H212 CONGRESSIONAL RECORD — HOUSE February 7, 2001 risky scheme, a close analysis of the Today we refer to cooperation as bi- The question, though, remains, is historical record, Mr. Speaker, will partisanship. Some argue that biparti- there really anything new being of- prove otherwise. Both Senator BOB sanship is absolutely necessary for the fered? The demand for bipartisanship is GRAHAM of Florida and Alan Greenspan American democracy to survive. The nothing more than a continuation of agree that the Bush tax cut is average media never mentions a concern for the the third-way movement of the last by historical standards. survival of the Republic, but there are several decades. The effort always is to Consider, for example, this chart, those who argue that left-wing inter- soften the image of the authoritarians prepared by the nonpartisan National ventionism should give no ground to who see a need to run the economy and Taxpayers Union. The Bush tax cut and right-wing interventionism, that too regulate people’s lives, while pre- the tax cut proposal we support in the much is at stake. tending not to give up any of the ad- Economic Recovery and Growth Act of The media are demanding the Bush vantages of the free market or the sup- 2001 are considerably smaller than ei- administration and the Republican posed benefits that come from compas- ther the Kennedy tax cut of the 1960s or Congress immediately yield to those sionate welfare or a socialist govern- significantly smaller than the Reagan insisting on higher taxes and more ment. tax cut of 1981 as a percentage of gross Federal Government intervention for b 1145 national product. So too, Mr. Speaker, the sake of national unity because our the Bush tax cut and the Economic Re- government is neatly split between two It is nothing more than political, covery and Growth Act proposal rep- concise philosophic views. But if one have-your-cake-and-eat-it-too, decep- resent a smaller portion of Federal rev- looks closely, one is more likely to find tion. enues in constant 2000 dollars than ei- only a variation of a single system of Many insecure and wanting citizens ther of the earlier tax reduction pro- authoritarianism, in contrast to the cling to the notion that they can be posals. rarely mentioned constitutional non- taken care of through government be- In fact, even Democrat Speaker Tip authoritarian approach to government. nevolence without sacrificing the free O’Neill, not exactly legendary for his The big debate between the two fac- market and personal liberty. Those support of big tax cuts, Democrat tions in Washington boils down to who anxiously await next month’s gov- Speaker Tip O’Neill’s alternative tax nothing more than a contest over ernment check prefer not to deal with initiative in 1981 was larger than the power and political cronyism, rather the question of how goods and services plan that many of us conservatives in than any deep philosophic differences. are produced and under what political the Congress propose today. The Eco- The feared gridlock anticipated for circumstances they are most effi- nomic Recovery and Growth Act pro- the 107th Congress will differ little ciently provided. Sadly, whether per- posal is a well-reasoned and sensible al- from the other legislative battles in re- sonal freedom is sacrificed in the proc- ternative to plans that call for keeping cent Congresses. Yes, there will be ess is a serious concern for only a small more money in Washington, D.C. heated arguments regarding the size of number of Americans. As the preceding comparisons dem- budgets, local versus Federal control, The third way, a bipartisan com- onstrate, Mr. Speaker, the Bush and private versus government solutions; promise that sounds less our own Bush-plus tax cut are anything but a serious debate over the precise confrontational and circumvents the but dangerous or irresponsible. They role for government is unlikely to issue of individual liberty, free mar- are, instead, measured actions, taken occur. kets and production is an alluring, but to alleviate two serious challenges fac- I do not expect any serious challenge dangerous, alternative. The harsh re- ing the American people today. to the 20th century consensus of both ality is that it is difficult to sell the First, by reducing rates and thus in- major parties that the Federal Govern- principles of liberty to those who are creasing the incentive for work and in- ment has a significant responsibility to dependent on government programs, vestment, both plans can help reinvigo- deal with education, health care, re- and this includes both the poor bene- rate an economy that is finally begin- tirement programs, or managing the ficiaries as well as the self-serving, ning to collapse under the weight of 8 distribution of the welfare-state bene- wealthy elites who know how to ben- years of ever-increasing tax and regu- fits. Both parties are in general agree- efit from government policies. The au- latory burdens. Secondly, the proposals ment on monetary management, envi- thoritarian demagogues are always will finally offer relief to American ronmental protection, safety and risk, anxious to play on the needs of people