Eight years after President Nixon removed the connection of the US dollar from gold, Congressman Ron Paul delivered three speeches about the value of the US dollar. The first speech was given on July 20, 1979 admonishing the US government to stop the destruction of the value of the dollar. Two months after, on September 28, the second speech was delivered and it is about the connection of the changing prices between gold and the dollar. The last speech was given one month after, on October 17 and it concerns about the relationship between the dollar and inflation.
Stop Destroying the Dollar
Simply reading the first speech, one wonders why the Congressman was talking about the US government to stop destroying the dollar. If only an ordinary person is making this charge, people can easily dismiss it that the person talking is out of his mind. But it was an American Republican Congressman himself who upholds personal liberty, the US constitution, and the free market issuing this warning. The public is missing something important if we fail to grasp why the Republican Congressman was insisting that the US government is indeed destroying its own currency by increasing its supply. We are missing to see the implications of this act of dollar destruction on our personal and economic freedom.
The Gold Panic
The second speech about the relationship between the values of dollar and gold makes me think of the present trend among investing advisors counseling their clients to protect their wealth by buying gold. Good for those who have extra cash to follow such advice.
After reading the second speech, I realized that the gold panic has already started 33 years ago. I have no Internet access upon writing this article and therefore have no way to know the exact price of gold in 1979. The only data I have is that in 1995 the price of gold per ounce was $380.90 and the last time I checked its price two months ago was $1,615.00 per ounce. In other words, in 1979, the price of gold was far below $380.90 per ounce and yet there was already an indication of panic that time. The question is: if there was gold panic in 1979 when the price of gold was still very low, how people now ought to respond when the price of gold has already reached $1,615.00 per ounce? I am thinking that perhaps the conventional answer works within the span of 33 years that the gold panic that Ron Paul mentioned was somehow cooled down. Or maybe we are in the latter stage of that panic. Or perhaps, there are still other reasons. I do not know.
All I know is that the increasing price of gold is an indication of the declining value of the dollar resulting from its continuous creation out of thin air. Just a week ago, I read George Soros and central banks storing gold. One writer indicates that such action is a preparation for something big that is about to happen. For Ron Paul, such big shift is a sure sign that increasing number of people all over the world no longer trusts governments and fiat money. The only way to calm the panic is to stop printing fiat money and restore the official connection of the dollar to the gold once again.
Strong Dollar is a Deception
One month after that second speech, the Republican Congressman delivered another speech concerning the value of US dollar. In this speech, Dr. Paul exposed the prevailing deception reported in mainstream media that the dollar was getting stronger. It was a deception for the whole story was not told to the public and the basis measuring the strength of the dollar was misleading.
For Ron Paul, compared to other currencies, the dollar could appear strong simply because other countries were also inflating their money supply. Instead of using other currencies, Dr. Paul suggested two reliable tests to assess the strength of the dollar: in terms of its purchasing power and in relation to the price of gold.
Which of the two is telling the truth, the report of the mainstream media or the speech of Dr. Paul? Obviously, the two are not telling the same thing. Believing one would mean disregarding the other. Unfortunately, only few are able to see beyond the appearances of things due to absence of education in Austrian way of thinking.