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Ron Paul's Freedom Report
A publication of the Foundation for Rational Economics and Education
VOLUME 3, NO.1 JANUARY/FEBRUARY 1999
This Special Edition double issue is adapted from remarks delivered by Rep. Paul
on February 2, 1999, at the opening of the First Session of the 106th Congress.
The State of the Republic
Mr. Speaker: Many Americans argue that we are now enjoying the best of times. Those who are content point out the economy is booming. We're not at war, crime rates are down, and the majority of Americans feel safe and secure in their homes and communities. Others, however, concern themselves with less visible problems smoldering beneath the surface. They point out that economic booms, when brought about artificially with credit creation, are destined to end with a bang.
The absence of overt war does not negate the fact that tens of thousands of American troops are scattered around the world in the middle of ancient fights that are not likely to be settled by our meddling and may escalate at any time. Congress' relinquishing the power to wage war to the President, although ignored or endorsed by many, raises serious questions regarding the status of our Republic.
Although many Americans are content with their routine activities, much evidence exists that personal privacy is threatened. Crime remains a concern for many to the point where questions are raised about whether or not violent crimes are being accurately reported. Ironically, there are many Americans who now fear the dreaded federal bureaucrat, and the possible illegal seizure of their property, even more than they fear the thug in the street.
I remain concerned about the economy, our militarism, and internationalism, and the loss of our privacy to the nameless bureaucrat's systematic invasion of every aspect of our lives. I'm convinced that if these problems are not dealt with, the Republic, which we have sworn an oath to defend and protect, will not survive.
All Members should be concerned about the war powers illegitimately assumed by the President, the financial bubble that will play havoc with the standard of living of most Americans when it bursts, and the systematic undermining of our privacy - even in this age of relative contentment.
War Power (The Power to Wage War)
The Founders of this great nation abhorred tyranny and loved liberty. The power of the King to wage war, tax, and abuse the personal rights of the American Colonists drove them to rebel, win a revolution, and codify their convictions in a new constitution. It was serious business, and every issue was thoroughly debated and explained, most prominently in the Federalist Papers. Debate about trade among the states and other countries, sound money, and constraints on presidential power occupied a major portion of their time.
Initially, the Articles of Confederation spoke clearly about who should be responsible for waging war. It gave the Constitutional Congress "sole and exclusive right and power of determining on peace and war." In the debate at the Constitutional Convention, it was clear that this congressional responsibility was maintained, and that the power of the British King was not to be taken as "a proper guide in defining executive (war) powers" for the newly formed republic.
The result was a Constitution that gave Congress the power to declare war, issue letters of marque and reprisal, call up the militia, raise and train an army and navy, and regulate foreign commerce (a tool often used in international conflict). The President was also required to share power with the Senate in ratifying treaties and appointing Ambassadors.
Let there be no doubt, the President, according to the Constitution, has no power to wage war. However, it has been recognized throughout our history that certain circumstances might require the President to act in "self defense" if Congress is not readily available to act and the United States is attacked.
Flagrant abuse of the war power by most modern-day presidents, including the most recent episodes in Iraq, Afghanistan, and Sudan, should prompt Congress to revisit this entire issue of war powers.
Certain abuses of power are more obviously injurious than others. For instance, the use of the FBI and the IRS to illegally monitor and intimidate citizens is a power that is easy to condemn (yet somehow, is allowed to thrive). On the other hand, the illegal and immoral power to create money out of thin air for the purpose of financing a welfare/warfare state (serving certain financial interests) causes the harmful business cycle - but it is a process that most in Washington do not understand or care about and overlook. These ominous powers of great magnitude were never meant to be permitted under the Constitution.
However, as bad as these abuses are, the power of a single person - the President - to wage war is the most egregious of all abuses of powers. Congress deserves the blame for allowing such power to gravitate into the hands of the President.
The fact that nary a complaint was made in Congress for the recent aggressive military behavior of our President in Iraq, for reasons that had nothing whatsoever to do with national security, should not be ignored. Congress unwisely and quickly rubber-stamped this military operation. We should analyze this closely and decide one way or the other whether we in Congress want to promote a war powers policy that conforms to the Constitution, or continue to allow our presidents ever-greater leverage to wage war anytime, anyplace, and for any reason.