families who are currently taxed at a both natural and man-made. Both par- made dependent by a defective political rate not seen since the world was at ticipate in telling others around the system of government intervention, war. world how they must adopt a demo- while perpetuating their own power. Hard-working Americans deserve to cratic process similar to ours as we po- Anything that can help the people to keep more of their wages, Mr. Speaker, lice our worldwide financial interests. avoid facing the reality of the short- so that they may provide for their fam- We can expect most of the media-di- comings of the welfare-warfare state is ilies, not for bigger government bu- rected propaganda to be designed to welcomed. Thus, our system is destined reaucracies. speed up and broaden the role of the to perpetuate itself until the immu- f Federal Government in our lives and in table laws of economics bring it to a the economy. Unfortunately, the token halt at the expense of liberty and pros- CHALLENGE TO AMERICA: A CUR- opposition will not present a principled perity. RENT ASSESSMENT OF OUR RE- challenge to big government, only an The third-way compromise or bipar- PUBLIC argument that we must move more tisan cooperation can never reconcile The SPEAKER pro tempore (Mr. slowly and make an effort to allow the differences between those who REHBERG). Under the Speaker’s an- greater local decision-making. produce and those who live off others. nounced policy of January 3, 2001, the Without presenting a specific philo- It will only make it worse. Theft is gentleman from Texas (Mr. PAUL) is sophic alternative to authoritarian theft, and forced redistribution of recognized for 60 minutes. intervention from the left, the opposi- wealth is just that. The third way, Mr. PAUL. Mr. Speaker, I have asked tion concedes that the principle of gov- though, can deceive and perpetuate an for this time to spend a little bit of ernment involvement per se is proper, unworkable system when both major time talking about the assessment of practical, and constitutional. factions endorse the principle. our American Republic. The cliche ‘‘the third way’’ has been In the last session of the Congress, Mr. Speaker, the beginning of the used to define the so-called com- the majority party, with bipartisan 21st century lends itself to a reassess- promise between the conventional wis- agreement, increased the Labor, Health ment of our history and gives us an op- dom of the conservative and liberal and Human Services and Education ap- portunity to redirect our country’s fu- firebrands. This nice-sounding com- propriation by 26 percent over the pre- ture course, if deemed prudent. The promise refers not only to the noisy vious year, nine times the rate of infla- main question before the new Congress rhetoric we hear in the United States tion. The Education Department alone and the administration is, are we to Congress, but also in Britain, Ger- received $44 billion, nearly double Clin- have gridlock, or cooperation? many, and other nations as well. ton’s first educational budget of 1993. February 7, 2001 CONGRESSIONAL RECORD — HOUSE H213 The Labor, HHS and Education appro- tion. Short of that, the only other rea- good of the country, but working to- priation was $34 billion more than the sonable solution must come from Mem- gether to promote a giant interven- Republican budget had authorized. Al- bers’ refusal to be influenced by the tionist state dangerous to us all is far ready, the spirit of bipartisanship has pressure the special interest money can different from working together to pre- prompted a new administration to re- exert. This requires moral restraint by serve constitutionally protected lib- quest another $10 billion along with our leaders. Since this has not hap- erties. more mandates on public schools. This pened, special interest favoritism has Many argue that the compromise of is a far cry from the clear constitu- continued to grow. bipartisanship is needed to get even a tional mandate that neither the Con- The bipartisanship of the last 50 little of what the limited government gress nor the Federal courts have any years has allowed our government to advocates want, but this is a fallacious authority to be involved in public edu- gain control over half of the income of argument. More freedom can never be cation. The argument that this bipar- most Americans. Being enslaved half gained by giving up freedom, no matter tisan approach is a reasonable com- the time is hardly a good compromise, the rationale. If liberals want $46 bil- promise between the total free market but supporters of the political status lion for the Department of Education of local government or local govern- quo point out that in spite of the loss and conservatives argue for $42 billion, ment approach, and that of a huge ac- of personal freedom, the country con- a compromise of $44 billion is a total tivist centralized government approach tinues to thrive in many ways. But victory for the advocates of Federal may appeal to some, but it is fraught there are some serious questions that Government control of public edu- with great danger. Big government we as a people must answer. Is