Ron Paul: Krugman’s Trillion Dollar Coin is NOT Real Wealth

by Ron Paul

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.

  • http://www.youtube.com/profile?user=waterhead001 waterhead001

    First, no austerity, we are in a depression. Austerity will be genocidal. First, attack wall street, they are causing the bleeding, have a plan for recovery, then pay back the debt. We would have to become manufacturers and producers, get out of nafta, bring the means of production back here. Invest in infrastructure, put people back to work. who should pay for the depression? wall street should pay! A 1% sales tax on deriviatives and hedge-funds. Ron Paul never lays a glove on wall street.

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  • http://www.youtube.com/profile?user=KeithStalin Keith Stalin

    But we seem to be issuing money to pay for medicare, to pay the interest on the money we borrow from the chinese and to pay these endless wars.and were SELLING the debt to the chinese??. 2 and 2 are not adding up. China will want to be paid back,. Why SELL the debt. Use it to build, But why SELL it??

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  • http://www.youtube.com/profile?user=waterhead001 waterhead001

    Why not issue money towards real capatal? Build infrastructure projects, roads, bridges, water purification systems, electrical power grids, nuclear power plants, invest in science, industry and technology-invest in real capatal? The Chinese are doing that, their doing well. In 20 years they will probably be on the moon, we’ll be here stuck in the mud.

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  • http://www.youtube.com/profile?user=KeithStalin Keith Stalin

    In principle it should work. But as Paul said, If it works, WHY is there still poverty? Why not issue enough currency to everybody,. Not enough to say, buy a million dollar house, But enough to have what you need. Ultimately that’s what they seem to be doing,. Good or Bad?

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  • http://www.youtube.com/profile?user=SkyKnighT010 SkyKnighT010

    It’s only a matter of time that the people act.

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  • http://www.youtube.com/profile?user=blai745 blai745

    guns are bad Mkay….

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  • http://www.youtube.com/profile?user=waterhead001 waterhead001

    All money is fiat money. The value of a nations currency is determined by manufacturing and production. Gold has no inherent value. The American school of economics is proven to work. Let’s go back to that!

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  • http://www.youtube.com/profile?user=comeonmakemyday comeonmakemyday

    Sandy Hook -staged proof- Hot off the presses

    /watch?v=uEKbaQJqEEM

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  • http://www.youtube.com/profile?user=comeonmakemyday comeonmakemyday

    Sandy Hook -staged proof- Hot off the presses

    /watch?v=uEKbaQJqEEM

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  • http://www.youtube.com/profile?user=PrivateAckbar PrivateAckbar

    I don’t think you understand.

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  • http://www.youtube.com/profile?user=bilpayne bilpayne

    we need a sovereign nation of sovereign people set up to test our ideals

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  • http://www.youtube.com/profile?user=bilpayne bilpayne

    if you can set a value to them they will work

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  • http://www.youtube.com/profile?user=bilpayne bilpayne

    Competing currencies would be good and help set a value

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  • http://www.youtube.com/profile?user=leraginasian leraginasian

    obama is just a puppet for the shadow government’s agenda. you know what i think? i think this is all happening on PURPOSE. they want to collapse our economy, start ww3 and a civil war, and initiate the rfid implant during it all. this is their plan, and it’s going well.

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  • http://www.youtube.com/profile?user=fetor41 fetor41

    Guys Guys Guys, don’t worry, Imma make a few 1Trillion dollar coins on my 3D printer. I got ya covered.

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  • http://www.youtube.com/profile?user=HangthebankersDOTcom HangthebankersDOTcom

    Buy physical silver bullion!!

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  • http://www.youtube.com/profile?user=dmanjohn dman john

    Here is a person incarcerated in federal prison for issuing gold and silver coin. watch?v=yqpN0sRlpSg

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  • http://www.youtube.com/profile?user=brisly brisly

    Sheeple just get what they voted for, they need to wake up.

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  • http://www.youtube.com/profile?user=comeonmakemyday comeonmakemyday

    ONE of The BEST sandy hook vids. No B.S.
    /watch?v=P1ynYhB26qE
    TheSONSOFLIBERTYMC

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  • http://www.youtube.com/profile?user=comeonmakemyday comeonmakemyday

    ONE of The BEST sandy hook vids. No B.S.
    /watch?v=P1ynYhB26qE
    TheSONSOFLIBERTYMC

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