The End of the Dollar Hegemony (Ron Paul, 2006)
Ron Paul declares the end of the dollar's dominance in 2006.
He goes into some history and describes countries that conquered others to obtain gold, and used that to finance their armies and conquer more. He says these countries suffered from moral decline, and ended up failing. He contrasts this countries that used gold merely as a form of money for commerce.
Besides, conquering nations not only brought home gold; they brought home slaves as well... This system of government worked well for a while, but the moral decline of the people led to an unwillingness to produce for themselves. There was a limit to the number of countries that could be sacked for their wealth, and this always brought empires to an end. When gold no longer could be obtained, their military might crumbled.
He draws an analogy between countries that conquered for gold to finance their armies, and modern day America's use of paper money creation to finance the military and welfare. He claims paper money creation is leading to moral decline in America.
[The paper money] system destroys the character of the counterfeiting nation's people just as was the case when gold was the currency, and it was obtained by conquering other nations. This destroys the incentive to save and produce while encouraging debt and runaway welfare.
He argues the dollar system is circular, in that newly created money is used to finance the US military, and the US military in turn is used to support the dollar system. He speculates that Saddam Hussein's decision to switch from euros to dollars for their oil was a contributing factor to the second gulf war.
He goes into his narrative of the history of the dollar, starting with the creation of the Federal Reserve in 1913 through today. Some major events he calls out are:
- The 1944 Bretton Woods system replacing the British Pound with the US Dollar as the reserve currency
- Subsequent printing of dollars unbacked by gold
- Demands from European powers to get their gold back at $35/oz redemption rate
- Nixon's decision to abandon the gold standard by closing the gold window
- Subsequent agreement with OPEC to price oil in dollars
At the time of the speech (Feb 2006), gold was valued at $575/oz. Today it is valued at $1713/oz. The S&P500 has risen from $1274 to $3942 in the same time period.