This policy of allowing our presidents a free hand in waging war has been in place since the end of World War II, although abuse to a lesser degree has occurred since the beginning of the 20th Century. Specifically, since joining the United Nations, congressional authority to determine when and if our troops will fight abroad has been seriously undermined. From Truman's sending of troops to Korea, to Bush's Persian Gulf War, we have seen big wars fought, tens of thousands killed, hundreds of thousands wounded, and hundreds of billions of dollars wasted. U.S. security, never at risk, has been needlessly jeopardized by the so-called "peace-keeping missions" and "police exercises," while constitutional law has been seriously and dangerously undermined.
Something must be done! The cost of this policy has been great in terms of loss of life and dollars, and damage to our constitutional system of law. The Vietnam and Korean Wars caused greater than 100,000 deaths. If we continue to allow our presidents to casually pursue war for the flimsiest of reasons, we may well be looking at a major conflict somewhere in the world where we have no business or need to be involved.
The correction to this problem requires a concerted effort on the part of Congress to reclaim and reassert its war-power responsibilities under the Constitution. Efforts to do exactly this were made after Vietnam in 1973, and more recently in 1995. Neither effort was successful. Ironically the President emerged with more power when each effort was undermined by supporters of presidential authoritarianism and internationalism in the Congress.
Few objected to the Truman-ordered UN "police action" in Korea in the 1950s - but they should have. This illegal, major war encouraged all subsequent presidents to assume greater authority to wage war than was ever intended by the Constitution, or assumed by all presidents prior to World War II.
It is precisely because of the way we have entered each military action since the 1940s - without declaring war - that their purposes have been vague and victory illusive. Pain, suffering, and long-term negative consequences have resulted. The road on which this country embarked 50 years ago has led to the sacrifice of congressional prerogatives and citizen control over excessive powers that have fallen into the hands of presidents quite willing to abuse their authority.
If our society is to remain free, no one individual can be permitted to provoke war with aggressive military acts. Congress and the people are obligated to rein in this flagrant abuse of presidential powers.
Not only did we suffer greatly from the unwise and illegal Korean and Vietnam Wars, Congress has allowed a continuous abuse of military power by presidents in an ever-increasing frequency. We have seen: troops needlessly die in Lebanon; Granada invaded for questionable reasons; Libya bombed with innocent civilians killed; persistent naval operations in the Persian Gulf; Panama invaded; Iraq bombed on numerous occasions; Somalia invaded; a secret and illegal war fought in Nicaragua; Haiti occupied; and troops stationed in Bosnia.
Even congressional permission to pursue the Persian Gulf War was an afterthought. President Bush emphatically stated it was unnecessary because he received his authority from the United Nations.
Without an actual declaration of war, and support from the American people, victory is unachievable. This has been the case in the ongoing war against Iraq. Without a legitimate threat to national security, the willingness to declare war and fight to victory is difficult to achieve. Such war efforts become narrowly political, serve special interests, and are not fought to defend the United States against a serious military threat. If we can win a cold war with the Soviets, we hardly need a hot war with a third-world nation like Iraq.
In the 1960s, the American people expressed great concern over excessive presidential war powers. This drew the interest of the U.S. Congress after Vietnam in the early 1970s. The War Powers Resolution of 1973 resulted. But due to shrewd manipulation and political chicanery, the effort resulted in giving the President more authority, allowing him to wage war for sixty to ninety days without congressional approval. Prior to this, when the Constitution and historic precedent had been followed, the President could not (and for the most part did not) engage in any military effort not directly defensive in nature without explicit congressional approval.
The result of the passage of the War Powers Resolution was exactly opposite to the authors' intentions: more power was granted to the President to send troops hither and yon, with various presidents sometimes reporting to the Congress and sometimes not. But carelessly and unwisely, Congress has rarely objected, and in recent years has not demanded its proper role in decisions of war or hesitated to continue the funding that various presidents have demanded.
