Our nation stands at the precipice of an economic meltdown that would make the current recession seem like the “best of times.” The almighty dollar, once labeled “good as gold,” stands close to repudiation. Yet the Obama administration and congressional leaders are failing to address the reason for the dollar’s decline.
We find ourselves mired in the “it can’t happen here” syndrome. The experts won’t tell the public what happened in Germany in the 1920s, or in Hungary and Argentina more recently, or in Zimbabwe only a few years back. But all of the agony and chaos experienced in those nations should be expected in America. The dollar has plummeted so far in value that its worth is now less than five percent of what is was when a deceived Congress voted to create the Federal Reserve in 1913.
Addressing this increasingly dire situation, Congressman Ron Paul has introduced H.R. 1098, the “Free Competition in Currency Act of 2011.” Its main purposes are: 1) repeal the legal tender laws; and 2) bar taxation when buying or selling such commodities as gold, silver, and platinum if the intention is to use them as money.
National Review's latest cover story is a character assassination of Ron Paul and the JBS.
The sovereign debt woes of the European Union are nearing a critical stage. Greece's short-term bonds have recently shot to 60 percent, indicating an extremely high probability that the ancient country will default. Though Portugal and Spain, two of the other “PIIGS” member-states in the EU, are temporarily off the radar screen, neither has solved its fundamental debt problems.
In Finland, the only Scandinavian nation in the eurozone, the True Finns political party has enjoyed remarkable success running largely on a platform of refusing to bail out spendthrift EU members whose expenditure-to-revenue ratios would make full repayment of debt instruments unlikely without outside help. The other Scandinavian nations have become increasingly reluctant to join the eurozone over the last few years.
The sovereign debt crisis originally involved four governments — the so-called PIGS: Portugal, Ireland, Greece, and Spain. What is particularly disconcerting for those attempting to solve the EU's economic problems has been the inclusion of Italy in this group (now known as PIIGS).
As the nation continues to struggle with a prolonged economic slump and an unemployment rate that remains stubbornly above nine percent, former Federal Reserve Chairman Paul Volcker has warned the Fed against the temptation to jeopardize price stability in an effort to jumpstart the economy. Even "a little inflation" can be dangerous, Volcker warned in an op-ed piece in Monday's New York Times. Volcker noted "a sense of desperation" abroad in the land, since "both monetary and fiscal policy have almost exhausted their potential, given the size of the fiscal deficits and the already extremely low level of interests rates.
"So now we are beginning to hear murmurings about the possible invigorating effects of 'just a little inflation.' Perhaps 4 or 5 percent a year would be just the thing to deal with the overhang of debt and encourage the 'animal spirits' of business, or so the argument goes." Businesses will be encouraged to invest today in anticipation of higher prices tomorrow. A further weakening of the dollar would also boost exports, thereby spurring an economic recovery, some theorists have suggested, arguing that we can return to price stability as the economy expands again.
Anyone who watches television news for more than a few hours is likely to see an advertisement for gold. As the Federal Reserve continues to print fiat money in vast quantities — backed by nothing except the vague promise that this paper is legal tender and can be used to pay all debts public and private — people are increasingly looking for something of real value. And that something is gold.
When American currency was redeemable in gold, its value was stable. Even “bimetallism,” which provided that currency could also be redeemed in silver, did not significantly affect the value of the dollar.
Historically, a major issue in certain presidential campaigns — such as those of William Jennings Byran v. William McKinley in 1896 and 1900 — was whether to allow dollars to be redeemed in silver. Because of America's silver mines — primarily in the Rocky Mountain region — allowing such an exchange would bring more currency into circulation, producing mild inflation. What person alive then would have ever imagined the dire straits of today, when our currency is backed only by a federal government drowning in debt?
We built up the industrial might of China, now the powers that be want to build up Russian industry.
The fiscal and monetary crisis confronting America today is more than an economic problem, it is a threat to our liberties and the nation's sovereignty, constitutional lawyer Edwin Vieira said at a Constitution Day celebration in Portsmouth, N.H. on Sunday. Unless a sound currency is established, the coming economic collapse will result in America "falling victim to a domestic totalitarian police state with the loss of American sovereignty and independence and lead to some sort of regional or global system, i.e. a new world order," he said.
Citing Italy and Germany in the 1920s and 1930s as examples, Vieira warned of the hyperinflation that occurs when a government dramatically increases its printing of dollars to cover its mounting debts. No form of government has ever survived a national debt that equal to more than 41 percent of its annual budget, he said, adding that in the United States today, it is 44 percent. "Our country is set up to fail," he said, as jobs and technology are shipped overseas, artificial "bubbles" are created in the domestic economy and banks and large-scale investors turn to the federal government for relief.
If the European Union begins to disintegrate, what signs would portend its spiral into disunion? One would be a member nation utterly ignoring the financial rules intended to support the EU by providing false and misleading information about its economy — actions already undertaken by both Greece and Portugal. Another indication of impending EU disintegration would be a member state simply printing its own euros — after only technically meeting the requirement of notification — as did Ireland a few months ago.
Or the European Union might dissolve as European society itself is breaking down with the rise of both radical Islam and secular humanism. Many Muslim settlements in the continent have become “no go” zones for police and fire services, and the disdain by the elites in Europe for historic Christian values is now deeply entrenched in the culture.
Furthermore, representative government is no longer working in some of the EU nations.
Even as the dollar is crashing and inflation in the United States is rampant, Federal Reserve officials have announced plans to flow dollars into banks in the European Union. The European Central Bank, which is to receive the largest amount, will in turn will extend the money to other major banks in EU member states, which are finding it increasingly difficult to raise funds from investors deeply concerned by the massive regional government's unstable economic climate.
Meanwhile, the planned participation of central banks across the globe in the scheme is now prompting some to ponder how these efforts will impact the drive for gold, as well as the future of the European economy. The Washington Post reports:
The initiative, which entails temporarily swapping dollars for foreign currencies, also involves the central banks of Britain, Switzerland and Japan, underlining the extent of international concern about Europe’s deteriorating financial system. By tapping the Fed for dollars, the other central banks are taking advantage of long-standing arrangements, first put in place four years ago at the outset of the global financial crisis to prevent bank lending from freezing up.
To the list of mega-corporations bailed out by the United States government, we now must add — Europe. In an announcement that rocked financial markets worldwide, the European Central Bank announced today a concerted effort in combination with four other major central banks — the Bank of England, the Bank of Japan, the Bank of Switzerland, and yes, the United States Federal Reserve — to use dollars rather than euros in an attempt to paper over the European Union’s economic woes.
Starting in October, the Federal Reserve and other major central banks will begin auctioning allotments of dollars to the European Central Bank, which will then use the new money to shore up shaky European megabanks. The allotments, which will have three-month maturities and will be structured like typical repurchase operations (“repos”), will be issued against euro-denominated collateral and repaid, with interest, in dollars. That, at least, is the theory.
Currency swaps involving the Federal Reserve and other central banks are nothing new, and have been a focal concern of Fed opponents like Congressman Ron Paul, who has long suggested that much of the Fed’s financial chicanery has been carried out in the form of such currency deals with foreign central banks, in total secrecy.