The Pentagon recently reported that it now spends roughly $8.4 billion per month waging the war in Iraq, while the additional cost of our engagement in Afghanistan brings the monthly total to a staggering $10 billion. Since 2001, Congress has spent more than $500 billion on specific appropriations for Iraq. This sum is not reflected in official budget and deficit figures. Congress has funded the war by passing a series of so-called “supplemental” spending bills, which are passed outside of the normal appropriations process and thus deemed off-budget.
This is fundamentally dishonest: if we’re going to have a war, let’s face the costs-- both human and economic-- squarely. Congress has no business hiding the costs of war through accounting tricks.
As the war in Iraq surges forward, and the administration ponders military action against Iran, it’s important to ask ourselves an overlooked question: Can we really afford it? If every American taxpayer had to submit an extra five or ten thousand dollars to the IRS this April to pay for the war, I’m quite certain it would end very quickly. The problem is that government finances war by borrowing and printing money, rather than presenting a bill directly in the form of higher taxes. When the costs are obscured, the question of whether any war is worth it becomes distorted.
Congress and the Federal Reserve Bank have a cozy, unspoken arrangement that makes war easier to finance. Congress has an insatiable appetite for new spending, but raising taxes is politically unpopular. The Federal Reserve, however, is happy to accommodate deficit spending by creating new money through the Treasury Department. In exchange, Congress leaves the Fed alone to operate free of pesky oversight and free of political scrutiny. Monetary policy is utterly ignored in Washington, even though the Federal Reserve system is a creation of Congress.
The result of this arrangement is inflation. And inflation finances war.
Economist Lawrence Parks has explained how the creation of the Federal Reserve Bank in 1913 made possible our involvement in World War I. Without the ability to create new money, the federal government never could have afforded the enormous mobilization of men and material. Prior to that, American wars were financed through taxes and borrowing, both of which have limits. But government printing presses, at least in theory, have no limits. That’s why the money supply has nearly tripled just since 1990.
For perspective, consider our ongoing military commitment in Korea. In Korea alone, U.S. taxpayers have spent $1 trillion in today’s dollars over 55 years. What do we have to show for it? North Korea is a belligerent adversary armed with nuclear weapons, while South Korea is at best ambivalent about our role as their protector. The stalemate stretches on with no end in sight, as the grandchildren and great-grandchildren of the men who fought in Korea give little thought to what was gained or lost. The Korean conflict should serve as a cautionary tale against the open-ended military occupation of any region.
The $500 billion we’ve officially spent in Iraq is an enormous sum, but the real total is much higher, hidden within the Defense Department and foreign aid budgets. As we build permanent military bases and a $1 billion embassy in Iraq, we need to keep asking whether it’s really worth it. Congress should at least fund the war in an honest way so the American people can judge for themselves.
Monday
Wednesday
CAN WE ACHIEVE PEACE IN THE MIDDLE EAST?
Former President Carter’s new book about the ongoing conflict between Israel and Palestine has raised the ire of Americans on two sides of the debate. I say “two sides” rather than “both sides,” because there is another perspective that is never discussed in American politics. That perspective is the perspective of our founding fathers, namely that America should not intervene in the internal affairs of other nations.
Everyone assumes America must play the leading role in crafting some settlement or compromise between the Israelis and the Palestinians. But Jefferson, Madison, and Washington explicitly warned against involving ourselves in foreign conflicts.
The conflict in Gaza and the West Bank is almost like a schoolyard fight: when America and the world stand watching, neither side will give an inch for fear of appearing weak. But deep down, the people who actually have to live there desperately want an end to the violence. They don’t need solutions imposed by outsiders. It’s easy to sit here safe in America and talk tough, but we’re not the ones suffering.
Practically speaking, our meddling in the Middle East has only intensified strife and conflict. American tax dollars have militarized the entire region. We give Israel about $3 billion each year, but we also give Egypt $2 billion. Most other Middle East countries get money too, some of which ends up in the hands of Palestinian terrorists. Both sides have far more military weapons as a result. Talk about adding fuel to the fire! Our foolish and unconstitutional foreign aid has produced more violence, not less.
Congress and each successive administration pledge their political, financial, and military support for Israel. Yet while we call ourselves a strong ally of the Israeli people, we send billions in foreign aid every year to some Muslim states that many Israelis regard as enemies. From the Israeli point of view, many of the same Islamic nations we fund with our tax dollars want to destroy the Jewish state. Many average Israelis and American Jews see America as hypocritically hedging its bets.
This illustrates perfectly the inherent problem with foreign aid: once we give money to one country, we have to give it to all the rest or risk making enemies. This is especially true in the Middle East and other strife-torn regions, where our financial support for one side is seen as an act of aggression by the other. Just as our money never makes Israel secure, it doesn’t buy us any true friends elsewhere in the region. On the contrary, millions of Muslims hate the United States.
It is time to challenge the notion that it is our job to broker peace in the Middle East and every other troubled region across the globe. America can and should use every diplomatic means at our disposal to end the violence in the West Bank, but we should draw the line at any further entanglement. Third-party outsiders cannot impose political solutions in Palestine or anywhere else. Peace can be achieved only when self-determination operates freely in all nations. “Peace plans” imposed by outsiders or the UN cause resentment and seldom produce lasting peace.
The simple truth is that we cannot resolve every human conflict across the globe, and there will always be violence somewhere on earth. The fatal conceit lies in believing America can impose geopolitical solutions wherever it chooses.
Everyone assumes America must play the leading role in crafting some settlement or compromise between the Israelis and the Palestinians. But Jefferson, Madison, and Washington explicitly warned against involving ourselves in foreign conflicts.
The conflict in Gaza and the West Bank is almost like a schoolyard fight: when America and the world stand watching, neither side will give an inch for fear of appearing weak. But deep down, the people who actually have to live there desperately want an end to the violence. They don’t need solutions imposed by outsiders. It’s easy to sit here safe in America and talk tough, but we’re not the ones suffering.
Practically speaking, our meddling in the Middle East has only intensified strife and conflict. American tax dollars have militarized the entire region. We give Israel about $3 billion each year, but we also give Egypt $2 billion. Most other Middle East countries get money too, some of which ends up in the hands of Palestinian terrorists. Both sides have far more military weapons as a result. Talk about adding fuel to the fire! Our foolish and unconstitutional foreign aid has produced more violence, not less.
Congress and each successive administration pledge their political, financial, and military support for Israel. Yet while we call ourselves a strong ally of the Israeli people, we send billions in foreign aid every year to some Muslim states that many Israelis regard as enemies. From the Israeli point of view, many of the same Islamic nations we fund with our tax dollars want to destroy the Jewish state. Many average Israelis and American Jews see America as hypocritically hedging its bets.
This illustrates perfectly the inherent problem with foreign aid: once we give money to one country, we have to give it to all the rest or risk making enemies. This is especially true in the Middle East and other strife-torn regions, where our financial support for one side is seen as an act of aggression by the other. Just as our money never makes Israel secure, it doesn’t buy us any true friends elsewhere in the region. On the contrary, millions of Muslims hate the United States.
It is time to challenge the notion that it is our job to broker peace in the Middle East and every other troubled region across the globe. America can and should use every diplomatic means at our disposal to end the violence in the West Bank, but we should draw the line at any further entanglement. Third-party outsiders cannot impose political solutions in Palestine or anywhere else. Peace can be achieved only when self-determination operates freely in all nations. “Peace plans” imposed by outsiders or the UN cause resentment and seldom produce lasting peace.
The simple truth is that we cannot resolve every human conflict across the globe, and there will always be violence somewhere on earth. The fatal conceit lies in believing America can impose geopolitical solutions wherever it chooses.
A VOTE OF "NO CONFIDENCE"
Before the U.S. House of Representatives
The financial press, and even the network news shows, have begun reporting the price of gold regularly. For twenty years, between 1980 and 2000, the price of gold was rarely mentioned. There was little interest, and the price was either falling or remaining steady.
Since 2001 however, interest in gold has soared along with its price. With the price now over $600 an ounce, a lot more people are becoming interested in gold as an investment and an economic indicator. Much can be learned by understanding what the rising dollar price of gold means.
The rise in gold prices from $250 per ounce in 2001 to over $600 today has drawn investors and speculators into the precious metals market. Though many already have made handsome profits, buying gold per se should not be touted as a good investment. After all, gold earns no interest and its quality never changes. It's static, and does not grow as sound investments should.
It's more accurate to say that one might invest in a gold or silver mining company, where management, labor costs, and the nature of new discoveries all play a vital role in determining the quality of the investment and the profits made.
Buying gold and holding it is somewhat analogous to converting one's savings into one hundred dollar bills and hiding them under the mattress - yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There's a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, i.e. gold, however, goes up if the government devalues the circulating fiat currency.
Holding gold is protection or insurance against government's proclivity to debase its currency. The purchasing power of gold goes up not because it's a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.
One of the characteristics of commodity money - one that originated naturally in the marketplace - is that it must serve as a store of value. Gold and silver meet that test - paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It's more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.
The point is that most who buy gold do so to protect against a depreciating currency rather than as an investment in the classical sense. Americans understand this less than citizens of other countries; some nations have suffered from severe monetary inflation that literally led to the destruction of their national currency. Though our inflation - i.e. the depreciation of the U.S. dollar - has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and our political system. The belief that money created out of thin air can work economic miracles, if only properly "managed," is pervasive in D.C.
