Mr. Chairman, I am extremely concerned over current US policy toward Yemen, which I believe will backfire and leave the United States less safe and much poorer. Increasing US involvement in Yemen may be sold as a fight against terrorism, but in fact it is more about expanding US government control and influence over this strategically-placed nation at the gateway to Asia.

The current administration, according to today’s testimony of Assistant Secretary of State Jeffrey Feltman, has dramatically increased foreign aid to Yemen, from $17 million in FY 2008 to $40 million in FY 2009, to $67 million for FY 2010, to, according to the president’s recent budget sent to Congress, $106 million for FY 2011. That represents an incredible six-fold increase in US aid to Yemen over just four years, at a time when the US economy continues to falter.

When I look at the US assistance plan for Yemen I see that it is primarily focused on nation-building. That is the failed idea that if the United States sends enough money to a foreign government, with which that government purchases US-manufactured weapons and hires US-based consultants and non-governmental organizations, that country will achieve a strong economy and political stability and in gratitude will become eternally friendly to the US and US interests. I have yet to see a single successful example of this strategy.

According to Assistant Secretary Feltman’s statement, “Priorities for U.S. assistance include political and fiscal reforms and meaningful attention to legitimate internal grievances; better governance through decentralization, reduced corruption and civil service reform; human rights protections; jobs-related training; economic diversification to generate employment and enhance livelihoods, and strengthened natural resource management.” How can we believe that the US government can achieve abroad what we know it cannot effectively achieve at home? We are going to spend millions of dollars to help create jobs in Yemen as we continue to shed jobs in the United States?

Yemen is a country mired in civil conflict. The Shi’ites in the north, who make up a significant percentage of the country’s total population and a majority in their region, have been fighting against what they see as the discriminatory policies of the Sunni-based government in the capitol, Sana’a, for years. Yemenis in the south, who up until 1990 were a separate country, likewise oppose the central government and threaten to escalate this opposition. Added into this mix are elements of what are called al-Qaeda in the Arabian Peninsula (AQAP), some of whom are left over from the US-supported fight against the Soviet occupation of Afghanistan in the 1980s, and others have been radicalized by their exposure to Wahhabi extremism in US-allied Saudi Arabia. Still others in AQAP are veterans of the insurgency against US occupation of Iraq. We cannot forget either those Yemenis who were held for years by the United States without charges at Guantanamo Bay. How many of those were innocent of terrorist actions or intent but became radicalized under such conditions?

Saudi Arabia’s concern over the Shi’ite unrest in north Yemen has led to unsubstantiated claims of Iranian involvement in attempt to draw the US into a regional problem that has nothing to do with the United States. Saudi Arabia has struggled with unrest among its own Shi’ite population and is determined to prevent any spill-over. There are some here in the US who repeat false claims of Iranian involvement in the hope of expanding the US military presence in the area. Others in the United States irresponsibly call for a US pre-emptive war in Yemen. We should be clear on this: expanded US involvement in Yemen plays into the hands of bin Laden and his organization as has been made clear on many occasions. Luring the United States into a conflict in Yemen by falsely advertising it part of a war on terror will certainly radicalize the Yemeni population against the United States. It will weaken our over-extended military and it will further destroy our economy.

Similarly, the US-backed central government in Sana’a stands to gain by claiming its internal problems are part of a global crisis that requires US intervention. The central Yemeni government has much to gain by making its battles and its problems our battles and our problems. But that gain will come at the expense of US soldiers, US security, and the American economy. I wonder how long it will be before the US establishes a permanent base on the strategic territory of Yemen?

I hope, as we begin to debate the foreign affairs budget for next year, that we may yet change course from that of the last administration, where the failed policies of interventionism, militarism, and nation-building have left the United States in a diminished position in the world.

