Currency Wars: A Race to the Bottom of the Inflationary Barrel

by Ron Paul

Inflation fears are heating up this week as Fed Chairman Ben Bernanke gave a speech in Boston on Friday, causing further frantic flight into gold by those fearful of the coming “quantitative easing” the Fed is set to deliver in November. Others who view gold as a short term investment engaged in immediate profit-taking after Bernanke’s speech.

Gold is more correctly viewed as insurance against bad monetary policy decisions that erode the value of savings. Those bad decisions keep coming at an ever faster clip these days and we hear more and more talk of currency wars especially between the dollar, the Chinese yuan, the Japanese yen, the Australian dollar, and the Euro. As the economies of the world continue to stagnate or contract, monetary policy decisions become more relevant to people who once thought this topic arcane. We have several examples this week of major fumbles on the part of the US Central Bank:

  • The Federal Reserve continues to insist that inflation is too low, even while the monetary base remains at record levels, and food and gas prices continue to climb.
  • As the Fed continues to drive down the value of the dollar, the government accuses China of deliberately devaluing its currency, and the House has passed legislation aimed at punishing China for this alleged devaluation.
  • Low returns on US bonds are driving investors into higher-performing foreign bonds. Some of these countries are responding by reinstituting capital controls to guard against hot money and the carry trade.
  • The spat with China and reemergence of capital controls have led some to fear that we are in the first stages of an all-out currency war.
  • The instability in the international monetary system, the decreasing value of the dollar, and the large amounts of new US debt could lead the IMF and countries such as China, Japan, Russia, India, and Brazil to abandon the dollar and adopt a new multinational currency.

While the big players in these currency games sort everything out, the people hurt the most are the savers, the workers, and those on fixed incomes as their money buys less and less. Make no mistake – the Fed and the Treasury Department are playing games with our money, especially in how they report statistics like unemployment and inflation. These games erode our standard of living and hide just how much damage their inflationary policies are doing.

Official core inflation for the US is only 1.14%, but that excludes such crucial day-to-day goods such as food and energy. Real inflation certainly is higher, maybe much higher. John Williams of Shadow Government Statistics calculates true inflation at a whopping 8.48%! But manipulated inflation statistics give the government cover when they again deny seniors a cost of living increase in their social security checks. They also serve to convince the public that further expansion of the money supply will boost the economy without causing any real pain, which has essentially been the core argument of Greenspan-Bernanke fed policy for the last 20 years.

Of course, the United States is not alone in its disastrous monetary policy decisions. These pressures are inherent in any fiat monetary system where money is created at will, for the benefit of the special interests. As all these currencies race to the bottom of the inflationary barrel, the only security to be had will be in honest money like gold as the system falls apart. My hope is that we can return to the wisdom of the Constitution and get back to sound, commodity-backed money before our dollar suffers a wholesale collapse.

»crosslinked«

  • Well to do what Ron Paul wants to do we first have to audit Fort Knox. I really doubt the gold is there. If it is, Id be ok with Rons plan. If not I personally dont see another solution than doing what Lincoln did.

  • Well to do what Ron Paul wants to do we first have to audit Fort Knox. I really doubt the gold is there. If it is, Id be ok with Rons plan. If not I personally dont see another solution than doing what Lincoln did.

  • Perhaps NOW the ‘Private Owners’ of the Worlds various Central Banking Systems would care to try the original US Constitutional principles that ‘WERE’ supposed to be used to Govern the Issuance of ‘NEW Currency’ into the ‘ US Free Market System’?

    Now that the Biological and Ecological effects of their ‘Private CFR Global Expansion System’ has matured! Their previous issuance has shown to have many environmental side effects apparent now over several ‘Generations’. These side effects are being studied by the ‘Scientific Community’; Pollution and ‘Natural Resource Depletion’ seem to top the charts.

    However, the most under evaluated are in the ‘Socio-Political’ effects that ‘Force’ the ‘Private Owners’ of the worlds various ‘Central Banks’ to take great measures in the controlling of ‘Main Stream Media’.

    The current ability of the ‘Scientific Community’ to have the ‘Time and Resources’ needed to explore and research ‘Depends’ on a previously established ‘Socio-political System’ of ‘Prosperity’; this was established through the implementation of the ‘US Constitution’ FOLKS. However, there is one aspect of this establishment that has never been fully implemented over the span of necessary ‘Generational’ fulfillment.

