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.



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253 Comments:

  1. Why did Americans elect me? Could it be because of the dreams from my real dad?

    Dreams from my dad
    who I never even knew,
    for Kenyans are so sad
    I've hoodwinked you.

    Dreams from my dad
    I didn't want to tell you,
    Davis is my real dad
    and he's Communist too.

    Dreams from my dad,
    Air Force One we ride,
    taxpayers are not mad
    and Benghazi? I must lie!

    Dreams from my dad
    biggest fraud in history,
    Hitler seems like my dad
    and I'm still a mystery.

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  2. Why did Americans elect me? Could it be because of the dreams from my real dad?

    Dreams from my dad
    who I never even knew,
    for Kenyans are so sad
    I've hoodwinked you.

    Dreams from my dad
    I didn't want to tell you,
    Davis is my real dad
    and he's Communist too.

    Dreams from my dad,
    Air Force One we ride,
    taxpayers are not mad
    and Benghazi? I must lie!

    Dreams from my dad
    biggest fraud in history,
    Hitler seems like my dad
    and I'm still a mystery.

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  3. Fiat money was widely rejected in its' conception. Many years ago when we ran out of silver an gold. You are absolutely right Ronald. Why are so many people hurting, when most of the world's economies are based solely on Fiat Money?. I support money by decree. Your penny and my penny, is decreed by my government to be just that. Unless the world forgives its' debts. Due to population expansion, exponentially.A larger denomination of Fiat money will be required. It is just smart business. Ronald

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  4. Dr. Paul is right, but he does not go far enough. "Fiat money" is not money. "Money" is some generally accepted medium of exchange, and for something to be "money," it must possess value in itself, equal in value to its denomination. In US history, a "penny" must be composed of a specific weight of copper, etc.

    "Fiat money" is actually an IOU, enforced at the barrel of a gun. It is used to steal real wealth; and those who force us to accept it should be subject to the same form of "prairie justice" as any other armed robber.

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  5. Robin,

    I gave you a "Reply" below your comment.

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  6. How in the world did we ever get so far away from sanity??
    Thank you Dr. Paul for continuing to be a beacon in the storm!
    Simply put, YOU ROCK!!

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  7. THE CASE AGAINST GUN CONTROL ----------------> watch?v=CcvRSPByW7E

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  8. Goodbye America. Enter the coming European superpower... all is unfolding as was foretold...

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  9. Goodbye America. Enter the coming European superpower... all is unfolding as was foretold...

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  10. This platinum coin will only realize more debt for future generations. Debit is enslavement the more debt and longer a individual or individuals or a nation is in debt and the longer duration it takes to resolve it. The longer the enslavement.

    How many platinum coins representing a suspended debt will it take to consume and break The United States of America? Destroying its principles, its constitutions and its people.

    What we have here is American Communism at work, a so called leader chosen to appease a people, the majority of the leaders and a people in this nation, because of color. Leaders of a people of color who are continually proposing the destruction of there own and this nation. With little resolve to offer on what comes after there is nothing left? But keeping there hate alive and more reasons in there own failures, to find blame and hate in those around them. Drowning out there leaders of real reason with there militant behavior and hatred and continual shouts of dissent. Hanging on to past events so distant into the past there is not one from the second generation. Alive today to tell the truth and relate of what really took place.

    Historians and journalists glorifying them selves for what they have written not for what actually happened and the facts. Distorting history for all to view in there interpretation only. Promoting the half truths and lies of past events, of these so called reasons of hate. In the hopes of the destruction of a people and a nation. They themselves creating a quick sand under there own feet and all future generations where there will be no escape or resolve except to be swallowed up into more hate.

    There hope to rebuild a false utopia worshiping above all mass material. Placing it above the living as less than second class citizens, enslaved indefinitely in preserving this false utopia, of false hopes and dreams except for a few elite. Born of a so called righteous nature. So called gods believing only in themselves to be righteous and the rest nothing but ignorant squallier.

    The American communist is alive and well. It has never died as so proclaimed by its faithful worshipers, spewing forth there half truths and lies deceiving all willing to listen and believe that there kind of hate is dead. When the true hatred of every thing that breaths is born out of communism.