As we start the new year 2010, the establishment politicians, economists and Wall Street are trying to convince themselves that we have turned the corner and economic growth has once again begun.  The predictions that conditions are getting back to normal come from those who never saw the crisis coming and don’t have the vaguest notion what caused it.  Some of them concede that it could be a jobless recovery.  That will establish a new definition for a recovery.
 Official unemployment is at 10% but even the government knows that if everyone is counted, including those individuals that are too discouraged to even be looking for work, the unemployment rate is 17%.  Free-market economists claim the actual unemployment rate is closer to 22%.
 There’s reason to believe that the correction is just barely started and has a long way to run.  If the financial bubble came from excess credit created by the Federal Reserve, doubling the money supply can hardly be a solution.  It wouldn’t make much sense for a doctor taking care of a very sick patient from severe infection to deliberately give the patient another infection.  Yet that’s what the PhD doctors are doing to our very sick economy.  It can’t work.  It will make the economy much sicker. If our leaders don’t wake up soon, the economy will be brought to its knees.  Great danger lies ahead.
 In foreign policy, it’s always crucial that the motives of those who would do us harm are understood.  Denial of the truth and accepting more politically palatable excuses will guarantee that threats to our safety will continue as we pursue a seriously flawed involvement overseas.
 It’s the same in economic policy.  If there’s denial or ignorance of the real cause of financial bubbles and the inevitable corrections that must follow, the economy cannot be reenergized.
 We should have learned the lesson from the Depression of the 1930s that it was a predictable result from the Federal Reserves orchestrated excesses of the 1920s.  Instead, the new-born Keynesian economists who took charge made certain that the correction would not be a one or two year affair as were the previous corrections in our history.  The aggressive intervention by Hoover and Roosevelt, the Republicans and the Democrats, turned a short recession into the Great Depression, which lasted until the end of World War II.
 The real tragedy was that the interpretation of the 1930s institutionalized bad economic theories.  Unfortunately, and erroneously, the Depression was blamed on the gold standard, free markets and a lack of regulations.  Though monetary policy was analyzed, its importance was 100% misinterpreted.  The low interest rates and excess credit of the 1920s, driven by Federal Reserve policy, was not considered a factor in producing the stock market bubble and the mal-investment.
 Instead, the 1930s analysts and even later analysis by Milton Freidman and the monetarists, along with academic “scholars” like Bernanke, came to an opposite conclusion: the Fed was at fault but only because it was too tight, arguing that massive monetary inflation was the only answer to the slumping economy.
 And now we are witnessing a grand experiment by the very person who for years claimed special knowledge regarding the Depression. Chairman Bernanke is in the midst of trying to solve the problem of massive monetary inflation and excessively low interest rates instituted by his predecessor, Alan Greenspan, by implementing even more inflation at historic rates.  The sad part is the answer to his very risky experiment with the wealth of our country and the health of our economy will take years to analyze.  The conclusions will be just as flawed as they were in the aftermath of the Great Depression by an intellectual and political community that had totally rejected commodity money and the principle of free market with the current understanding in Washington.
 One hope, though, is that free-market thinking and Austrian economic theories will have greater influence in the next decade or two, since their influence is now on a dramatic upswing.  But there are a lot of hurdles to overcome.
 In the 1930s, in an effort to find the true cause of the crisis, Congress ordered an official investigation.  It became known as the “Pecora Investigation” named after Ferdinand Pecora, the aggressive chief council of the hearings.  It received a lot of public attention and brought about many major changes but, tragically, every conclusion made and new policies implemented caused the depression to worsen and legitimized bad economic theories that continue to haunt us to this day.
 The Federal Reserve was not blamed except for not printing enough money fast enough.  Artificially low interest rates and mal-investment, the main source of the grossly distorted economy and bubble of the 1920s were exonerated.  Not enough regulations were blamed, thus the Glass-Steagall Act and the Securities Act of 1933 were passed and deepened the depression.  Separating commercial and investment banking and the newly created SEC were to have solved all future problems—as long as the Fed was free from any restraint in its money creation operation to serve big-government spenders and members of the banking cartel.
 Since the flaws in the monetary and economic system were not corrected but made worse after the Depression, it was to be expected that periodic booms and busts would persist.  The longer these cycles could be papered over with new money and credit, the greater would be the distortions and debt that would one day have to undergo a major correction.
 That correction is now in its early stages.  Since the dollar was the reserve currency of the world and totally fiat since 1971, without any linkage to gold, the financial bubble became worldwide.  This bubble that burst in 2008 was the largest in history.  During the formation of the bubble, the U.S. as the issuer of the world currency received undeserved benefits.  We essentially became the counterfeiter of the world and no one called us on it.  Even today, the trust in the dollar that persists has buffeted the pain of the correction for us.  This unique setup was a prime cause for our balance of payment deficits and the huge foreign debt we owe—the largest in the history of the world.  The discord in the world financial system is telling us that it’s time for us to pay for our profligate spending and massive foreign indebtedness.  We have lived, as a nation, far beyond our means and the message is, for the foreseeable future, that we will be forced to live beneath our means as this debt is paid.