Approval of presidentially directed aggression is routinely given, disguised as "support for the troops." If any Member doesn't obediently endorse every action the President might take for whatever reason, it is inferred the Member lacks patriotism and wisdom. It is amazing how far we have drifted from a grave responsibility the Founders imagined the Congress and the people would jealously protect.
It is too often (and foolishly) argued that we must permit great flexibility for the President to retaliate whenever American troops are endangered. But this comes only after the President has already invaded and placed our troops in harms way. By what stretch of the imagination can one say that these actions can be considered "defensive" in nature?
The best way to promote support for the troops is to employ them in the manner that is least provocative. They must be given a mission confined to defending the United States, not policing the world, not taking orders from the United Nations, nor serving the special commercial interests of U.S. corporations around the world."
The 1995 effort to repeal the War Powers Resolution failed because it was not a clean repeal, but one still requiring "consultation and reporting" to the Congress. The House leadership admitted during debate that this "repeal" actually would give the President more power to use troops overseas and, therefore, leadership was urging passage of the measure. This led to enough confusion to prevent its passage, because it implied the "consultation and reporting" language might be enough to circumvent the stricter rules laid out by the Constitution. The leadership's accurate assessment prompted anti-war Republicans and Democrats to narrowly reject the proposal 201-217.
The message here is that clean repeal of the War Powers Resolution is the only way presidential authority to wage war can be curtailed. We need to return to the Constitution as a strict guide to who has the authority to exert war powers, and then scrupulously follow it, as did essentially all political parties and presidents in the 19th Century. If our presidents don't act accordingly, Congress must quickly and forcefully meet its responsibility by denying funds to foreign intervention and aggression.
The basic problem is there are still too many Members of Congress who endorse a presidency armed with a tyrant's authority to wage war. If this assumption of power by the President with Congress' approval is not reversed, the Republic cannot be maintained. Putting the power to wage war in the hands of a single person, the President, is dangerous and costly and it destroys the notion that the people - through their congressional representatives - decide when aggressive military action should start and war should take place.
The sacrifice of this constitutional principle, guarded diligently for 175 years but severely eroded in the past 50, must be restored if we hope to protect our liberties and avoid yet another unnecessary, and heaven forbid, major world conflict. Merely changing the law will not be enough to guarantee that future presidents won't violate their trust.
A moral commitment to the principle of limited presidential war power and the spirit of the Republic is required. The best of all situations is when the spirit of the Republic is one and the same as the law itself, and honorable men are in the positions of responsibility to carry out the law. Although we cannot guarantee the people's, future Congresses' or our Presidents' moral commitment to the principles of liberty by simply changing the law, we must nevertheless make every effort to make the law and the Constitution as morally sound as possible.
Our responsibility here in the Congress is to protect liberty and do our best to insure peace and trade with all who do not aggress against us. Peace is always best achieved when we reject the notion that Americans must subsidize foreign nations for the sake of a benefit that flows back to a select few Americans. Maintaining an empire or striving for a world government while allowing excessive war powers to accrue to an imperial President, will surely lead to needless military conflicts, loss of life and liberty, and a complete undermining of our constitutional Republic.
Privacy
Privacy is the very essence of liberty. Without it, individual rights cannot exist. Privacy and property are interlocking. If both were protected, little would need to be said about other civil liberties. If one's home, church, or business is one's "castle," and the privacy of one's person, papers, and effects are rigidly protected, all rights desired in a free society will be guaranteed.
Diligently protecting the right to privacy and property guarantees religious, journalistic, and political expression, as well as a free-market economy and sound money.
Today's systematic and pervasive attack on the privacy of all American citizens undermines the principle of private property ownership. Understanding why the attack on privacy is rapidly expanding and recognizing a need to reverse this trend is imperative if our Republic is to survive.
Just What Part of the 4th Amendment Don't You Understand?
Lack of respect for the privacy and property of the American colonists by the British Crown was powerful motivation for the American Revolution. It resulted in the strongly worded and crystal-clear 4th Amendment. Emphatically, searches and seizures are prohibited except when warrants are issued upon probable cause, supported by oath or affirmation, with details listed giving the place, person, and things to be seized. This is a far cry from the routine seizure by the federal government and the forfeiture of property which occurs today.