this cation. Saving $2 billion means nothing clearly wins. Limited government and prosperity real? Will it be long-lasting? in the scheme of things, especially the free market lose. Any talk of the What is the true cost in economic since the case for the constitutional third way is nothing more than propa- terms? Have we sacrificed our liberties position of zero funding was never even for government security? Have we un- ganda for big government. It is no com- entertained. When the budget and gov- dermined the very system that has al- promise at all. ernment controls are expanding each The principle of Federal Government lowed productive effort to provide a year, a token compromise in the pro- high standard of living for so many? control is fully endorsed by both sides, posed increase means nothing. And Has this system in recent years ex- and the argument that the third way those who claim it to be a legitimate cluded some from the benefits that might slow growth of big government victory do great harm to the cause of Wall Street and others have enjoyed? falls flat. Actually, with bipartisan co- liberty by condoning the process. In- Has it led to needless and dangerous operation, government growth may stead of it being a third-way alter- U.S. interventions overseas and created well accelerate. native to the two sides arguing over problems that we are not yet fully How true bipartisanship works in minor details of how to use govern- aware of? Is it morally permissible in a Washington is best illustrated by the ment force, the three options instead country that professes to respect indi- way a number of former Members of are philosophically the same. A true al- vidual liberty to routinely give hand- Congress make a living after leaving outs to the poor and provide benefits to ternative must be offered if the growth Congress. They find it quite convenient the privileged and rich by stealing the of the state is to be contained. Third- to associate with other former mem- fruits of labor from hard-working way bipartisanship is not the answer. bers of the opposing party and start a However, if, in the future, the con- Americans? lobbying firm. What might have ap- As we move into the next Congress, stitutionalists argue for zero funding peared to be contentious differences some worry that gridlock will make it for the Education Department and the when in office are easily put aside to impossible to get needed legislation liberals argue to increase it to $50 bil- lobby their respective party members. passed. This seems highly unlikely. If lion and finally $25 billion is accepted Essentially, no philosophic differences big government supporters found ways as a compromise, progress will have of importance exist; it is only a matter to enlarge the government in the past, been made. But this is not what is of degree and favors sought, since both the current evenly-split Congress will being talked about in D.C. When an ef- parties must be won over. The dif- hardly impede this trend and may even fort is made to find a third way, both ferences they might have had while accelerate it. With a recession on the sides are talking about expanding gov- they were voting Members of Congress horizon, both sides will be more eager ernment and neither side questions the existed only for the purpose of appeal- than ever to cooperate on expanding legitimacy of the particular program ing to their different constituencies, Federal spending to stimulate the involved. Unless the moral and Con- not serious differences of opinion as to economy, whether the fictitious budget stitutional debate changes, there can what the role of government ought to surplus shrinks or not. In this frantic be no hope that the trend toward big- be. This is the reality of bipartisan- effort to take care of the economy, pro- ger government with a sustained at- ship. mote education, save Social Security, tack on personal liberty will be re- Sadly, our system handsomely re- and provide for the medical needs of all versed. It must become a moral and wards those who lobby well and in a bi- Americans, no serious discussion will constitutional issue. partisan fashion. Congressional service take place on the political conditions Budgetary tokenism hides the real too often is a training ground or a farm required for a free people to thrive. If issue. Even if someone claims to have system for the ultimate government not, all efforts to patch the current just saved the taxpayer a couple billion service: lobbying Congress for the ben- system together will be at the expense dollars, the deception does great harm efit of powerful and wealthy special in- of personal liberty, private property, in the long run by failure to emphasize terests. It should be clearly evident, and sound money. the importance of the Constitution and however, that all the campaign finance If we are truly taking a more dan- the moral principles of liberty. It in- reform and lobbying controls conceiv- gerous course, the biggest question is, stead helps to deceive the people into able will not help the situation. Lim- how long will it be before a major po- believing something productive is iting the right to petition Congress