In many ways we shouldn't be surprised about this trust in such an unsound system. For at least four generations our government-run universities have systematically preached a monetary doctrine justifying the so-called wisdom of paper money over the "foolishness" of sound money. Not only that, paper money has worked surprisingly well in the past 35 years - the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these several decades have gained the knowledge necessary to make paper money respond as if it were gold. This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.
Many central bankers in the last 15 years became so confident they had achieved this milestone that they sold off large hoards of their gold reserves. At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing market gold prices. This recent deception failed just as it did in the 1960s, when our government tried to hold gold artificially low at $35 an ounce. But since they could not truly repeal the economic laws regarding money, just as many central bankers sold, others bought. It's fascinating that the European central banks sold gold while Asian central banks bought it over the last several years.
Since gold has proven to be the real money of the ages, we see once again a shift in wealth from the West to the East, just as we saw a loss of our industrial base in the same direction. Though Treasury officials deny any U.S. sales or loans of our official gold holdings, no audits are permitted so no one can be certain.
The special nature of the dollar as the reserve currency of the world has allowed this game to last longer than it would have otherwise. But the fact that gold has gone from $252 per ounce to over $600 means there is concern about the future of the dollar. The higher the price for gold, the greater the concern for the dollar. Instead of dwelling on the dollar price of gold, we should be talking about the depreciation of the dollar. In 1934 a dollar was worth 1/20th of an ounce of gold; $20 bought an ounce of gold. Today a dollar is worth 1/600th of an ounce of gold, meaning it takes $600 to buy one ounce of gold.
The number of dollars created by the Federal Reserve, and through the fractional reserve banking system, is crucial in determining how the market assesses the relationship of the dollar and gold. Though there's a strong correlation, it's not instantaneous or perfectly predictable. There are many variables to consider, but in the long term the dollar price of gold represents past inflation of the money supply. Equally important, it represents the anticipation of how much new money will be created in the future. This introduces the factor of trust and confidence in our monetary authorities and our politicians. And these days the American people are casting a vote of "no confidence" in this regard, and for good reasons.
The incentive for central bankers to create new money out of thin air is twofold. One is to practice central economic planning through the manipulation of interest rates. The second is to monetize the escalating federal debt politicians create and thrive on.
Today no one in Washington believes for a minute that runaway deficits are going to be curtailed. In March alone, the federal government created an historic $85 billion deficit. The current supplemental bill going through Congress has grown from $92 billion to over $106 billion, and everyone knows it will not draw President Bush's first veto. Most knowledgeable people therefore assume that inflation of the money supply is not only going to continue, but accelerate. This anticipation, plus the fact that many new dollars have been created over the past 15 years that have not yet been fully discounted, guarantees the further depreciation of the dollar in terms of gold.
There's no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it's about to do in the future. Forget about the lip service given to transparency by new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community, and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply.
Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting the monetary aggregate known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us and Congress makes no demands to receive it.
Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed's inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments, and other central bankers will act accordingly. The fact that our money supply is rising significantly cannot be hidden from the markets.
The response in time will drive the dollar down, while driving interest rates and commodity prices up. Already we see this trend developing, which surely will accelerate in the not too distant future. Part of this reaction will be from those who seek a haven to protect their wealth - not invest - by treating gold and silver as universal and historic money. This means holding fewer dollars that are decreasing in value while holding gold as it increases in value.
A soaring gold price is a vote of "no confidence" in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to reign in runaway spending.
Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won't help in the long run. If the markets are fooled short term, it only means the adjustments will be much more dramatic later on. And in the meantime, other market imbalances develop.
The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock markets bubbles and housing bubbles. When these distortions run their course and are discovered, the corrections will be quite painful.
Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations. This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.
Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold - since it serves as a check on government size and power. This is a sad commentary on the politics of today. The best analogy to our affinity for government spending, borrowing, and inflating is that of a drug addict who knows if he doesn't quit he'll die; yet he can't quit because of the heavy price required to overcome the dependency. The right choice is very difficult, but remaining addicted to drugs guarantees the death of the patient, while our addiction to deficit spending, debt, and inflation guarantees the collapse of our economy.
Special interest groups, who vigorously compete for federal dollars, want to perpetuate the system rather than admit to a dangerous addiction. Those who champion welfare for the poor, entitlements for the middle class, or war contracts for the military industrial corporations, all agree on the so-called benefits bestowed by the Fed's power to counterfeit fiat money. Bankers, who benefit from our fractional reserve system, likewise never criticize the Fed, especially since it's the lender of last resort that bails out financial institutions when crises arise. And it's true, special interests and bankers do benefit from the Fed, and may well get bailed out - just as we saw with the Long-Term Capital Management fund crisis a few years ago. In the past, companies like Lockheed and Chrysler benefited as well. But what the Fed cannot do is guarantee the market will maintain trust in the worthiness of the dollar. Current policy guarantees that the integrity of the dollar will be undermined. Exactly when this will occur, and the extent of the resulting damage to financial system, cannot be known for sure - but it is coming. There are plenty of indications already on the horizon.
Foreign policy plays a significant role in the economy and the value of the dollar. A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency - especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.
The cost of war is enormously detrimental; it significantly contributes tothe economic instability of the nation by boosting spending, deficits, andinflation. Funds used for war are funds that could have remained in the productive economy to raise the standard of living of Americans now unemployed, underemployed, or barely living on the margin.
Yet even these costs may be preferable to paying for war with huge taxincreases. This is because although fiat dollars are theoretically worthless, value is imbued by the trust placed in them by the world'sfinancial community. Subjective trust in a currency can overrideobjective knowledge about government policies, but only for a limited time.
Economic strength and military power contribute to the trust in acurrency; in today's world trust in the U.S. dollar is not earned andtherefore fragile. The history of the dollar, being as good as gold upuntil 1971, is helpful in maintaining an artificially higher value for thedollar than deserved.
Foreign policy contributes to the crisis when the spending to maintain ourworldwide military commitments becomes prohibitive, and inflationarypressures accelerate. But the real crisis hits when the world realizesthe king has no clothes, in that the dollar has no backing, and we face amilitary setback even greater than we already are experiencing in Iraq. Our token friends may quickly transform into vocal enemies once the attackon the dollar begins.
False trust placed in the dollar once was helpful to us, but panic andrejection of the dollar will develop into a real financial crisis. Thenwe will have no other option but to tighten our belts, go back to work,stop borrowing, start saving, and rebuild our industrial base, whileadjusting to a lower standard of living for most Americans.
Counterfeiting the nation's money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That's why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency. Too bad they weren't explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar.
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.
Historically, paper money never has lasted for long periods of time, while gold has survived thousands of years of attacks by political interests and big government. In time, the world once again will restore trust in the monetary system by making some currency as good as gold.
Gold, or any acceptable market commodity money, is required to preserve liberty. Monopoly control by government of a system that creates fiat money out of thin air guarantees the loss of liberty. No matter how well-intended our militarism is portrayed, or how happily the promises of wonderful programs for the poor are promoted, inflating the money supply to pay these bills makes government bigger. Empires always fail, and expenses always exceed projections. Harmful unintended consequences are the rule, not the exception. Welfare for the poor is inefficient and wasteful. The beneficiaries are rarely the poor themselves, but instead the politicians, bureaucrats, or the wealthy. The same is true of all foreign aid-- it's nothing more than a program that steals from the poor in a rich country and gives to the rich leaders of a poor country. Whether it's war or welfare payments, it always means higher taxes, inflation, and debt. Whether it's the extraction of wealth from the productive economy, the distortion of the market by interest rate manipulation, or spending for war and welfare, it can't happen without infringing upon personal liberty.
At home the war on poverty, terrorism, drugs, or foreign rulers provides an opportunity for authoritarians to rise to power, individuals who think nothing of violating the people's rights to privacy and freedom of speech. They believe their role is to protect the secrecy of government, rather than protect the privacy of citizens. Unfortunately, that is the atmosphere under which we live today, with essentially no respect for the Bill of Rights.
Though great economic harm comes from a government monopoly fiat monetary system, the loss of liberty associated with it is equally troubling. Justas empires are self-limiting in terms of money and manpower, so too is a monetary system based on illusion and fraud. When the end comes we will be given an opportunity to choose once again between honest money and liberty on one hand; chaos, poverty, and authoritarianism on the other.
The economic harm done by a fiat monetary system is pervasive, dangerous,and unfair. Though runaway inflation is injurious to almost everyone, itis more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. Small businesses and individual enterprises suffermore than the financial elite, who borrow large sums before the money loses value. Those who are on the receiving end of government contracts--especially in the military industrial complex during wartime--receive undeserved benefits.
It's a mistake to blame high gasoline and oil prices on price gouging. Ifwe impose new taxes or fix prices, while ignoring monetary inflation, corporate subsidies, and excessive regulations, shortages will result. The market is the only way to determine the best price for any commodity. The law of supply and demand cannot be repealed. The real problems arise when government planners give subsidies to energy companies and favor one form of energy over another.
Energy prices are rising for many reasons: Inflation; increased demand from China and India; decreased supply resulting from our invasion ofIraq; anticipated disruption of supply as we push regime change in Iran; regulatory restrictions on gasoline production; government interference in the free market development of alternative fuels; and subsidies to big oil such as free leases and grants for research and development.
Interestingly, the cost of oil and gas is actually much higher than we pay at the retail level. Much of the DOD budget is spent protecting "our" oil supplies, and if such spending is factored in gasoline probably costs us more than $5 a gallon. The sad irony is that this military effort to secure cheap oil supplies inevitably backfires, and actually curtails supplies and boosts prices at the pump. The waste and fraud in issuing contracts to large corporations for work in Iraq only add to price in creases.
