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« The National Debt: A Short History Of Presidential Lies | Main | Obama's Inauguration - A Bad Lip Reading »
Tuesday
Jan292013

Ron Paul: 'Krugman's Magic Money Tree Will Bankrupt The U.S.'

It's all politics aboard the U.S.S. Ponzi.

'Bernanke's fiat money is NOT wealth.'

---

Transcript

The Coming Debt Limit Drama: Government Wins, We Lose

Last week President Obama bluntly warned Congress that he will not negotiate when it comes to raising the statutory debt limit.  If Republicans attempt to use a debt ceiling vote to win concessions on spending from the White House, Mr. Obama threatens simply to raise the limit by executive order or other unilateral action. 

This is business as usual in Washington.  Democrats literally do not believe we have a deficit and debt problem, and reliably propose greater borrowing and spending.  Republicans talk a good game when it comes to government debt, but have no credibility to argue against deficits or abuses of executive power.  Brinksmanship ensues, and ugly compromises are reached at the 11th hour.  We all lose as the endless borrowing and money printing further erode our dollar and our economy.

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.  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.  Consider Paul Krugman, America’s most reliable Keynesian economist and a beloved figure among mainstream journalists.   He recently wrote an article about the debt limit issue, in which he discussed a controversial proposal to have the federal government simply create a platinum coin with a face value of $1 trillion:

“Here’s how it would work: The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt.”

To be fair, Mr. Krugman acknowledges that minting such a coin would be an accounting “trick,” but he is dead serious about this option for the Obama administration.  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. 

Krugman’s suggestion is just another variant of the endless stimulus proposals, which purport to create greater aggregate demand in the economy by creating more money.  Whether this is done by the Fed or the Treasury is of little importance, as long as government is creating demand-side “growth,” however artificial.

But in just a few short sentences Professor Hans-Hermann Hoppe eviscerates the Krugmans of the world by pointing out the obvious: 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 US 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?

The truth is obvious to everyone.  Fiat currency is not wealth, and the creation of more fiat dollars does not mean that more rice, steel, soybeans, Ipads, or Honda Accords suddenly come into existence.  The creation of new fiat currency simply strengthens a fantasy balance sheet, either by adding to cash reserves or servicing debt.  But this balance sheet wealth is an illusion, just as the notion we can continue to raise the debt limit and borrow money forever is an illusion

 

 

More detail here:

CNBC: Weisenthal Pushes $1 Trillion Dollar Coin

 

Paul joins the party:

Krugman Joins The $1 Trillion Coin IDIOT Brigade

 

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Reader Comments (5)

Diane Sawyer weighs stepping down from ABC News

http://www.nydailynews.com/entertainment/gossip/confidential/diane-sawyer-eyes-big-signoff-article-1.1249915#ixzz2JOBNK7BJ

Nothing would make me happier. Least intelligent anchor on television. Hands down. I got stories.
Jan 29, 2013 at 1:09 PM | Registered CommenterDailyBail
DB,
I think intelligence is not required for MSM anchors and Journalists. Presenting corporate and government agendas as the best possible future for the american people doesn't require intelligence, it takes script reading and acting skills. Most of the MSM people are aware these agendas are for the best possible future of the elite rulers, not the american people and it takes Oscar winning performances to keep the truth buried and people believing the bullshit the truth is buried in.
Jan 29, 2013 at 3:08 PM | Unregistered CommenterSagebrush
Since the banks will not relinquish their monopoly control and the governments in thrall to the money power will never tell the truth to us and break through what are we to do? We are seeing that even the growing public awakening is not met with dialog but with repression. What are WE to do? If we do nothing but complain to one another and analyse the fraud yet allow ourselves to be meekly herded into "global governance" with everyone the subjects of these bankers, then we deserve slavery. What are WE to DO?

Thought experiement: A number of grass roots cells all over the planet come together around a unifying idea to declare into existence a Planetary Trust which manages the mineral resources of the solar system on behalf of the world's people. These assets form the backing of a new planetary currencey in the form of shares in this wealth.

That is to say: The planetary bank is OWNED by the world's people and works FOR them. Cut the banksters of at the knees, figuratively speaking.
Jan 29, 2013 at 3:31 PM | Unregistered CommenterTrevor Streeton
Well said, Sage.
Jan 30, 2013 at 1:24 PM | Registered CommenterDailyBail
I'd like to hear a Diane Sawyer story. Wasn't she some type of beauty queen or is that Gretchen Karlson on Fox.
Jan 30, 2013 at 1:30 PM | Unregistered CommenterSKINFLINT

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