Authored by Ron Paul via DailyReckoning.com,

According to data collected by the research firm Statista, 29 percent of Americans cannot afford to take a vacation this year. A vacation is not the only thing Americans are struggling to afford. The failure of wages to keep up with price inflation is why household debt hit a record level of 18.4 trillion dollars this year, with the average household owing more than 100,000 dollars.

The Federal Reserve is responsible for the decline in American living standards and the rise in income inequality. The turning point in the people’s economic fortunes was on August 15, 1971.

That is when then-President Richard Nixon closed the “gold window,” severing the last link between the dollar and gold. This left America with a purely fiat currency and no restraint on the Federal Reserve’s ability to create money.

When the Federal Reserve pumps money into the economy the new money is not equally distributed. It first goes to wealthy and well-connected individuals. These individuals benefit from having increased purchasing power before the new money has caused price increases.

The Fed also contributes to economic instability and inequality by creating bubbles that distort the signals sent by the market. This causes over-investment in some sectors. When bubbles burst, workers employed in certain sectors lose their jobs, while those at top often suffer at most a modest setback.

The government bails out the “too big to fail” corporations, but the government never considers workers and homeowners too big to fail.

The Federal Reserve facilitates the growth of the welfare-warfare state by purchasing Treasury bonds, thus monetizing federal debt.

The majority of government spending is on programs benefiting powerful special interests. This includes in large part the military-industrial complex that gobbles up more money from the government each year.

The Federal Reserve’s continued devaluation of the dollar to finance an empire abroad and a welfare state at home is the driving force behind the erosion of the people’s living standards. As the dollar loses purchasing power, demand for government assistance increases, leading to more government spending, more debt monetization, and a further decline in living standards.

The fact that almost a third of Americans cannot afford a vacation illustrates how fiat money harms average Americans. Continued growth of federal debt and Fed-created inflation will lead to a major economic crisis.

This will either induce or be caused by a rejection of the dollar’s world reserve currency status. The result will be a rise of demagogic authoritarians of both left and right and increased political violence, leading to an increase in government repression.

Those of us who know the truth must continue to explain that the solution to our problems is a vacation from the welfare-warfare state and the fiat money system that facilitates government growth at the expense of the people’s standards of living and liberty.

Limited government, free markets, and peaceful relations and free trade with as many nations as possible are components of the path to lasting peace and prosperity.