When problems arise under conditions that exist today, it's a serious error to blame the little bit of the free market that still functions. Last summer the market worked efficiently after Katrina - gas hit $3 agallon, but soon supplies increased, usage went down, and the price returned to $2. In the 1980s, market forces took oil from $40 per barrelto $10 per barrel, and no one cried for the oil companies that went bankrupt. Today's increases are for the reasons mentioned above. It's natural for labor to seek its highest wage, and businesses to strive for the greatest profit. That's the way the market works. When the freemarket is allowed to work, it's the consumer who ultimately determines price and quality, with labor and business accommodating consumer choices. Once this process is distorted by government, prices rise excessively,labor costs and profits are negatively affected, and problems emerge. Instead of fixing the problem, politicians and demagogues respond by demanding windfall profits taxes and price controls, while never questioning how previous government interference caused the whole mess in the first place. Never let it be said that higher oil prices and profits cause inflation; inflation of the money supply causes higher prices!
Since keeping interest rates below market levels is synonymous with new money creation by the Fed, the resulting business cycle, higher cost ofliving, and job losses all can be laid at the doorstep of the Fed. This burden hits the poor the most, making Fed taxation by inflation the worstof all regressive taxes. Statistics about revenues generated by the income tax are grossly misleading; in reality much harm is done by our welfare/warfare system supposedly designed to help the poor and tax the rich. Only sound money can rectify the blatant injustice of this destructive system.
The Founders understood this great danger, and voted overwhelmingly to reject "emitting bills of credit," the term they used for paper or fiat money. It's too bad the knowledge and advice of our founders, and their mandate in the Constitution, are ignored today at our great peril. The current surge in gold prices - which reflects our dollar's devaluation--is warning us to pay closer attention to our fiscal, monetary, entitlement, and foreign policy.
A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil priceshigher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.
Certainly geo-political events in the Middle East under a gold standard would not alter its price, though they could affect the supply of oil and cause oil prices to rise. Only under conditions created by excessive paper money would one expect all or most prices to rise. This is a mere reflection of the devaluation of the dollar.
Particular things to remember:
If one endorses small government and maximum liberty, one must support commodity money.
One of the strongest restraints against unnecessary war is a gold standard.
Deficit financing by government is severely restricted by sound money.
The harmful effects of the business cycle are virtually eliminated with an honest gold standard.
Saving and thrift are encouraged by a gold standard; and discouraged by paper money.
Price inflation, with generally rising price levels, is characteristic of paper money. Reports that the consumer price index and the producer price index are rising are distractions: the real cause of inflation is the Fed's creation of new money.
Interest rate manipulation by central bank helps the rich, the banks, the government, and the politicians.
Paper money permits the regressive inflation tax to be passed off on the poor and the middle class.
Speculative financial bubbles are characteristic of paper money - not gold.
Paper money encourages economic and political chaos, which subsequently causes a search for scapegoats rather than blaming the central bank.
Dangerous protectionist measures frequently are implemented to compensate for the dislocations caused by fiat money.
Paper money, inflation, and the conditions they create contribute to the problems of illegal immigration.
The value of gold is remarkably stable.
The dollar price of gold reflects dollar depreciation.
Holding gold helps preserve and store wealth, but technically gold is nota true investment.
Since 2001 the dollar has been devalued by 60%.
In 1934 FDR devalued the dollar by 41%.
In 1971 Nixon devalued the dollar by 7.9%.
In 1973 Nixon devalued the dollar by 10%.
These were momentous monetary events, and every knowledgeable person worldwide paid close attention. Major changes were endured in 1979 and1980 to save the dollar from disintegration. This involved a severe recession, interest rates over 21%, and general price inflation of 15%.
Today we face a 60% devaluation and counting, yet no one seems to care. It's of greater significance than the three events mentioned above. And yet the one measurement that best reflects the degree of inflation, the Fed and our government deny us. Since March, M3 reporting has been discontinued. For starters, I'd like to see Congress demand that this report be resumed. I fully believe the American people and Congress are entitled to this information. Will we one day complain about false intelligence, as we have with the Iraq war? Will we complain about not having enough information to address monetary policy after it's too late?
If ever there was a time to get a handle on what sound money is and what it means, that time is today.
Inflation, as exposed by high gold prices, transfers wealth from the middle class to the rich, as real wages decline while the salaries ofCEOs, movie stars, and athletes skyrocket-- along with the profits of the military industrial complex, the oil industry, and other special interests.
A sharply rising gold price is a vote of "no confidence" in Congress'ability to control the budget, the Fed's ability to control the money supply, and the administration's ability to bring stability to the Middle East.
Ultimately, the gold price is a measurement of trust in the currency and the politicians who run the country. It's been that way for a long time,and is not about to change.
If we care about the financial system, the tax system, and the monumental debt we're accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money-- money the government and central banks absolutely cannot create out of thin air.
Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Run away inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.
The financial press, and even the network news shows, have begun reporting the price of gold regularly. For twenty years, between 1980 and 2000, the price of gold was rarely mentioned. There was little interest, and the price was either falling or remaining steady.
Since 2001 however, interest in gold has soared along with its price. With the price now over $600 an ounce, a lot more people are becoming interested in gold as an investment and an economic indicator. Much can be learned by understanding what the rising dollar price of gold means.
The rise in gold prices from $250 per ounce in 2001 to over $600 today has drawn investors and speculators into the precious metals market. Though many already have made handsome profits, buying gold per se should not be touted as a good investment. After all, gold earns no interest and its quality never changes. It's static, and does not grow as sound investments should.
It's more accurate to say that one might invest in a gold or silver mining company, where management, labor costs, and the nature of new discoveries all play a vital role in determining the quality of the investment and the profits made.
Buying gold and holding it is somewhat analogous to converting one's savings into one hundred dollar bills and hiding them under the mattress - yet not exactly the same. Both gold and dollars are considered money, and holding money does not qualify as an investment. There's a big difference between the two however, since by holding paper money one loses purchasing power. The purchasing power of commodity money, i.e. gold, however, goes up if the government devalues the circulating fiat currency.
Holding gold is protection or insurance against government's proclivity to debase its currency. The purchasing power of gold goes up not because it's a so-called good investment; it goes up in value only because the paper currency goes down in value. In our current situation, that means the dollar.
One of the characteristics of commodity money - one that originated naturally in the marketplace - is that it must serve as a store of value. Gold and silver meet that test - paper does not. Because of this profound difference, the incentive and wisdom of holding emergency funds in the form of gold becomes attractive when the official currency is being devalued. It's more attractive than trying to save wealth in the form of a fiat currency, even when earning some nominal interest. The lack of earned interest on gold is not a problem once people realize the purchasing power of their currency is declining faster than the interest rates they might earn. The purchasing power of gold can rise even faster than increases in the cost of living.
The point is that most who buy gold do so to protect against a depreciating currency rather than as an investment in the classical sense. Americans understand this less than citizens of other countries; some nations have suffered from severe monetary inflation that literally led to the destruction of their national currency. Though our inflation - i.e. the depreciation of the U.S. dollar - has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents. Officially, our central bankers and our politicians express no fear that the course on which we are set is fraught with great danger to our economy and our political system. The belief that money created out of thin air can work economic miracles, if only properly "managed," is pervasive in D.C.
In many ways we shouldn't be surprised about this trust in such an unsound system. For at least four generations our government-run universities have systematically preached a monetary doctrine justifying the so-called wisdom of paper money over the "foolishness" of sound money. Not only that, paper money has worked surprisingly well in the past 35 years - the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these several decades have gained the knowledge necessary to make paper money respond as if it were gold. This removes the problem of obtaining gold to back currency, and hence frees politicians from the rigid discipline a gold standard imposes.
Many central bankers in the last 15 years became so confident they had achieved this milestone that they sold off large hoards of their gold reserves. At other times they tried to prove that paper works better than gold by artificially propping up the dollar by suppressing market gold prices. This recent deception failed just as it did in the 1960s, when our government tried to hold gold artificially low at $35 an ounce. But since they could not truly repeal the economic laws regarding money, just as many central bankers sold, others bought. It's fascinating that the European central banks sold gold while Asian central banks bought it over the last several years.
Since gold has proven to be the real money of the ages, we see once again a shift in wealth from the West to the East, just as we saw a loss of our industrial base in the same direction. Though Treasury officials deny any U.S. sales or loans of our official gold holdings, no audits are permitted so no one can be certain.
The special nature of the dollar as the reserve currency of the world has allowed this game to last longer than it would have otherwise. But the fact that gold has gone from $252 per ounce to over $600 means there is concern about the future of the dollar. The higher the price for gold, the greater the concern for the dollar. Instead of dwelling on the dollar price of gold, we should be talking about the depreciation of the dollar. In 1934 a dollar was worth 1/20th of an ounce of gold; $20 bought an ounce of gold. Today a dollar is worth 1/600th of an ounce of gold, meaning it takes $600 to buy one ounce of gold.
The number of dollars created by the Federal Reserve, and through the fractional reserve banking system, is crucial in determining how the market assesses the relationship of the dollar and gold. Though there's a strong correlation, it's not instantaneous or perfectly predictable. There are many variables to consider, but in the long term the dollar price of gold represents past inflation of the money supply. Equally important, it represents the anticipation of how much new money will be created in the future. This introduces the factor of trust and confidence in our monetary authorities and our politicians. And these days the American people are casting a vote of "no confidence" in this regard, and for good reasons.
