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Ron Paul Appeals To America: "Default Now, Or Suffer A More Expensive Crisis Later"
By Ron Paul, op-ed first posted in Bloomberg
Default Now, Or Suffer A More Expensive Crisis Later
Debate over the debt ceiling has
reached a fever pitch in recent weeks, with each side trying to
outdo the other in a game of political chicken. If you
believe some of the things that are being written, the world
will come to an end if the U.S. defaults on even the tiniest
portion of its debt.
In strict terms, the default being discussed will occur if
the U.S. fails to meet its debt obligations, through failure to
pay either interest or principal due a bondholder. Proponents of
raising the debt ceiling claim that a default on Aug. 2 is
unprecedented and will result in calamity (never mind that this
is simply an arbitrary date, easily changed, marking a
congressional recess). My expectations of such a scenario are
more sanguine.
The U.S. government defaulted at least three times on its
obligations during the 20th century.
-- In 1934, the government banned ownership of gold and
eliminated the right to exchange gold certificates for gold
coins. It then immediately revalued gold from $20.67 per troy
ounce to $35, thus devaluing the dollar holdings of all
Americans by 40 percent.
-- From 1934 to 1968, the federal government continued to
issue and redeem silver certificates, notes that circulated as
legal tender that could be redeemed for silver coins or silver
bars. In 1968, Congress unilaterally reneged on this obligation,
too.
-- From 1934 to 1971, foreign governments were permitted by
the U.S. government to exchange their dollars for gold through
the gold window. In 1971, President Richard Nixon severed this
final link between the dollar and gold by closing the gold
window, thus in effect defaulting once again on a debt
obligation of the U.S. government.
Unlimited Spending
No longer constrained by any sort of commodity backing, the
federal government was now free to engage in almost unlimited
fiscal profligacy, the only check on its spending being the
market’s appetite for Treasury debt. Despite the defaults in
1934, 1968 and 1971, world markets have been only too willing to
purchase Treasury debt and thereby fund the government’s deficit
spending. If these major defaults didn’t result in decreased
investor appetite for U.S. obligations, I see no reason why
defaulting on a small amount of debt this August would cause any
major changes.
The national debt now stands at just over $14 trillion,
while net total liabilities are estimated at over $200 trillion.
The government is insolvent, as there is no way that this
massive sum of liabilities can ever be paid off. Successive
Congresses and administrations have shown absolutely no
restraint when it comes to the budget process, and the idea that
either of the two parties is serious about getting our fiscal
house in order is laughable.
Boom and Bust
The Austrian School’s theory of the business cycle
describes how loose central bank monetary policy causes booms
and busts: It drives down interest rates below the market rate,
lowering the cost of borrowing; encourages malinvestment; and
causes economic miscalculation as resources are diverted from
the highest value use as reflected in true consumer preferences.
Loose monetary policy caused the dot-com bubble and the housing
bubble, and now is causing the government debt bubble.
For far too long, the Federal Reserve’s monetary
policy and quantitative easing have kept interest rates
artificially low, enabling the government to drastically
increase its spending by funding its profligacy through new debt
whose service costs were lower than they otherwise would have
been.
Neither Republicans nor Democrats sought to end this gravy
train, with one party prioritizing war spending and the other
prioritizing welfare spending, and with both supporting both
types of spending. But now, with the end of the second round of
quantitative easing, the federal funds rate at the zero bound,
and the debt limit maxed out, Congress finds itself in a real
quandary.
Hard Decisions
It isn’t too late to return to fiscal sanity. We could
start by canceling out the debt held by the Federal Reserve,
which would clear $1.6 trillion under the debt ceiling. Or we
could cut trillions of dollars in spending by bringing our
troops home from overseas, making gradual reforms to Social
Security and Medicare, and bringing the federal government back
within the limits envisioned by the Constitution. Yet no one is
willing to step up to the plate and make the hard decisions that
are necessary. Everyone wants to kick the can down the road and
believe that deficit spending can continue unabated.
Unless major changes are made today, the U.S. will default
on its debt sooner or later, and it is certainly preferable that
it be sooner rather than later.
