Statists all across the United States, especially those within the mainstream press, are uncorking their champagne bottles today and celebrating the newest deal that lifts the debt ceiling.
Predictably, the political strategy of crying “Default! Default! Default!” succeeded spectacularly, just as it does every time. In fact, it worked so well that this time Congress decided to not even set a new ceiling. Instead, the deal authorizes federal officials to spend and borrow to their heart’s content for the next two years — beyond Election Day 2024, of course.
The people who will pay the price for this deal will be American taxpayers. If you happen to die before the day of reckoning arrives, you’ll escape having to bear the consequences of what these people have done. But if you’re alive when that day of reckoning comes, you will be one of the ones reaping the whirlwind.
Right now, each taxpayer’s share of the federal government’s $31 trillion in debt is around $275,000. It will be increasing over the next couple of years. How many people list that liability on their financial statements? I’ll bet not very many. And yet, there it is — and growing.
The biggest fear factor in the debt-ceiling circus is always the default factor. “Default! Default! Default!” the statists cry. “If the debt ceiling isn’t raised, the federal government will default on its debts and the United States will fall into the ocean.”
Really?
Well, for one thing, it’s simply not true that failing to raise the debt ceiling automatically meant default in the payment of the federal government’s debts. That’s because the federal government could slash welfare-warfare state programs instead of defaulting on its debts. The military, for example, spends more than the next 10 countries combined. There’s obviously plenty to cut there, but of course, given the control that the Pentagon, the CIA, and the NSA have over Congress, the notion of cutting military spending was never seriously considered.
Throughout the debt-ceiling circus, the mainstream press claimed that there had never been a default on the government’s debt. That’s simply not true.
For more than a century, the official money of the United States consisted of gold coins and silver coins. That was the monetary system called for in the Constitution. No, it wasn’t a paper-money system that was “backed by gold,” as the mainstream press often claims. It was a monetary system in which the official money was gold coins and silver coins.
Under the Constitution, the federal government was authorized to borrow money. They exercised that power by issuing notes, bills, and bonds, which people would purchase with their gold coins. These debt instruments promised to pay the lenders back in gold coins.
In the 1930s, the Franklin Roosevelt administration declared an end to America’s gold-coin, silver-coin system. FDR did this without even the semblance of a constitutional amendment. Displaying the attributes of a European dictator, he ordered every American to deliver his gold coins to the federal government. FDR threatened that if anyone got caught violating his edict, he would slap him with a federal criminal indictment, conviction, and incarceration for 10 years in a federal penitentiary. Not surprisingly, most Americans hurriedly rushed to turn in their gold in exchange for irredeemable paper money.
What about those notes, bills, and bonds in which the federal government promised to pay people back their gold coins? FDR had a quick answer: Tough luck. We are going to pay you back in devalued, irredeemable paper money. And there is nothing you can do about it.
In a word: Default. People had in good faith loaned their gold coins to the federal government. The federal government had promised in writing to pay back its loans with gold coins. The federal government knowingly, intentionally, and deliberately broke its promise by refusing to pay back its loans with gold coins. Instead, it chose to pay back its loans with cheapened, debased, irredeemable paper money. In taking this route, the government defaulted.
Did the United States fall into the ocean? Nope. It simply became a paragon of immorality, one that people could no longer trust.
FDR’s nationalization of gold, along with his conversion of the federal government to a welfare state, set the stage for a century of out-of-control federal spending, debt, and monetary debauchery. Once President Truman converted the federal government to a national-security state in 1947, so much paper money was printed to cover federal welfare-warfare state expenditures that silver coins, which FDR had not made illegal to own, were driven out of circulation.
Contrary to popular opinion, the biggest threat to the freedom and well-being of the American people is not Russia, China, Syria, Afghanistan, Iraq, Cuba, North Korea, Vietnam, the terrorists, the Muslims, the drug dealers, or the illegal immigrants. The biggest threat to our freedom and well-being lies in Washington, D.C. It is the welfare-warfare state that is taking us down from within. It is just a question of whether the American people will put a stop to it before it takes us down completely.
The post What Debt Ceiling? first appeared on Tenth Amendment Center.
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