The incentive for central bankers to create new money out of thin air is twofold. One is to practice central economic planning through the manipulation of interest rates. The second is to monetize the escalating federal debt politicians create and thrive on.
Today no one in Washington believes for a minute that runaway deficits are going to be curtailed. In March alone, the federal government created an historic $85 billion deficit. The current supplemental bill going through Congress has grown from $92 billion to over $106 billion, and everyone knows it will not draw President Bush's first veto. Most knowledgeable people therefore assume that inflation of the money supply is not only going to continue, but accelerate. This anticipation, plus the fact that many new dollars have been created over the past 15 years that have not yet been fully discounted, guarantees the further depreciation of the dollar in terms of gold.
There's no single measurement that reveals what the Fed has done in the recent past or tells us exactly what it's about to do in the future. Forget about the lip service given to transparency by new Fed Chairman Bernanke. Not only is this administration one of the most secretive across the board in our history, the current Fed firmly supports denying the most important measurement of current monetary policy to Congress, the financial community, and the American public. Because of a lack of interest and poor understanding of monetary policy, Congress has expressed essentially no concern about the significant change in reporting statistics on the money supply.
Beginning in March, though planned before Bernanke arrived at the Fed, the central bank discontinued compiling and reporting the monetary aggregate known as M3. M3 is the best description of how quickly the Fed is creating new money and credit. Common sense tells us that a government central bank creating new money out of thin air depreciates the value of each dollar in circulation. Yet this report is no longer available to us and Congress makes no demands to receive it.
Though M3 is the most helpful statistic to track Fed activity, it by no means tells us everything we need to know about trends in monetary policy. Total bank credit, still available to us, gives us indirect information reflecting the Fed's inflationary policies. But ultimately the markets will figure out exactly what the Fed is up to, and then individuals, financial institutions, governments, and other central bankers will act accordingly. The fact that our money supply is rising significantly cannot be hidden from the markets.
The response in time will drive the dollar down, while driving interest rates and commodity prices up. Already we see this trend developing, which surely will accelerate in the not too distant future. Part of this reaction will be from those who seek a haven to protect their wealth - not invest - by treating gold and silver as universal and historic money. This means holding fewer dollars that are decreasing in value while holding gold as it increases in value.
A soaring gold price is a vote of "no confidence" in the central bank and the dollar. This certainly was the case in 1979 and 1980. Today, gold prices reflect a growing restlessness with the increasing money supply, our budgetary and trade deficits, our unfunded liabilities, and the inability of Congress and the administration to reign in runaway spending.
Denying us statistical information, manipulating interest rates, and artificially trying to keep gold prices in check won't help in the long run. If the markets are fooled short term, it only means the adjustments will be much more dramatic later on. And in the meantime, other market imbalances develop.
The Fed tries to keep the consumer spending spree going, not through hard work and savings, but by creating artificial wealth in stock markets bubbles and housing bubbles. When these distortions run their course and are discovered, the corrections will be quite painful.
Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations. This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.
Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold - since it serves as a check on government size and power. This is a sad commentary on the politics of today. The best analogy to our affinity for government spending, borrowing, and inflating is that of a drug addict who knows if he doesn't quit he'll die; yet he can't quit because of the heavy price required to overcome the dependency. The right choice is very difficult, but remaining addicted to drugs guarantees the death of the patient, while our addiction to deficit spending, debt, and inflation guarantees the collapse of our economy.
Special interest groups, who vigorously compete for federal dollars, want to perpetuate the system rather than admit to a dangerous addiction. Those who champion welfare for the poor, entitlements for the middle class, or war contracts for the military industrial corporations, all agree on the so-called benefits bestowed by the Fed's power to counterfeit fiat money. Bankers, who benefit from our fractional reserve system, likewise never criticize the Fed, especially since it's the lender of last resort that bails out financial institutions when crises arise. And it's true, special interests and bankers do benefit from the Fed, and may well get bailed out - just as we saw with the Long-Term Capital Management fund crisis a few years ago. In the past, companies like Lockheed and Chrysler benefited as well. But what the Fed cannot do is guarantee the market will maintain trust in the worthiness of the dollar. Current policy guarantees that the integrity of the dollar will be undermined. Exactly when this will occur, and the extent of the resulting damage to financial system, cannot be known for sure - but it is coming. There are plenty of indications already on the horizon.
Foreign policy plays a significant role in the economy and the value of the dollar. A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency - especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.
The cost of war is enormously detrimental; it significantly contributes tothe economic instability of the nation by boosting spending, deficits, andinflation. Funds used for war are funds that could have remained in the productive economy to raise the standard of living of Americans now unemployed, underemployed, or barely living on the margin.
Yet even these costs may be preferable to paying for war with huge taxincreases. This is because although fiat dollars are theoretically worthless, value is imbued by the trust placed in them by the world'sfinancial community. Subjective trust in a currency can overrideobjective knowledge about government policies, but only for a limited time.
Economic strength and military power contribute to the trust in acurrency; in today's world trust in the U.S. dollar is not earned andtherefore fragile. The history of the dollar, being as good as gold upuntil 1971, is helpful in maintaining an artificially higher value for thedollar than deserved.
Foreign policy contributes to the crisis when the spending to maintain ourworldwide military commitments becomes prohibitive, and inflationarypressures accelerate. But the real crisis hits when the world realizesthe king has no clothes, in that the dollar has no backing, and we face amilitary setback even greater than we already are experiencing in Iraq. Our token friends may quickly transform into vocal enemies once the attackon the dollar begins.
False trust placed in the dollar once was helpful to us, but panic andrejection of the dollar will develop into a real financial crisis. Thenwe will have no other option but to tighten our belts, go back to work,stop borrowing, start saving, and rebuild our industrial base, whileadjusting to a lower standard of living for most Americans.
Counterfeiting the nation's money is a serious offense. The founders were especially adamant about avoiding the chaos, inflation, and destruction associated with the Continental dollar. That's why the Constitution is clear that only gold and silver should be legal tender in the United States. In 1792 the Coinage Act authorized the death penalty for any private citizen who counterfeited the currency. Too bad they weren't explicit that counterfeiting by government officials is just as detrimental to the economy and the value of the dollar.
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.
Historically, paper money never has lasted for long periods of time, while gold has survived thousands of years of attacks by political interests and big government. In time, the world once again will restore trust in the monetary system by making some currency as good as gold.
Gold, or any acceptable market commodity money, is required to preserve liberty. Monopoly control by government of a system that creates fiat money out of thin air guarantees the loss of liberty. No matter how well-intended our militarism is portrayed, or how happily the promises of wonderful programs for the poor are promoted, inflating the money supply to pay these bills makes government bigger. Empires always fail, and expenses always exceed projections. Harmful unintended consequences are the rule, not the exception. Welfare for the poor is inefficient and wasteful. The beneficiaries are rarely the poor themselves, but instead the politicians, bureaucrats, or the wealthy. The same is true of all foreign aid-- it's nothing more than a program that steals from the poor in a rich country and gives to the rich leaders of a poor country. Whether it's war or welfare payments, it always means higher taxes, inflation, and debt. Whether it's the extraction of wealth from the productive economy, the distortion of the market by interest rate manipulation, or spending for war and welfare, it can't happen without infringing upon personal liberty.
At home the war on poverty, terrorism, drugs, or foreign rulers provides an opportunity for authoritarians to rise to power, individuals who think nothing of violating the people's rights to privacy and freedom of speech. They believe their role is to protect the secrecy of government, rather than protect the privacy of citizens. Unfortunately, that is the atmosphere under which we live today, with essentially no respect for the Bill of Rights.
Though great economic harm comes from a government monopoly fiat monetary system, the loss of liberty associated with it is equally troubling. Justas empires are self-limiting in terms of money and manpower, so too is a monetary system based on illusion and fraud. When the end comes we will be given an opportunity to choose once again between honest money and liberty on one hand; chaos, poverty, and authoritarianism on the other.
The economic harm done by a fiat monetary system is pervasive, dangerous,and unfair. Though runaway inflation is injurious to almost everyone, itis more insidious for certain groups. Once inflation is recognized as a tax, it becomes clear the tax is regressive: penalizing the poor and middle class more than the rich and politically privileged. Price inflation, a consequence of inflating the money supply by the central bank, hits poor and marginal workers first and foremost. It especially penalizes savers, retirees, those on fixed incomes, and anyone who trusts government promises. Small businesses and individual enterprises suffermore than the financial elite, who borrow large sums before the money loses value. Those who are on the receiving end of government contracts--especially in the military industrial complex during wartime--receive undeserved benefits.
It's a mistake to blame high gasoline and oil prices on price gouging. Ifwe impose new taxes or fix prices, while ignoring monetary inflation, corporate subsidies, and excessive regulations, shortages will result. The market is the only way to determine the best price for any commodity. The law of supply and demand cannot be repealed. The real problems arise when government planners give subsidies to energy companies and favor one form of energy over another.
Energy prices are rising for many reasons: Inflation; increased demand from China and India; decreased supply resulting from our invasion ofIraq; anticipated disruption of supply as we push regime change in Iran; regulatory restrictions on gasoline production; government interference in the free market development of alternative fuels; and subsidies to big oil such as free leases and grants for research and development.
