Once again, we are seeing the results of a standoff regarding raising the federal debt limit. We’ve seen it in 1985, 1995, 2002, 2003, 2011, 2013, 2014 and 2015… and around 70 other times before that. The House of Representatives already voted to pass a continuing resolution to fund the government through Dec. 3 and raise the $28 trillion debt ceiling. Will it pass the Senate?
Almost certainly… yet as we move toward a business-as-usual finish to the phony debt-ceiling drama playing out in Washington, history will record that no one — not even the supposedly conservative members of Congress — ever got around to talking about spending cuts. Isn’t that weird?
All we got was the breathless warning from Treasury Secretary Janet Yellen: “In a matter of days, millions of Americans could be strapped for cash. Nearly 50 million seniors could stop receiving Social Security checks for a time. Troops could go unpaid. Millions of families who rely on the monthly child tax credit could see delays.”
She said this in all seriousness, without an iota of care that the real horror is that 100 million Americans rely on handouts from the government for their income.
During the Obama years — and in many of the years prior — the debt ceiling was used as a political tool by one party or the other to extract concessions on spending or taxes and to agitate class warfare. Chuck Schumer and company are trying a similar tactic this year, announcing along with Nancy Pelosi that a proposal to suspend the debt limit through December 2022 would be included in a must-pass bill to fund government agencies for three months.
If the government can’t borrow more money and there’s a shutdown after Dec. 3rd, “essential” government services — payments to Congress members, military operations (though not always military paychecks), etc. — continue. But things like park access are restricted and Social Security checks are delayed; anything that can make the American public feel pain. It makes for good theater even if it is bad governance.
As Dr. Ron Paul wrote during the 2013 debt ceiling battle, “A failure to increase government’s borrowing authority would not lead to a default any more that an individual’s failure to get a credit card limit increase in would mean they would have to declare bankruptcy. Instead, the failure of either an individual or a government to obtain new borrowing authority would force the individual or the government to live within their means, and may even force them to finally reduce their spending. Most people would say it is irresponsible to give a spendthrift, debit-ridden individual a credit increase. Why then is it responsible to give an irresponsible spendthrift government an increase in borrowing authority?”
Paying it off
Some supposedly smart folks out there are again raising the question, as they did in 2013, “Why don’t we mint some $1 trillion coins?”
Dear reader, the Treasury does not have the authority to do this. It would be counterfeiting. Let me quote you from a recent AIER article: “…the Secretary of the Treasury is only authorized to issue bullion or proof platinum coins. As their name implies, bullion coins are not like the fiat or fiduciary coins … The market value of the metal in a fiduciary coin is worth less, sometimes much less, than the coin’s face (legal) value. That’s so nobody has an incentive to melt it down.
“The market value of the metal in a bullion coin, by contrast, is worth more, often far more, than the coin’s face value. The American Platinum Eagle, for example, is stamped $100 but because the coin contains 1 troy ounce of platinum nobody in their right mind would pay off a $100 debt with it. Instead, they would sell it for about $1,000 in Federal Reserve Notes, give or take … For the Treasury to lawfully strike a $1 trillion bullion or proof coin, it would have to buy at least $1 trillion worth of platinum.”
In any case, the Biden administration is not entertaining such an illegal scam. Instead, the usual scammers will do the usual thing, and after a few days of grandstanding by politicians and caterwauling by the mainstream media, Congress will do its “bold work” and vote to raise the borrowing limit. Just like it did in 2011, when House Weeper John Boehner (R-Ohio) went before Wall Street’s Economic Club to assure the nervous nellies on Wail Street that Republicans would agree to raise the debt ceiling while keeping up the façade that Republicans care about cutting government spending.
It’s hardly ever been true. How else would you explain that fact that, over the next few months, the CBO estimates the Treasury Department expects to collect only $1 in tax revenue for every $2 it is bound by law to spend?
The trouble is that we hear the word “debt” and we try to apply the conventional definition of debt as a legitimate accounting concept. It cannot be done as it refers to the so-called national debt because the nation’s debt is created out of thin air or on government computers. It is fiat.
The terms “debt” and “fiat” are incompatible. Fiat, by definition, is default; but debt implies repayment. Yet the most learned writers I read actually believe there is a U.S. government “debt,” and they repeat it over and over.
During these “debt crises,” the media likes to trot out figures claiming to show how much each household owes on the U.S. debt. Isn’t that clever? The media would have you believe that you are responsible for the trillions of dollars of debt that you did not rack up, had no say in creating and, in fact, represents money that was stolen from you.
I can easily see why the government cabal wants the people to believe that there is government debt. Otherwise, people might get wind of the truth, that money in America isn’t created by the U.S. government. Rather, it’s created out of thin air by the banks through accounting entries! They might discover that the Federal Reserve was operating on printing press money (fiat).
In fact, there was one man who did discover this, much to his chagrin. His name was Merrill Jenkins. Right in the Federal Reserve’s own literature, Jenkins found descriptions of how “money supply” was irrelevant because a bank loaning money simply creates that money through bookkeeping entries and then deposits it into the account of the borrower.
The exception, of course, is interest due on the loan. That money would have to come from money already in circulation, and it is up to the borrower to come up with those dollars. If you go here, you can discover for yourself the truth about this theft and what you can do about it.
The net effect of this is that one class of people perpetually steals from the other class. This makes us and them natural enemies.
The implication of the “debt crisis” is that if the debt ceiling is not raised then American will go into default. The truth is, America is already in default. But it cannot go bankrupt in the traditional sense.
Governments produce nothing, so governments must live off of the producers. It is the nature of governments to grow bigger and bigger and consume more and more of the national wealth. Do you see this happening?
At some point, government overconsumes the national wealth and collapses. Government finally consumes more than the people can produce, as we can clearly see when the government will only be able to collect $1 in taxes for every $2 it is obligated to spend. The rest must be borrowed. Thus, the “debt” ceiling. So then, modern bankruptcy of national governments is not overspending. It is overconsumption of the national wealth. What a farce!
Money printing is inflation, and inflation is the hidden tax. Picture a bucket of milk as your savings. Now, picture the government pouring water into your milk. The more water, the less milk, until finally the bucket is holding only water and your milk is washed away. So it is with your savings under inflation. You can’t hide it deep enough underground to save it from the inflation monster.
The economic collapse is accelerating. Expect more ridiculous ideas out of Washington in the coming months as the political class tries to hide it for as long as possible. As I mentioned earlier, go here, to learn the truth and more importantly, what you can do about it.
Written by Bob Livingston