    The first step in conquering such a evil religious philosophy and ideology is to know it lives insidiously amongst all that is truly good. teaching and educating all, about all of its deceptive practices, half truth and lies. Teaching and educating all about its twisting the language of all and in its encouraging that taking "aim" or "shooting" in word only, will lead all into violence and should never be spoken. Another definition by the politically correct communists. Teaching and educating all that the truly mentally ill are those poor deluded souls who worship and believe in the false utopia and kingdom of socialism and communism and fascism. That all those believing in this utter deluded warped false sense of security "Communism" are being lead into there complete annihilation, destined to the ash heap in history by Jehovah God Almighty. So proclaimed by the most high Jehovah before the foundations of the world were laid.

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  11. ╰⊰✿*•..DEBTS currency is NOT Wealth but SLAVERY.. for every dollar you borrow the PRIVATE Central Banks print 9~11 times the amount.. to LEND it to the People and the Government NOT to own it.. the People has to pay Special INTEREST in Taxes to the Banks for Life.. subjected to FOREIGN Policies of Wars to raise the spending Debt Ceiling.. to be owned in every aspects of our Life politically, economically and militarily.. all in the Name of Greed and Arrogance of the Chosen FEW Elite..•*✿╮

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  12. I'm Ron Paul and I approve this message

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  13. This is a clear sign of what's to come. The FED is chipping away at our constitution, invading our privacy, and stealing our money. Then, "WHEN" they crash the system, the'll say freedom doesn't work and all will be lost. The power of the FED is given to them by us, they will soon take that power from us.

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  14. You have no clue what you're talking about and I'm not going to spend time educating you. Read Human Action, Man Economy and State or Menger's Principles if you want to know what you're talking about.

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  15. lol economics is definitely not a science

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  16. American dollar.......ALREADY DESTROYED.......
    I have lived in a foreign country for the last 3 years..........
    In that time, the US Dollar has lost 20% from the exchange rate.........

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  17. Pharaohbama wants to bankrupt the country. It's that simple. The ultimate goal is to utterly shred the system so that a new one can be built in keeping with the NWO plan. A budget is required by law, and yet we have not had a budget in 4 years. They just keep voting themselves indulgences. This is absolute corruption.

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  18. French Canadian,
    This is what Jesse Ventura had to say about Sanday Hook...Jesse Ventura Releases Statement on Sandy Hook Shooting -

    “I don’t see enough evidence to think Sandy Hook was a false flag operation. This is more of a tragic event turned into political opportunity than it is a staged event.

    Was there investigative bungling and the sensationalist media reporting unverified stories? Yes.

    Was there confusion and were facts lost and gained in that confusion? Yes.

    Are there people, even witnesses, looking for their 30 seconds in the spotlight? Yes.

    Are there individuals and institutions using and shaping this event for their own political agendas? Yes, and we must keep a very watchful eye on those institutions to keep them from twisting the facts of this event. ... "

    What I see is someone who is dismissing this as what happens in any crisis...There's nothing amiss here...

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    • Robin,

      Okay, I see what you mean. Jesse Ventura is a lot like Alex Jones. They both are very careful about an event like this at the beginning. Their credibility in on the table. Not every event is a False Flag. But as facts developps, they start questionning and investigating the event.

      Alex at the beginning was saying: "I don't know if this is a False Flag or not, but it sures looks fishy and especially the timing and the hyping." After many other facts were discovered, Alex is now saying : "It has everything of a False Flag. I can't prove it 100% now, but my guts tells me that it is. I put nothing besides them, if they were able to do Fast and Furious, they are able to have done Sandy Hook."

      Jesse retires in Mexico every winter, so he is far from all of this Sandy Hook event. Where he stays, he has no television, cell or even computer. So he probably didn't hear half of what we heard since.

      Like I told you, Jesse and Alex acts alike. Jesse with his series onConspiracy on True T.V... brings facts to prove things. Alex on his show, brings facts to prove his stand also. I REALLY like the way they work, with FACTS,... just like Ben Swann decided to work also. Thanks God we have these 3 men and Dr Paul.

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  19. With Gold, you can predict how much will be mined years in advance. With dollars, you can get a feel for how much will be printed, bit in the end it comes down to wire with statements from the Federal Reserve.

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  20. After having to sit through my Marxism class in college, hearing Ron Paul's voice again is a pinch back to reality.

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