If the government defaults on its debt now, the
consequences undoubtedly will be painful in the short term. The
loss of its AAA rating will raise the cost of issuing new debt,
but this is not altogether a bad thing. Higher borrowing costs
will ensure that the government cannot continue the same old
spending policies. Budgets will have to be brought into balance
(as the cost of servicing debt will be so expensive as to
preclude future debt financing of government operations), so
hopefully, in the long term, the government will return to sound
financial footing.
Raising the Ceiling
The alternative to defaulting now is to keep increasing the
debt ceiling, keep spending like a drunken sailor, and hope that
the default comes after we die. A future default won’t take the
form of a missed payment, but rather will come through
hyperinflation. The already incestuous relationship between the
Federal Reserve and the Treasury will grow even closer as the
Fed begins to purchase debt directly from the Treasury and
monetizes debt on a scale that makes QE2 look like a drop in the
bucket. Imagine the societal breakdown of Weimar Germany, but in
a country five times as large. That is what we face if we do not
come to terms with our debt problem immediately.
Default will be painful, but it is all but inevitable for a
country as heavily indebted as the U.S. Just as pumping money
into the system to combat a recession only ensures an
unsustainable economic boom and a future recession worse than
the first, so too does continuously raising the debt ceiling
only forestall the day of reckoning and ensure that, when it
comes, it will be cataclysmic.
We have a choice: default now and take our medicine, or put
it off as long as possible, when the effects will be much worse.
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Wrong. Checks won't bounce they just won't buy anything.
Too true. I don't think Zimbabwe 'defaulted' on their debt (as everyone is so concerned about now). They will print up a $100 quadrillion note to pay off the debt any time you want. Not enough? No problem, just tell them how much you want and they will print a 1 googol note if wanted.
Their stock market also did amazingly well a few years ago. Look at the index, up 12,000% in a year.
http://mises.org/daily/2532
I'll bet there are hundreds of millions of Americans who wish their stock portfolios could give them a 12,000% annual return. Dow 36,000 would be a distant memory.
If they keep extending the debt ceiling, they will get their wish before too long.
or they will just tax more of your social security payments
taxes and inflation (just another form of tax) are politicians' get out of jail free card.
or they can change the terms: you don't get social security payments until the new retirement age set at 100.
If one has enough income, one can pay their debts.
The US has been losing an average of 50,000 jobs per month to China since they joined the WTO (right after 911)
Poverty is not the road to prosperity.
Raise the debt ceiling or implement austerity. Both solutions will land the little guy in the same boat: Broke and fooked. If poverty made everyone rich, Haiti would be at the top of the heap.
More Americans are putting necessities on their credit cards. They're doing it because there isn't money coming in from anywhere else.
Behind this debt problem is a much greater income crisis.
He had me until he said this, "Despite the defaults in 1934, 1968 and 1971, world markets have been only too willing to purchase Treasury debt and thereby fund the government’s deficit spending.". This shows he does not understand the monetary system in America. Do you think before the govt spends they go ask China to buy some treasuries. Treasury bonds only serve to set the interest rate, THAT IS ALL. Ron(and a lot of others) does not understand that we are no longer on a gold standard. Treasury bonds purchases are not even necessary. The govt spends by crediting accounts. It's just numbers in spreadsheets. Either he is lying to you or he doesn't understand. Either way it is sad.
dootyfree, what do you mean "Treasury bonds only serve to set the interest rate, THAT IS ALL" ? Treasury notes and bonds are I owe you. When government overspent, it needs to borrow money public or privately. If government spends only by crediting accounts, where do the credit line comes from ?
You lost me there.
When China buys bonds, those dollars are not spent. China just has a savings account(treasury bonds) at the fed. The dollars they give us just sit in a checking account at the fed. The govt doesn't borrow money to spend, the money is just created. The govt never has or not have dollars. Think of it as points on a scoreboard. The scorekeeper never "has" points, he just credits points to each side. Just like the govt just credits accounts, they never "have" dollars.
Just digits on a screen. It's all one big con game. The moment people figure out that those digits are just that, we are cooked geese. When this happens I believe it will be literally overnight. Yikes!
