Ron Paul appeared on CNN's "American Morning" on Friday, pushing the same apocalyptic message he served up during the Republican primaries, with one difference. His prediction of doom makes a heck of a lot more sense now than it did then.
"This system that we've had since 1971 is nonviable," he said, "and it's coming to an end."
That's what this whole story is about, the end of a monetary system that we've had since 1971. And something has to give. You just can't create more money out of thin air and propping up everybody.
It's an immoral system. You're asking the poor people to bail out the rich. You're asking the innocent people to bail out the guilty. You're asking people to just totally defy the Constitution because there's no place in the Constitution that says that we can do these things.
And, besides, economically, it's a disaster. This is going to cause a great deal of harm. It's like a drug addict taking a strong fix, and he feels better for a day or two. But believe me, we're going to kill the patient. And the patient here is the dollar system and our entire world economy.
1971 was the year in which Richard Nixon abandoned the gold standard codified in the 1946 Bretton Woods agreement, thereby launching the modern era of freely floating national currencies. From Ron Paul's point of view, government economic policy ever since has been a futile attempt to avoid economic downturns by, in essence, pumping more "fiat" currency into the monetary system. The piper has come calling, says Paul, and current efforts to increase liquidity and bail out the banking system will only make things worse.
So if things do get even worse, was Ron Paul suggesting that he's ready for another run at the gold ring in 2012?
But right now there's a fight going on in this country. Our numbers are growing. We're not the majority, but our numbers are growing. And as this situation deteriorates, more people are going to say, "Hey, maybe it's right. Maybe limited government and freedom works. Maybe freedom is popular, and maybe freedom really works." And this idea that we have to depend on government for all these programs is an illusion.
Ron Paul isn't the only person thinking about the failure of the Bretton Woods system. There's been a bit of a buzz coming out of Europe this week by politicians calling for a Bretton Woods II -- a globally coordinated approach to regulating the 21st century global economy.
"Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline," European Central Bank President Jean-Claude Trichet said on Tuesday, after giving a speech at the Economic Club of New York. "It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline."
European leaders are calling for an international summit meeting, to be held perhaps as early as November. Bloomberg News reports that among the possibilities being considered are "more international supervision for cross-border banks, a global 'early warning' system for crises, a revamp of the International Monetary Fund, tougher regulations on hedge funds, new rules for credit rating companies, limits on executive pay and punishments for excessive risk-taking."
Or as U.K. Prime Minister Gordon Brown wrote in Friday's Washington Post:
This week, European leaders came together to propose the guiding principles that we believe should underpin this new Bretton Woods: transparency, sound banking, responsibility, integrity and global governance. We agreed that urgent decisions implementing these principles should be made to root out the irresponsible and often undisclosed lending at the heart of our problems. To do this, we need cross-border supervision of financial institutions; shared global standards for accounting and regulation; a more responsible approach to executive remuneration that rewards hard work, effort and enterprise but not irresponsible risk-taking; and the renewal of our international institutions to make them effective early-warning systems for the world economy.
I don't think "global governance" is exactly what Ron Paul has in mind. But my guess is that something along these lines is going to get hashed out later this year or next -- and whoever is elected president of the United States is going to play a very large role in determining the contours of the new global regulatory system.
And if doesn't work? Well then, Ron Paul, or someone like him, will probably get a chance to pursue a different approach.