Once a careless attitude emerges with respect to privacy, all other rights are jeopardized. Our papers are no longer considered personal and their confidentiality has been eliminated. Federal agents search private property without announcement, and huge fines are levied when federal regulations appear to have been violated. Proof of innocence is demanded if one chooses to fight the abuse in court and avoid the heavy fines.
Eighty thousand armed federal bureaucrats and law enforcement officers now patrol our land and business establishments. Suspicious religious groups are monitored and sometimes destroyed without due process of law, and with little or no evidence of wrongdoing. Local and state jurisdiction is rarely recognized once the Feds move in.
Today, it's routine for government to illegally seize property and require the victim to prove his innocence in order to retrieve it. Many times the victim gives up due to the expense and legal roadblocks placed in his way.
Although voters in the 1990s have cried out for a change in direction and demanded smaller, less-intrusive government, the attack on privacy by the Congress, the Administration, and the courts has accelerated.
Plans have been laid and are now being implemented for a national ID card, a national medical databank, a databank on individual physicians, another on deadbeat dads, and for intrusive programs monitoring our every financial transaction ... while the Social Security Number has been established as the universal identifier. The Social Security Number is already commonly used for just about everything: getting a birth certificate, buying a car, seeing an MD, getting a job, opening a bank account, getting a driver's license, making many routine purchases and, of course, for getting a death certificate. Cradle-to-grave government surveillance is here and gets more pervasive daily.
The attack on privacy is neither coincidence nor an event that arises without reason; it is the result of a philosophy that justifies it and requires it. A government not dedicated to preserving liberty must, by its very nature, allow this precious right to erode. A political system designed, as ours was, to protect life, liberty and property, would vigorously protect all citizens' rights to privacy. This cannot occur unless the property and fruits of one's labor - of every citizen's labor - are protected from confiscation by thugs in the street as well as in our capitols.
The promoters of government's intrusion into our privacy characteristically use worn-out cliches to defend what they do. The most common argument is "if you have nothing to hide, why worry about it?" This is ludicrous. We may have nothing to hide in our home or bedrooms, but that's no reason for permitting Big Brother to monitor us with surveillance cameras. The same can be argued for our churches, our businesses, or for any peaceful action we may pursue. Our personal activities are no one else's business. We may have nothing to hide but we have plenty to lose - our right to be left alone - if we are not careful.
Others argue that to operate government programs efficiently, close monitoring is best achieved with a universal identifier - the Social Security Number. Efficiency and protection from fraud may well be enhanced with the use of a universal identifier, but this contradicts the whole notion of the proper role for government in a free society.
Most of the federal programs are unconstitutional to start with. Eliminating waste and fraud, and promoting efficiency for an unconstitutional program that requires a violation of someone else's rights should not be a high priority for Congress. But the temptation is too great, even for those who question the wisdom of the government programs, and compromise of the 4th Amendment becomes acceptable.
Essentially all those who vote to allow the continual erosion of our privacy and other constitutional rights never do it because they consciously support a tyrannical government. It's always done with good intentions. I have never heard a proposal to promote the national ID Card for any reason other than a "good" purpose.
Believe me, most of the evil done by elected congresses and parliaments throughout all of history has been done with good intentions. That doesn't change the evil done, it just makes it harder to stop. Therefore, we cannot ignore the motivations behind those who promote the Welfare State. Bad ideas, whether promoted and implemented by men of bad intentions or good, will yield bad results. Well-intentioned people - men of good will - should respond to our persuasive arguments, and experience teaches me they do. Ignorance is as much the enemy of sound policy as is political corruption.
Various management problems and support for welfarism motivate those who argue for "only a little sacrifice of freedom" to achieve a greater good for society as a whole. Each effort undermining our privacy is so justified. The national ID card is "needed," it is said, "to detect illegal aliens" - yet every American will have to use this card to open up a bank account, get a job, fly on an airplane, see a doctor, go to school, or drive a car.
Financial privacy must be sacrificed, it is argued, in order to catch money launderers, drug dealers, mobsters, and tax cheats. Privacy for privacy's sake, unfortunately, is a non-issue.