or litical economic crisis engulfs our being done, but it is really worse than restricting people’s right to spend their land? That, of course, is not known, that, because neither party makes an own money will always fail and is not and certainly not necessary, if we as a effort to cut the budget. The American morally acceptable and misses the people and especially the Congress un- people must prepare themselves for point. As long as government has so derstand the nature of the crisis and do ever more spending and taxes. much to offer, public officials will be something to prevent the crisis from A different approach is needed if we tempted to accept the generous offers undermining our liberties. We should, want to protect the freedoms of all of support from special interests. Those instead, encourage prosperity by avoid- Americans, to perpetuate prosperity, who can benefit have too much at ing any international conflict that and to avoid a major military con- stake not to be in the business of influ- threatens our safety or wastefully con- frontation. All three options in reality encing government. sumes our needed resources. represents only a variation of the one Eliminating the power of government Congressional leaders do have a re- based on authoritarian and interven- to pass out favors is the only real solu- sponsibility to work together for the tionist principles. Nothing should be H214 CONGRESSIONAL RECORD — HOUSE February 7, 2001 taken for granted, neither our lib- Although computer technology has tional western-style central banking erties, nor our material well-being. Un- been quite beneficial to the economy, tinkering. derstanding the nature of a free society in some ways these benefits have been There is good reason to believe that and favorably deciding on its merits misleading by hiding the ill effects of Congress and the American people are required before true reform can be central bank manipulation of interest ought to be concerned and start pre- expected. If, however, satisfaction and rates and by causing many to believe paring for a slump that could play complacency with the current trend to- that the usual business-cycle correc- havoc with our Federal budget and the ward bigger and more centralized gov- tion could be averted. Instead, delaying value of the American dollar. Certainly ernment remain the dominant view, a correction that is destined to come the Congress has a profound responsi- those who love liberty more than only contributes to greater distortions bility in this area. If we ignore the promised security must be prepared for in the economy, thus requiring an even problems or continue to endorse the an unpleasant future. greater adjustment. economic myths of past generations, It seems obvious that we are dealing b 1200 our prosperity will be threatened. But with a financial bubble now deflating. our liberties could be lost as well if ex- Those alternative plans will surely Certainly, most observers recognize panding the government’s role in the vary from one to another. Tragically, that the NASDAQ was grossly over- for some it will contribute to the vio- economy is pursued as the only solu- priced. The question remains, though, lence that will surely come when prom- tion to the crisis. as to what is needed for the entire ises of government security are not economy to reach equilibrium and It is important to understand how we forthcoming. We can expect further allow sound growth to resume. got ourselves into this mess. The blind violations of civil liberties by a govern- Western leaders for most of the 20th faith that wealth and capital can be ment determined to maintain order century have come to accept a type of created by the central bank’s creating when difficult economic and political central planning they believe is not money and credit out of thin air, using conditions develop. burdened by the shortcomings of true government debt as its collateral, But none of this needs occur if the along with fixing short-term interest principles that underpin our Republic, socialist-type central planning. Instead rates, is a myth that must one day be as designed by the Founders, can be of outright government ownership of dispelled. All the hopes of productivity resurrected and reinstituted. Current the means of production, the economy increases in a dreamed-about new era problems that we now confront are was to be fine-tuned by fixing interest economy cannot repeal eternal eco- government-created and can be much rates, that is, Fed funds rates, sub- nomic laws. more easily dealt with when govern- sidizing credit, government-sponsored ment is limited to its proper role of enterprises, stimulating sluggish seg- The big shift in sentiment of the past protecting liberty, instead of pro- ments of the economy, farming and the several months has come with a loss of moting a welfare-fascist state. weapons industry, aiding the sick, confidence in the status of the new par- There are reasons to be optimistic Medicaid and Medicare, federally man- adigm. If we are not careful, the likely that the principles of the Republic, the aging education, the Department of weakening of the U.S. dollar could lead free