(2006) Ron Paul: GOLD AND THE US DOLLAR [Part 2]

( April 25th, 2006) Rep. Ron Paul speaks before the US House of Representatives. (2006) Ron Paul: GOLD AND THE US DOLLAR [Part 1] http://www.youtube.com/watch?v=_GcP_Lw4BCc (2006) Ron Paul: GOLD AND THE US DOLLAR [Part 2] http://www.youtube.com/watch?v=sHsh_SwAstw (2006) Ron Paul: GOLD AND THE US DOLLAR [Part 3] http://www.youtube.com/watch?v=C04kIwnzRSg (2006) Ron Paul: GOLD AND THE US DOLLAR [Part 4] http://www.youtube.com/watch?v=GEm03U7eXTw --------------------------------------------------------------- (Transcript) There is no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it is about to do in the future. Forget about the lip service given to transparency by the new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply. Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting monetary aggregates known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us, and Congress makes no demands to receive it. Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed's inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments and other central bankers will act accordingly. The fact that our money supply is rising significantly cannot be hidden from the markets. The response in time will drive the dollar down while driving interest rates and commodity prices up. Already we see this trend developing, which surely will accelerate in the not-too-distant future. Part of this reaction will be from those who seek a haven to protect their wealth, not invest, by treating gold and silver as universal and historic money. This means holding fewer dollars that are decreasing in value while holding gold as it increases in value. A soaring gold price is a vote of no confidence in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of this Congress and the administration to rein in runaway spending. Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won't help in the long run. If the markets are fooled only on the short term, it only means the adjustments will be much more dramatic later on, and in the meantime other market imbalances develop. The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock market bubbles and housing bubbles. When these distortions run these courses and are discovered, the corrections will be quite painful as was witnessed with the collapse of the NASDAQ bubble. Likewise a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations. This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day. Though everyone decries inflation, trade imbalances, economic downturns and Federal deficits, few attempt a closer study of our monetary system and how these events are interconnected. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline [Page: H1731] of gold since it serves as a check on government size and power. This is a sad commentary on the politics of today. (...) [ http://www.c-spanarchives.org/congress/?q=node/77531&id=7442935 ]