Former Texas Republican Congressman and three-time presidential candidate Ron Paul published an op-ed piece in the EurAsia Review on Monday, in which he talks about the federal debt and the latest conception of minting a $1 trillion platinum coin to help tackle the enormous debt levels.
In the next several weeks, the Republican leadership and President Barack Obama will debate on raising the debt limit. The GOP has discussed about attempting to gain various concessions for an increase in the debt ceiling, but the president has said he would use executive action to enlargen the limit.
According to Dr. Paul, “This is business as usual in Washington.” Paul writes that the Democrats seem rather indifferent to the issues of debt and deficits and prefer to borrow and spend, while the Republicans have no credibility when it comes to debt, deficits and the utilization of executive power.
“Keep in mind that the federal government relentlessly spends about $100 billion more each month than it collects in taxes. This means roughly 40% of every dollar Washington spends is borrowed, to be ‘paid back’ only in highly devalued, newly created money,” stated the bestselling author. “Ultimately this can only lead to the destruction of the US dollar, as history plainly teaches. But in the face of this reality Obama just shrugs, turning to demagoguery and talk of little old ladies’ Social Security checks. Like Obama, far too many Americans view federal debt as a nonissue.”
Paul continues to then cite renowned Keynesian Economist Paul Krugman, who proposed minting the $1 trillion platinum coin and initiate an “accounting trick” to bypass the Congress in relation to the debt limit.
Economic Collapse News reported earlier this month that the Treasury Department has confirmed that it will not be issuing such a coin. It noted that even if it did mint it, the Federal Reserve would not accept it.
“This then is the state of modern economics discourse in America, where a respected New York Times economist literally can propose creating ‘money for nothing’ and have the idea taken seriously,” added Paul.
To disembowel “the Krugmans of the world,” Paul used Capitalist Philosopher Professor Hans-Hermann Hoppe’s various questions that ultimately disprove the notion that the creation of money will lead to economic growth and wealth.
“If governments or central banks really can create wealth simply by creating money, why does poverty exist anywhere on earth? Why haven’t successive rounds of quantitative easing by the U.S. Fed solved our economic recession? And if Fed money creation really works, and doesn’t create inflation, why haven’t Americans gotten richer as the money supply has grown?”
Like most adherers to Austrian Economics, Paul concludes that fiat money is not wealth and the generating of new money will not lead to the sudden existence of new commodities, goods and services. Instead, inflation just “strengthens a fantasy balance sheet” and the “balance sheet wealth is just an illusion.
“Just as the notion we can continue to raise the debt limit and borrow money forever is an illusion.”
It was reported Tuesday that House Republicans are planning to hold a vote Wednesday on legislation the Congressional leadership unveiled. The proposal includes withholding the pay of lawmakers in either house if their chamber fails to pass a budget by Apr. 15.
All of a sudden, though, there are Members of Congress who are complaining that it’s unconstitutional because of the 27th Amendment: “No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.”
Speaking to a huge crowd on the National Mall on Monday, President Obama told the people in his inaugural address:
“We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.”
The national debt stands at $16.46 trillion, while the federal government is close to $50 billion over the $16.394 trillion debt limit.