market, and respect for private Education, and many other welfare to a loss of confidence in America and property can be restored. However, schemes. all her institutions. there remains good reason, as well, to The majority of Americans have not yet accepted the harsh reality that this U.S. political and economic power be concerned that we must confront has propped up the world economy for the serious political and economic less threatening, friendlier type of eco- nomic planning is minimally more effi- years. Trust in the dollar has given us firestorm seen on the horizon before license to borrow and spend way be- that happens. cient than that of the socialist plan- yond our means. But just because My concerns are threefold: the health ners with their 5-year economic plans. world conditions have allowed us great- of the economy, the potential for war, We must face the fact that the busi- and the coming social discord. If our ness cycle, with its recurring reces- er leverage to borrow and inflate the problems are ignored, they will further sions, wage controls, wealth transfers, currency than otherwise might have undermine the civil liberties of all and social discord, is still with us, and been permitted, the economic limita- Americans. The next decade will be a will get worse unless there is a funda- tions of such a policy still exist. This great challenge to all Americans. mental change in economic and mone- trust, however, did allow for a greater The booming economy of the last 6 tary policy. Regardless of the type, financial bubble to develop and disloca- years has come to an end. The only central economic planning is a dan- tions to last longer, compared to simi- question remaining is how bad the gerous notion. lar excesses in less powerful nations. slump will be. Although many econo- In an economic downturn, a large There is one remnant of the Bretton mists express surprise at the sudden majority of our political leaders be- Woods gold exchange standard that has and serious shift in sentiment, others lieve that recession’s ill effects can be aided U.S. dominance over the past 30 have been warning of its inevitability. greatly minimized by monetary and years. Gold was once the reserve all Boom times built on central bank cred- fiscal policy. Although cutting taxes is central banks held to back up their it creation always end in recession or always beneficial, spending one’s way currencies. After World War II, the depression. But central planners, being out of a recession is no panacea. Even world central banks were satisfied to extremely optimistic, hope that this if some help is gained by cutting taxes, hold dollars, still considered to be as time it will be different, that a new era or temporary relief given by an in- good as gold, since internationally the has arrived. crease in government spending, they dollar could still be exchanged for gold For several years we have heard the distract from the real cause of the at $35 an ounce. endless nostrum of a technology and downturn: previously pursued faulty When the system broke down in 1971 productivity-driven paradigm that monetary policy. and we defaulted on our promises to would make the excesses of the 1990s The consequences of interest rate pay in gold, chaos broke out. By de- permanent and real. Arguments that manipulation in a recession, along with fault, the dollar maintained its status productivity increases made the grand tax-and-spending changes, are unpre- as the reserve currency of the world. prosperity of the last 6 years possible dictable and do not always produce the This is true even to this day. The dol- were accepted as conventional wisdom, same results each time they are used. lar still represents approximately 77 although sound free-market analysts This is why interest rates of less than percent of all world central bank re- warned otherwise. 1 percent and massive spending pro- We are now witnessing an economic grams have not revitalized Japan’s serves. downturn that will, in all likelihood, economy or her stock market. This means that the United States be quite serious. If our economic plan- We may well be witnessing the begin- has a license to steal. We print the ners pursue the wrong course, they will ning of a major worldwide economic money and spend it overseas, while make it much worse and prolong the downturn, making even more unpre- world trust continues because of our recovery. dictable the consequence of conven- dominant economic and military February 7, 2001 CONGRESSIONAL RECORD — HOUSE H215 power. This results in a current ac- hope we can keep the pain and suf- perform the role of lender of last re- count and trade deficit so large that al- fering to a minimum. sort, and to finance and monetize gov- most all economists agree that it can- The most recent new era of the 1990s ernment debt. It is for this reason that not last. The longer and more exten- appeared to be an answer to all politi- the price of gold, in their eyes, must be sive the distortions in the inter- cians’ dreams: a good economy, low un- held in check. national market, the greater will be employment, minimal price inflation, a From 1945 to 1971, the United States the crisis