Look it up if you want. Unlike this website, instead of fearmongering, I try to present the truth.
For you to make the absurd statement that "Ron Paul doesn't know that we're not on the gold standard," you are ass backwards, brother.
That we're not on the gold standard is not only something Ron Paul knows and speaks about, it's the core reason he has identified, quite properly, that we've been prolific borrowers as a nation, since fiat printing is unchecked by any constraint of any kind, whereas a gold standard forces us to suffer inflation immediately and in honest terms if we wish to borrow more money for the gravy train, bloated structure and welfare state our nation is and depends on - that $42 an ounce gold, by the Federal Reserves books, would be closer to $5,000 an ounce as of NOW, if we were still on the gold standard (that we went off of, entirely and for purposes of legalities, in 1971 - though we actually went off of it under FDR).
You really have no clue as to what you're talking about. I don't mean that you're stupid, and I'm not trying to insult you, but I am accusing you of ignorance if you really believe what you wrote.
Go do some research on not only Ron Paul's positions, but those economists of the Austrian School.
It's only by being subject to immediate, adverse consequences that a debt junkie can ever get motivated enough to go through treatment, withdrawal and stay sober and solvent.
That's what a gold standard (you can substitute anything that is finite, 'storable,' and of value for gold, if you wish, it doesn't change the dynamic) does; it instills discipline.
Finally, we'd get rid of the Federal Reserve, which factually is a non-governmental and privately held entity, that loans money to us at interest, since Congress and Woodrow Wilson gave the Fed a license to loanshark, even giving away the sovereign right to print or own damn money! We fought the British for our independence and right to print our own damn money and not have to pay tribute to the crown!
All that conjecture is nice, but you give no actual facts of the workings of the monetary system. It's funny, your comment actually has nothing to do with what I wrote.... Please focus my friend and explain to me the workings of the monetary system.
You chartalist, you!!!
Correct, Ron Paul is mistaken. A currency backed by gold is ok. Gold as currency is stupid.
Ron Paul also misses the point that wealth at the moment is a derivative. The pyramid is much higher than doing some accounting adjustments. We have no historical comparison except some minor tulip bulb examples. To unwind, it is best to unpack carefully over time. Like defusing a mine.
And the most important reason, it is doable. We can solve the problems, but not in ten days.
Then government will just lie that they have gold in them vaults but prevent anyone who is not a member of the Fed to actually validate it. Then it is all about "trust" again.
dollar is not all paper. it is backed by 2 things: oil and US military. But lately, oil producers like iran are moving away from the dollar and military can't be redeployed.
It's more akin to trying to defuse a mount everest sized stack of dynamite with a 1 ft long fuse that's already lit, by slowly dismantling it over time.
The 'over time' part is the 'kick the can' scenario. They always promise to cut the debt 'next year' or over the next 10years.
How can 'cutting' $4 trillion from the DEFICIT over 10 years make a diffence when the budget is running an ANNUAL deficit of $1.6 trillion? In 10 years that means we ADD $12 trillion to the national debt.
Something is going to give, the pyramid will collapse one way or another, I think we can all see that, we're only arguing over the details of how.
he's missing the point
this sucker has already stalled, but it will take a while to make contact. why rush it?
right now it's about getting what you can while there's still time - a million doesn't buy what it used to
What’s really gonna happen…..
The current kick-the-can policy will continue. As governments around the world “need” more money, rights and freedoms will disappear in their endless pursuit of taxes. As a result of this pursuit, commerce will go completely electronic. Uncle Sam will know all and see all, and certainly “collect” all, at least in the U.S. At the personal level, you will need a number to buy or sell. U.S. commerce will be monitored, and thr gov’t “share” acquired instantly. When the reckless spending continues to get worse, and the “fixes” still fail, there is only one thing to do. Go bigger. Implement the same controls over the global economy. When that fails, cuz we know it will, then comes the ultimate reset. Here it is. One global currency. The global economy being completely electronic, the global currency’s time has come. The reset will be exactly the opposite of what everyone thinks. No doom and gloom, but a time of great rejoicing! How and why? When the new global currency goes into use, it will start as follows: 1. Everyone owed money will start with that money credited to them. 2. Everyone who owes money will start with no debt, as the owed are already paid. Who loses? Everyone is happy! The economy takes off across the globe! Final kicker…..it will only last 3.5 years before the debts pile up again, and this time, there is no way out.
