Posted on 06/11/2002 4:06:34 AM PDT by Boonie Rat
The Declining Dollar
by Rep. Ron Paul, MD
US House of Representatives, June 5, 2002
Mr. Speaker, I have for several years come to the House floor to express my concern for the value of the dollar. It has been, and is, my concern that we in the Congress have not met our responsibility in this regard. The constitutional mandate for Congress should only permit silver and gold to be used as legal tender and has been ignored for decades and has caused much economic pain for many innocent Americans. Instead of maintaining a sound dollar, Congress has by both default and deliberate action promoted a policy that systematically depreciates the dollar. The financial markets are keenly aware of the minute-by-minute fluctuations of all the fiat currencies and look to these swings in value for an investment advantage. This type of anticipation and speculation does not exist in a sound monetary system.
But Congress should be interested in the dollar fluctuation not as an investment but because of our responsibility for maintaining a sound and stable currency, a requirement for sustained economic growth.
The consensus now is that the dollar is weakening and the hope is that the drop in its value will be neither too much nor occur too quickly; but no matter what the spin is, a depreciating currency, one that is losing its value against goods, services, other currencies and gold, cannot be beneficial and may well be dangerous. A sharply dropping dollar, especially since it is the reserve currency of the world, can play havoc with the entire world economy.
Gold is history's oldest and most stable currency. Central bankers and politicians hate gold because it restrains spending and denies them the power to create money and credit out of thin air. Those who promote big government, whether to wage war and promote foreign expansionism or to finance the welfare state here at home, cherish this power.
History and economic law are on the side of the gold. Paper money always fails. Unfortunately, though, this occurs only after many innocent people have suffered the consequences of the fraud that paper money represents. Monetary inflation is a hidden tax levied more on the poor and those on fixed incomes than the wealthy, the bankers, or the corporations.
In the past 2 years, gold has been the strongest currency throughout the world in spite of persistent central bank selling designed to suppress the gold price in hopes of hiding the evil caused by the inflationary policies that all central bankers follow. This type of depreciation only works for short periods; economic law always rules over the astounding power and influence of central bankers.
That is what is starting to happen, and trust in the dollar is being lost. The value of the dollar this year is down 18 percent compared to gold. This drop in value should not be ignored by Congress. We should never have permitted this policy that was deliberately designed to undermine the value of the currency.
There are a lot of reasons the market is pushing down the value of the dollar at this time. But only one is foremost. Current world economic and political conditions lead to less trust in the dollar's value. Economic strength here at home is questionable and causes concerns. Our huge foreign debt is more than $2 trillion, and our current account deficit is now 4 percent of GDP and growing. Financing this debt requires borrowing $1.3 billion per day from overseas. But these problems are ancillary to the real reason that the dollar must go down in value. For nearly 7 years the U.S. has had the privilege of creating unlimited amounts of dollars with foreigners only too eager to accept them to satisfy our ravenous appetite for consumer items. The markets have yet to discount most of this monetary inflation. But they are doing so now; and for us to ignore what is happening, we do so at the Nation's peril. Price inflation and much higher interest rates are around the corner.
Misplaced confidence in a currency can lead money managers and investors astray, but eventually the piper must be paid. Last year's record interest rate drop by the Federal Reserve was like pouring gasoline on a fire. Now the policy of the past decade is being recognized as being weak for the dollar; and trust and confidence in it is justifiably being questioned.
Trust in paper is difficult to measure and anticipate, but long-term value in gold is dependable and more reliably assessed. Printing money and creating artificial credit may temporarily lower interest rates, but it also causes the distortions of malinvestment, overcapacity, excessive debt and speculation. These conditions cause instability, and market forces eventually overrule the intentions of the central bankers. That is when the apparent benefits of the easy money disappear, such as we dramatically have seen with the crash of the dot-coms and the Enrons and many other stocks.
Now it is back to reality. This is serious business, and the correction that must come to adjust for the Federal Reserve's mischief of the past 30 years has only begun. Congress must soon consider significant changes in our monetary system.