Interestingly, the cost of oil and gas is actually much higher than we pay at the retail level. Much of the DOD budget is spent protecting "our" oil supplies, and if such spending is factored in gasoline probably costs us more than $5 a gallon. The sad irony is that this military effort to secure cheap oil supplies inevitably backfires, and actually curtails supplies and boosts prices at the pump. The waste and fraud in issuing contracts to large corporations for work in Iraq only add to price in creases.
When problems arise under conditions that exist today, it's a serious error to blame the little bit of the free market that still functions. Last summer the market worked efficiently after Katrina - gas hit $3 agallon, but soon supplies increased, usage went down, and the price returned to $2. In the 1980s, market forces took oil from $40 per barrelto $10 per barrel, and no one cried for the oil companies that went bankrupt. Today's increases are for the reasons mentioned above. It's natural for labor to seek its highest wage, and businesses to strive for the greatest profit. That's the way the market works. When the freemarket is allowed to work, it's the consumer who ultimately determines price and quality, with labor and business accommodating consumer choices. Once this process is distorted by government, prices rise excessively,labor costs and profits are negatively affected, and problems emerge. Instead of fixing the problem, politicians and demagogues respond by demanding windfall profits taxes and price controls, while never questioning how previous government interference caused the whole mess in the first place. Never let it be said that higher oil prices and profits cause inflation; inflation of the money supply causes higher prices!
Since keeping interest rates below market levels is synonymous with new money creation by the Fed, the resulting business cycle, higher cost ofliving, and job losses all can be laid at the doorstep of the Fed. This burden hits the poor the most, making Fed taxation by inflation the worstof all regressive taxes. Statistics about revenues generated by the income tax are grossly misleading; in reality much harm is done by our welfare/warfare system supposedly designed to help the poor and tax the rich. Only sound money can rectify the blatant injustice of this destructive system.
The Founders understood this great danger, and voted overwhelmingly to reject "emitting bills of credit," the term they used for paper or fiat money. It's too bad the knowledge and advice of our founders, and their mandate in the Constitution, are ignored today at our great peril. The current surge in gold prices - which reflects our dollar's devaluation--is warning us to pay closer attention to our fiscal, monetary, entitlement, and foreign policy.
A recent headline in the financial press announced that gold prices surged over concern that confrontation with Iran will further push oil priceshigher. This may well reflect the current situation, but higher gold prices mainly reflect monetary expansion by the Federal Reserve. Dwelling on current events and their effect on gold prices reflects concern for symptoms rather than an understanding of the actual cause of these price increases. Without an enormous increase in the money supply over the past 35 years and a worldwide paper monetary system, this increase in the price of gold would not have occurred.
Certainly geo-political events in the Middle East under a gold standard would not alter its price, though they could affect the supply of oil and cause oil prices to rise. Only under conditions created by excessive paper money would one expect all or most prices to rise. This is a mere reflection of the devaluation of the dollar.
Particular things to remember:
If one endorses small government and maximum liberty, one must support commodity money.
One of the strongest restraints against unnecessary war is a gold standard.
Deficit financing by government is severely restricted by sound money.
The harmful effects of the business cycle are virtually eliminated with an honest gold standard.
Saving and thrift are encouraged by a gold standard; and discouraged by paper money.
Price inflation, with generally rising price levels, is characteristic of paper money. Reports that the consumer price index and the producer price index are rising are distractions: the real cause of inflation is the Fed's creation of new money.
Interest rate manipulation by central bank helps the rich, the banks, the government, and the politicians.
Paper money permits the regressive inflation tax to be passed off on the poor and the middle class.
Speculative financial bubbles are characteristic of paper money - not gold.
Paper money encourages economic and political chaos, which subsequently causes a search for scapegoats rather than blaming the central bank.
Dangerous protectionist measures frequently are implemented to compensate for the dislocations caused by fiat money.
Paper money, inflation, and the conditions they create contribute to the problems of illegal immigration.
The value of gold is remarkably stable.
The dollar price of gold reflects dollar depreciation.
Holding gold helps preserve and store wealth, but technically gold is nota true investment.
Since 2001 the dollar has been devalued by 60%.
In 1934 FDR devalued the dollar by 41%.
In 1971 Nixon devalued the dollar by 7.9%.
In 1973 Nixon devalued the dollar by 10%.
These were momentous monetary events, and every knowledgeable person worldwide paid close attention. Major changes were endured in 1979 and1980 to save the dollar from disintegration. This involved a severe recession, interest rates over 21%, and general price inflation of 15%.
Today we face a 60% devaluation and counting, yet no one seems to care. It's of greater significance than the three events mentioned above. And yet the one measurement that best reflects the degree of inflation, the Fed and our government deny us. Since March, M3 reporting has been discontinued. For starters, I'd like to see Congress demand that this report be resumed. I fully believe the American people and Congress are entitled to this information. Will we one day complain about false intelligence, as we have with the Iraq war? Will we complain about not having enough information to address monetary policy after it's too late?
If ever there was a time to get a handle on what sound money is and what it means, that time is today.
Inflation, as exposed by high gold prices, transfers wealth from the middle class to the rich, as real wages decline while the salaries ofCEOs, movie stars, and athletes skyrocket-- along with the profits of the military industrial complex, the oil industry, and other special interests.
A sharply rising gold price is a vote of "no confidence" in Congress'ability to control the budget, the Fed's ability to control the money supply, and the administration's ability to bring stability to the Middle East.
Ultimately, the gold price is a measurement of trust in the currency and the politicians who run the country. It's been that way for a long time,and is not about to change.
If we care about the financial system, the tax system, and the monumental debt we're accumulating, we must start talking about the benefits and discipline that come only with a commodity standard of money-- money the government and central banks absolutely cannot create out of thin air.
Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 of an ounce of gold or 1/2,000 of an ounce of gold? The longer we wait, the more people suffer and the more difficult reforms become. Run away inflation inevitably leads to political chaos, something numerous countries have suffered throughout the 20th century. The worst example of course was the German inflation of the 1920s that led to the rise of Hitler. Even the communist takeover of China was associated with runaway inflation brought on by Chinese Nationalists. The time for action is now, and it is up to the American people and the U.S. Congress to demand it.
WE ALL SUPPORT THE TROOPS
Mr. Speaker, I have never met anyone who did not support our troops.
Sometimes, however, we hear accusations that someone or some group does not support the men and women serving in our armed forces. This is pure demagoguery, and it’s intellectually dishonest. The accusers play on emotions to gain support for controversial policies, implying that those who disagree are unpatriotic. But keeping our troops out of harm’s way, especially when war is unnecessary, is never unpatriotic. There’s no better way to support the troops.
Since we now know that Iraq had no weapons of mass destruction and was not threatening anyone, we must come to terms with 3,000 American deaths and 23,000 American casualties. It’s disconcerting that those who never believed the justifications given for our invasion, and who now want the war ended, are still accused of not supporting the troops! This is strange indeed!
Instead of questioning who has the best interests of our troops at heart, we should be debating which policy is best for our country. Defensive wars to preserve our liberties, fought only with proper congressional declarations, are legitimate. Casualties under such circumstances still are heartbreaking, but they are understandable. Casualties that occur in undeclared, unnecessary wars, however, are bewildering. Why must so many Americans be killed or hurt in Iraq when our security and our liberty were not threatened?
Clichés about supporting the troops are designed to distract us from failed policies, policies promoted by powerful special interests that benefit from war. Anything to steer the discussion away from the real reasons the war in Iraq will not end anytime soon.
Many now agree that we must change our policy and extricate ourselves from the mess in Iraq. They cite a mandate from the American people for a new direction. This opinion is now more popular, and thus now more widely held by politicians in Washington. But there’s always a qualifier: We can’t simply stop funding the war, because we must support the troops. I find this conclusion bizarre. It means one either believes the “support the troops” propaganda put out by the original promoters of the war, or that one actually is for the war after all, despite the public protestations.
In reality, support for the status quo (and the president’s troop surge) in Iraq means expanding the war to include Syria and Iran. The naval build up in the region, and the proxy war we just fought to take over Somalia, demonstrate the administration’s intentions to escalate our current war into something larger.
There’s just no legitimacy to the argument that voting against funding the war somehow harms our troops. Perpetuating and escalating the war only serve those whose egos are attached to some claimed victory in Iraq, and those with a determination to engineer regime change in Iran.
Don’t believe for a minute that additional congressional funding is needed so our troops can defend themselves or extricate themselves from the war zone. That’s nonsense. The DOD has hundreds of billions of dollars in the pipeline available to move troops anywhere on earth-- including home.
We shouldn’t forget that the administration took $600 million from the war in Afghanistan and used it in Iraq, before any direct appropriations were made for the invasion of Iraq. Funds are always available to put our troops into harms way; they are always available for leaving a war zone.
Those in Congress who claim they want the war ended, yet feel compelled to keep funding it, are badly misguided. They either are wrong in their assessment that cutting funds would hurt the troops, or they need to be more honest about supporting a policy destined to dramatically increase the size and scope of this misadventure in the Middle East. Rest assured one can be patriotic and truly support the troops by denying funds to perpetuate and spread this ill-advised war.
The sooner we come to this realization, the better it will be for all of us.
Sometimes, however, we hear accusations that someone or some group does not support the men and women serving in our armed forces. This is pure demagoguery, and it’s intellectually dishonest. The accusers play on emotions to gain support for controversial policies, implying that those who disagree are unpatriotic. But keeping our troops out of harm’s way, especially when war is unnecessary, is never unpatriotic. There’s no better way to support the troops.
