Tuesday, July 26, 2011


by James Craig Green

While Republicans and Democrats point fingers at each other like immature children in the playground debating whether and under what conditions to raise the nation's debt limit, Congressman Ron Paul offers an elegantly simple solution. Since the Treasury owes money to the Federal Reserve (i.e., right-hand Peter owes left-hand Paul), simply cancel this obligation by the amount of the current deficit.

While explaining his solution in a speech to Congress on July 19th, Dr. Paul also explained why the current debt is unsustainable and why adding more debt will only make the current problem worse; not better. As always, Congress is likely to ignore Dr. Paul, because his solution would make the essence of the problem obvious for all to see. This undercuts the culture of deception upon which the American political process is based. Arguably, if Americans understood the simple facts of the debt crisis and the consequences of adding more debt to the nation's future obligations, it might become more obvious that no one in Congress but Dr. Paul, and perhaps a handful of others, really understand the problem and actually want to solve it.


Of course, no one expects Congress or the President to suddenly gain a lifetime's understanding of market economics, or to admit that government, each and every year, makes the economy worse, not better. By creating money out of thin air to bail out major banks who used it to enhance their balance sheets, both President George W. Bush and Barack Obama, along with their Treasury Secretaries Paulson and Geithner (former heads of Goldman Sachs and New York Fed), set a new low in government intervention in the economy (you didn't believe them when they said this would create new loans, did you?). Their bailouts of the very banks that made risky loans and re-packaged worthless (toxic) assets into new securities and defrauded investors throughout the world made sure that these priveleged big consumers of public funds didn't have to pay for their stupidity, negligence and fraud.

Both Presidents Bush and Obama and their Treasury Secretaries implemented the most corrupt and inconceivable "No Bank Left Behind" plan, except for Lehman Brothers, who apparently didn't have any insiders within either administration.

As Dr. Paul points out in the video, the actual current debt is not only this year's 1.6 TRILLION DOLLAR spending increase, but also borrowing from Social Security, Highway and other trust funds, raising it to TWO TRILLION DOLLARS. Furthermore, if this year's additions to entitlement programs (hard-wired into budgets without congressional oversight) were included, it would total FIVE TRILLION DOLLARS.

Dr. Paul clearly explains that only by continuing the Fed's 100-year-old process of inflating the currency, reducing everyone's dollars, can the Administration and Congress hope to get out of this mess with their skins, and reputations, intact. A naive belief to be sure, but heck, it worked for every other administration and congress in our lifetimes, so why not just kick the can down the road and get re-elected? By the time the piper has to be paid, most of these dedicated "public servants" will be retired on government pensions.

Next time, I will present a new paper by economist Russell Randall, who makes a good case for the inevitability of an economic depression worse than anything we or our grandparents have ever seen.

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