$16,000,000,000,000 Default

$16,000,000,000,000 Default
Posted on August 2, 2011 by Lew Rockwell

From the Ron Paul campaign:

"Politicians need to understand that without real change default is inevitable. In fact, default happens every day through monetary policy tricks. Every time the Federal Reserve engages in more quantitative easing and devalues the dollar, it is defaulting on the American people." -- Ron Paul (July 18, 2011)

Now we know why the Fed was so opposed to an audit.

According to the recent GAO report on its limited audit of the Federal Reserve, the central bank secretly pumped $16 trillion into American and foreign banks during the recent economic crisis. All of the Fed's fat cat cronies were taken care of at the expense of the American public, without any transparency whatsoever. And now the big spenders in Washington are doing everything they can to raise the debt ceiling so we can borrow and spend more money we simply DO NOT HAVE.

The latest debt deal will reportedly cut spending by only slightly over $900 billion over 10 years (Jake Tapper, ABC News, July 31, 2011). But we will have a $1.6 trillion deficit after this year alone, meaning those meager cuts will do nothing to solve our unsustainable spending problem. Meanwhile, the Federal Reserve continues to wipe out the value of our dollar. All of this is speeding us toward an even deeper crisis, one that will hurt every American and could permanently wreck our economy.


Put These Numbers in Perspective

Congress has been in a frenzy over the suggestion that we not raise the debt ceiling, and simply spend what we take in.

The U.S. GDP is $14.8 trillion. The entire U.S. debt spanning over 200 years is $14.5 trillion. The current debt ceiling compromise is over cuts that would be enacted over the next decade to the tune of $900 billion. The budget debate in early 2011 was over $1.5 trillion. But there was no debate over the $16,000,000,000,000 ( GAO Report) handed out to failing corporations and banks around the world in just a few short years.How can we afford to have the Fed give away more than our entire national debt in just three years?

We have been fighting in Congress these past few weeks over raising our debt ceiling by about $2.4 trillion ( GAO Report), an amount the Fed secretly loaned out to just one bank. There truly is something wrong here.Letting the Fed have its way with the American peoples' money, and allowing the government spending to grow unchecked is not a sustainable way to govern. We must cut off the credit card and begin living responsibly.


Why Can't We Get Serious About the Debt

Partisan politics always trumps serious debate.

"If my Republican friends believe that increasing our debt by almost $800 billion today and more than $3 trillion over the last five years is the right thing to do, they should be upfront about it. They should explain why they think more debt is good for the economy. How can the Republican majority in this Congress explain to their constituents that trillions of dollars in new debt is good for our economy? How can they explain that they think it's fair to force our children, our grandchildren, our great grandchildren to finance this debt through higher taxes? That's what it will have to be. Why is it right to increase our nation's dependence on foreign creditors?" – Senator Harry Reid (Mary Katharine Ham, The Daily Caller, March 16, 2006)Obviously, the Senate Majority Leader is arguing a little differently in the present day.

"We can't back out on the money we owe the rest of the world. We can't do as the Gingrich crowd did a few years ago ­ close the government." – Senator Harry Reid ( NBC, January 9, 2011)


Cut or Borrow? Who's Telling the Truth?

Obama believes our credit rating would have declined if we did not raise the debt limit.

"For the first time in history, our country's AAA credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. We would risk sparking a deep economic crisis -– this one caused almost entirely by Washington." – President Barack Obama ( White House, July 25, 2011)

But credit rating agencies, not bureaucrats, believe our rating will inevitably decline based on increasing our debt.

"We are taking a negative action not based on the delay in raising the debt ceiling but rather our concern about the high level of debt to GDP in excess of 100%. Nonetheless, since the US's debt is denominated in dollars, a hard default is unlikely." ( Egan Jones, July 16, 2011)"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable." ( Standard & Poor's, April 18, 2011)"Standard & Poor's threatened…to downgrade the United States' prized AAA credit rating unless the Obama administration and Congress find a way to slash the yawning federal budget deficit within two years." (Steven Johnson, Reuters, April 18, 2011)


One Man Leads by Example, Voting Record, and Principle

In Washington, rhetoric often belies actual principles. But there has been one person who remains consistent in both rhetoric and action -- Texas representative, doctor and 2012 Republican presidential candidate Ron Paul.

"What should bother Americans most is that under cover of this debt ceiling circus, we learned from a recent GAO one-time, limited audit that the Federal Reserve secretly pumped $16 trillion into American and foreign banks over three years. To put that into perspective, our entire national debt is $14.5 trillion, and our annual deficit will be about $1.6 trillion, meaning the Federal Reserve created and appropriated more than our entire national debt to banks around the world in a few short years."

"I have no doubt that we face financial collapse and ruin if we continue to grow our debt. The ratings agencies have stated that if we do not cut spending by at least $4 trillion in the next few years we will face a downgrade of our triple-A rating. We need to make major spending cuts now, in this budget, and we can no longer afford to allow more deficit spending based on promises of future cuts."

"For decades, politicians have promised future restraint in exchange for hikes in the debt limit. We are always told that we must act immediately to avoid a crisis. But time and time again, politicians reveal themselves to be untrustworthy and we soon find ourselves in a crisis being led by the same folks who wish only to maintain the status quo."

"That is something that the American people should not tolerate." – Ron Paul