Monday, July 7, 2008


Something Big is Going On

The following statement is written by Congressman Paul about the pending
financial disaster. He will introduce this statement as a special order and
insert it into the Congressional Record next week. Fortunately, we have the
opportunity to debut it first on the Campaign for Liberty blog. It reads as

I have, for the past 35 years, expressed my grave concern for the future of
America. The course we have taken over the past century has threatened our
liberties, security and prosperity. In spite of these long-held concerns, I
have days—growing more frequent all the time—when I’m convinced the time
is now upon us that some Big Events are about to occur. These fast-approaching
events will not go unnoticed. They will affect all of us. They will not be
limited to just some areas of our country. The world economy and political
system will share in the chaos about to be unleashed.

Though the world has long suffered from the senselessness of wars that should
have been avoided, my greatest fear is that the course on which we find
ourselves will bring even greater conflict and economic suffering to the
innocent people of the world—unless we quickly change our ways.

America, with her traditions of free markets and property rights, led the way
toward great wealth and progress throughout the world as well as at home. Since
we have lost our confidence in the principles of liberty, self reliance, hard
work and frugality, and instead took on empire building, financed through
inflation and debt, all this has changed. This is indeed frightening and an
historic event.

The problem we face is not new in history. Authoritarianism has been around a
long time. For centuries, inflation and debt have been used by tyrants to hold
power, promote aggression, and provide “bread and circuses” for the people.
The notion that a country can afford “guns and butter” with no significant
penalty existed even before the 1960s when it became a popular slogan. It was
then, though, we were told the Vietnam War and a massive expansion of the
welfare state were not problems. The seventies proved that assumption wrong.

Today things are different from even ancient times or the 1970s. There is
something to the argument that we are now a global economy. The world has more
people and is more integrated due to modern technology, communications, and
travel. If modern technology had been used to promote the ideas of liberty,
free markets, sound money and trade, it would have ushered in a new golden
age—a globalism we could accept.

Instead, the wealth and freedom we now enjoy are shrinking and rest upon a
fragile philosophic infrastructure. It is not unlike the levies and bridges in
our own country that our system of war and welfare has caused us to ignore.

I’m fearful that my concerns have been legitimate and may even be worse than
I first thought. They are now at our doorstep. Time is short for making a
course correction before this grand experiment in liberty goes into deep

There are reasons to believe this coming crisis is different and bigger than
the world has ever experienced. Instead of using globalism in a positive
fashion, it’s been used to globalize all of the mistakes of the politicians,
bureaucrats and central bankers.

Being an unchallenged sole superpower was never accepted by us with a sense of
humility and respect. Our arrogance and aggressiveness have been used to
promote a world empire backed by the most powerful army of history. This type
of globalist intervention creates problems for all citizens of the world and
fails to contribute to the well-being of the world’s populations. Just think
how our personal liberties have been trashed here at home in the last decade.

The financial crisis, still in its early stages, is apparent to everyone:
gasoline prices over $4 a gallon; skyrocketing education and medical-care
costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble;
stockmarkets plunging; unemployment rising;, massive underemployment; excessive
government debt; and unmanageable personal debt. Little doubt exists as to
whether we’ll get stagflation. The question that will soon be asked is: When
will the stagflation become an inflationary depression?

There are various reasons that the world economy has been globalized and the
problems we face are worldwide. We cannot understand what we’re facing
without understanding fiat money and the long-developing dollar bubble.

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

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. Its 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

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.

Since the correction of all this misallocation of resources is necessary and
must come, one can look for some good that may come as this “Big Event”

There are two choices that people can make. The one choice that is unavailable
to us is to limp along with the status quo and prop up the system with more
debt, inflation and lies. That won’t happen.

One of the two choices, and the one chosen so often by government in the past
is that of rejecting the principles of liberty and resorting to even bigger and
more authoritarian government. Some argue that giving dictatorial powers to the
President, just as we have allowed him to run the American empire, is what we
should do. That’s the great danger, and in this post-911 atmosphere, too many
Americans are seeking safety over freedom. We have already lost too many of our
personal liberties already. Real fear of economic collapse could prompt central
planners to act to such a degree that the New Deal of the 30’s might look like
Jefferson’s Declaration of Independence.

The more the government is allowed to do in taking over and running the
economy, the deeper the depression gets and the longer it lasts. That was the
story of the 30ss and the early 40s, and the same mistakes are likely to be
made again if we do not wake up.

But the good news is that it need not be so bad if we do the right thing. I saw
“Something Big” happening in the past 18 months on the campaign trail. I was
encouraged that we are capable of waking up and doing the right thing. I have
literally met thousands of high school and college kids who are quite willing
to accept the challenge and responsibility of a free society and reject the
cradle-to-grave welfare that is promised them by so many do-good politicians.

If more hear the message of liberty, more will join in this effort. The failure
of our foreign policy, welfare system, and monetary policies and virtually all
government solutions are so readily apparent, it doesn’t take that much
convincing. But the positive message of how freedom works and why it’s
possible is what is urgently needed.

One of the best parts of accepting self reliance in a free society is that true
personal satisfaction with one’s own life can be achieved. This doesn’t
happen when the government assumes the role of guardian, parent or provider,
because it eliminates a sense of pride. But the real problem is the government
can’t provide the safety and economic security that it claims. The so-called
good that government claims it can deliver is always achieved at the expense of
someone else’s freedom. It’s a failed system and the young people know it.

Restoring a free society doesn’t eliminate the need to get our house in order
and to pay for the extravagant spending. But the pain would not be long-lasting
if we did the right things, and best of all the empire would have to end for
financial reasons. Our wars would stop, the attack on civil liberties would
cease, and prosperity would return. The choices are clear: it shouldn’t be
difficult, but the big event now unfolding gives us a great opportunity to
reverse the tide and resume the truly great American Revolution started in
1776. Opportunity knocks in spite of the urgency and the dangers we face.

Let’s make “Something Big is Happening” be the discovery that freedom
works and is popular and the big economic and political event we’re
witnessing is a blessing in disguise.

Ron Paul

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