Posts Tagged ‘treasury’
“Stop the Presses!” Continued Fed Action Could Damage Economy More Than Downgrade
Alan Greenspan on NBC's "Meet the Press"
Yesterday on NBC’s Meet the Press, Former Federal Reserve Chairman Alan Greenspan made a remark that reveals some dangerous suggestions about the power of the Federal Reserve. When host David Gregory asked Greenspan if U.S. Treasury bonds were a safe investment, Greenspan replied:
“Very much so. I think there’s–this is not an issue of credit rating. The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”
For those familiar with the workings of the U.S. monetary system, this comment might come as no surprise. The Federal Reserve retains authority to print the legal tender of the United States, and has ever since Congress abdicated that constitutional power with the Federal Reserve Act of 1913. In the last decade, the Fed has demonstrated its willingness to exercise this authority by adding enormous sums of cash to the monetary supply through bailouts of the airlines, banks, and automakers. The Fed is currently in its second round of what it calls “Quantitative Easing,” a euphemism for money creation neatly dubbed QE2. Current Fed Chairman Ben Bernanke has hinted that the Fed could continue this dangerous inflationary practice with a third round of money creation.
While the Fed’s unstoppable printing press endangers the U.S. dollar already, Greenspan’s comment suggests that our mounting debt could kick this machine into high speed. America’s national debt recently reached 100% of GDP. In less than a decade, the Federal government has doubled the amount of money that it owes. Our government’s outlays far outstrip its receipts, and without a serious reduction in spending, this trend has no end in sight. Greenspan’s suggestion that the Fed simply create more money out of thin air to pay off our debts would only worsen the situation. That level of money creation could propel our currency into hyperinflation, the effects of which would be disastrous, making the effects of the S&P downgrade pale in comparison.
The answer to addressing our astronomical obligations, of course, is not to print money out of nowhere and risk serious hyperinflation, but to reverse the rising tide of federal spending. Defense costs have exploded over the last decade, due in large part to the six wars in which the U.S. is currently involved. Drawdown of our globe-straddling foreign presence would make a huge dent in the bloated defense budget, making this a good place to start.
James Robertson currently attends the University of Mississippi, where he plans to receive degrees in Political Science and English. He is the President of the Ole Miss Chapter of Young Americans for Liberty.
Ron Paul Returns $100,000 to the Treasury
Ron Paul truly walks the walk on fiscal conservatism:
Like him or hate him, Dr. Ron Paul doesn’t just talk a big game about fiscal conservatism, he lives it. In 2008, his congressional office returned $58,000 to the Treasury. In 2009, his office returned $90,000. Now, according to an official press release, Dr. Ron Paul’s congressional office has just paid back $100,000.
Not that $100,000 is going to make a serious dent in our fiscal imbalances, but Paul demonstrates the responsibility our government needs. The article also suggests:
If President Obama claims that he is serious about reigning in the runaway debt, perhaps he should install Dr. Ron Paul as the CEO of the bipartisan deficit commission. It appears he’s the only one in the federal government with the track record to speak with the highest degree of credibility.
By Preston Mui