The recent KNOW YOUR CUSTOMER PLAN was designed by Richard Small, Assistant Director of the Division of Banking Supervision and Regulations at the Federal Reserve. Mr. Small is not happy with all the complaints that he has received regarding his monstrous proposal. This program requires that every bank keep a detailed profile for every customer on how much he deposits, where it comes from, and when and where the money is spent. If there is any deviation from the profile on record, the bank will have to report this to a half-dozen government agencies which will require the customer to do a lot of explaining. This program may catch a few drug dealers but will infringe on the liberty of every law-abiding citizen.
After many thousands of complaints were registered at the Federal Reserve and the other agencies, Richard Small said that in essence the complaints were coming from "these (strange) people who are overly concerned about the Constitution and privacy."
Legal justification, Small explains, comes from a court case that states that our personal papers, when in the hands of a third party like a bank, do not qualify for protection under the 4th Amendment. A court case should never have the authority to repeal a fundamental right as important as that guaranteed by the 4th Amendment.
Although Small is accurate in quoting the court case, that doesn't make it right. This reasoning, when applied to our medical records, destroys all confidentially between the doctor and the patient. Thus we see proposals for a national databank to assure us there will be no waste or fraud, that doctors are practicing good medicine, that the exchange of medical records between HMOs will be facilitated, and that statistical research is made easier. The more the government is involved in medicine (or anything else), the greater the odds that personal privacy will be abused.
The IRS and the DEA, with powers illegally given them by the Congress and the courts, have prompted a flood of seizures and forfeitures in the last several decades - all without due process, frequently without search warrants or probable cause. But this flagrant abuse of privacy may well turn out to be a blessing in disguise.
The disastrous state of the public school system has prompted millions of parents to provide private or home schooling for their children. The worse the government schools become, the more people resort to private options - even without tax relief from the politicians. This is possible as long as some remnant of our freedom remains and these options are permitted.
Hopefully, a similar reaction will occur in the area of privacy, and government snooping may provide the incentive for Americans to finally do something about the system. Of course, home schooling is a relatively simplistic solution compared to avoiding the roving and snooping eye of Big Brother. Overcoming the intrusiveness of government into nearly every aspect of our lives, will be difficult. Solving the privacy problem requires awakening the American people so they can send a strong message to the U.S. Congress declaring "we have had enough."
Stopping the systematic intrusion into our privacy will eventually require challenging the entire Welfare State. Socialism and welfarism self-destruct after a prolonged period of time due to their natural inefficiencies and national bankruptcy. As the system ages, more and more efforts must be made to delay its demise by borrowing, inflating and coercing. The degree of violation of our privacy is a measurement of the coercion thought necessary by authoritarians to continue the process.
The privacy issue invites an open debate between those who seriously believe welfare redistribution helps the poor and doesn't violate anyone's right, and those who disagree with them but promote policies undermining privacy in an effort to reduce fraud and waste, and make the programs work efficiently, even though they disagree with the programs themselves. The opportunity for this debate will actually increase as it becomes more evident that our country is poorer than most believe, and that sustaining the Welfare State at current levels will prove impossible.
An ever-increasing invasion of our privacy will eventually force everyone to reconsider the efficiency of the Welfare State if our standard of living declines. Our job is to make the principled, moral, constitutional, and practical case for respecting everyone's privacy - even when it's suspected that private activities, barring violence, do not conform to our own private moral standards. We could go a long way to guaranteeing privacy for all Americans if we, as Members of Congress, would take our oath of office more seriously and do exactly what the Constitution says.
Financial Bubble
A huge financial bubble distorts the world financial markets. This bubble has been developing for a long time but has gotten much larger in the last couple of years. Understanding this issue is critical to the economic security of all Americans that we in Congress strive to protect.
Credit expansion is the root cause of all financial bubbles. Fiat monetary systems inevitably cause unsustainable economic expansion that results in recession and/or depression. Recession must always result, with the degree and duration determined by government fiscal policy and central bank monetary policy. If wages and prices are not allowed to adjust (as they do through the mechanism of recession), and the correction is thwarted by invigorated monetary expansion, new and sustained economic growth will be delayed or prevented.
