Mr. PAUL. Global leaders are scurrying around to put together, as quickly as possible, a new plan to solve the international financial crisis.

The world economies have been built on generous credit expansion with each country inflating their currencies at different rates. Additionally, each country has had different political, tax, and regulatory policies leading to various degrees of trust and stability. Economies that have “enjoyed” inflationary booms, by their very nature, must undergo a market correction. The market demands deflation of all excesses, while the politicians and special interests agitate for continued credit inflation. Under these circumstances, financial assets may deflate in price but monetary inflation continues and the currency is further depreciated thus putting serious pressure on the dollar; as in the case of the United States.

Fluctuating fiat currencies, no matter how inefficient as compared to a world commodity monetary standard, function solely because exchange rates are allowed to fluctuate and currency movements across borders are freely permitted as capital seeks the most efficient market. This process provides an indication when host countries need to improve monetary and fiscal policy.

A gold standard solves capital flow problems automatically and avoids all currency speculation. Gold prevents excesses from developing to any dangerous level.

Decades ago, the gold standard was abandoned and now our global planners want to take another step to regulate all capital flows throughout the world thus removing the only good indicator left to warn of dangers ahead and the need for sound reform. The rapid transfer of capital around the world is the messenger and not the cause. Killing the messenger will only hide and increase distortions while prolonging the economic pain.

The proposal of the Group of 22 to regulate capital flows through a new “World Central Bank” prevents any effort to restore efficient market mechanisms and prevents any serious discussion for using gold as the money of choice.

All money managers in major countries decry currency controls by any individual country yet are now about to embark on a new world-wide approach to regulating all capital flows-a global economic plan to socialize all world credit. But, it won’t work because the plan is deeply and inherently flawed.

First, the plan demands additional appropriations to transfer wealth from the richer to the poorer nations through increased funding of the International Monetary Fund, World Bank, Development Bank, and direct foreign aid programs.

Second, it calls for more credit expansion by the richer nations, more loan guarantees, and export-import bank credits and, indirectly, by providing credit to the Exchange Stabilization Fund and possibly to the Bank International Settlements.

Third this plan calls for an international government agreement to strictly control capital flows and mandate debt forgiveness in contrast to allowing countries to default. Controlling swift movements of capital is impossible and any attempt only encourages world government through planning by a world fiat monetary system. Any temporary “benefit” can only be achieved through an authoritarian approach to managing the world economy, all done with the pretense of preserving financial stability at the expense of national sovereignty and personal liberty.

Let there be no doubt, the current chaos is being used to promote a new world fiat monetary system while giving political powers to its managers.

Instead, we should be talking about abandoning the paper money system we have lived with for 27 years. It has, after all, brought us the current world-wide financial mess.

Free markets and stable money should be our goal, not further institutionalizing of world economic planning and fiat money at the sacrifice of personal liberty. Indeed, we need a serious discussion of the current crisis but so far no one should be encouraged by the direction in which the Group of 22 is going. Our responsibility here in the Congress is to protect the dollar, not to sit idly by as it’s being deliberately devalued.

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