when the market dictates a skyrocketing stock market, with cap- literally dumped nearly 500 million correction. That is what we are start- ital gains tax revenues flooding the ounces of gold at $35 an ounce in an ef- ing to see. Treasury, thus providing money to ac- fort to do the same thing by continuing When the recession hits full force, commodate every special-interest de- the policy of printing money at will, even the extraordinary power and in- mand. with the hopes that there would be no fluence of Alan Greenspan and the Fed- But it was too good to be true. It was consequences to the value of the dollar. eral Reserve, along with all other cen- based on an inflated currency and mas- That all ended in 1971, when the mar- tral banks of the world, will not be sive corporate, personal and govern- kets overwhelmed the world central enough to stop the powerful natural ment borrowing. A recession was inevi- bankers. economic forces that demand equi- table to pay for the extravagance that A similar effort continues today, librium. Liquidation of unreasonable many knew was an inherent part of the with central banks selling and loaning debt and the elimination of the over- new era, understanding that abundance gold to keep the price in check. It is capacity built into the system and a without a commensurate amount of working and does convey false con- return to trustworthy money and work was not achievable. fidence, but it cannot last. Most Amer- trustworthy government will be nec- The mantra now is for the Fed to icans are wise to the government sta- essary. Quite an undertaking. quickly lower short-term interest rates tistics regarding prices and the no-in- Instead of looking at the real cost to stimulate the economy and alleviate flation-exists rhetoric. Everyone is and actual reasons for the recent good a liquidity crisis. This policy may aware that the prices of oil, gasoline, years, politicians and many Americans stimulate a boom and may help in a natural gas, medical care, repairs, have been all too eager to accept the mild downturn, but it does not always houses, and entertainment have all newfound wealth as permanent and de- work in a bad recession. It actually been rapidly rising. served, as part of a grand new era. could do great harm since it could The artificially low gold price has Even with a national debt that contin- weaken the dollar, which in turn would aided the government’s charade, but it ued to grow, all the talk in Washington allow market forces instead to push has also allowed a bigger bubble to de- was about how to handle the magnifi- long-term interest rates higher. Delib- velop. cent budget surpluses. erately lowering interest rates is not b 1215 Since 1998, when it was announced even necessary for the dollar to drop, that we had a budgetary surplus to deal since our policy has led to a current ac- This policy cannot continue. Eco- with, the national debt has neverthe- count deficit of a magnitude that de- nomic law dictates a correction that less grown by more than $230 billion, mands the dollar eventually readjust most Americans will find distasteful albeit at a rate less than in the past, and weaken. and painful. Duration and severity of but certainly a sum that should not be A slumping stock market will also the liquidation phase of the business ignored. But the really big borrowing cause the dollar to decline and interest cycle can be limited by proper re- has been what the U.S. as a whole has rates to rise. Federal Reserve Board sponses, but it cannot be avoided and borrowed from foreigners to pay for the central planning, though, through in- could be made worse if the wrong huge deficit we have in our current ac- terest rate control, is not a panacea. It course is chosen. count. We are now by far the largest is, instead, the culprit that produces Recent deterioration of the junk foreign debtor in the world and in all of the business cycle. Government and bond market indicates how serious the history. Fed officials have been reassuring the situation is. Junk bonds are now pay- The convenient arrangement has al- public that no structural problems ing 9 to 10 percent more than short- lowed us to live beyond our means, and exist, citing no inflation and a gold term government securities. The qual- according to long-understood economic price that reassures the world that the ity of business loans is suffering, while laws must end. A declining dollar con- dollar is indeed still king. more and more corporate bonds are firms that our ability to painlessly bor- The Fed can create excess credit, but qualifying for junk status. The Fed row huge sums will no longer be cheap it cannot control where it goes as it tries to reassure us by attempting to or wise. During the past 30 years, in the circulates throughout the economy, stimulate the economy with low, short- post-Bretton Woods era, worldwide sen- nor can it dictate value. Claiming that term Fed fund rates at the same time timent has permitted us to inflate our a subdued government-rigged CPI and interest rates for businesses and con- money supply and get others to accept PPI proves that no inflation exists is sumers are rising. There comes a time the