Congress must soon consider significant changes in our monetary system if we hope to preserve a system of sound growth and wealth preservation. Paper money managed by the Federal Reserve System cannot accomplish this. In fact, it does the opposite.
Dr. Ron Paul is a Republican member of Congress from Texas.
Ah, but Article 1, Sec. 8, Par. 5 confers to Congress the power to coin money and Par.6 confers on Congress the power to punish counterfeiting of the current coin of the United States.
Coinage mandates a metallic currency standard under the US Constitution. Article 1, Sec. 10, Par. 1 prohibits the issuance of an inferior currency by any of the states. Note that the states are not prohibited from coining their own money - provided that it is made from silver or gold - however the US Congress has oversight through its' power to regulate the value of "foreign coin" as mentioned in Art. 1, Sec. 8, Par 5. It is illogical that the framers enjoined the several states to a monetary standard different from - or even superior to - that of United States under the Constitution.
Coinage mandates a metallic currency standard under the US Constitution.
No, it doesn't. United States vs. Rifen, 577 F.2d 1111. C.A.Mo. 1978, and Nixon v. Phillipoff, 615 F.Supp. 890, affirmed 787 F.2d 596. D.C.Ind. 1985, are germane.
Can you elaborate on their applicability to this question. I'm not familiar with the citations - is either is a Supreme Court ruling ?
The direct and honest way for the Congress to expand its' monetary authority would have been an amendment to Article 1 to substitute the word "create" for "coin" and submit it to the states for ratification. It is however doubtful that the states would have ratified a constitutional amendment granting such monetarily expansive power to the Congress.
I agree with Dukie here. The Supreme Court (and other courts) have been filled with people who believe in a "living Constitution" and no longer rule on whether new laws are "Constitutionaly legal" or not so these rulings from the '70s and '80s were made by the same people that taught Bill and Hillary how to be socialists.
Read the Federalist Papers, even the supporter of a central bank (Hamilton) argued for metals to be the currency of the United States. If you look at history, there is no denying that metal coins were to be the currency of the US.
By the way, the Supreme Court supported the taking of gold from American citizens in 1993, abortion, the Social Security system, and gun control; do you support those perversions also, poohbah?
Do you understand the principle of stare decisis? These rulings are from lower courts and were routinely denied cert, which means that they were in conformance with pre-existing precedent...which dates back to the Legal Tender cases (Knox vs. Lee and Parker vs. Davis) of 1871.
Just kidding.
But seriously, Hamilton was a very ambitious bastard (literally), but he was no traitor, let alone a tool for the Rothschilds. In fact, the Rothschilds were only just emerging from obscurity at this time. The first real money the family made was factoring the notes provided to William of Hesse by Britain in excahnge for the use of William's Hessian mercenaries (this interaction led Nathan Rothschild to move to England and establish the family branch in London). The Rothschilds' involvement in American finance remained very modest until well into the 20th century. A permanent Rothschild family presence did not exist in America until the late 1970s, when Francois Mitterand nationalized the French Rothschilds' bank, and most of the French branch re-located here.
coin - 1. A piece of metal or alloy of strictly determined weight and composition stamped in one of the mints of a government for circulation as money.
coin'age - 1. The act, art or practice of stamping money.
I see no references to notes, printed paper, script, etc. IMHO, the decline of precision in language and defined terms is a fundamental cause of expansive government and the erosion of liberty.
coin, v.t.; coined pt, pp; coining , ppr; To stamp and convert into money; to mint as in to coin silver.
Again we have reference to the process of stamping which involves metal and dies.
It seems what happens when we get into the concept of legal definitions which stretch beyond common dictionary definitions, do we not end up having the courts making definitions by decree.... by fiat ? Either as Limbaugh often says: Words mean things. Or language is situational and therefore arbitrary.
That's not the legal definition; it's merely a linguistic one.
Again we have reference to the process of stamping which involves metal and dies.
You are just hell-bent on giving Russia and South Africa control of our economy, aren't you?