  The inflation optimists are excited about current signs of economic growth and have even announced the end of the recession.  It is conceivable that a reprieve can be achieved and the penalty that our economy must endure delayed.  A reprieve must not be confused with a pardon; one is a temporary delay, the other an exemption.  The payback for our excesses is certain to come.
  Massively increasing debt and monetary inflation can slow the crash and change some government statistics encouraging the optimists.  But real job growth and return of prosperity will remain elusive.  The odds of us once again becoming an exporter of manufactured goods, like steel, cars, and textiles, are remote.
  Ironically, a reprieve may well restore some confidence and motivate some spending and investment.  But instead of restoring long-term growth, it may well act perversely by precipitating price inflation and higher interest rates.  Since today’s interest rates are artificially set, much of our investing is unproductively misdirected.
  Current enthusiasm in the stock market is once again a reflection of the message that low interest rates send.  Thus too, the government’s stimulus package has helped to sustain the bond bubble, which in time must be deflated in order to get back to sound economic growth.  All of this activity poses a threat to the dollar.
 Governments are very powerful, and when in partnership with the monetary authorities that can inflate the currency at will, big government thrives.  Welfare demands and senseless wars can be financed for long period of time through inflation, as long as trust in the currency lasts.  Trust, though ultimately controlled by facts, can be misleading, since currency values can gain benefit from a country that has a strong military and wealth and a reasonably healthy economy.  Eventually, markets and reality overwhelm, and illusions about a currency’s worth become a reality.
  Today, reality is setting in and the first of three major events has begun.  The worldwide financial system, built on a foundation of paper, has received the shock waves of an impending collapse.
 The wild speculation and the derivatives market, the stock market bubble, the insurmountable debt—public and private—and the massive mal-investments have been shattered.
 The only solution so far offered worldwide, but led by the United States has been to “print money” faster, keep interest rates low at practically zero percent, and remove all stops for controlling deficits.  These are the very policies that caused the disequilibrium, and doing more of the same, but only faster, can hardly help our economy.  The addiction to easy credit and deficit defies a wise political solution.  Politicians are incapable of delivering the message of frugality, common sense, and sound money.
 We can expect that the course we are on to continue and accelerate, since the first event, the collapse of the financial system, is still in its early stage.
 The housing crisis is far from over; the commercial property crisis has not yet gotten much attention, and the financial obligations of the government are growing exponentially.  And none of this forces the slightest pause in the expanding of welfare growth.  The number of regulations, which are indeed a tax, are exploding though the market was already suffering from regulatory excesses. There’s a consensus in Washington that “wise” regulations can compensate for all the mistakes made by the Federal Reserve, the Executive Branch, and Congress.  This fallacy has been around a long time and will be difficult to overcome.
 The pessimism of the middle class continues to get worse despite the prognostication of Wall Street and the Administration.  Most Americans know that the standard of living and real wages have not gone up for the past 10 years.  If you’re not a shrewd stock trader and instead invested in stocks 10 years ago and held on, in real terms you would have lost 20% of your savings.  The middle class is poorer also because house prices have crashed and many have lost their homes.  On top of this, all we hear about is the trillions of dollars of debt and entitlement obligations that have been racked up for future taxpayers to pay.  When it is revealed that the insider friends of the Fed and Congress get billions of dollars in bailout at the expense of the middle class, it’s no wonder the people are taking to the streets and directing their hostilities toward both Republicans and Democrats in Washington.  Many would agree it is well-earned anger and properly directed.
 This anger and frustration will certainly grow as the consequences of the collapse of the financial system become more severe.  The concerted effort to prevent the correction the market demands, guarantees a prolonged agonizing crisis.  Every effort to reverse the tide will depend on spending, higher deficits, increased taxes and money creation.   This effort is now providing another grand bubble: the dollar/bond bubble.
 The next event will be a dollar crisis.  A full-blown dollar crisis will be worse than our current financial crisis  The extent of a dollar crisis depends on whether or not the Washington politicians wake up and change their ways—a dubious hope.
 More likely, the insanity will continue until some not yet known event will undermine the confidence of the dollar worldwide.  Signs of less desire by foreigners to hold our dollars are already present.  I’m certain our Treasury and Federal Reserve are pulling out all stops to prevent a massive run on the dollar.  At present the “orderly” retreat from the dollar is working.  But it won’t last.
