Politicians and the Dollar Collapse

Here is a great video of Ron Paul talking to the house about the consequences of passing a bill to bailout the US carmakers. He mentions something that seems rare for a politician to say because politicians always act with short sightedness. They need votes so they don’t do what is best for the country; they do what will please people short term.

In terms of the economy, in general they treat symptoms. It’s like taking pain killers to not feel the pain instead of treating the cause of the pain. Here Paul criticizes the government handling of the crisis, the federal bank, and the general way the government throws more printed money at problems.

Ever since Nixon took the US of the Gold standard (Dollars were previously backed by stored Gold. Now it is only backed by the honor of US Government.), the government prints more money to solve problems and devaluates the currency. (Hurting US savers and rewarding debtors.)

For many years the US has imported more than it has exported (simply put), especially to countries like China. Therefore the rest of the world has many US dollars and “I owe you’s” and we have a trade deficit with them.

The government already approved 700 billion for finance companies to ‘save the economy’ (Adding more fuel to the fire of long term pain for short term gain.) and now they want to bailout the carmakers. The carmakers were failing regardless of the economy.

If you are another country and you own dollars or US government bonds (I owe you’s), how do you feel if the country who owes you is devaluating its currency (that you own) to solve economic problems?

This has been going on for years. That’s why the dollar was sliding big time the past few years. The economic crises saved it temporarily because people are afraid to invest in anything right now and put their wealth in dollars.

Eventually there will be nothing to save the dollar. People and nations will get fed up owning a currency that is consistently being devalued by a country that does nothing more that print more money and get into more debt. Eventually they will sell all their dollars causing a collapse and that is exactly what Paul is referring to in this video.