our money is going to be worth something 
if you guys keep spending so much over there and devalue not only your 
currency, but the currencies throughout the world.
  Well, today China reversed its position and said--Luo Ping, the 
Director General of the Chinese Banking Regulatory Commission--said in 
a speech in New York, ``We're still going to buy your Treasuries 
because where else are we going to put our money, because the United 
States is still the biggest economy and the best place to put our 
money. But we're really upset with you because you're devaluing your 
currency, and you're going to be devaluing ours as well.''
  And he said this, ``Except for U.S. Treasuries, what can you hold? 
Gold? You don't hold Japanese government bonds or UK bonds. U.S. 
Treasuries are still the safest haven. For everyone, including China.'' 
But, you're devaluing your currency over there, and we don't want ours 
devalued, but we don't have anyplace to go.
  He said further on, ``We hate you guys,'' using his language, ``We 
hate you guys. Once you start issuing $1 trillion, $2 trillion or more 
in dollars, we know the dollar is going to depreciate, so we hate you 
guys, but there's nothing else we can do.'' Now what does this tell us 
as Americans?
  This is a chart showing the amount of money in circulation in the 
United States. And you can't see--my colleagues who might be watching 
in their offices--but you can see the amount of money in circulation 
was pretty steady up until about the last 10 or 12 years, and then you 
see it has just risen like a rocket. It's just gone straight up. And 
that's before we started all this spending we are talking about right 
now, which worries not only us but the Chinese and Japanese and others 
that hold an awful lot of our debt and are buying more right now as we 
speak.
  What's going to happen tomorrow is we're going to spend another $800 
billion. Almost $1 trillion. The Secretary of the Treasury said the 
other day that he was going to have to put probably another $1 trillion 
or maybe even $2 trillion into the banking system in this country to 
make sure everything continues on the right path.
  We are going to spend another $400 billion in an omnibus spending 
bill in a couple of weeks. So we are looking at probably $2 to $3 
trillion in additional spending before too long, and it's going to 
probably triple the amount of money we have in circulation over the 
long haul. In the short haul, maybe only about half of that. Maybe only 
$1 trillion or $1.5 trillion.
  But what that means is the amount of money in circulation is going to 
go up like a rocket. And that is what we call inflation, because the 
amount of goods and services produced by this country is not increasing 
at a rapid rate right now because of the economy. And so we are going 
to have pretty much the same amount or maybe a little bit less of goods 
and services being sold in this country, but we are going to have 
almost twice as much money.
  So, the amount of money chasing goods and services is going to 
double, which means when you go to buy something, it's going to cost a 
lot more. If you have 100 quarts of milk, and I used this illustration 
the other night, and you have $100, then a quart of milk is going to 
cost about $1. But if you double the amount of money to $200 or $300, 
then the quart of milk is going to go up at the same rate. That's the 
law of supply and demand. And we're putting so much money in 
circulation that we are going to have, in my opinion, hyperinflation.
  Now we had this back in the 1970s. It was worse then than it is now. 
Jimmy Carter was President. We had double-digit inflation. Fourteen 
percent. That's what we call hyperinflation. It will probably be worse 
than that now. We had double-digit unemployment. We have 7 percent now. 
It was 12 percent back then.
  And so they brought a guy in named Volcker to do something about it. 
And he raised interest rates to 21\1/2\ percent, and we had the worst 
recession up until that time for probably 30 or 40 years. And then 
Ronald Reagan was elected. He came in and he cut taxes and stimulated 
economic growth. We had one of the longest periods of income recovery 
in American history.
  We are doing the same thing today that Carter did back in the 
seventies. I don't think my colleagues--most of them--remembered that, 
because they are too young. And we are not going to profit from 
history. But what we are doing is we're throwing money at the problem 
instead of solving the problem by creating an economic recovery.
  The way to create an economic recovery is to give business, industry, 
and American citizens as much of their tax money back as possible so 
they can spend it. They can spend it more wisely than the government of 
the United States. And if you ask all of your neighbors, said, Who 
could spend $100 better, you or the government? And most of them will 
say, We can.
  We have got to control spending, and we're not doing it. We're 
heading in the wrong direction. We're printing money. We're going to be 
printing money at a very rapid rate, and it's going to cost everybody 
in this country and the future generations a great deal, not only in 
inflation, but more taxes and the quality of life.

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