I recently took quite a bit of flak from those supporters of Ron Paul who disputed the account published in the New York Sun that the Congressman from Texas had advocated selling off some of the nation's gold to pay for its debts.
I was then and still am opposed to that idea on several grounds not the least of which is the idea that there is insufficient gold, even at the current market value, to make a serious dent in the gargantuan $14 trillion + debt burden of the US. That then begs the question as to which class of debtors would get the option of being paid in gold, US citizens who own the debt either directly or indirectly through investments made in pension funds or mutual funds, etc., or foreign creditors such as China who hold a tremendous amount of our overall debt.
First of all, who would make such a decision? Secondly, no matter which group was chosen, the other group was going to be provoked into an angry response. Certainly if China were snubbed in favor of our own citizens, they being our banker, the fallout would not at all be pleasant. If China were paid in gold and our own citizens left to be paid in a depreciating fiat currency, the noise of protest and outrage here at home would be deafening.
The main issue I have with selling our gold to pay off our debt is that it smells too much to me like a scenario in which a drunken spendthrift has run his family into the debt house forcing the unfortunate souls to sell anything they have left of value to extricate themselves from their prison. In our case however it is a prison imposed by the reckless folly and stupidity of the political class of this nation.
I see a future for gold in a revised monetary system and I believe that the US would be much better served by retaining our nation's gold holdings intact (whatever we happen to have left of those holdings is anyone's guess) rather than selling off such a precious asset.
I would love to get further into this topic but that is not my intention at this time. In the interest of fairness and to give credit where credit is due, the honorable Congressman from Texas has issued a statement on his website detailing his strong opposition to extending the debt ceiling. Let me say that this is Ron Paul at his best and he has my complete support when he makes a statement of such nature.
I would much rather see statements of this kind, followed up with action by a majority of Republicans in Congress, that would enforce a fiscal restraint on our reckless and dangerous spending, rather than any talk of potential gold sales.
Hats off to the Congressman for this one. From Dr. Paul's comments below:
Stop Raising the Debt Ceiling
The federal government once again has reached the limit of its legal ability to borrow money, meaning it cannot issue new Treasury debt without action by Congress to increase the debt ceiling limit.
Please be sure to read the entire set of comments by clicking here:
http://paul.house.gov/index.php?option=com_content&view=article&id=1868:stop-raising-the-debt-ceiling&catid=62:texas-straight-talk&Itemid=69
Hi Dan,
ReplyDeleteI again apologize for my earlier comments on your blog. We, the supporters of Dr. Paul sometimes get overzealous and try to defend him at every opportunity.
With that, I would also like to say that out of all the politicians, Dr. Paul is the only statesman. He is the only one credible enough to be worthy of any meaningful criticism.
I believe Ron Paul wants to sell the gold for one reason. He wants an audit. I don't think he actually wants to get rid of it. He believes in a currency backed by physical assets. That is a core believe of Dr. Ron. Every thing he does must be considered from this context.
ReplyDeleteI also see a (potential) future role of gold in a new monetary system. Silver, energy (oil) could also be useful.
ReplyDeleteAuditing our gold would be a great step in transparency (which the unFederal notReserve) continually resists.
I do agree with much of Ron Paul's stances, though not all. I particularly agree with Ron Paul's desire to roll back the size of the federal government to 2000. After all, wasn't government big enough then?
I'm not a Ron Paul apologist, but like you Dan, I do like some of the things he says and his views on monetary policy.
ReplyDeleteI've got to agree with bruinjoe93. When I first heard of Ron Paul's suggestion to sell the gold I thought it odd, for one, even selling all the gold we have at current market value (which I think is around $398,524,476,000.00 give or take)really wouldn't clear up the problem of the debt. So it seemed a bit absurd. Which made me think that he was just trying to push some buttons so we could get an audit.
Agree with bruinJoe93. RP wants an audit of US Gold reserves and, as we all know, before you can think of selling something it's a pretty good idea to know what you've got! No way to know for sure, but my suspicion is that Congressman Paul has no real ambitions to sell any of the gold. He's just come up with an ingenious way to encourage the audit he really does want. Will be interesting to see how this all plays out.
ReplyDeleteHi Dan,
ReplyDeleteI think Ron Paul has a dual purpose: 1- to compel an audit of gold reserves before the sale and 2- to get the gold into the hands of Americans and out of the government's hands forever; this as a prelude to a gold coin standard free of governmental regulation completely and returning honest money to the people for good.