    Thus, the US after Two Hundred Years of Evolution has not fully implemented its DNA, so to speak!

    David, this is what we can do for the US. Use the obvious scientific evidence currently presented to fuel the decommissioning of …………..SHIT

    I already see how they will neutralize US.

    David, I know of another Plan, one that we can utilize without having to make ‘Industrial War” with our enemies and still inherit the life of Earth after the Central Bankers civilization is destroyed forever! Ha Ha Ha Ha HAAH!

  • I am REALLY trying to understand the financial arena and have such a hard time. I wish I had the same talent I do for writing about things political but things financial driving the entire political system I just do not get. I am a liberal Democrat BUT I do think Ron is on to something (NOT Rand but RON). I like him and I think he knows what he is talking about. I love his ideas on foreign entanglements and his libertarian philosophy as to the social issues BUT I simply do not know finance

  • I am REALLY trying to understand the financial arena and have such a hard time. I wish I had the same talent I do for writing about things political but things financial driving the entire political system I just do not get. I am a liberal Democrat BUT I do think Ron is on to something (NOT Rand but RON). I like him and I think he knows what he is talking about. I love his ideas on foreign entanglements and his libertarian philosophy as to the social issues BUT I simply do not know finance

  • I am REALLY trying to understand the financial arena and have such a hard time. I wish I had the same talent I do for writing about things political but things financial driving the entire political system I just do not get. I am a liberal Democrat BUT I do think Ron is on to something (NOT Rand but RON). I like him and I think he knows what he is talking about. I love his ideas on foreign entanglements and his libertarian philosophy as to the social issues BUT I simply do not know finance

  • natalierosen

    I am REALLY trying to understand the financial arena and have such a hard time. I wish I had the same talent I do for writing about things political but things financial driving the entire political system I just do not get. I am a liberal Democrat BUT I do think Ron is on to something (NOT Rand but RON). I like him and I think he knows what he is talking about. I love his ideas on foreign entanglements and his libertarian philosophy as to the social issues BUT I simply do not know finance

    • moqzy

      The key is figuring out the financial arena – most people can’t (or don’t want to take the time to) understand what is really going on and the government thrives on this combination of ignorance and apathy. I have no doubt that the more you learn about how the government takes/spends our money, the more you’ll agree with Ron…

      I don’t think it should be about “left” vs. “right”. The government pits us against each other so that we spend our time fighting amongst ourselves instead of realizing what they’re really up to…

      I have my BS in Economics (Bachelor of Science…not the other BS) and have been in banking/finance for over 10 years. Let me know if there’s anything I can help you with in the quest to unravel the financial jargon and rhetoric. I would love to clear up any questions you have.

      • J

        MOQZY

        Please explain the role/effects of interest on our money being issued by (central) banks.

        Thnx

  • http://www.youtube.com/watch?v=U71-KsDArFM
    Here’s the YouTube link to SECRET OF OZ documentary on the banks

  • Learn about the GREATEST CRIME AGAINST HUMANITY. The GREAT CENTRAL BANK SCAM which is the root cause of all the poverty, disease, hunger and misery in our world!!

    Thomas Jefferson warned us:
    “I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

    1.View this important documentary on the secret of the bankers as revealed in the Wizard of Oz children’s book. AMAZING!!!

    2.Take action and begin the REVOLUTION as foreseen by Henry Ford:
    ” It is well that the people of the nation do not understand our banking and monetary system for if they did I believe there would be a revolution before tomorrow morning.”

    3. Write, email and call your Congress representatives that you DEMAND that Congress takes control of the Federal Reserve and our government prints our money (no more borrowing)!! The ultimate power of any nation is the power over its money. Creating our money is too important to be put into private hands. History shows that leads only to rule by the rich and ultimately slavery.

    4. Tomorrow vote for independents and those you feel are righteous and fearless. This next Congress must follow OUR WILL, not that of the bankers and corporations. [Remember bankers and corporations fund both parties to control ‘the game’. Notice that the candidates with the most ads and pamphlets are more indebted to their corporation contributors and will probably vote to retain the Federal Reserve. Do not be gullible…..be wise.]

    This is a MUST WATCH historical journey…

    “BRING BACK THE GREEN BACK”

    YouTube help center | e-mail options | report spam

    The Secret of Oz – English – FREE.mov
    The world economy is doomed to spiral downwards until we do 2 things: outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a “National Debt”. Remember: It’s not what backs the money, it’s who controls its quantity.