I agree with you. This is probably the plan, although there will be some catch to it, such as handing over the final sovereignty of nations. So ya, let's let them reset it.
But make sure after they reset we fudge their plans for world domination....somehow.
I think this is called a jubilee in ancient times?
So, maybe we should all max out our credit and buy loads of PM with it...then
wait for the jubilee....and ride off into the sunset. This is a positive note for the day.
I for one will love a good old fashioned Jubilee, it would allow me to execute some other actions designed harden and improve our situation at home. Not necessarily get rich (That is beside the point...) I could slap solar on the home for what I am paying now in student loans.
If they do a reset on every citizen, instantly this Nation will become very strong and I would imagine not without quite a bit of .... difficult times as the ones who are creditors are dragged away from the tear gas and police lines.
I am not such a hard old dried up ass not to sit for a moment with a dream still in this life. It's nice to dream once in a while. But not too often.
Ah, your mention of 3.5 years tells me you read this somwhere, possibly in quaint 17th century English.
I am of the opinion that the 3.5 years starting in 2005 and ending in 2008 were the good years. This last 3.5 years (until 2012) were the "you better get your shit together" years. I think you're right about the electronic commerce and number needed to buy and sell, but the debt forgiveness will, once the rejoicing is over, be met with some form of natural calamity which will nip the boom in the bud. What sort of calamity? I am hoping for comets, personally- big, electrically charged comets with nasty plasma horns and trailing lots of hydrocarbons. That will be a real show with which to get things started.
Whatever it is you can bet it will be CIA funded!
Tuco
The CIA funds comets?
That would be incredibly cool, and I think I would go work for them if that's the case, evil or no.
The globalists will have a real problem globalizing anything in a world that wants to fractionalize as we are seeing in the Eurozone. The Eurozone was a decades long wet dream of the globists. Take that George Soros you demon pig!
Tuco
No doubt fraud by bankers such as Countrywide is reason for problem to large extent. It's white collar crime and they have all gotten away with it but you are still left with liability. Tragic outcome for nation , but individual middle class taxpayer that did not benefit from scheme should not have to pay. Instead tax the wealthy that did benefit including some clawback of profits. However fair, not likely to happen for reasons we all know. Nevertheless default now is better.
geno
Default will hurt the innocent far more than the guilty. They also have the hedges.
consider moving to Canada, although when US defaults, Canadian economy will surely take a hit.
That starts sounding almost biblical.
The more I learn about Ron Paul, the more I like him.
1 (2 if you count his son) out of 535.
We're f*cked.
No! I'm perfectly happy saddling my great great great grandkids with an unpayable debt so we can have unlimited warfare/welfare state today.
97% of America to Ron Paul: "huh? Does this have to do with the NFL lockout?"
Wait. Can someone explain this part to me:
Isn't the Fed a privately held bank? Would not the Fed then become insolvent and either 1) lean on it's stakeholders for money, or 2) go titsup? Seems like either way the Fed would be blown. And our money supply with it.
No? Yes? What's up with that?
Wow, the treasurey might actually have to take over the issuing of currency again; you know just like its spelled out in that Constitution document thingy. That would mean we would save 6% on every dollar issued! We can't have that now can we!?!
So you are saying the Fed would be blown, just as I thought.
That makes a $1.6T in debt write-offs all the more attractive to someone a few years (and one more election cycle) down the road.
We can let the Fed go tits up. Congress could reauthorize the printing of United States Notes. It would still be fiat funny money, but at least the owners of the Federal Reserve would no longer skim a percentage of each one printed.
http://en.wikipedia.org/wiki/United_States_Note
the Treasury would debase that dollar twice as fast as the Fed. At least the Fed announces their POMO and puts some pretense of 'open market purchases'.
