Ron Paul: Restore the Dollar

by Ron Paul

We frequently hear the financial press refer to the U.S. dollar as the “world’s reserve currency,” implying that our dollar will always retain its value in an ever shifting world economy. But this is a dangerous and mistaken assumption.

Since August 15, 1971, when President Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold, the U.S. dollar has operated as a pure fiat currency. This means the dollar became an article of faith in the continued stability and might of the U.S. government.

In essence, we declared our insolvency in 1971. Everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it– not even a pretense of gold convertibility! Realizing the world was embarking on something new and mind-boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC in the 1970s to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence backed the dollar with oil.

In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite radical Islamic movements among those who resented our influence in the region. The arrangement also gave the dollar artificial strength, with tremendous financial benefits for the United States. It allowed us to export our monetary inflation by buying oil and other goods at a great discount as the dollar flourished.

In 2003, however, Iran began pricing its oil exports in Euro for Asian and European buyers. The Iranian government also opened an oil bourse in 2008 on the island of Kish in the Persian Gulf for the express purpose of trading oil in Euro and other currencies. In 2009 Iran completely ceased any oil transactions in U.S. dollars. These actions by the second largest OPEC oil producer pose a direct threat to the continued status of our dollar as the world’s reserve currency, a threat which partially explains our ongoing hostility toward Tehran.

While the erosion of our petrodollar agreement with OPEC certainly threatens the dollar’s status in the Middle East, an even larger threat resides in the Far East. 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.

If we act now to replace the fiat system with a stable dollar backed by precious metals or commodities, the dollar can regain its status as the safest store of value among all government currencies. If not, the rest of the world will abandon the dollar as the global reserve currency.

Both Congress and American consumers will then find borrowing a dramatically more expensive proposition. Remember, 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.

  • Do not pick GJ either. He is the same as the other corrupt people.

  • douglas

    Why fiat currency?
    What does give value to the issuance of the Federal Reserve?
    Understanding paper currency and its value within free enterprise is a very complex subject to say the least.
    Look back into US History then understand the power. What is it about US currency that they have used and abused beyond measure?
    What do you labor for every day without question?
    Then discovery that the fools who have taken fascist control over monetary policy have done nothing but create a Beast!
    Beast! An unsustainable global economic system that does not represent the individuals involved in making it valuable.


    • douglas

      I have just outlined the plan to destroy the America. So, take the chip if you like, but I am going to hold out for all peoples who come from ever race of Humanity. I will hold out till the end for every tribe of Humanity.

  • If we vote for Gary Johnson is November, do you think he’ll pick Ron Paul for Secretary of State?

  • hookagold
  • The only person in Washington that has the guts to say the truth…… God help you america. Im Canadian and the fact is we go down with you. So people wake up my god wake up.

  • who are you voting for?

  • Then start acting like you’re not a kid and quit flinging FUD and rumour as if it’s true. Gary Johnson has less respect for your liberties than the Republican Party so quit making a fool of yourself by promoting him as some Second Coming of the Liberty Messiah. He hates you being able to make choices for yourself. Get it thru your thick skull, That’s anti-Liberty.

  • not a kid and been an lper since the 80s. bye

  • I hope Ron Paul becomes US president!

  • And what will your story be tomorrow?

    Face it kid, few are fooled by Gary Johnson besides you. If you’re sincerely fooled and not playing at disinfo agent. Tnx for playing though. It broke up the monotony of my evening. Now go pound sand like a good acolyte.

  • I don’t like Mitt Romney but if we have good people in Congress & the Senate via the GOP Romney can be to a degree more or less controlled & manipulated to the Liberty movement’s advantage. If Obama gains a second term these good people in Congress & the Senate are our last line of defense and with a 2nd term Obama with nothing to loose we are going to need that defense & answered prayers to boot. I think this is exactly why Rand endorsed Romney as well as not to become a pariah within the GOP.

  • the lesser of 3 evils is our best move. unless people honestly think that enough people will not vote and/or write in RP to make an actual difference.
    my question is, what difference would that be??????

  • Keep up the great work people!: ronpaul2012dotnet

  • Bill Still won the debate and won the nomination as well until Gary Johnson and other Libertarian officials cheated him out completely! The same results that got Ron Paul cheated out completely by Mitt Romney and other Republican officials as well!: watch?v=oGhcngTNMoM

  • Bill Still won the debate and won the nomination as well until Gary Johnson and other Libertarian officials cheated him out completely! The same results that got Ron Paul cheated out completely by Mitt Romney and other Republican officials as well: watch?v=oGhcngTNMoM

  • Gary Johnson is just another career politician!: watch?v=0Y1egV2Q2FE

  • Bullshit… people still forget we have a system of Cheques & Ballances meaning we have the Executive, Legislative & Judicial branches not just the Executive branch. Regardless of who wins between Romney vs. Obama (or anyone else highly unlikely though) it is the Congressional elections that will really matter come November, that is where the real reform begins.

  • Keep up the good work people!: ronpaul2012dotnet

  • Citizen

    Ron Paul NOT going for a 3rd pary run is a good thing!

    Dr Paul is popular enough that he would draw off the true conservative and disappointed voters from the GOP and simply HAND OBAMA the ELECTION.
    If BHO gets another 4 years…. WE the PEOPLE are doomed, done, finished.

    I believe that the GOP will win with Mittens and things will still get real ugly, economically speaking. This will force the GOP to adobt the Ron Paul Revolution standards of austerity and fiscal restraint.

    Both the DEMS and the GOP are in financial denial. Delusional in their thinking that it can ever be business as usual.

    I’m sorry (both parties) but you’ve finally “run out of other peoples money” too.
    Grand promises and schemes of reovery are delusional, get a grip!

    Ron Paul has the ONLY solution,
    END the FED,
    the addiction to fiat money out of thin is simply to strong to resist.
    IN GOD WE TRUST…!!!!