[Congressional Record (Bound Edition), Volume 156 (2010), Part 6]
[House]
[Pages 7453-7454]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            CURRENCY CRISIS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Texas (Mr. Paul) is recognized for 5 minutes.
  Mr. PAUL. I rise today to talk a bit about our economy and the 
marketplace which, if anybody has observed, is in shambles. A couple of 
years ago, we had a financial crisis; basically, a bit of problems in 
debt with the financial institutions, the banks, and a lot of 
corporations. That was a rather hectic period of time. But I think what 
we're moving into now is much, much more serious, and what I see 
happening is that this is not a financial problem as much as a currency 
problem. Everybody knows there are major problems in Greece right now 
because of the debt load that they have and they cannot finance, and 
nobody is there at the moment to bail them out.
  A lot has been happening. I have been interested in this subject for 
a long time. As a matter of fact, in 1971, with the breakdown of the 
Bretton Woods agreement, I became fascinated with economics and 
politics. At that time, there was a devaluation of the dollar of 3.8 
percent, and it was very, very big news. And that's when the dollar was 
connected to gold and there was a devaluation against gold. This was a 
major event and ushered in a major amount of inflation in the 1970s. 
Yet, this process continues. As a matter of fact, the breakdown in 1971 
opened up the doors to massive inflation. And that's what we have been 
doing for 35, 40 years of inflating the currency, creating many and 
multiple financial bubbles which have burst and have given us a great 
deal of trouble. But a currency crisis is much worse because people 
lose confidence in the dollar.
  Now, I have talked a lot about the value of the dollar. And somebody 
might wonder exactly why I would come today and talk about the concern 
I have for the value of the dollar, because if you look at the dollar, 
the dollar is a haven. The dollar has been going up sharply in terms of 
other international currencies. They would say that this is a haven. 
It's still strong. People are buying our Treasury bills. But I still 
argue the case that there is a currency crisis going on. Because if you 
look at the one true money, the one money that has existed for 6,000 
years that outlasts all the paper money and all the fiat currency, that 
is gold. It doesn't look very good and is sending a signal that a lot 
of inflation lurks in the future.
  In the past several years, maybe even 10 or 15 years, the dollar and 
the gold relationship depended on gold acting as a commodity. It moved 
with the stock market. It moved with commodity prices. But no longer. 
Instead of the gold going down when the stocks went down, instead of 
the gold going down when the commodities go down, instead of the gold 
going down when the dollar goes up, all of a sudden people are 
resorting to putting dollars and other currencies in gold. This is 
sending a signal that the confidence is being lost in the entire fiat 
monetary system. And the dollar, of course, is the reserve currency of 
the world and, therefore, a very significant event.
  But there are even other statistics to suggest that we're in for a 
lot more inflation. If we look at what has happened to producer prices 
in the past 12 months, we find out that producer prices have already 
moved up significantly. For instance, finished consumer goods are up 
8.2 percent in the last 12 months. Finished consumers goods, excluding 
food, are up 8.3. Finished energy goods are up 20 percent.

[[Page 7454]]

Now, that has not yet affected the Consumer Price Index, but, in the 
months to come, the producer prices will move into the consumer 
products, so we can expect a lot more inflation.

                              {time}  1615

  Now, the way we get in this trouble is due to accepting some notions 
about money that are false. We have believed since 1971 that there 
should be no linkage of our money to anything sound as the Constitution 
mandates. There should be no linkage of the dollar to gold or silver, 
which then gives the Congress leeway of spending endlessly; deficits 
don't matter. We can tax and we can borrow; but if we still don't have 
enough money, we can depend on the Federal Reserve just to print the 
money.
  Now, that has lasted for a long time, and we've been getting away 
with it; but the market is more powerful than the central bank and the 
politicians. The market usually rules and they come and say the money 
isn't worth what it used to be. There's too much mal-investment, 
there's too much debt, and therefore a correction must occur. This 
happened with the financial situation: there had to be a correction, 
the bubble burst, and there are some adjustments.
  But everything that we have done over these past several years and 
even over the last several decades has always been to resort to more 
inflation, print more money, spend more money, which only produces a 
problem that delays the inevitable. What I am afraid of is the 
inevitable is here, and we must do something about it.

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