The treasury would just flat out print currency, no conversion from pink paper to green paper required.
The upside is the collapse would come a lot sooner.
Now as soon as we can force the Treasury to only issue coins in gold or silver as per the Consitution then we're talking a different story.
Again, to all the naysayers... only the US treasury is restricted to issuing gold/silver coinage, everyone else can use whatever the FK they want, if we legalise competing currencies.
Agreed Cougar. B of A, Citibank, Wells Fargo/Wachovia are amongst the owners of the privately held Federal Reserve. I think the best we could wish for is a moratorium on the interest on the debt that we owe the Federal Reserve for which they have zero cost basis. Let's hold our breath waiting.
Tuco
It's all about bad policy. And who sets policy? The Keynesians.
Anybody fed up with Keynesianism yet?
They aren't all bad. How often do you get to laugh at and make fun of retarded people and get away with it?
Next time the Bernank starts sucking us you off tell him to leave the helmet on!
Keynesian economics is just like sanctions against third world countries. They just need time to work.
Tuco
http://www.youtube.com/watch?v=KsRe_tEehNM&feature=related
America doesn't hear you Ron. La la la la la with their fingers in their ears. They are only concerned about if they can marry their gay lover or whether or not Plaxico Burress is on injured reserve this year. Oh and what those Zany kids on Jersey Shore are doing next season. Let's not forget about that.
Hey. You just reminded me that I have a lot to catch up on. Why am I reading this stupid article when I could be catching up on the real fantasy world.
Who's the mystery junker? You know I'm telling the truth. Don't fight it.
Good point, but what about Plaxico?! The Rams sure could use him. What was his crime anyway, carrying a weapon?! Heaven forbid!! Ha, ha, ha!
Ron Paul is a good man, I have met him and some of my friends fighting hopeless causes in DC have worked with him. I enjoy watching his fight, making Ben sweat. I am not sure if it is possible for him to get the seat, I think something would happen to him before then to make him cooperative with TPTB or disappear. What I am most curious about is why he is allowed to question the FED and other laws that have been created by perverting the US Constitution since 1776.
For the record, I like his idea, cut the debt, give the bank and the government back to the citizens. I wish we could cut all of the government, without starving or impoverishing the citizens. I don't depend on the Government for food, energy, water, medical, or anything else I can think of.
Good Luck Dr. Paul
You depend on the government for border integrity. And as a defense against foreign invasion (both militarily and economically). And as a way to level certain playing fields in business and civil society.
Honestly, I don't know if the government these days is handling even one of those functions correctly.
It would be nice if it did.
Exactly correct Cougar. The government's main job is to protect the rights of its citizens from enemies both foreign and domestic. Problem is that our government "is" the domestic enemy. Good post Cougar!
Tuco Benedicto Pacifico Juan Maria Ramirez
Inflation is default. So whats the problem...Law?
What in the hell does this have to do with fighting racism, terrorism, global warming, copyright infringement, creationism, sexism, the war on Christmas. This country just needs to get it's priorities straightened out. Remember folks government is a business with flags a national anthem, and lots of guns - but a business nonetheless. Due in large part to the afore mentioned failed product lines our business/government is bankrupt. So be it - let's remember, learn, and move forward by creating some more real wealth. We the people have a lot of work to do.
Now that was different. Well reasoned, clear on point, no racism, no invective, no name-calling and it made -- struggling here, what was it again -- oh yes I recall now; it made sense.
I must be on the wrong web site.
Yes, and your comments are always so reasonable and well thought out. If you wish to improve this website perhaps you can bow out gracefully. Just a thought my cougar.
Tuco
Bow out? That's not a bad idea actually. Thought about it more than once recently.
It's important I feel to go with one's instincts on these things.
So back to the shadows, from whence I once emerged. Though now perhaps, somewhat wiser.
c@
+1 Country about to see some real change
From an agent of said change
The revolution is in fact occurring online. The minds are being won. Real change is coming if we just keep on keeping on.