Since we now know that Iraq had no weapons of mass destruction and was not threatening anyone, we must come to terms with 3,000 American deaths and 23,000 American casualties. It’s disconcerting that those who never believed the justifications given for our invasion, and who now want the war ended, are still accused of not supporting the troops! This is strange indeed!
Instead of questioning who has the best interests of our troops at heart, we should be debating which policy is best for our country. Defensive wars to preserve our liberties, fought only with proper congressional declarations, are legitimate. Casualties under such circumstances still are heartbreaking, but they are understandable. Casualties that occur in undeclared, unnecessary wars, however, are bewildering. Why must so many Americans be killed or hurt in Iraq when our security and our liberty were not threatened?
Clichés about supporting the troops are designed to distract us from failed policies, policies promoted by powerful special interests that benefit from war. Anything to steer the discussion away from the real reasons the war in Iraq will not end anytime soon.
Many now agree that we must change our policy and extricate ourselves from the mess in Iraq. They cite a mandate from the American people for a new direction. This opinion is now more popular, and thus now more widely held by politicians in Washington. But there’s always a qualifier: We can’t simply stop funding the war, because we must support the troops. I find this conclusion bizarre. It means one either believes the “support the troops” propaganda put out by the original promoters of the war, or that one actually is for the war after all, despite the public protestations.
In reality, support for the status quo (and the president’s troop surge) in Iraq means expanding the war to include Syria and Iran. The naval build up in the region, and the proxy war we just fought to take over Somalia, demonstrate the administration’s intentions to escalate our current war into something larger.
There’s just no legitimacy to the argument that voting against funding the war somehow harms our troops. Perpetuating and escalating the war only serve those whose egos are attached to some claimed victory in Iraq, and those with a determination to engineer regime change in Iran.
Don’t believe for a minute that additional congressional funding is needed so our troops can defend themselves or extricate themselves from the war zone. That’s nonsense. The DOD has hundreds of billions of dollars in the pipeline available to move troops anywhere on earth-- including home.
We shouldn’t forget that the administration took $600 million from the war in Afghanistan and used it in Iraq, before any direct appropriations were made for the invasion of Iraq. Funds are always available to put our troops into harms way; they are always available for leaving a war zone.
Those in Congress who claim they want the war ended, yet feel compelled to keep funding it, are badly misguided. They either are wrong in their assessment that cutting funds would hurt the troops, or they need to be more honest about supporting a policy destined to dramatically increase the size and scope of this misadventure in the Middle East. Rest assured one can be patriotic and truly support the troops by denying funds to perpetuate and spread this ill-advised war.
The sooner we come to this realization, the better it will be for all of us.
ESCALATION IN THE MIDDLE EAST
While the president’s announcement that an additional 20,000 troops would be sent to Iraq dominated the headlines last week, the real story was the president’s sharp rhetoric towards Iran and Syria. And recent moves by the administration only serve to confirm the likelihood of a wider conflict in the Middle East.
The president stated last week that, “Succeeding in Iraq also requires defending its territorial integrity – and stabilizing the region in the face of the extremist challenge. This begins with addressing Iran and Syria.” He also announced the deployment of an additional aircraft carrier battle group to the Persian Gulf, and the deployment of Patriot air missile defense systems to countries in the Middle East. Meanwhile, US troops stormed the Iranian consulate in Iraq and detained several Iranian diplomats. Taken together, the message was clear: the administration intends to move the US closer to a dangerous and ill-advised conflict with Iran.
As I said last week on the House floor, speculation in Washington focuses on when, not if, either Israel or the U.S. will bomb Iran – possibly with nuclear weapons. The accusation sounds very familiar: namely, that Iran possesses weapons of mass destruction. Iran has never been found in violation of the Nuclear Non-Proliferation Treaty, and our own Central Intelligence Agency says Iran is more than ten years away from producing any kind of nuclear weapon. Yet we are told we must act immediately while we still can!
This all sounds very familiar, but many of my colleagues don’t seem to have learned much from the invasion of Iraq. House Democrats strongly criticized the Iraq troop surge after the president’s announcement, but then praised the president’s confrontational words condemning Iran. Many of those opposing a troop surge are not calling for a withdrawal of our troops from the Middle East, but rather for “redeployment.” Redeployment to where? Iran?
We need to return to reality when it comes to our Middle East policy. We need to reject the increasingly shrill rhetoric coming from the same voices who urged the president to invade Iraq.
The truth is that Iran, like Iraq, is a third-world nation without a significant military. Nothing in history hints that she is likely to invade a neighboring country, let alone America or Israel. I am concerned, however, that a contrived Gulf of Tonkin-type incident may occur to gain popular support for an attack on Iran.
The best approach to Iran, and Syria for that matter, is to heed the advice of the Iraq Study Group Report, which states:
"… the United States should engage directly with Iran and Syria in order to try to obtain their commitment to constructive policies toward Iraq and other regional issues. In engaging with Syria and Iran, the United States should consider incentives, as well as disincentives, in seeking constructive results."
In coming weeks I plan to introduce legislation that urges the administration to heed the advice of the Iraq Study Group. Dialogue and discussion should replace inflammatory rhetoric and confrontation in our Middle East policy, if we truly seek to defeat violent extremism and terrorism.
The president stated last week that, “Succeeding in Iraq also requires defending its territorial integrity – and stabilizing the region in the face of the extremist challenge. This begins with addressing Iran and Syria.” He also announced the deployment of an additional aircraft carrier battle group to the Persian Gulf, and the deployment of Patriot air missile defense systems to countries in the Middle East. Meanwhile, US troops stormed the Iranian consulate in Iraq and detained several Iranian diplomats. Taken together, the message was clear: the administration intends to move the US closer to a dangerous and ill-advised conflict with Iran.
As I said last week on the House floor, speculation in Washington focuses on when, not if, either Israel or the U.S. will bomb Iran – possibly with nuclear weapons. The accusation sounds very familiar: namely, that Iran possesses weapons of mass destruction. Iran has never been found in violation of the Nuclear Non-Proliferation Treaty, and our own Central Intelligence Agency says Iran is more than ten years away from producing any kind of nuclear weapon. Yet we are told we must act immediately while we still can!
This all sounds very familiar, but many of my colleagues don’t seem to have learned much from the invasion of Iraq. House Democrats strongly criticized the Iraq troop surge after the president’s announcement, but then praised the president’s confrontational words condemning Iran. Many of those opposing a troop surge are not calling for a withdrawal of our troops from the Middle East, but rather for “redeployment.” Redeployment to where? Iran?
We need to return to reality when it comes to our Middle East policy. We need to reject the increasingly shrill rhetoric coming from the same voices who urged the president to invade Iraq.
The truth is that Iran, like Iraq, is a third-world nation without a significant military. Nothing in history hints that she is likely to invade a neighboring country, let alone America or Israel. I am concerned, however, that a contrived Gulf of Tonkin-type incident may occur to gain popular support for an attack on Iran.
The best approach to Iran, and Syria for that matter, is to heed the advice of the Iraq Study Group Report, which states:
"… the United States should engage directly with Iran and Syria in order to try to obtain their commitment to constructive policies toward Iraq and other regional issues. In engaging with Syria and Iran, the United States should consider incentives, as well as disincentives, in seeking constructive results."
In coming weeks I plan to introduce legislation that urges the administration to heed the advice of the Iraq Study Group. Dialogue and discussion should replace inflammatory rhetoric and confrontation in our Middle East policy, if we truly seek to defeat violent extremism and terrorism.
ESCALATION IS HARDLY THE ANSWER
Before the US House of Representatives, January 11, 2007
Mr. Speaker, A military victory in Iraq is unattainable, just as it was in the Vietnam war.
At the close of the Vietnam war in 1975, a telling conversation took place between an NVA Colonel named Tu and an American Colonel named Harry Summers. Colonel Summers reportedly said, “You never beat us on the battlefield.” Tu replied, “That may be so, but it is also irrelevant.” It is likewise irrelevant to seek military victory in Iraq.
As conditions deteriorate in Iraq, the American people are told more blood must be spilled to achieve just such a military victory. 20,000 additional troops and another $100 billion are needed for a “surge.” Yet the people remain rightfully skeptical.
Though we’ve been in Iraq nearly four years, the meager goal today simply is to secure Baghdad. This hardly shows that the mission is even partly accomplished.
Astonishingly, American taxpayers now will be forced to finance a multi-billion dollar jobs program in Iraq. Suddenly the war is about jobs! We export our manufacturing jobs to Asia, and now we plan to export our welfare jobs to Iraq – all at the expense of the poor and middle class here at home.
Plans are being made to become more ruthless in achieving stability in Iraq. It appears Muqtada al Sadr will be on the receiving end of our military efforts, despite his overwhelming support among large segments of the Iraqi people.
It’s interesting to note that one excuse given for our failure is leveled at the Iraqis themselves. They have not done enough, we’re told, and are difficult to train.
Yet no one complains that Mahdi or Kurdish militias or the Badr Brigade (the real Iraq government, not our appointed government) are not well trained. Our problems obviously have nothing to do with training Iraqis to fight, but instead with loyalties and motivations.
We claim to be spreading democracy in Iraq, but al Sadr has far more democratic support with the majority Shiites than our troops enjoy. The problem is not a lack of democratic consensus; it is the antipathy toward our presence among most Iraqis.
