Unless major changes are made today, the U.S. will default on its debt sooner or later, and it is certainly preferable that it be sooner rather than later.And of course Paul shatters the ridiculous notion that the U.S. has never defaulted on its debt before:
If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing.
The U.S. government defaulted at least three times on its obligations during the 20th century.And what would a Ron Paul op-ed be without mentioning the Austrian school:
-- In 1934, the government banned ownership of gold and eliminated the right to exchange gold certificates for gold coins. It then immediately revalued gold from $20.67 per troy ounce to $35, thus devaluing the dollar holdings of all Americans by 40 percent.
-- From 1934 to 1968, the federal government continued to issue and redeem silver certificates, notes that circulated as legal tender that could be redeemed for silver coins or silver bars. In 1968, Congress unilaterally reneged on this obligation, too.
-- From 1934 to 1971, foreign governments were permitted by the U.S. government to exchange their dollars for gold through the gold window. In 1971, President Richard Nixon severed this final link between the dollar and gold by closing the gold window, thus in effect defaulting once again on a debt obligation of the U.S. government.
The Austrian School’s theory of the business cycle describes how loose central bank monetary policy causes booms and busts: It drives down interest rates below the market rate, lowering the cost of borrowing; encourages malinvestment; and causes economic miscalculation as resources are diverted from the highest value use as reflected in true consumer preferences. Loose monetary policy caused the dot-com bubble and the housing bubble, and now is causing the government debt bubble.So if you have been paying attention at all to major news networks, you would see that Paul is getting a lot of coverage lately. Certainly a lot more than last election cycle. Well it looks like its finally beginning to pay off, check out the title of this article from the Neo-Con poll lovers group known as Rasmussen:
For far too long, the Federal Reserve’s monetary policy and quantitative easing have kept interest rates artificially low, enabling the government to drastically increase its spending by funding its profligacy through new debt whose service costs were lower than they otherwise would have been.
"Obama 41%, Ron Paul 37%"
The latest Rasmussen Reports national telephone survey of Likely Voters shows Paul picking up 37% of the vote, while the president earns 41%. The Texas congressman joins Mitt Romney, Michelle Bachmann, and Rick Perry as candidates within hailing distance of the president at this time.I always tell people around me that Ron Paul's real challenge will be winning the nomination from the Republican Party, not winning the general election. If, God forbid, Paul wins the nomination, all he has to do is point out that Obama has escalated the War on Terror, increased the War on Drugs, and has generally aligned himself with the interests of Wall Street besides wanting to raise taxes on the super rich (and by super rich, he means those bourgeoisie households earning the extraordinary amount of $250,000 a year). Once pointing these facts out, its always fun to ask Obama supporters how exactly he qualifies as a liberal again.
Yesterday, in light of the new Greece bailout, I mentioned the idea of a European fund being made to start selling bonds. Well what do ya know:
French President Nicolas Sarkozy compared the transformation of the bailout fund to the creation of a “European Monetary Fund.”We can only hope that this proposal doesn't get adopted but judging from recent bailout actions, it seems like a worthless endeavor.