It seems what happens when we get into the concept of legal definitions which stretch beyond common dictionary definitions, do we not end up having the courts making definitions by decree.... by fiat ?
No, it means that legal language and common speech can be different, even while examining the same word.
Rather than defending our borders, it seems Dubya's "free trade" policy is geared towards #2 and #3.PAPER CURRENCY: Paper usually issued by the national government that are used as money. Metal coins are also frequently included under the generic heading of currency. Currency in the U.S. economy is issued by the Federal Reserve System (paper) and the U.S. Treasury (coins). This constitutes about 30 to 40 percent of the M1 money supply. Most modern currency is fiat money.
FIAT MONEY: A medium of exchange (money) with value in exchange, but little or no value in use. Modern paper currency, coins, and checkable deposits are fiat money. The value of fiat money comes from the public's general willingness to accept it in exchange for other goods. This willingness comes from the fact that EVERYONE is willing to accept fiat money in exchange, which largely depends on the public's confidence in the authority (usually government) issuing the fiat money. Fiat money is NOT valuable unto itself, but it is valuable for what it can buy.
TRADE DEFICIT: Formally termed a balance of trade deficit, a condition in which a nation's imports are greater than exports. In other words, a country is buying more stuff for foreigners than foreigners are buying from domestic producers. A trade deficit is usually thought to be bad for a country. For this reason, some countries seek to reduce their trade deficit by--(1) establishing trade barriers on imports, (2) reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive, or (3) invading foreign countries with sizable armies.
No, I do not. I also don't understand economic theories about the "velocity of money," but that doesn't mean that I can't read and interpret the Constitution and what the founders declared money should be.
These rulings are from lower courts and were routinely denied cert, which means that they were in conformance with pre-existing precedent...which dates back to the Legal Tender cases (Knox vs. Lee and Parker vs. Davis) of 1871.
Whoopie ding! Courts have been a weak link in the Constitutional form of government from the beginning of our Rebublic. They have tended to be a rubber stamp for a form of Corporate Capitalism (fascism) that the founding fathers never intended.
Let's go back to my previous question to you. Do you cite court cases when defending abortion, Social Security, welfare, etc. If so you must be a Liberal and don't belong on this forum.
PS Just cause the court says so doesn't make it so.
The right of coining money, which is here taken from the States, was left in their hands by the Confederation, as a concurrent right with that of Congress, under an exception in favor of the exclusive right of Congress to regulate the alloy and value. In this instance, also, the new provision is an improvement on the old. Whilst the alloy and value depended on the general authority, a right of coinage in the particular States could have no other effect than to multiply expensive mints and diversify the forms and weights of the circulating pieces. The latter inconvenience defeats one purpose for which the power was originally submitted to the federal head; and as far as the former might prevent an inconvenient remittance of gold and silver to the central mint for recoinage, the end can be as well attained by local mints established under the general authority...Notice that every mention of money refers to alloy, while this is a subtle point, I interpret it to mean that money should always be metal. My theory is that they didn't want the Federal money to be limited to only silver and gold (to account for changes in the markets of copper, platinum, nickel etc) but that their intention was to have money consist of metals however various they may be.The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. In addition to these persuasive considerations, it may be observed, that the same reasons which show the necessity of denying to the States the power of regulating coin, prove with equal force that they ought not to be at liberty to substitute a paper medium in the place of coin...
No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.
The prosperity of commerce is now perceived and acknowledged by all enlightened statesmen to be the most useful as well as the most productive source of national wealth, and has accordingly become a primary object of their political cares. By multipying the means of gratification, by promoting the introduction and circulation of the precious metals, those darling objects of human avarice and enterprise, it serves to vivify and invigorate the channels of industry, and to make them flow with greater activity and copiousness.
The Congress addressed the Federal question of money with the Coinage Act of 1792 which fixed the value of a dollar at the same silver content (.7982 oz.) as that of the Spanish 8 reales (known as the Spanish Milled dollar or ‘Pillar’ dollar).
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