In real estate the three important considerations are location, location, location. In Iraq the three conditions are occupation, occupation, occupation. Nothing can improve in Iraq until we understand that our occupation is the primary source of the chaos and killing. We are a foreign occupying force, strongly resented by the majority of Iraq’s citizens.
Our inability to adapt to the tactics of 4th-generation warfare compounds our military failure. Unless we understand this, even doubling our troop strength will not solve the problems created by our occupation.
The talk of a troop surge and jobs program in Iraq only distracts Americans from the very real possibility of an attack on Iran. Our growing naval presence in the region and our harsh rhetoric toward Iran are unsettling. Securing the Horn of Africa and sending Ethiopian troops into Somalia do not bode well for world peace. Yet these developments are almost totally ignored by Congress.
Rumors are flying about when, not if, Iran will be bombed by either Israel or the U.S. – possibly with nuclear weapons. Our CIA says Iran is ten years away from producing a nuclear bomb and has no delivery system, but this does not impede our plans to keep “everything on the table” when dealing with Iran.
We should remember that Iran, like Iraq, is a third-world nation without a significant military. Nothing in history hints that she is likely to invade a neighboring country, let alone do anything to America or Israel. I am concerned, however, that a contrived Gulf of Tonkin–type incident may occur to gain popular support for an attack on Iran.
Even if such an attack is carried out by Israel over U.S. objections, we will be politically and morally culpable since we provided the weapons and dollars to make it possible.
Mr. Speaker, let’s hope I’m wrong about this one.
Mr. Speaker, A military victory in Iraq is unattainable, just as it was in the Vietnam war.
At the close of the Vietnam war in 1975, a telling conversation took place between an NVA Colonel named Tu and an American Colonel named Harry Summers. Colonel Summers reportedly said, “You never beat us on the battlefield.” Tu replied, “That may be so, but it is also irrelevant.” It is likewise irrelevant to seek military victory in Iraq.
As conditions deteriorate in Iraq, the American people are told more blood must be spilled to achieve just such a military victory. 20,000 additional troops and another $100 billion are needed for a “surge.” Yet the people remain rightfully skeptical.
Though we’ve been in Iraq nearly four years, the meager goal today simply is to secure Baghdad. This hardly shows that the mission is even partly accomplished.
Astonishingly, American taxpayers now will be forced to finance a multi-billion dollar jobs program in Iraq. Suddenly the war is about jobs! We export our manufacturing jobs to Asia, and now we plan to export our welfare jobs to Iraq – all at the expense of the poor and middle class here at home.
Plans are being made to become more ruthless in achieving stability in Iraq. It appears Muqtada al Sadr will be on the receiving end of our military efforts, despite his overwhelming support among large segments of the Iraqi people.
It’s interesting to note that one excuse given for our failure is leveled at the Iraqis themselves. They have not done enough, we’re told, and are difficult to train.
Yet no one complains that Mahdi or Kurdish militias or the Badr Brigade (the real Iraq government, not our appointed government) are not well trained. Our problems obviously have nothing to do with training Iraqis to fight, but instead with loyalties and motivations.
We claim to be spreading democracy in Iraq, but al Sadr has far more democratic support with the majority Shiites than our troops enjoy. The problem is not a lack of democratic consensus; it is the antipathy toward our presence among most Iraqis.
In real estate the three important considerations are location, location, location. In Iraq the three conditions are occupation, occupation, occupation. Nothing can improve in Iraq until we understand that our occupation is the primary source of the chaos and killing. We are a foreign occupying force, strongly resented by the majority of Iraq’s citizens.
Our inability to adapt to the tactics of 4th-generation warfare compounds our military failure. Unless we understand this, even doubling our troop strength will not solve the problems created by our occupation.
The talk of a troop surge and jobs program in Iraq only distracts Americans from the very real possibility of an attack on Iran. Our growing naval presence in the region and our harsh rhetoric toward Iran are unsettling. Securing the Horn of Africa and sending Ethiopian troops into Somalia do not bode well for world peace. Yet these developments are almost totally ignored by Congress.
Rumors are flying about when, not if, Iran will be bombed by either Israel or the U.S. – possibly with nuclear weapons. Our CIA says Iran is ten years away from producing a nuclear bomb and has no delivery system, but this does not impede our plans to keep “everything on the table” when dealing with Iran.
We should remember that Iran, like Iraq, is a third-world nation without a significant military. Nothing in history hints that she is likely to invade a neighboring country, let alone do anything to America or Israel. I am concerned, however, that a contrived Gulf of Tonkin–type incident may occur to gain popular support for an attack on Iran.
Even if such an attack is carried out by Israel over U.S. objections, we will be politically and morally culpable since we provided the weapons and dollars to make it possible.
Mr. Speaker, let’s hope I’m wrong about this one.
TOTALIZATION IS A BAD IDEA
Through a Freedom of Information Act Request, a private group recently obtained a copy of a 2004 agreement between the United States and Mexico that will allow hundreds of thousands of noncitizens to receive Social Security benefits.
The agreement creates a so-called “totalization” plan between the two nations. Totalization is nothing new. The first such agreements were made in the late 1970s between the United States and several foreign governments simply to make sure American citizens living abroad did not suffer from double taxation with respect to Social Security taxes. From there, however, totalization agreements have become vehicles for noncitizens to become eligible for U.S. Social Security benefits. The new agreement with Mexico would make an estimated 160,000 Mexican citizens eligible in the next five years.
Ultimately, the bill for Mexicans working legally in the U.S. could reach one billion dollars by 2050, when the estimated Mexican beneficiaries could reach 300,000. Worse still, an estimated five million Mexicans working illegally in the United States could be eligible for the program. According to press reports, a provision in the Social Security Act allows illegal immigrants to receive Social Security benefits if the United States and another country have a totalization agreement.
It’s important to note that Congress, like the American people, heretofore had not seen this totalization agreement. This decision to expand our single largest entitlement program was made with no input from the legislative branch of government. If the president signs it, Congress will have to affirmatively act to override him and in essence veto the agreement. This is the opposite of how it’s supposed to work.
There are obvious reasons to oppose a Social Security totalization agreement with Mexico. First, our Social Security system already faces trillions of dollars in future shortages as the Baby Boomer generation retires and fewer young workers pay into the system. Adding hundreds of thousand of noncitizens to the Social Security rolls can only hasten the day of reckoning.
Second, Social Security never was intended to serve as an individual foreign aid program for noncitizens abroad. Remember, there is no real Social Security trust fund, and the distinction between income taxes and payroll taxes is entirely artificial. The Social Security contributions made by noncitizens are spent immediately as general revenues. So while it’s unfortunate that some are forced to pay into a system from which they might never receive a penny, the same can be said of younger American citizens. If noncitizens wish to obtain Social Security benefits, or any other U.S. government entitlements, they should seek to become U.S. citizens.
Also, totalization agreements allow noncitizens to quality for Social Security benefits by working in the U.S. as little as 18 months. A Mexican citizen could work here for only a year and a half, return to Mexico, and retire with full U.S. benefits. This is grossly unfair to Americans who must work more quarters even to qualify for benefits – especially younger people who face the possibility that there may be nothing left when it is their turn to retire.
Those in favor of sending U.S. Social Security benefits to Mexican citizens argue that crushing poverty in Mexico demands some form of U.S. assistance to that country's aged. While poverty in Mexico truly is deplorable and saddening, the fact remains that Congress has no constitutional authority to enact what is essentially another foreign aid program.
The agreement creates a so-called “totalization” plan between the two nations. Totalization is nothing new. The first such agreements were made in the late 1970s between the United States and several foreign governments simply to make sure American citizens living abroad did not suffer from double taxation with respect to Social Security taxes. From there, however, totalization agreements have become vehicles for noncitizens to become eligible for U.S. Social Security benefits. The new agreement with Mexico would make an estimated 160,000 Mexican citizens eligible in the next five years.
Ultimately, the bill for Mexicans working legally in the U.S. could reach one billion dollars by 2050, when the estimated Mexican beneficiaries could reach 300,000. Worse still, an estimated five million Mexicans working illegally in the United States could be eligible for the program. According to press reports, a provision in the Social Security Act allows illegal immigrants to receive Social Security benefits if the United States and another country have a totalization agreement.
It’s important to note that Congress, like the American people, heretofore had not seen this totalization agreement. This decision to expand our single largest entitlement program was made with no input from the legislative branch of government. If the president signs it, Congress will have to affirmatively act to override him and in essence veto the agreement. This is the opposite of how it’s supposed to work.
There are obvious reasons to oppose a Social Security totalization agreement with Mexico. First, our Social Security system already faces trillions of dollars in future shortages as the Baby Boomer generation retires and fewer young workers pay into the system. Adding hundreds of thousand of noncitizens to the Social Security rolls can only hasten the day of reckoning.
Second, Social Security never was intended to serve as an individual foreign aid program for noncitizens abroad. Remember, there is no real Social Security trust fund, and the distinction between income taxes and payroll taxes is entirely artificial. The Social Security contributions made by noncitizens are spent immediately as general revenues. So while it’s unfortunate that some are forced to pay into a system from which they might never receive a penny, the same can be said of younger American citizens. If noncitizens wish to obtain Social Security benefits, or any other U.S. government entitlements, they should seek to become U.S. citizens.
Also, totalization agreements allow noncitizens to quality for Social Security benefits by working in the U.S. as little as 18 months. A Mexican citizen could work here for only a year and a half, return to Mexico, and retire with full U.S. benefits. This is grossly unfair to Americans who must work more quarters even to qualify for benefits – especially younger people who face the possibility that there may be nothing left when it is their turn to retire.
