,

The bombings in Kabul, Afghanistan on
Thursday that took the lives of over a dozen American soldiers,
and many others, dominated the news cycle and rightfully so.

It certainly is a result of two decades of a completely failed
foreign policy and a war that dragged on with no mission
statement for at least 10 years, probably more.

While many are focused on foreign affairs
these days, on the home front, our country is facing rising
prices in stores and at the pump, inflation is taking off, the
national debt is soaring to record levels, and a corona-crisis
continues to spin out of control.

My column this week focused on the price
shocks that happened in the Nixon era, which are rearing their
ugly head again, but could actually be worse. Let's hope that
trend doesn't continue.

In the end, the Federal Reserve is the
culprit behind many of our nation's problems which is why it's
important to Audit the Fed and see what they are really up to.

I believe an economic crisis is bubbling. The
good news is the crisis may mark the beginning of the end of the
fiat monetary system and the welfare-warfare state, along with
the dawn of a new era of free markets, sound money, and limited
government.

I hope you'll take a read below. And please
know I'm always grateful for all your support.


-Ron



_____________


From the Nixon Shock to Biden-flation

This month marks fifty years since President
Richard Nixon closed the "gold window" that had allowed foreign
governments to exchange U.S. dollars for gold. Nixon's action
severed the last link between the dollar and gold, transforming
the dollar into pure fiat currency.

Since the "Nixon shock" of 1971, the dollar's
value - and the average American's living standard - has
continuously declined, while income inequality and the size,
scope, and cost of government have risen.

Since the beginning of this year, price
inflation has increased much, and it could continue onward to
exceed the 1970s-era price spikes. Understandably, Republicans
are trying to blame President Joe Biden for the price increases.
However, a major cause of the current price inflation is the
unprecedented money creation the Federal Reserve has engaged in
since the 2008 market meltdown. This, though, does not mean Biden
and most U.S. politicians of both parties do not bear some
responsibility for rising prices. Their support for the Fed and
massive government spending contributes to the problem.

The main way the Fed pumps money into the
economy is by monthly purchases of 120 billion dollars of
Treasury and mortgage-backed securities. Even many Keynesian
economists agree that rising price inflation means the Fed should
stop pumping money into the economy. Yet, this year the Fed is
likely, at most, to only slightly reduce its purchases of
Treasury securities. It will almost certainly keep interest rates
at near-zero levels.

A reason the Fed will not stop or
significantly reduce its purchases of Treasuries and allow
interest rates to increase is that doing so would increase
federal debt payments to unsustainable levels. Even with interest
rates at historic lows, interest payments remain a significant
portion of federal spending, and recent indications are that the
U.S. government is not about to start being frugal. Consider,
for example, Congress' six trillion dollars "Covid relief and
economic stimulus" spending spree and the Senate passage of the
trillion dollars "traditional infrastructure" bill and a budget
"outline" of a 3.5 trillion dollars "human infrastructure" bill.


The "human infrastructure" bill represents an
expansion of government along the lines of the Great Society.
Among its initiatives are universal pre-kindergarten; two "free"
years of community college; increased government control of
health care via expansions of Obamacare, Medicare, and Medicaid;
and a raft of new government mandates and spending aimed at
reshaping the U.S. economy to fight "climate change."

The need to gain support of "moderate"
Democrats will likely mean the final "human infrastructure" bill
will costs less than 3.5 trillion dollars. However, no Democrat
is objecting to the bill's programs; the objectors just want
cheaper tolls on the road to serfdom. While progressives will
likely accept reduced spending levels in order to get their wish
list into law, they will then work to increase funding and expand
the programs. As the programs become more entrenched, even many
"conservatives" will support increasing their funding.

The expansion of government will increase
pressure on the Fed to keep the money spigots open. This will
lead to a major economic crisis. The good news is the crisis may
mark the beginning of the end of the fiat monetary system and the
welfare-warfare state, along with the dawn of a new era of free
markets, sound money, and limited government.

For Liberty,

Ron Paul
Chairman



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liberty, constitutional government, sound money, free markets,
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