Rand Paul: “fiat money, that is, money created out of thin air, causes numerous problems internationally as well as domestically. It…”

“fiat money, that is, money created out of thin air, causes numerous problems internationally as well as domestically. It causes domestic price inflation, economic downturns, unemployment, excessive debt, corporate, personal and government, malinvestment and overcapacity, all very serious and poorly understood by many of our officials. But fluctuating values in various paper currencies cause all kinds of disruptions in international trade and finance as well. Trade surpluses and deficits when sound money conditions exist are of little concern, since they prompt changes in policy or price adjustments in a natural or smooth manner. When currencies are non-convertible into something of real value, they can be arbitrarily increased at will. Trade deficits, and especially current account deficits, are of much greater significance. When trade imbalances are not corrected, sudden devaluations, higher interest rates and domestic inflation are forced on the country that has most abused its monetary power. This was seen in 1997 in the Asian crisis, and precarious economic conditions continue in that region. Japan has yet to recover from its monetary inflation of the seventies and eighties and has now suffered with a lethargic economy for over a decade. Even after this length of time, there is no serious thought for currency reform in Japan or any other Asian country.”