dollar as if it were as good as gold. pure nonsense. It is well established when Fed policy is ineffective, much to This convenient arrangement has dis- that, under certain circumstances, new everyone’s chagrin. couraged savings, which are now at an credit inflation can find its way into Micromanaging an economy effec- historic low. the stock or real estate market, as it tively for a long period of time, even Savings in a capitalist economy are did in the 1920s, while consumer prices with the power a central bank wields, crucial for furnishing capital and es- remained relatively stable. This does is an impossible task. The good times tablishing market interest rates. With not negate the distortions inherent in are ephemeral and eventually must be negative savings and with the Fed fix- a system charged with artificially low paid for by contraction and renewed ing rates by creating credit out of thin interest rates. Instead, it allows the real savings. air and calling it capital, we have distortion to last longer and become There is much more to inflation than abandoned a necessary part of free more serious, leading to a bigger cor- rising prices. Inflation is defined as the market capitalism, without which a rection. increase in the supply of money and smooth and growing economy is not If gold prices reflected the true ex- credit. Obsessively sticking to the ‘‘ris- sustainable. tent of the inflated dollar, confidence ing prices’’ definition conveniently ig- No one should be surprised when re- in the dollar specifically and in paper nores placing the blame on the respon- cessions hit, or bewildered as to their more generally would be undermined. sible party: The Federal Reserve. The cause or danger. The greater surprise It is a high priority of the Fed and all last thing central banks, or the politi- would be the endurance of an economy central banks of the world for this not cians who need a backup for all their fine-tuned by a manipulative central to happen. Revealing to the public the spending mischief, want is for the gov- bank and a compulsively interven- fraud associated with all paper money ernment to lose its power for creating tionist Congress. would cause loss of credibility of all money out of thin air, which serves po- But the full payment for our last eco- central banks. This knowledge would litical and privileged financial inter- nomic sins may now be required. Let us jeopardize the central bank’s ability to ests. H216 CONGRESSIONAL RECORD — HOUSE February 7, 2001 When the people are forced to think Because the pain and suffering that This will only happen if the dollar is only about rising prices, government- comes from monetary debasement is knocked off its pedestal. No one knows doctored price indexes can dampen con- never evenly distributed, certain seg- if that is going to happen sooner or cerns for inflation. Blame then can be ments of society actually benefit. later. But when it does, our constitu- laid at the doorstep of corporate profit- In the 1990s, Wall Streeters thrived tional system of government will be eers, price gougers, labor unions, oil while some low-income, non-welfare, challenged to the core. sheiks, or greedy doctors. But it is non-homeowners suffered with rising Ultimately, the solution will require never placed at the feet of the highly costs for fuel, rent, repairs, and med- a recommitment to the principles of paid athletes or entertainers. It would ical care. Generally, one should expect liberty, including a belief in sound be economically incorrect to do so, but the middle class to suffer and to lit- money, when money once again will be it is political correctness that does not erally be wiped out in severe inflation. something of value rather than pieces allow some groups to be vilified. When this happens, as it did in many of paper or mere blips from a Federal Much else related to artificially low countries throughout the 20th century, Reserve computer. In spite of the grand interest rates goes unnoticed. An over- social and political conflicts become technological revolution, we are still priced stock market, overcapacity in paramount when finger-pointing be- having trouble with a few simple, basic certain industries, excesses in real es- comes commonplace by those who suf- tasks: counting votes, keeping the tate markets, artificially high bond fer, looking for scapegoats. Almost al- lights on, or even understanding the prices, general mal-investments, exces- ways, the hostility is inaccurately di- sinister nature of paper money. sive debt and speculation all result rected. Mr. Speaker, I will continue this spe- from the generous and artificial credit There is a greater threat from the cial order tomorrow. monetary mischief than just the eco- the Federal Reserve pumps into the fi- f nancial system. These distortions are nomic harm it does. The threat to lib- GENERAL LEAVE every bit, if not more, harmful than erty resulting when economic strife rising prices. As the economy soars hits and finger-pointing increases Mr. PAUL. Mr. Speaker, I ask unani- should concern us most. We should from the stimulus effect of low interest mous consent that all Members may never be complacent about