Depreciation of the Dollar
The value of the dollar is a much more important issue than most realize
in Washington. Our current account deficit of 6 percent of gross domestic
product (GDP), and our total foreign indebtedness of over three trillion
dollars, pose a threat to our standard of living. Unfortunately, when
the crisis hits our leaders will have little ability to stem the tide
of price inflation and higher interest rates that will usher in a dangerous
period of economic weakness. Our dependency on foreign borrowing to finance
our spendthrift habits is not sustainable. We borrow $1.8 billion a day!
The solution involves changing our policy with regards to foreign commitments,
foreign wars, empire overseas, and the ever-growing entitlement system
here at home. This change is highly unlikely without significant turmoil,
and it certainly is not on the administration’s agenda for the next four
years. That’s why the world is now betting against the dollar.
Ron Paul, “What the Price of Gold Is Telling Us,” U.S.
House of Representatives, April 25, 2006.
The “tax” is paid when prices rise as the result of a depreciating dollar.
Savers and those living on fixed or low incomes are hardest hit as the
cost of living rises. Low- and middle-income families suffer the most
as they struggle to make ends meet while wealth is literally transferred
from the middle class to the wealthy.
Ron Paul, “What the Price of Gold Is Telling Us,” U.S.
House of Representatives, April 25, 2006.
In wartime, many nations actually operated counterfeiting programs to
undermine our dollar, but never to a disastrous level. The enemy knew
how harmful excessive creation of new money could be to the dollar and
our economy. But it seems we never learned the dangers of creating new
money out of thin air. We don’t need an Arab nation or the Chinese to
undermine our system with a counterfeiting operation. We do it ourselves,
with all the disadvantages that would occur if others did it to us. Today
we hear threats from some Arab, Muslim, and far Eastern countries about
undermining the dollar system—not by dishonest counterfeiting but by initiating
an alternative monetary system based on gold. Wouldn’t that be ironic?
Such an event theoretically could do great harm to us. This day may well
come, not so much as a direct political attack on the dollar system but
out of necessity to restore confidence in money once again.
Ron Paul, “What the Price of Gold Is Telling Us,” U.S.
House of Representatives, April 25, 2006.