This is part of a longer speech that can be obtained by contacting F.R.E.E. Foundation. This bubble has been developing for a long time but has gotten much larger in the last couple of years. Understanding this issue is critical to the economic security of all Americans that we in Congress strive to protect .
Credit expansion is the root cause of all financial bubbles.
Recession must always result, with the degree and duration determined by government fiscal policy and central bank monetary policy. Financial dislocations caused by central banks in various countries will differ one from another due to political perceptions, military considerations, and reserve currency status . The U.S.'s ability to inflate has been dramatically enhanced by other countries' willingness to absorb our inflated currency, our dollar being the reserve currency of the world . Our economic and military power give us additional license to inflate our currency, thus delaying the inevitable correction inherent in a paper monetary system . But this not only prolongs the inevitable, it allows for a larger bubble to develop, further jeopardizing our future economy.