    • David

      Hi Mary;

      I’m so glad i caught your post on here, and your definitely among friends too. Also love the video you subsequently posted, its very familiar to us and has appeared on here several times before.

      Anyway, several of us on here have been involved in a concerted effort to accomplish our common objectives which are obviously yours as well. Check for posts from myself, Truthseeker, Douglas, Jack / Jake, Larry, James, Alvie and too many others to continue listing here. What you state is already well apparent to pretty much the entire US population by now and this is also in large part due to many of us from here forwarding the discussions into circulation among the general public as well, which has forced them to think and consider both the cause of the problems they’ve been subjected to along with the simple and readily apparent solutions as well.

      Were initiating some action which with enough participation has a chance of accomplishing the objective or at least moving significantly toward it and we’ll make plans and follow up with subsequent action of necessary.

      http://www.ronpaul.com/on-the-issues/comment-page-17/#comment-139142

      We need your participation. Also please come and contribute to the discussions when you can, everything is valuable material much of which can be forwarded into circulation in order to motivate further action from the population whom the efforts themselves will benefit.

  • Douglas

    A properly executed US Constitutional Currency system of Issuance is supposed to be governed by the People for the People. This is a Humane Interaction of Necessity, not a Mathematical Formula. Mathematical Formula can help show the State of a System but cannot predicted or establish the ongoing needs of a People.

    When a currency is properly issued into society under the US Constitution it represents ALL the Constituents involved. Thus safeguarding improper issuance, Fractional Reserve Banking, and provides only the necessary amount of currency needed to properly expand the Peoples Economy.

    This exposition of mine will naturally stop over production and over consumption which will result in a balanced economy without inflation or deflation.

    • Douglas

      James Madison said:

      “””“Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these precede debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force, of the people…. [There is also an] inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and … degeneracy of manners and of morals…. No nation could preserve its freedom in the midst of continual warfare.

      A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defense against. Foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people.

      Oppressors can tyrannize only when they achieve a standing army, an enslaved press, and a disarmed populace

      A well regulated militia, composed of the body of the people, trained in arms, is the best most natural defense of a free country””””…..

      What would James Madison say now? He would see how the Military Industrial Complex born out of WWII through the Private Owners of the Western Central Banks and that after they lost control of Hitler they had to stop him. So, the whole disproportional build up of Hitler’s Army was multiplied by Their desparate need to stop him.

      After, the whole world was either blown up, big in debt or left with a huge Industrial Complex that either had to keep going or be converted into peace time productions. For example, the ‘Space Program’ was implemented in full force as a way to offset the economic dependency on the Industrial Military Complex.

      What Eisenhower realized was that the same people who gave rise to the Axis of Evil were the same who profited off its destruction and stayed in power.. The fact that they lost control of Hitler is not the main issues. The issue is what they where planning on doing with Hitler’s massive Industrial Socialistic Complex before he turned on them. That is what you have been deprived of!

      David, what we are dealing with here will take much more than a public effort to sway the general population to decommission the private ownership of The Federal Reserve. It would be much more to do the whole operation covertly without the Public Knowing. Our enemies simply have too much power over the Media and thus the Minds of the Public to be effective on a Political Scale. Nor, will some brilliant economic genius single handedly be able to neutralize such a Power.

      For example, the Private Central Banking Families have already placed ‘check mate’ into position in the event the US public should rise up and oust their power and influence over US Monetary policy. Why do you think the Power of the US Government is so cooperative and easily manipulated by such a Powerful Unconstitutional Force? It is called Global Multi-National Economic Interdependency. Yea, the US could easily brake off and take care of our own economy; However, not without a great deal of turmoil, public misunderstandings and China coming to claim their share of US Securities in the form of Land, Real-estate, Production and Labor.

      “Check Mate”!

      So, it would be better to covertly weed out all the Private Central Banking Families ‘AGENTS’ operating in the US Government, CIA, Pentagon, FBI, IRS, FDA, etc. Then slowly restore the economic independent sustainability of the US as nonchalantly as possible. To keep the publics Media Mind in the right direction we will have to put CFR members and organizers on public trial.