Those in favor of sending U.S. Social Security benefits to Mexican citizens argue that crushing poverty in Mexico demands some form of U.S. assistance to that country's aged. While poverty in Mexico truly is deplorable and saddening, the fact remains that Congress has no constitutional authority to enact what is essentially another foreign aid program.
3000 AMERICAN DEATHS IN IRAQ
Before the US House of Representatives, January 5, 2007
Mr. Speaker, Saddam Hussein is Dead. So are Three Thousand Americans.
The regime in Iraq has been changed. Yet victory will not be declared: not only does the war go on, it’s about to escalate. Obviously the turmoil in Iraq is worse than ever, and most Americans no longer are willing to tolerate the costs, both human and economic, associated with this war.
We have been in Iraq for 45 months. Many more Americans have been killed in Iraq than were killed in the first 45 months of our war in Vietnam. I was in the U.S. Air Force in 1965, and I remember well when President Johnson announced a troop surge in Vietnam to hasten victory. That war went on for another decade, and by the time we finally got out 60,000 Americans had died. God knows we should have gotten out ten years earlier. “Troop surge” meant serious escalation.
The election is over and Americans have spoken. Enough is enough! They want the war ended and our troops brought home. But the opposite likely will occur, with bipartisan support. Up to 50,000 more troops will be sent. The goal no longer is to win, but simply to secure Baghdad! So much has been spent with so little to show for it.
Who possibly benefits from escalating chaos in Iraq? Neoconservatives unabashedly have written about how chaos presents opportunities for promoting their goals. Certainly Osama bin Laden has benefited from the turmoil in Iraq, as have the Iranian Shiites who now are better positioned to take control of southern Iraq.
Yes, Saddam Hussein is dead, and only the Sunnis mourn. The Shiites and Kurds celebrate his death, as do the Iranians and especially bin Laden – all enemies of Saddam Hussein. We have performed a tremendous service for both bin Laden and Ahmadinejad, and it will cost us plenty. The violent reaction to our complicity in the execution of Saddam Hussein is yet to come.
Three thousand American military personnel are dead, more than 22,000 are wounded, and tens of thousands will be psychologically traumatized by their tours of duty in Iraq. Little concern is given to the hundreds of thousands of Iraqi civilians killed in this war. We’ve spent $400 billion so far, with no end in sight.
This is money we don’t have. It is all borrowed from countries like China, that increasingly succeed in the global economy while we drain wealth from our citizens through heavy taxation and insidious inflation. Our manufacturing base is now nearly extinct.
Where the additional U.S. troops in Iraq will come from is anybody’s guess. But surely they won’t be redeployed from Japan, Korea, or Europe. We at least must pretend that our bankrupt empire is intact. But then again, the Soviet empire appeared intact in 1988.
Some Members of Congress, intent on equitably distributing the suffering among all Americans, want to bring back the draft. Administration officials vehemently deny making any concrete plans for a draft. But why should we believe this? Look what happened when so many believed the reasons given for our preemptive invasion of Iraq.
Selective Service officials admit running a check of their lists of available young men. If the draft is reinstated, we probably will include young women as well to serve the god of “equality.” Conscription is slavery, plain and simple. And it was made illegal under the 13th amendment, which prohibits involuntary servitude. One may well be killed as a military draftee, which makes conscription a very dangerous kind of enslavement.
Instead of testing the efficacy of the Selective Service System and sending more troops off to a war we’re losing, we ought to revive our love of liberty. We should repeal the Selective Service Act. A free society should never depend on compulsory conscription to defend itself.
We get into trouble by not following the precepts of liberty or obeying the rule of law. Preemptive, undeclared wars fought under false pretenses are a road to disaster. If a full declaration of war by Congress had been demanded as the Constitution requires, this war never would have been fought. If we did not create credit out of thin air as the Constitution prohibits, we never would have convinced taxpayers to support this war directly from their pockets. How long this financial charade can go on is difficult to judge, but when the end comes it will not go unnoticed by any American.
Mr. Speaker, Saddam Hussein is Dead. So are Three Thousand Americans.
The regime in Iraq has been changed. Yet victory will not be declared: not only does the war go on, it’s about to escalate. Obviously the turmoil in Iraq is worse than ever, and most Americans no longer are willing to tolerate the costs, both human and economic, associated with this war.
We have been in Iraq for 45 months. Many more Americans have been killed in Iraq than were killed in the first 45 months of our war in Vietnam. I was in the U.S. Air Force in 1965, and I remember well when President Johnson announced a troop surge in Vietnam to hasten victory. That war went on for another decade, and by the time we finally got out 60,000 Americans had died. God knows we should have gotten out ten years earlier. “Troop surge” meant serious escalation.
The election is over and Americans have spoken. Enough is enough! They want the war ended and our troops brought home. But the opposite likely will occur, with bipartisan support. Up to 50,000 more troops will be sent. The goal no longer is to win, but simply to secure Baghdad! So much has been spent with so little to show for it.
Who possibly benefits from escalating chaos in Iraq? Neoconservatives unabashedly have written about how chaos presents opportunities for promoting their goals. Certainly Osama bin Laden has benefited from the turmoil in Iraq, as have the Iranian Shiites who now are better positioned to take control of southern Iraq.
Yes, Saddam Hussein is dead, and only the Sunnis mourn. The Shiites and Kurds celebrate his death, as do the Iranians and especially bin Laden – all enemies of Saddam Hussein. We have performed a tremendous service for both bin Laden and Ahmadinejad, and it will cost us plenty. The violent reaction to our complicity in the execution of Saddam Hussein is yet to come.
Three thousand American military personnel are dead, more than 22,000 are wounded, and tens of thousands will be psychologically traumatized by their tours of duty in Iraq. Little concern is given to the hundreds of thousands of Iraqi civilians killed in this war. We’ve spent $400 billion so far, with no end in sight.
This is money we don’t have. It is all borrowed from countries like China, that increasingly succeed in the global economy while we drain wealth from our citizens through heavy taxation and insidious inflation. Our manufacturing base is now nearly extinct.
Where the additional U.S. troops in Iraq will come from is anybody’s guess. But surely they won’t be redeployed from Japan, Korea, or Europe. We at least must pretend that our bankrupt empire is intact. But then again, the Soviet empire appeared intact in 1988.
Some Members of Congress, intent on equitably distributing the suffering among all Americans, want to bring back the draft. Administration officials vehemently deny making any concrete plans for a draft. But why should we believe this? Look what happened when so many believed the reasons given for our preemptive invasion of Iraq.
Selective Service officials admit running a check of their lists of available young men. If the draft is reinstated, we probably will include young women as well to serve the god of “equality.” Conscription is slavery, plain and simple. And it was made illegal under the 13th amendment, which prohibits involuntary servitude. One may well be killed as a military draftee, which makes conscription a very dangerous kind of enslavement.
Instead of testing the efficacy of the Selective Service System and sending more troops off to a war we’re losing, we ought to revive our love of liberty. We should repeal the Selective Service Act. A free society should never depend on compulsory conscription to defend itself.
We get into trouble by not following the precepts of liberty or obeying the rule of law. Preemptive, undeclared wars fought under false pretenses are a road to disaster. If a full declaration of war by Congress had been demanded as the Constitution requires, this war never would have been fought. If we did not create credit out of thin air as the Constitution prohibits, we never would have convinced taxpayers to support this war directly from their pockets. How long this financial charade can go on is difficult to judge, but when the end comes it will not go unnoticed by any American.
THE WORLD'S RESERVE CURRENCY
The financial press reported last week that the euro, the new currency created only five years ago and used by most European nations, has supplanted the U.S. dollar as the most widely used form of cash internationally. There are now more Euros in circulation worldwide than dollars.This alone is not necessarily troubling, as the dollar remains the world’s most important reserve currency. About 65% of foreign central bank exchange reserves are still held in dollars, versus only about 25% in euros. And the European Central Bank faces the same inflationary pressures that our own Federal Reserve Bank Governors face, including a growing entitlement burden that threatens economic ruin as both societies age. European politicians want to spend money just as badly as American politicians, and undoubtedly will clamor to inflate – and thus devalue – the euro to fund their creaky social welfare systems.
Still, the rise of the Euro internationally is another sign that the U.S. dollar is not what it used to be. There is increasing pressure on nations to buy and sell oil in euros, and anecdotal evidence suggests that drug dealers and money launderers now prefer euros to dollars. Historically, the underground cash economy has always sought the most stable and valuable paper currency to conduct business.
More importantly, our greatest benefactors for the last twenty years – Asian central banks – have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency. When the rest of the world finally abandons the dollar as the global reserve currency, both Congress and American consumers will find borrowing money a more expensive proposition.
Remember, America can maintain a large trade deficit only if foreign banks continue to hold large numbers of dollars as their reserve currency. Our entire consumption economy is based on the willingness of foreigners to hold U.S. debt. We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.At some point Americans must realize that Congress, and the Federal Reserve system that permits the creation of new money by fiat, are the real culprits in the erosion of your personal savings and buying power. Congress relentlessly spends more than the Treasury collects in taxes each year, which means the U.S. government must either borrow or print money to operate – both of which cause the value of the dollar to drop. When we borrow a billion dollars every day simply to run the government, and when the Federal Reserve increases the money supply by trillions of dollars in just 15 years, we hardly can expect our dollars to increase in value.
Subscribe to:
Posts (Atom)
