As Europe is bailed out to the tune of nearly $1 trillion dollars, Congressman Ron Paul warns that the constant monetization of debt, allied with taxpayer-funded bailouts, will inevitably lead to runaway inflation and the collapse of paper currencies.
Under the terms of the Federal Reserve’s credit swap deal with the EU – in addition to an additional IMF bailout of which U.S. taxpayers will be picking up 20 per cent ($57 billion dollars) of the tab, Paul pointed out that not just taxpayers but “anybody that buys anything” will be funding the European bailout because of the attendant inflationary consequences.
“The prices are going up already, producer prices are going up, the cost of living will go up so everyone in American will suffer and eventually the whole world will suffer because we cannot carry the whole world with our dollar,” Paul told Fox Business, adding that eventually people will lose confidence in the dollar.
The Congressman agreed with the host that the bailouts would lead to the crash of paper currencies, noting that last week’s stock market turmoil was accompanied by gold acting as a currency rather than just reacting to the value of the dollar.
“Gold has been money for 6,000 years and it will remain that way and it will rule the roost,” said Paul, adding that the dollar was weak in comparison with the strength of gold.
“All paper currencies are under attack and this cannot be sustained,” said the Congressman.
Paul then explained how the ECB has completely reversed its promise that it wouldn’t monetize debt and how Bernanke had also gone back on his word that U.S. dollars would be use for this purpose. “When I talked to Bernanke last time in the Committee he said they had no intention of bailing out Greece but they are, through the IMF as well as opening up these swap lines to all the central banks, so it is on the shoulders on the burden of the American taxpayer and our dollar so all we’re doing is perpetuating a very very bad system and this is not a solution at all,” he said.
Paul agreed with the host that the bailout was merely a stunt to buy time while failing to address the underlying problem of European socialism and the entitlement culture, which is fast running out of money with which to keep itself ticking over.