TD, a hero among men
I may not be the world's biggest Ron Paul fan, but he's dead right on this. A great catastrophe is coming, and I don't see the political will to deal with it yet. At least Ron Paul sticks without compromising on his principles. If he were president, we would know where he stands! I would vote for that! PRINCIPLES!
Let's do it.
Bring on the inevitable Default now.
The Constitution says gold and silver coin is only legal tender in payments of debt.
The debt is a bill for FRN's.
We don't owe jack till somebody produces a bill for legal tender.
Problem solved with a reset to zero.
Now to work on the spending part....
Is there ANYONE other than RP that has the balls (or V) to tackle the problem? No.
EVERYONE else is just kicking it down the road so someone else can deal with it.
This whole $3T over 10 years is not going to do ANYTHING. $300 BILLION PER YEAR
AVERAGE, CURRENT DEFICIT $1.6T!!!! What's Greece's debt/GDP? What's US now?
In three years with these "cuts"?
The longer it's put off, the more brutal the change will be.
So let's be grown-up about the problem and start fixing it now. Elect Ron Paul...
tell someone/everyone you know about him....help spread the word
Don't forget Donald.
I would want him to take on the Oval Office should he be so inclined.
governments never default like you and I. Instead they just restructure debts and put a moratorium on certain payments.
US government owns you
US government owned by global oligarchs
global oligarchs own you
there is no where to go, but your fantasy "reality show" land.
For gods sake AH, grow a pair. If you believe that you are part of the problem.
Spot on. Excellent article. Nobody else in politics speaks quite so candidly and accurately.
electronpaul- 'Is there ANYONE other than RP that has the balls (or V) to tackle the problem?'
answer: Obviously not.
i love ron paul and all, but why can't her hire someone to make sure he doesn't say stupid things about legalizing heroin and letting the states' regulate it.
he says a lot of great stuff but once in a while ssays absurd shit that really throws people off supporting him. it's too bad.
why doesn't he hire a p.r. person for libertarians who want to be taken seriously?
It's probably what makes me like him, he's true to himself even if it means he's marginalized by most of the conservative right. He's not trying to be what you and I want him to be, he's being himself. and is why he's been so unelectable..
I believe he espouses letting the states enforce the laws that the electorate in that state decide which would allow the fed gov't to discontinue the 'War on Drugs' and the massive expenses associated with it.
Good and important point.
"Austerity now or later, your choice."
Pffft! I know.. as IF we have a choice.
Austerity now or later?
:D There fixed it for you.
How about some auserity from the owners of the privately held Federal Reserve that got us into this mess. How about a moratorium on interest payments until we work things out?! Afterall, their cost basis is 0.
Tuco
Yes, it is called following the ninth and tenth amendments to the Bill of Rights.
Tuco
Ron Paul speaks clearly for me. I consider myself conservative but I also believe what consenting adults do in private is none of the government's business. Legalize all drugs! There should only be laws to protect minors from drugs. COMMON SENSE.
This is where Republicans disagree. Also The Federal Reserve Bank. That's how you can tell a true Libertarian from a Republican. Don't trust those "Teabagger" Republicans. They are not Teabaggers at all. They just stole the title from Ron Paul and now its soiled. Here's the litmus test. Will this candidate end the Federal Reserve Bank? All Dems and Republicans will say NO. Ron Paul will say YES!!!!
It's about ending the FEDERAL war on drugs, which has cost billions if not trillions and put sick people into jail, when these addicts need help from a doctor not to be treated as criminals.
http://www.ronpaul.com/2009-03-30/ron-paul-end-the-war-on-drugs/
newsflash: heroin's already legalized. it's called Oxycontin.
It's not absurd. It's consistent. He's always consistent. Be it gay marriage, drug laws, even issuing money. Those are powers each state has to regulate. Abortion is the one thing you can say he's not consistent with, in that he does want a federal ban, but only progressives complain about murdering civilian children but are ok with killing a fetus because it 'doesn't feel pain'. Yes it's the mother's body, but in the same way a father driving a minivan with his kids in it has a responsibility to not drive drunk, a pregnant woman has a responsibility to take care of the life inside her (exceptions for rape or where the mother's life is endangered are ok)
.
