Will America be facing hyperinflation?
*Texas Straight Talk, by Congressman Ron Paul, December 1, 2008:
"As the printing presses for the bailouts run at full speed, those
in power are no longer even pretending that the new giveaways will fix
our problems. Now that we are used to rewarding failure with
taxpayer-funded bailouts, we are being told that this is 'just a
start,' more funds will inevitably be needed for more industries, and
that things would be much worse had we done nothing.
The updated total bailout commitments add up to over $8 trillion now.
This translates into a monetary base increase of 75 percent over the
last two months. This money does not come from some rainy day fund
tucked away in the budget somewhere – it is created from thin air, and
devalues every dollar in circulation. Dumping money on an economy, as
they have been doing, is not the same as dumping wealth. In fact, it
has quite the opposite effect.
One key attribute that gives money value is scarcity. If something that
is used as money becomes too plentiful, it loses value. That is how
inflation and hyperinflation happens. Giving a central bank the power
to create fiat money out of thin air creates the tremendous risk of
eventual hyperinflation. Most of the founding fathers did not want a
central bank. Having just experienced the hyperinflation of the
Continental dollar, they understood the power and the temptations
inherent in that type of system. It gives one entity far too much power
to control and destabilize the economy.
Our central bankers have had a tremendous amount of hubris over the
years, believing that they could actually manage a paper money system
in such a way as to replicate the behavior and benefits of a gold
standard. In fact, back in 2004 then Fed Chairman Alan Greenspan told
me as much. People talk about toxic assets, but the real toxicity in
our economy comes from the neo-alchemy practiced by the Federal Reserve
System. Just as alchemists of the past frequently poisoned themselves
with the lead or mercury they were trying to turn to gold, today’s
bankers are poisoning the economy with accelerated fiat money creation.
Throughout the ages, gold has stood the test of time as a consistently
reliable medium of exchange, and has frequently been referred to as
'God’s money,' as only God can make more of it. Seeking superhuman
power over money in the way alchemists did in ancient times caused
society to shun them as charlatans. In much the same way, free people
today should be sending the message that this power and control over
our money is no longer acceptable.
The irony is that even had the ancient practice of alchemy been
successful, and gold was suddenly, magically made abundant, alchemists
still would have failed to create real wealth. Creating gold from lead
would have cheapened its status to that of rhinestones or cubic
zirconia. It is unnatural and dangerous for paper to be considered as
precious as a precious metal. Our fiat currency system is crumbling and
coming to an end, as all fiat currencies eventually do."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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