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. And you are what? LMAO. CLOWN. I AM HE WHO SAYS FUCK U!

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  2. lol. Classic. Dr. Paul, I salute you! God Bless!

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  3. Keynesian economists like Krugman & those in the Federal Reserve are completely crazy and should be laughed out of office or leadership positions. They should be given a few good kicks in the butt while being thrown out. Anyone in Congress (& the President) deserves the same treatment who goes along with their nonsense. Ultimately, it's the average American voter that is the problem for either re-electing these people back into office or not laughing them out of town.

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  4. So you are in favor of a trillion dollar coin?

    Tell you what, why don't you go make some bombs and blow some shit up. Don't worry, according to you're idiotic Keynesian logic, you'll be economic stimulus not a terrorist

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  5. Please someone just run into the Federal Reserve with guns and kill all of those people, then burn it down!

    Problem solved.

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  6. Fiat currencies are not evil, in and of, themselves. There is not enough physical gold or silver or all precious metals of all types on the periodic chart to make enough coinage for the USA of 350 million residents, plus, the world, whom may still want to do business in dollars.

    Man, is evil, in and of himself. And therein lies the problem. All these problems on earth can be cured in a moment, if you can cure what’s in men’s hearts.

    No matter how much wealth there is, or the type of wealth there is, or the type of currencies there may be created, we now have a world, whereas 10 million, highly educated, highly intelligent people, whom run all the governments, are mostly corrupt.

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    • it is only a small number of people who are sociopaths. the problem is they rise to the top because they do not obey the laws that are designed for regular people. in a struggle between the good guy and the bad guy the bad guy almost always wins. this does not mean, however, the most people are bad. america is about to collapse because of all the bad people at the top. if RON PAUL were president and all members of congress were libertarians we wouldn't have this problem today. dont throw the water out with the baby bath. if everyone were bad, as you say, nothing good would ever have happened or exist in the world today. RON PAUL is a good guy!

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  7. The trillion dollar coin is a good example of why some people want a one world government and fiat money supply, so they create money from nothing and point a gun at anybody who knows it's a fraud.

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  8. The trillion dollar coin is the trillion dollar heist.

    Paul Krugman isn't a stupid man. He's a conman and thief.

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  9. Listen to the guy. When he left Congress he was richer than 82% of his colleagues. He did that just by following the philosophy he talks about here.

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  10. If minting a one trillion dollar coin was NOT an idiotic idea then why stop at just ONE trillion? Why not mint 17 of them and totally pay off the national debt? Just use 1 oz of platinum for each and keep minting coins until we all have one. Of course it is a stupid idea to think the Government can just mint a coin to solve the national debt. Not only stupid but absolutely reckless.
    Many foreign economies have been totally ruined when irresponsible governments have utilized the printing press to pay their debts. It is the same as having a lot of credit cards and constantly using one to pay off another until you are all maxed out. The US Government has been doing exactly this for many years and they are already maxed out but instead of doing the right thing they are always looking for another Band-Aid to delay the problem further.
    Paper money which is not backed by gold is unconstitutional. It is clearly stated in article 1, sections 8/10 of the constitution, “No state shall pay its debts with anything except gold & silver coins unless it is backed by gold or silver”. The whole reason for this is to avoid inflation. When dollars which are not backed by gold are put into circulation they are worthless and therefore they reduce the value of all our dollars by diluting their value. This results in higher prices for you and me on everything we buy, aka inflation. This is just another way to tax the American public without calling it a tax.
    The Government needs to “man up” and deal with the debt problem instead of trying to sweep the garbage under the carpet. See the video and read more about Printing Money To Pay Debts… http://goldirasavings.com/printing-money-to-pay-debts

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  11. wRONg Paul is a fuckin' jackass.

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  12. Dr. Paul as a 22 year old American I beg you to get back into congress and become our next president. Give us hope!

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  13. Teach your children well so they won't live their fathers hell. I have already started to explain our monetary system to my daughter. I wish someone would have taught me but I was raised by dependant liberal parents so I too am just as poor as them.

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  14. ron paul is a good guy not a puppet guy

    case closed

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  15. That guy is the genetic prototype of the lobotomized zombie population the establishment been investing for decades.
    Highly drugged & vaccinated, probably believes pizza is a vegetable!

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  16. That guy is the genetic prototype of the lobotomized zombie population the establishment been investing for decades.
    Highly drugged & vaccinated, probably believes pizza is a vegetable!

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  17. Finally Krugman gets the infamy he deserves.

    Abolish slavery. Support theLibertyAmendment (dot org).

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  18. Finally Krugman gets the infamy he deserves.

    Abolish slavery. Support theLibertyAmendment (dot org).

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  19. Ron Paul, nor anyone else by this matter can do anything of and by himself...IF any one individual could do this, they would be a god, but I'm sure the one-worlders WOULD find a way around this.
    I recall Lt. Co. James "Bo" Gritz proposed a similar answer to the debt problem with the issuance of a huge-sized coin, which, of course, went nowhere, and his run for the US presidency went nowhere. We, as Amer-I-Cans, MUST find a way to solve this problem, preferably through our political processes, or prophecy will be fulfilled. It is my honest opinion that the only way to solve this problem is to audit AND remove the federal reserve from the world, THEN we can repair the world's economy. The next step is to go back to the Breton-Woods system. THIS IS DO-ABLE!!

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  20. you must be a fucking retard

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