16 trillion in secret loans. etc. "money" circus/charade....flea circus, ongoing.
michael hudson interview on d.n.
Pushing Crisis: GOP Cries Wolf on Debt Ceiling in Order to Impose Radical Pro-Rich Agenda
http://www.democracynow.org/2011/7/22/pushing_crisis_gop_cries_wolf_on
.
max breaking it down.
Eurozone debt crisis-News Analysis
Posted on July 22, 2011 by maxkeiser
http://maxkeiser.com/2011/07/22/eurozone-debt-crisis-news-analysis/
.
Rejecting Lucrative Offer, Cenk Uygur Leaves MSNBC After Being Told to "Act Like an Insider"
http://www.democracynow.org/2011/7/22/rejecting_lucrative_offer_cenk_uyg...
.
PsyWar - Wake UP!
http://www.youtube.com/watch?v=NXg70qJQ6O0
.
comment: this just in ... we are mortal and will not live forever,
that is opportunity knocks. who will answer? monday, tuesday.
7/26/2011. hammer sale.? where is the powder? just a feeling
.
*************
22 July 2011
Gold Daily and Silver Weekly Charts - Options Expiry on the Comex - Porcus Interruptus
http://jessescrossroadscafe.blogspot.com/2011/07/gold-daily-and-silver-w...
*************
<<The alternative to defaulting now is to keep increasing the debt ceiling, keep spending like a drunken sailor, and hope that the default comes after we die. A future default won’t take the form of a missed payment, but rather will come through hyperinflation. The already incestuous relationship between the Federal Reserve and the Treasury will grow even closer as the Fed begins to purchase debt directly from the Treasury and monetizes debt on a scale that makes QE2 look like a drop in the bucket. Imagine the societal breakdown of Weimar Germany, but in a country five times as large. That is what we face if we do not come to terms with our debt problem immediately.>>
http://www.bloomberg.com/news/2011-07-22/default-now-or-suffer-a-more-ex...
Thanks, Dr. Paul.
Harry Browne R.I.P.
Ron Paul sure worries about alot of stuff. Kick the can. WTF.
spending must be cut and taxes on the top 1% earners increased. corporations must pay taxes.
trillions have been spent and it is now time to pay the piper. bond holders will have to take a haircut. the loss of moral hazard has created this catastrophe.
the obscene wars and bases of foreign aggression must be terminated and abandoned. what an abomination.
Even if I agree with half of your post, I would love for you to explain why corporations "must pay" taxes? You think America having the highest corporate tax rate in the world has nothing to do with the jobs leaving? Why do you need double taxation? Just tax the end user/earner for the love of god. Corporate taxes are solely another mechanism for the government to stick their junk in places it doesn't belong so they can pick winners and losers. Everybody pretends that somehow by taxing corporations it is reducing their tax burden. It is not, it just causes misallocation of capital. If corporations have "extra" money from reduced taxes, they invest it or distribute to their shareholders, and eventually somebody will make money at the personal level and the tax will be paid. They sure as hell aren't going to sit on a pile of FRN's to be inflated away by BenSatan. It's all about shady backroom deals and loopholes for corporate donors. Corporations and their lobbyists are only "Evil" because of the way they make money not because they make money. Taxing corporations more will just increase the loopholes and create an even more unbalanced playing field that moves even more capital investment overseas.
spending must be cut and taxes on the top 1% earners increased. corporations must pay taxes.
trillions have been spent and it is now time to pay the piper. bond holders will have to take a haircut. the loss of moral hazard has created this catastrophe.
the obscene wars and bases of foreign aggression must be terminated and abandoned. what an abomination.
As much as I hate the way the system works and think that I would love to see it come crashing down, actually think about the consequences.
We need to make as smooth a transition as possible onto another money system but not give the patient a cardiac arrest. Immediate default might not be the best way.
Probably get junked and called a troll for this :)
Legalize competing currencies. Problem solved. All the RP haters can continue to use FRNs, we can transition to 'tradition' Everyone's happy
It is entirely possible that a few ideologues cause great damage to the American economic system. They will pay in the end but the damage will be done.