monetary rates, growth and distortions com- have 5 legislative days within which to policy. revise and extend their remarks and in- pound themselves. In a slump, the re- We must reassess the responsibility verse is true and the pain and suffering clude extraneous material on the sub- Congress has in maintaining a sound ject of the special order by the gen- is magnified as the adjustment back to monetary system. In the 19th century, tleman from Indiana (Mr. PENCE) reality occurs. the constitutionality of a central bank The extra credit in the 1990s has today. was questioned and challenged. Not found its way especially into the hous- The SPEAKER pro tempore (Mr. until 1913 were the advocates of a ing market like never before. Govern- SIMPSON). Is there objection to the re- strong federalist system able to foist a ment Sponsored Enterprises, in par- quest of the gentleman from Texas? powerful central bank on us, while de- There was no objection. ticular Freddie Mac and Fannie Mae, stroying the gold standard. This bank- have gobbled up huge sums to finance a ing system, which now serves as the fi- f booming housing market. GSE securi- nancial arm of Congress, has chosen to LEAVE OF ABSENCE ties enjoy implicit government guaran- pursue massive welfare spending and a By unanimous consent, leave of ab- tees that have allowed for a generous foreign policy that has caused us to be discount on most housing loans. They sence was granted to: at war for much of the 20th century. Mr. CALVERT (at the request of Mr. have also been the vehicles used by Without the central bank creating consumers to refinance and borrow ARMEY) for today on account of official money out of thin air, our welfare business. against their home equity to use these state and worldwide imperialism would f funds for other purposes, such as in- have been impossible to finance. At- vestment in the stock market. This has tempts at economic fine-tuning by SPECIAL ORDERS GRANTED further undermined savings by using monetary authorities would have been By unanimous consent, permission to the equity that builds with price infla- impossible without a powerful central address the House, following the legis- tion that homeowners enjoy when bank. Propping up the stock market as lative program and any special orders money is debased. it falters would be impossible as well. heretofore entered, was granted to: In addition, the Federal Reserve now But the day will come when we will (The following Members (at the re- buys and holds GSE securities as col- have no choice but to question the cur- quest of Mr. ABERCROMBIE) to revise lateral in their monetary operations. rent system. Yes, the Fed does help to and extend their remarks and include These securities are then literally used finance the welfare state. Yes, the Fed extraneous material:) as collateral for printing Federal Re- does come to the rescue when funds are Mr. BROWN of Ohio, for 5 minutes, serve notes. This is a dangerous prece- needed to fight wars and for us to pay today. dent. the cost of maintaining our empire. Mr. DAVIS of Illinois, for 5 minutes, If monetary inflation merely raised Yes, the Fed is able to stimulate the today. prices and all prices and labor costs economy and help create what appears Mr. UNDERWOOD, for 5 minutes, today. moved up at the same rate and it did to be good times. But it is all built on Mrs. MINK of Hawaii, for 5 minutes, not cause disequilibrium in the mar- an illusion. Wealth cannot come from a today. ket, it would be of little consequence. printing press. Empires crumble and a Mrs. JONES of Ohio, for 5 minutes, But inflation is far more than rising price is eventually paid for arrogance today. prices. Creating money out of thin air toward others. And booms inevitably Mr. GREEN of Texas, for 5 minutes, is morally equivalent to counter- turn into busts. today. feiting. It is fraud and theft, because it Talk of a new era these past 5 years Ms. JACKSON-LEE of Texas, for 5 min- steals purchasing power from the sav- has had many believing, including utes, today. ers and those on fixed incomes. That in Greenspan, that this time it really Mrs. CLAYTON, for 5 minutes, today. itself should compel all nations to pro- would be different. And it may indeed The following Members (at the re- hibit it, as did the authors of our Con- be different this time. The correction quest of Mr. PENCE) to revise and ex- stitution. could be an especially big one, since tend their remarks and include extra- Inflation is socially disruptive in the Fed-driven distortion of the past 10 neous material: that the management of fiat money, as years, plus the lingering distortion of Mr. SMITH of Michigan, for 5 minutes, all today’s currencies are, causes great the past decades, have been massive. today. hardships. Unemployment is a direct The correction could be made big f consequence of the constantly recur- enough to challenge all of our institu- ring recessions. Persistent rising costs tions, the entire welfare state, Social ADJOURNMENT impoverish many as the standard of Security, foreign intervention, and our Mr. PAUL. Mr. Speaker, I move that living of unfortunate groups erodes. national defense. the House do now adjourn.