"There were several stages.
From the inception of the Federal Reserve System in 1913 to 1933,
the Central Bank established itself as the official dollar manager.
By 1933, Americans could no longer own gold, thus removing restraint
on the Federal Reserve to inflate for war and welfare.
"By 1945, further restraints
were removed by creating the Bretton-Woods Monetary System making
the dollar the reserve currency of the world. This system lasted
up until 1971. During the period between 1945 and 1971, some
restraints on the Fed remained in place. Foreigners, but not
Americans, could convert dollars to gold at $35 an ounce. Due
to the excessive dollars being created, that system came to an
end in 1971.
"It's the post Bretton-Woods
system that was responsible for globalizing inflation and markets
and for generating a gigantic worldwide dollar bubble. That bubble
is now bursting, and we're seeing what it's like to suffer the
consequences of the many previous economic errors.
"Ironically in these past
35 years, we have benefited from this very flawed system. Because
the world accepted dollars as if they were gold, we only had
to counterfeit more dollars, spend them overseas (indirectly
encouraging our jobs to go overseas as well) and enjoy unearned
prosperity. Those who took our dollars and gave us goods and
services were only too anxious to loan those dollars back to
us. This allowed us to export our inflation and delay the consequences
we now are starting to see.
"But it was never destined
to last, and now we have to pay the piper. Our huge foreign debt
must be paid or liquidated. Our entitlements are coming due just
as the world has become more reluctant to hold dollars. The consequence
of that decision is price inflation in this country - and that's
what we are witnessing today. Already price inflation overseas
is even higher than here at home as a consequence of foreign
central bank's willingness to monetize our debt.
"Printing dollars over
long periods of time may not immediately push prices up - yet
in time it always does. Now we're seeing catch-up for past inflating
of the monetary supply. As bad as it is today with $4 a gallon
gasoline, this is just the beginning. It's a gross distraction
to hound away at 'drill, drill, drill' as a solution to the dollar
crisis and high gasoline prices. It's okay to let the market
increase supplies and drill, but that issue is a gross distraction
from the sins of deficits and Federal Reserve monetary shenanigans.
"This bubble is different
and bigger for another reason. The central banks of the world
secretly collude to centrally plan the world economy. I'm convinced
that agreements among central banks to 'monetize' U.S. debt these
past 15 years have existed, although secretly and out of the
reach of any oversight of anyone - especially the U.S. Congress
that doesn't care, or just flat doesn't understand. As this 'gift'
to us comes to an end, our problems worsen. The central banks
and the various governments are very powerful, but eventually
the markets overwhelm when the people who get stuck holding the
bag (of bad dollars) catch on and spend the dollars into the
economy with emotional zeal, thus igniting inflationary fever.
"This time - since there
are so many dollars and so many countries involved - the Fed
has been able to 'paper' over every approaching crisis for the
past 15 years, especially with Alan Greenspan as Chairman of
the Federal Reserve Board, which has allowed the bubble to become
history's greatest.
"The mistakes made with
excessive credit at artificially low rates are huge, and the
market is demanding a correction. This involves excessive debt,
misdirected investments, over-investments, and all the other
problems caused by the government when spending the money they
should never have had. Foreign militarism, welfare handouts and
$80 trillion entitlement promises are all coming to an end. We
don't have the money or the wealth-creating capacity to catch
up and care for all the needs that now exist because we rejected
the market economy, sound money, self reliance and the principles
of liberty."
-Rep Ron Paul