      On the Other Hand, we could make an International effort. This is an approach typical in many college political fraternal orders. What they promote is the International expansion of US principles such as Democracy, Free Markets and other Humane Rights. However, history shows that they are all used primarily to spread the power and control of the Private Central Banking Families.

      Our International effort would be impossible to implement without the Internet. In this case we would require a team that just focused on the Internet System of Alliances. We would simply promote that each Nation join together to keep and preserve their Independent Economic Sustainability with a proportional amount of trade.

      It was interesting to read how G-20 gathered and hashed out the exchange rates and the prospect of sustainable trade. Meanwhile, The Private Central Banking Families stand to benefit know matter who walks away with the best deal. How can G-20 pretend to figure out trade and exchange values when they have know audit or control over Private Central Banking Issuance.

      • David

        Hi Douglas;

        Love your posts as always, simple statements of fact as they are and using your wonderful knowledge of history to illustrate.

        In terms of destroying the power, just as you say to me, it will take more than a simple thing to accomplish this, but if we can approach this from as many angles and in as many ways as possible, promote mass public awareness of the problems and solutions toward which we have already accomplished much, and each apply our own individual efforts on whatever way each of us can toward this end, then i think it can be accomplished. As James stated in one of his posts, the guns are coming to bear and from many directions, so hopefully the loading and firing can commence before too long as well.

        Once again, thanks 🙂

        PS. to give you a little bit of a heads up on MPE, i’ve looked at the system and actually managed to find the time to listen to the 4 hour audio presentation mike had prepared while i was pulling an all niter in the CAD program the other day. The model needs some work in terms of making it presentable and the name itself immediately provokes an “and pigs will fly response”, but from what i’ve seen and understand of it thus far, all it consists of is a potentially viable method of calculating and approximating the correct amount of currency injections into the economy in order to match the ability of the population to create useful production and services and nothing more. The model does acknowledge the essential elements of making an economy work, in that it has to be done without banks to consume our productive effort, and with a means of exchange which can be created and regulated in order to match what the population is capable of creating in terms of what it is designed to trade for, and from what i’ve seen so far that’s about it. Will let you know one way or the other as i come to understand more, my interest is the freedom and prosperity of the American people, and i’m open to listening to anything which has a possibility of promoting that, thus far this seems to be so.

        • Douglas

          Actually, David, being a realistic, logical and practical observer one would see that even a well trained Citizenry in proper sovereign defense would be a suicide mission against the US Military Industrial Complex. Even a Citizenry like that of ’Switzerland’ would not be effective.

          We should work within the Political Framework of America to take control of the US Military Industrial Complex through the democratic instillation of our chosen ’Commander and Chief’. Otherwise we are just pawns in a Global Effort by the Private Central Banking Families effort to amass a secretly controlled Global Socialistic Economic Monopoly.

          However, encouraging Citizens to be Virtuous and Armed is a good thing as long as they do not pretend to withstand the IRS funded US Military Complex. This is a Political War and a Holy War if we take a logical look at what is taking place. We should be strategic and diplomatic in this effort. Now that the House has turned over to the Republicans there is a better chance that we can get the proper Audit of the Federal Reserve that is needed.

          Perhaps, we could never ‘Satisfyingly’ substitute the current system of Monetary Power, whether Politically or Militarily. However, we should have a plan in place to act if the current system fails do to whatever reason. Be it Nuclear War, Geological Cataclysm, The Classic Domino Effect or the deliberation of Controlled Crisis Intervention.

  • A great place to get Vemma and the insanely healthy energy Drink….

  • you’re way off the mark- its people like you that make politics a lost cause

  • you’re way off the mark- its people like you that make politics a lost cause

  • Steven Stipulkoski

    Hey Dr. Paul,

    I have been a fan of yours fro years, sent some money, wrote you in for the 2008 election and have a custom bumper sticker for you on my car.

    But now I am concerned. As a true libertarian, I support a true free market in private money creation. In theory you are for alternative currencies but always keep mentioning gold. May I point out that common stock is an ideal private money that requires neither precious metals nor usury? Suppose however that gold or silver were accepted for taxes as Gary North advocates. Would that not give precious metals based monies an advantage over other private monies such as common stock or Mike Rozeff’s “Wal-Mart Money”? In other words, in order to pay our taxes, we would be forced to buy PMs.

