The End of Dollar Hegemony by Rep. Ron Paul

[AZXD]

Just because he understand the error's of our ways does not him a profit make

Thursday, March 13, 2008
$1,000 Gold Has Officially Arrived: A Warning From Ron Paul

Posted by: Eric Ames @ 9:13 AM


It long appeared inevitable, but it has now officially happened: today the price of gold hit the $1,000 mark. Wondering what’s so important about the $1,000 gold price? Well, let's see what Congressman Ron Paul has to say.

The following excerpts were pulled from an article posted on Lewrockwell.com by Paul (all emphasis mine):

“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, e.g., 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.”

“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.” (This was written back in 2006, so you can probably add the uneasiness being felt from the credit crisis.)

“Likewise, a fiat monetary system encourages speculation and unsound borrowing. As problems develop, scapegoats are sought and frequently found in foreign nations (hello China). This prompts many to demand altering exchange rates and protectionist measures. The sentiment for this type of solution is growing each day.”

Congressman Paul then gets in-depth about how the fiat system will inevitably fail, as it has throughout history (which is an interesting truth). If you are interested in knowing the details, read the complete article. It is fairly lengthy, but well worth the time to read, whether or not you agree with his ideas—it will get your mind spinning a bit if nothing else.

I don’t envision the U.S. moving to a gold standard as Paul suggests, and I’m not sure exactly how I feel about that idea one way or the other. Paul makes an interesting—and extreme—point at the end of the article that I do want to bring up:

“Economic law dictates reform at some point. But should we wait until the dollar is 1/1,000 (which arrived today) 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. Runaway 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.”

[Delija]

Originally Posted by AZXD

But the economy is good

Yes, it's great. Ask any incumbent politician running for reelection! Particularly if they are in DC and closely aligned with president Bush...LOL

Also I'd have to guess that low occupancy rates on commercial office and retail space is just great for business...at least for start-up companies.

Originally Posted by Frenchy

If the value of the dollar falls, then the cost of buying oil goes up...And guess what...It has. Another Fed cut, and the dollar falls again.

Isn't this fun??

yes, a thrill a minute. I got invoiced this week on goods purchased in Thailand and shipped through an import agent we've used for years. The US Dollar is worth ~25% less than it was when I entered the deal and the shipping costs were about 40% higher than I had anticipated .....

With a steadily weakening dollar as Frenchy implies, the cost of oil will continue to rise regardless of OPEC production or American driving habits.

In addition, there is a huge psychological fear factor at play when round numbers of resistance are broken. $100 a barrel for oil and $1000 for an ounce of gold virtually coinciding bode very poorly for the near term due to an increase in speculators entering the commodities markets and skewing things relative to bona fide hedging. These speculators in such situations almost always drive prices up on the futures markets which is reflected in spot prices. Some may get very rich on this and the consumers will surely get screwed.

On a brighter note, this morning I saw a photo of the new five dollar bill. Good to know that as the value of the dollar drops, we at least get nice colorful paper bills as a consolation. Nice artwork, lots of colors. -

Peace,
D.

[AZXD]

It's optical Get smaller tweezers

[New2Arms]

Originally Posted by AZXD

It's optical Get smaller tweezers

Just think of the space it will save in your wallet... Oh wait, a forget bread will be $50 a loaf.

[FrankRizzoXD40]

Originally Posted by Frenchy

Someone suggested months ago that us "Paulites" treated RP like a God...I said more like a prophet.

Because he predicted that the fed would cut rates and that the dollar would go down

I'm hoping that most people here were expecting that...

Frank

[AZXD]

Originally Posted by FrankRizzoXD40

Because he predicted that the fed would cut rates and that the dollar would go down

I'm hoping that most people here were expecting that...

Frank

Some did, and some didn't.
Some said he was right, and others called him a demagogue who was wrong

But I'm not sure anyone hoped that "the fed would cut rates and that the dollar would go down"
Is that what you really meant to write ???

[FrankRizzoXD40]

Originally Posted by AZXD

Some did, and some didn't.
Some said he was right, and others called him a demagogue who was wrong

But I'm not sure anyone hoped that "the fed would cut rates and that the dollar would go down"
Is that what you really meant to write ???

I never hoped it would happen, but it was easy to see where we were headed. The economy goes in cycles. Tha combined with the recent behavior of our government and it is no surprise. Plus, the fed always custs interest rates when it looks like the economy is in trouble. Also, historically, gold usually goes up when the dollar goes down. The dollar usually goes down when our economy isn't doing so swell.

That was my point.

Frank

[AZXD]

Originally Posted by FrankRizzoXD40

I never hoped it would happen, but it was easy to see where we were headed. The economy goes in cycles. Tha combined with the recent behavior of our government and it is no surprise. Plus, the fed always custs interest rates when it looks like the economy is in trouble. Also, historically, gold usually goes up when the dollar goes down. The dollar usually goes down when our economy isn't doing so swell.

That was my point.

Frank

Yea, when you have the Fed manipulating the currency, things are bound to cycle. Then add in borrowing money from other countries to fight a war, and who knows what might happen. I thought the Fed loaned money to the U.S. treasury. Do ya think maybe they are broke, or do ya think the Fed has cut us off do to our high debt and great risk?

But I really like your analysis of ... gold up=dollar down ... dollar up=gold down.
To bad that only works with the U.S. economy. Look at it globally over and I think you'll a little bit different picture.

[FrankRizzoXD40]

Originally Posted by AZXD

Yea, when you have the Fed manipulating the currency, things are bound to cycle. Then add in borrowing money from other countries to fight a war, and who knows what might happen. I thought the Fed loaned money to the U.S. treasury. Do ya think maybe they are broke, or do ya think the Fed has cut us off do to our high debt and great risk?

Yes, those are additional reasons. The excessive printing of money is another.

Originally Posted by AZXD

But I really like your analysis of ... gold up=dollar down ... dollar up=gold down.
To bad that only works with the U.S. economy. Look at it globally over and I think you'll a little bit different picture.

That's why I said it. We were talking about the US, right?

Frank

[AZXD]

Originally Posted by FrankRizzoXD40

Yes, those are additional reasons. The excessive printing of money is another.



That's why I said it. We were talking about the US, right?

Frank