The Declining Dollar

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.

I think we scared poohbah away (especially spoosman). Or maybe he had to go back to work at the Fed...

It's tough work printing all those Federal Reserve Notes...

'Coining' WHAT?

There is absolutely no doubt that when the framers wrote "To coin" and "shall coin" they were referring to the production of physical gold and silver coin, having a specific weight. They were not referring to some philosophical concept of money.

Right on new spoosman! Way to get to the heart of the matter. They were 'coining' something PRECIOUS. A precious metal. A rare metal. Not some piece of crap from the tin pile like they do today.

"What was the "current coin of the United States" at the time the constitution was written? It was gold and silver coin. In the sentence where "coin" first appears, by the phrase "to coin", we have immediately following in the same sentence three references to physical gold and silver coin, because at the time the constitution was written this is what coin was -- physical units of gold and silver having a specific "weight". At the time the constitution was written, in the minds of those that wrote the phrase "to coin" the only thing they could have been thinking is the manufacture of physical gold and silver coin, having a specific designated weight, and that this coin was not to be counterfeited."

not to be counterfeited

couldn't be plainer. Bravo NS!

If this is implemented and the U.S. goes back to using real money, then our lifestyles as Americans would radically change. The money supply would become very tight, and Americans would be forced to end our love affair with the credit cards. America would have to ditch the Federal Reserve System with it's worthless "fiat currency." Government would be forced to live within it's means, and rein in spending, or else the government would devalue it's own currency.

A return to the Gold Standard might be the best thing that happened to American in a long time!

That's not the legal definition; it's merely a linguistic one.

Linguistic definition ? Legal definition ? Common law definition ? Semantic definition ? Why not just adhere to the definition of coin or to coin as they were understood by the framers ? Or attempt to amend the Constiution to say "create" or "print".

You are just hell-bent on giving Russia and South Africa control of our economy, aren't you?

Not at all, Poohbah. Isn't our wrongheaded "energy policy" more responsible for Saudi influence on our economy and foreign policy ? However we are self sufficient in proven silver deposits, even if we officially remonitize the metal, as the US is the world's leading producer.

It is clear that we shall agree to disagree on this matter, but I have enjoyed the exchange of ideas.

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