    Please address my concern. A favorite tool of the usury class has been to gain acceptance for their PRIVATE monies for GOVERNMENT debt thus adding value to their money. I will not be a party to that kind of government privilege for any private money or any class of private monies such as PMs.

    Thanks for your attention.

  • S S

    The funny thing is, this isn’t a race to see which new currency will become the standard, it’s a race by the IMF and worldbank to crash ALL currencies so that it can leap in like Superman and say that it can save the world with a global currency backed by the worldbank….as long as they can call all the shots, that is.

  • veradinx

    The funny thing is, this isn’t a race to see which new currency will become the standard, it’s a race by the IMF and worldbank to crash ALL currencies so that it can leap in like Superman and say that it can save the world with a global currency backed by the worldbank….as long as they can call all the shots, that is.

  • diedaily11

    Such an information-dense analysis. So cogent and clear. “Yeah but he’s still just a politician” some would point out. Really? I dont know. Truth is truth.

  • thrummer1953

    This has GOT to be stopped! Americans,have a right to a stable constitutional Dollar.Demand a public audit followed by an elimination of the corrupt & private Federall Reserve.

  • sh4p3shifter

    what is devaluation? inflating the money supply? why do people say we need it? cheers

  • Douglas

    It was interesting to read how G-20 gathered and hashed out the exchange rates and the prospect of sustainable trade. Meanwhile, The Private Central Banking Families stand to benefit know matter who walks away with the best deal. How can G-20 pretend to figure out trade and exchange values when they have know audit or control over Private Central Banking Issuance?

    James Madison said:

    “Of all the enemies to public liberty war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these precede debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. In war, too, the discretionary power of the Executive is extended; its influence in dealing out offices, honors, and emoluments is multiplied; and all the means of seducing the minds, are added to those of subduing the force, of the people…. [There is also an] inequality of fortunes, and the opportunities of fraud, growing out of a state of war, and … degeneracy of manners and of morals…. No nation could preserve its freedom in the midst of continual warfare.

    A standing military force, with an overgrown Executive will not long be safe companions to liberty. The means of defense against. Foreign danger, have been always the instruments of tyranny at home. Among the Romans it was a standing maxim to excite a war, whenever a revolt was apprehended. Throughout all Europe, the armies kept up under the pretext of defending, have enslaved the people.

    Oppressors can tyrannize only when they achieve a standing army, an enslaved press, and a disarmed populace

    A well regulated militia, composed of the body of the people, trained in arms, is the best most natural defense of a free country”.

    What would James Madison say now? He would see the Military Industrial Complex born out of WWII through the Private Owners of the Western Central Banks . After they lost control of Hitler they had to stop him. So, the whole disproportional build up of Hitler’s Army was multiplied by the effort to stop him.

    At the end of WWII, the whole world was either blown up, big in debt or left with a huge Industrial Complex that either had to keep going or be converted into peace time productions. For example, the ‘Space Program’ was implemented in full force as a way to offset the economic dependency on the Industrial Military Complex.

    What Eisenhower realized was that the same people who gave rise to the Axis of Evil were the same who profited off its destruction. The fact that they lost control of Hitler is not the main issue. The issue is what they where planning on doing with Hitler’s massive Industrial Socialistic Complex before he turned on them.

    What we are dealing with here will take much more than a public effort to sway the general population to decommission the private ownership of The Federal Reserve. It would be much more to do the whole operation covertly without the Public Knowing. Our enemies simply have too much power over the Media and thus the Minds of the Public to be effective on a Political Scale. Nor, will some brilliant economic genius single handedly be able to neutralize such a Power.

    For example, the Private Central Banking Families have already placed ‘check mate’ into position in the event the US Government oust their power and influence over US Monetary policy. Why do you think the Power of the US Government is so cooperative and easily manipulated by such a Powerful Unconstitutional Force? It is called Global Multi-National Economic Interdependency. Yea, the US could easily brake off and take care of our own economy; However, not without a great deal of turmoil, public suffering and China coming to claim their share of US Securities in the form of Land, Real-estate, Production and Labor.

    “Check Mate”!

    So, it would be better to covertly weed out all the Private Central Banking Families ‘AGENTS’ operating in the US Government, CIA, Pentagon, FBI, IRS, FDA, etc. Then slowly restore the economic independent sustainability of the US as nonchalantly as possible. To keep the publics Media Mind in the right direction we, at the same time, will have to put CFR members and organizers on public trial.