The True Gold Standard (Second Edition)
The world dollar system causes a truly vicious cycle in deficit spending. It gives the Congress a huge line of credit. History demonstrates that Congress will spend every penny it can get its hands on. The extravagance of federal spending has grown to a point almost impossible for the mind to imagine.
The sum total of federal spending for the nation’s first 120 some years was $15 billion dollars. The Congress spends every day or two more than it spent in well over a century
Adjusting for inflation would increase the real sum by some twenty-fold. Even that means spending at a rate well over 100X faster than that averaged in the America of Washington, Jefferson, or Lincoln.
How is this possible? The federal government has only three substantial sources of money: taxation; borrowing; and the printing press. The federal government has been fought to a standstill, for now, on its ability to tax harder. But under the world dollar standard world central banks re-lend, to Congress, our trade deficit dollars. And if borrowing fails… there is printing: QEs as far as the eye can see.
The world dollar system
Causes a persistent trade deficit, hollowing out our industrial base.
Destabilizes the value of the dollar, fomenting euphorias and panics.