 China is quite active in investing in natural resources around the world, including Iran.  While we live in the dark ages and believe only our military presence and military threats can protect our access to oil, China is actually spending some of their savings investing in their future access to energy and other precious metals and minerals.
 But the orderly retreat from the dollar won’t last forever.  Since 1973, shortly after the breakdown of the Bretton Woods Agreement, the dollar has lost 32% of its value against a Federal Reserve basket of currencies. But that doesn’t tell the real story, since that is a measurement against all other currencies, and they are fiat currencies as well.  This gave the dollar an artificial benefit from its position of power in great wealth and military prowess.  The dollar in relationship to gold, however, is down 97% since 1971, and 82% as measured by the CPI.  The dollar, mismanaged by the Fed, has not been a benefit to the savers who sought to responsibly take care of themselves.  They’ve been cheated by a rotten system and are just beginning to understand exactly how the Federal Reserve has been responsible for the swindle.
 It is impossible to predict the time when confidence will be lost, but it can come quickly.  Resorting to buying other paper currencies will not be of much help.  When the dollar crashes, most likely the purchasing power of all currencies—since all countries hold dollars as a reserve—will go down as well.
 This means that dollars and other currencies will go into buying consumer items, precious metals and other physical properties.  Consumer prices will soar, as well as interest rates.  The central bank will lose control; and the more they inflate, the worse the confidence becomes.  The interest rates will respond to these efforts by rising sharply.
 If the Fed tries to reverse the run on the dollar, interest rates will also soar, and the pain on the American citizens will be of such proportion that political chaos will result.  Either scenario leads to political and social chaos—the third event, and the most dangerous.
 With no ability of the federal government to fund its commitments, international or domestic, major changes will occur in our system.  The social unrest will elicit cries for government to exert unusual force to head off a complete breakdown of law and order.  The ultimate trap will be set for a system of government claiming to protect a free society.  If more power and police authority are not given to the federal government, it will be argued that only anarchy will result.  If more government policing power is given, it will mean a lethal threat to civil liberties.  Already we have permitted the notion that a single person, the Attorney General or President, can decide who is an “enemy combatant”, thus denying that individual the right to habeus corpus, permitting indefinite detentions without charges made.  This attitude toward civil liberties has changed significantly since the fear built around 9/11.
 Yes, I know declaring one an “enemy combatant” is reserved for the radical Muslims engaged in terrorism against the United States.  To be reassured by this reasoning is quite dangerous and naïve.  Logic should not lead us to equate suspects with terrorists, and include American citizens, and yet this has already been set by precedent.  Under difficult circumstances, our political leaders will not be hesitant to use these powers to maintain order.  Tragically, the people may even demand it.
 We are rapidly moving toward a dangerous time in our history.  Society as we know it is vulnerable to political and social chaos.
 This impending crisis comes as a consequence of our flawed foreign and domestic economic policies, a silly notion about money, ignorance about Central Banking, ignoring the onerous power and mischief of our out-of-control intelligence agencies, our unsustainable welfare state, and a willingness to sacrifice privacy and civil liberties in an attempt to achieve safety and security from an inept government.  Dangerous times indeed!
 What can be done about it?  Must we wait for the inevitable and expect to restore our liberties in a street fight against the overwhelming power of the state?  Not a good option!
 The only way that we can prevent blood from running in the streets is to offer a better idea of the proper role of government in a society that desires first and foremost -liberty.
 And that is impossible without a firm commitment by our thought leaders to the ideas of freedom, the source of all creative energy and prosperity. An all-powerful state is the threat to that ideal.
 The prevailing attitude of the people-as it once was in early America-must be that of liberty and self reliance, rather than the nanny state and dependency relying on government force to mold all private choices.
 If this is understood, a smooth-although not painless-transition to a free society is achievable.  Ignoring this option will be very destructive to everything that is dear to the hearts of most Americans.
 What is it that we must do?  We must immediately:
• Balance the budget by reducing spending
• Change our foreign policy to that of non-intervention
• A full audit and more supervision of the Federal Reserve leading to abolishing the Federal Reserve
• Legalize competition to the Federal Reserve with competing currencies
• Regain respect for civil liberties and privacy while reigning in the CIA
• Wean ourselves off the dependence of wealth transfers by government
• Abolish crony capitalism—no subsidies, no bailouts, no regulatory or tax privileges to protect the powerful elite especially the military industrial complex
• Eliminate the income tax, inheritance tax and taxes on savings and dividends.
None of this can happen without the restoration of Congress to its dominant position of the three Branches of Government as was originally intended by the Constitution.  The Executive and Judicial must be reined in, and Congress must assert its prerogatives over all legislation curtailing all unconstitutional agendae through budgetary controls.
 