Financial dislocations caused by central banks in various countries will differ one from another due to political perceptions, military considerations, and reserve currency status. The U.S.'s ability to inflate has been dramatically enhanced by other countries' willingness to absorb our inflated currency, our dollar being the reserve currency of the world. Foreign central banks now hold in reserve over $600 billion, an amount significantly greater than that held by our own Federal Reserve. Our economic and military power give us additional license to inflate our currency, thus delaying the inevitable correction inherent in a paper monetary system. But this not only prolongs the inevitable, it allows for a larger bubble to develop, further jeopardizing our future economy.
Because of the significance of the dollar to the world economy, our inflation and the dollar-generated bubble is much more dangerous than single-country inflations such as occurred in Mexico, Brazil, South Korea, Japan, and elsewhere. The significance of those inflations, however, cannot be dismissed.
When the Dow was at 6500, Federal Reserve Board Chairman Alan Greenspan cautioned the nation about "irrational exuberance," and for a day or two the markets were subdued. But while openly worrying about an unsustainable stock-market boom, he nevertheless accelerated the very credit expansion that threatened the market and created the "irrational exuberance" in the first place.
From the time Greenspan made this statement in December 1996 until December 1998, the money supply soared. Over $1 trillion of new money (as measured by M3) was created by the Federal Reserve. Another monetary measurement, MZM (a new statistical gimmick that is a combination of M1 and M2), is currently increasing at a 20% rate. This generous dose of credit has sparked even more "irrational exuberance," which has taken the DOW to over 9000 for a 30% increase in just two years. (It is interesting to note that in 1998, when the foreign-registered corporation LTCM, with its massive $1 trillion speculation in the derivatives markets, was threatened by the market's demanding a logical correction to its own "exuberance," Greenspan and company quickly came to LTCM's rescue with an even greater acceleration of credit expansion.)
The pain of market discipline is never acceptable when compared to the pleasure of postponing hard decisions and enjoying for a while longer the short-term benefits gained by keeping the financial bubble inflated. But the day when it's realized that exporting our inflation is not without limits is fast approaching. That's when the markets and Congress will have to deal with an attack on the dollar. A hint of what can happen when the world gets tired of holding too many of our dollars was experienced in the dollar crisis of 1979-1980.
There is abundant evidence warning of the impending danger. According to Federal Reserve statistics, household debt reached 81% of personal income in the second quarter of 1998. For twenty years prior to 1985, household debt averaged around 50% of personal income. Between 1985 and 1998, due to generous Federal Reserve credit, confident American consumers increased their debt 81%; now it's even higher. At the same time, our savings rate has dropped to 0%.
Conviction that stock prices will continue to provide extra cash and confidence in the economy have fueled wild consumer spending and accumulation of personal debt. The home-refinance index between 1997 and 1999 increased 700%. Secondary mortgages are offered for up to 120% of a home equity, with many of these funds finding their way into the stock market. Generous credit and quasi-government agencies make these mortgage-markets robust, but a correction will come when it's realized that the builders and the lenders have gotten ahead of themselves.
The willingness of foreign entities to take and hold our dollars has generated a huge current-account deficit for the United States. It's expected the $200 billion annual deficit that we're running now will accelerate to over $300 billion in 1999, unless the financial bubble bursts first. This trend has made us the greatest international debtor in the world, with a negative net international asset position of more than $1.7 trillion. A significantly weakened dollar will play havoc when this bill comes due and foreign debt holders demand payment.
Contributing to the bubble and dollar strength has been the fact that, even though the dollar has problems, other currencies are even weaker and thus make the dollar look strong in comparison.
Budgetary figures are frequently stated in a falsely optimistic manner. In 1969, when there was a surplus of approximately $3 billion, the national debt went down approximately the same amount. In 1998, however, with a so-called "surplus" of $70 billion, the national debt went up $113 billion. Instead of future surpluses (which aren't really surpluses) running "forever," the deficits will rise with a weaker economy and as a result of congressional plans to increase welfare and warfare spending.
Current government propaganda promotes the false notion that inflation is no longer a problem. Nothing could be further from the truth. The dangerous financial bubble is a result of the Federal Reserve's deliberate policy of inflation. The Fed's argument that there is no inflation, according to government-concocted CPI figures, is made to justify a continuing policy of monetary inflation, because they are terrified of the consequence of deflation.
