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. you must be a fucking retard

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  2. Why do we need platinum? Why not just have the Federal Reserve acquire a truckload of bullshit and declare it worth $16 billion? There's nothing else backing the dollar. Any why only $2 trillion. Zimbabwe has issued a$100 trillion bill.

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  3. Love to hear Paul rant about what has to be done to avoid fiscal disaster......what has he done besides rant about the problem....get him a soapbox and a bell and put him on a street corner!

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  4. That's genius. How long did it take you to write this masterpiece?

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  5. Am i missing something here? If we can make a trillion dollar coin ,which we can according to the constitution. Why not make 16 of them pay off the debt entirely and end the fed and start over with a currency that is not debt based ! Gold ,silver or time based just not debt why in the world should the government have to borrow money form anyone when they can just create it themselves . All debt based money does is make us slaves to the fed threw the IRS !

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  6. Ronpaul is a god damn piece of SHIT!

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  7. I apologize for my fellow Americans who did not listen to you
    who would not fight for liberty
    who only listen to the repetitious drumbeat of the puppeteers

    Our freedoms, our futures and our hope
    now lay in the hand of destiny
    god, let good fortune lay in favor
    of freedom

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  8. I apologize for my fellow Americans who did not listen to you
    who would not fight for liberty
    who only listen to the repetitious drumbeat of the puppeteers

    Our freedoms, our futures and our hope
    now lay in the hand of destiny
    god, let good fortune lay in favor
    of freedom

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  9. Make this video go VIRAL:
    The best quotes of the Founding Fathers regarding the 2nd Amendment in this video:

    "Their Own Quotes Prove They Wanted Americans Armed, and Government Restrained"

    Founding Fathers Battle Gun Grabbers From the Grave: Special Report (VIDEO)
    http://www.infowars.com/founding-fathers-battle-gun-grabbers-from-the-grave-special-report/

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  10. MUST READ:

    Paul Joseph Watson
    Infowars.com
    January 22, 2013

    Shock claim purported to come from “one of America’s foremost military heroes”

    2009 Nobel Peace Prize nominee Jim Garrow shockingly claims he was told by a top military veteran that the Obama administration’s “litmus test” for new military leaders is whether or not they will obey an order to fire on U.S. citizens

    Nobel Peace Prize Nominee: Obama Asks Military Leaders If They Will “Fire On US Citizens”
    http://www.infowars.com/nobel-peace-prize-nominee-obama-asks-military-leaders-if-they-will-fire-on-us-citizens/

    .

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  11. PLEASE VISIT : www.understandingmoney101.com THANK YOU!

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  12. VIDEO DESTROYS GUN CONTROL ----------------> watch?v=CcvRSPByW7E

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  13. I'd start investing in toilet paper, when our creditors turn their backs I.e greece, it will becomes far more cost effective too wipe the dollars. Thus toilet paper becomes a luxury item and perhaps quite the barter item.

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  14. I´m glad he´s continuing Texas Straight Talk.

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  15. Good comparison.

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  16. In other words........paper money is to gold what a porno pictures is to a real woman.
    Would you rather have real gold in your pocket and a real woman to wrap your arms around or would you be happy with a pocket full of mononpoly money and and a handful of.....er uh.. porn?

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  17. Cloward -Piven Obama's template

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  18. Fiat money is a scam in the fact the parasitic bankers (banksters) create money out of thin air and then take something tangible (your land) when you can repay a loan. Thus they are getting something for nothing.

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  19. to thrive we need to grow the bush into the stone not stone into the bush. If I cut all the people mid to high melanated in the world out with some stupid magic wand then the rest of us would not survive genetically very well or at all and economics would be shit..To thrive we need to grow the bush into the stone not stone into the bush.

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  20. The debt is a scam by congress and the elite global bankers. If they are not panicking, then this is just a printing money scheme, and they have control of the inner game of currency control. It's a charade! This is more evil than you can imagine, but the debt does not matter to them. It is just a fabrication, game and myth. America, has been chosen by the elite bankers to carry on this way without fail. The US debt is just a scam.

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