Signs abound that angry Americans are now more ready than ever before for a change in direction that is indeed real.  If this program were improvised-even suddenly and dramatically-the adjustment, though significant and to a degree somewhat painful, would be much shorter and of minor consequence compared to the chaos and poverty that will result if we refuse to change our gluttonous appetite for a free lunch.

I rise in reluctant opposition to this resolution. Certainly I am moved by the horrific destruction in Haiti and would without hesitation express condolences to those who have suffered and continue to suffer. As a medical doctor, I have through my career worked to alleviate the pain and suffering of others. Unfortunately, however, this resolution does not simply express our condolences, but rather it commits the US government “to begin the reconstruction of Haiti” and affirms that “the recovery and long-term needs of Haiti will require a sustained commitment by the United States….” I do not believe that a resolution expressing our deep regret and sorrow over this tragedy should be used to commit the United States to a “long-term” occupation of Haiti during which time the US government will provide for the reconstruction of that country.
I am concerned over the possibility of an open-ended US military occupation of Haiti and this legislation does nothing to alleviate my concerns. On the contrary, when this resolution refers to the need for a long term US plan for Haiti, I see a return to the failed attempts by the Clinton and Bush Administrations to establish Haiti as an American protectorate. Already we are seeing many argue that this kind of humanitarian mission is a perfect fit for the US military. I do not agree.
Certainly I would support and encourage the efforts of the American people to help the people of Haiti at this tragic time. I believe that the American people are very generous on their own and fear that a US government commitment to reconstruct Haiti may actually discourage private contributions. Mr. Speaker, already we see private US citizens and corporations raising millions of dollars for relief and reconstruction of Haiti. I do not believe the US government should get in the way of these laudable efforts. I do express my condolences but I unfortunately must urge my colleagues to vote against this resolution committing the United States government to rebuild Haiti.