The Federal Reserve may sincerely believe maintaining the status quo, preventing price inflation, and delaying deflation are possible, which is not true. The most astute money manager cannot balance inflation against deflation as long as there is continued credit expansion. The system inevitably collapses, as it finally did in Japan in the 1990s.
Even the lack of CPI inflation as reported by the Federal Reserve is suspect. A CPI of all consumer items measured by a private source shows an approximate 400% increase in prices since 1970. Most Americans realize their dollars are buying less each year and no chance exists for the purchasing power of the dollar to go up. Just because prices for TVs and computers may go down, the cost of medicine, food, stocks, and entertainment certainly can rise rapidly.
One characteristic of an economy that suffers from a constantly debased currency is sluggish or diminished growth in real income. In spite of our grand economic recovery, two-thirds of our U.S. workers have had stagnant or falling wages for the past 25 years. The demands for poverty relief from government agencies continues to increase. Last year alone, 678,000 jobs were lost due to downsizing. The new service-sector jobs found by many of those laid off rarely pay as well.
In the last year and a half, various countries have been hit hard with deflationary pressures. In spite of the IMF-led bailouts of nearly $200 billion, the danger of a worldwide depression remains. Even with the extra dollars sent to them courtesy of the American taxpayer, all countries hit experienced devaluation and significant price inflation in their home currency. Although helpful to banks lending overseas, these bailout efforts have clearly failed. It has cost a lot of money, and has prevented the true market correction of liquidation of bad debt that must eventually come. The longer the delay and the more dollars used, the greater the threat to the dollar down the road.
There are good reasons why we in the Congress should be concerned. A dollar crisis is an economic crisis that will threaten the standard of living for many Americans. An economic crisis frequently leads to political crisis - this is now occurring in Indonesia.
Congress is responsible for the value of the dollar, and yet, as we have too often done in other areas, we have passed this responsibility to someone else - in this case, the Federal Reserve.
The Constitution is clear that the Congress has responsibility for guaranteeing the value of the currency. No authority has ever been given to create a central bank. Creating money out of thin air is counterfeiting, even when done by a bank that the Congress tolerates.
With its own insatiable desire to spend money and perpetuate a welfare and military state, it is easy to see why Congress cooperates with such a system. A national debt of $5.6 trillion could not have developed without a Federal Reserve willing to monetize this debt and provide artificially low interest rates.
When the dollar crisis hits, and it becomes painfully evident that the short-term benefits weren't worth it, we will be forced to consider monetary reform. Reconsidering the directives given us in the Constitution with regard to money would go a long way toward developing a sound monetary system that best protects our economy and guides us away from casually going to war. Monetary reform is something that we ought to be thinking about - now.
Our Legislative Goal
Mr. Speaker, we in Congress along with the American people, will soon have to make decisions that will determine whether the American Republic survives. Allowing our presidents to wage war without the consent of Congress, ignoring the obvious detriment of fiat money to a healthy economy, and perpetuating pervasive government intrusion into the privacy of all Americans will surely end the American experiment with maximum liberty for all.
Too often the American people have chosen security over liberty. Allowing the president a "little" authority to deal with problems under a UN banner has been easier than reversing the trend of the last 50 years. Accepting the financial bubble is easy today because, on the short run, it helps everyone's portfolio, finances government spending, and helps to whittle away at the deficit, even though it only delays the day of reckoning when the bills will come due, as they already have in so many other countries of the world. Giving up a little privacy today seems a small price to pay for the many who receive the generous benefits of big government. But when prosperity comes to an end and the right to privacy has been squandered, it will be most difficult to restore the principles of a free society.
Materialistic concerns and indifference toward the principles of liberty will undo much of what has been built in America over the last 200 years unless there is a renewed belief that our God-given rights to life and liberty are worth voting for. False economic security is no substitute for productive effort in a free society where citizens are self-reliant, generous, and non-violent.
Nothing less than a limited government, designed to protect life and property, as is found in a Republic, must be our legislative goal.
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