Ritholz has a good link to a Schiller article and the link is on my blog:
http://ghickeyblog.blogspot.com
shameless plug.
gh
Sounds like the USA Govt is one nasty bunch of mother fuckers.......
I thought the Gov. was "by the people,for the people".
The American people are not that nasty....are they...???
I have a "man crush" on Ron.
Hey Scratch and Sniff....you smelly cunt...
I got to junk # 50 your one post.....
It felt GOOD.....
You fucking dirtbag.
+50
Man I swear it drives me nuts, whenever I hear BS such as "there's not enough gold for a gold standard" or "silver and gold should be 1/16 or 1/17".
The key argument of RP is to legalize competing currencies. Gold and silver being the restriction on what the GOVERNMENT is required to use and issue as coinage. If they run out of gold, like they did in the 1970s then spending should stop.
For all those saying only the rich who have gold will profit, are using the 'not enough gold' argument. If competing currencies are legalized, I can negotiate with my employer to pay me in oz of gold per month. It can be krugerrands, canadian maples, American eagles, gold brittanias (I would not accept Chinese pandas) etc. How do the rich get richer by me being paid in gold? By legalizing other currencies I could ask to be paid in silver oz instead or plastic digits, or bitcoins, or hell, federal reserve notes if i wanted to. The choice should be on us. Money itself is a commodity (not saying it has to be backed by a commodity. Money itself is a commodity).
There should be no fixed, mandated conversion between gold and silver. Arbitrage will sort out relative value differences for us. Setting a fixed standard makes the overvalued coinage disappear.
Hmm. I'm not the only one who doesn't trust gold from China.
Dup
Maybe Bill O'reilly can understand THAT...
Defaulting on government debts does nothing to cure anything. This is money we owe, let us print and pay. We are paying very little for our printing press.
The USA will still owe the money if it defaults. The best buy in all likelihood is short US Treasuries, since they represent what we are going to default. Gold in the long run will not offset the price of necessities and in all likelihood will be outlawed, again.
Bush was very good for Gold. Pubs are good for Gold. But how often can a dumbass like him elected. Granted there is lot of material in Texas but eventually enough people will, unlike zerohedge, catch on that fighting windmills didn't work.
This is not a battle between Keynes and the Austrians, it between those who can add and those that cannot. Those that believe there is an real world versus fantasy world gifted to us where services and community are not needed, nor need to be paid for. That the invisible hand and providence will magically correct our self inflicted ills.
Ron Paul stars in "Dances with Wolves, Part Deux: Bucksters Last Stand". Let it default, let them downgrade. The pain train is coming sooner or later, might as well take the ride so the kids won't have to. RP is not alone in his ideas when he's not in DC, once there he's basically a voice in the Bilderness. Even if you don't like him on all the issues, a guy who stands up and basically calls the Bernankster a fraud to his face,he needs to be cloned so at least some common sense is present in the District of Scumbia. As I'm basically out of business by choice, I'm too paralyzed by all this crap I see rolling out of DC, and not willing to risk anything in the markets, I simply prepare and provide for friends, family, and neighbors. Regardless of what happens, those are the people I'm going to depend on, and who will depend on me, when tomorrow comes.
The MSM must not consider Ron Paul a viable threat at this
time, they haven't started trashing him yet. If he starts to
gain some momentum, there'll be articles in the NYT questioning his
age (75) and portraying him as a loveble old kook who can't be
taken seriously, someone we wouldn't want running the
country now would we.
Near the end of his political life, Ron Paul breaks the key establishment rule: Never Say The Truth. Thanks Mr. Paul.
Look at this, to get an idea, about the ponzi, he is talking about:
http://www.wtfnoway.com/
delete this msg
re:"A future default won’t take the form of a missed payment, but rather will come through hyperinflation. "
I think we're already there. The real inflation rate average is around 10% a year if you use the old way they used to calculate infaltion. In the past 3 years, inflation has gone up 35%. Has anyone seen the price of food lately? How 'bout them higher gas prices?? $100 bucks doesn't buy you a lot of food anymore...