Dr Ron Paul Debt "Owed" To Federal Reserve NOT REAL
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Radical Freedom
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Radical Freedom
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Repudiate the National Debt
by Murray N. Rothbard
So what can be done now? The current federal debt is $3.5 trillion. Approximately $1.4 trillion, or 40 percent, is owned by one or another agency of the federal government. It is ridiculous for a citizen to be taxed by one arm of the federal government (the IRS), to pay interest and principal on debt owned by another agency of the federal government. It would save the taxpayer a great deal of money, and spare savings from further waste, to simply cancel that debt outright. The alleged debt is simply an accounting fiction that provides a mask over reality and furnishes a convenient means for mulcting the taxpayer. Thus, most people think that the Social Security Administration takes their premiums and accumulates it, perhaps by sound investment, and then "pays back" the "insured" citizen when he turns 65. Nothing could be further from the truth. There is no insurance and there is no "fund," as there indeed must be in any system of private insurance. The federal government simply takes the Social Security "premiums" (taxes) of the young person, spends them in the general expenditures of the Treasury, and then, when the person turns 65, taxes someone else to pay the "insurance benefit." Social Security, perhaps the most revered institution in the American polity, is also the greatest single racket. It's simply a giant Ponzi scheme controlled by the federal government. But this reality is masked by the Social Security Administration's purchase of government bonds, the Treasury then spending these funds on whatever it wishes. But the fact that the SSA has government bonds in its portfolio, and collects interest and payment from the American taxpayer, allows it to masquerade as a legitimate insurance business.
Repudiate the National Debt by Murray N. Rothbard
by Murray N. Rothbard
So what can be done now? The current federal debt is $3.5 trillion. Approximately $1.4 trillion, or 40 percent, is owned by one or another agency of the federal government. It is ridiculous for a citizen to be taxed by one arm of the federal government (the IRS), to pay interest and principal on debt owned by another agency of the federal government. It would save the taxpayer a great deal of money, and spare savings from further waste, to simply cancel that debt outright. The alleged debt is simply an accounting fiction that provides a mask over reality and furnishes a convenient means for mulcting the taxpayer. Thus, most people think that the Social Security Administration takes their premiums and accumulates it, perhaps by sound investment, and then "pays back" the "insured" citizen when he turns 65. Nothing could be further from the truth. There is no insurance and there is no "fund," as there indeed must be in any system of private insurance. The federal government simply takes the Social Security "premiums" (taxes) of the young person, spends them in the general expenditures of the Treasury, and then, when the person turns 65, taxes someone else to pay the "insurance benefit." Social Security, perhaps the most revered institution in the American polity, is also the greatest single racket. It's simply a giant Ponzi scheme controlled by the federal government. But this reality is masked by the Social Security Administration's purchase of government bonds, the Treasury then spending these funds on whatever it wishes. But the fact that the SSA has government bonds in its portfolio, and collects interest and payment from the American taxpayer, allows it to masquerade as a legitimate insurance business.
Repudiate the National Debt by Murray N. Rothbard
Contumacious
Radical Freedom
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Over 40 percent of the national debt is held not by private citizens but by government agencies at various
levels. Of the $934 billion national debt outstanding at the beginning of this year, U.S. government
agencies and trust funds held $190 billion, the Federal Reserve held $117 billion and state and local
governments held $73 billion. That portion in the hands of U.S. government agencies and trust funds is
money the government owes to itself, and repudiating it would merely eliminate an accounting fiction.
Repudiating that portion owed to states and local governments, while affecting the solvency of those
governments, and perhaps forcing them to repudiate as well, will not have a direct impact on the welfare
of private citizens.
Repudiating those government securities owned by the Federal Reserve System would have the added
advantage of exposing the true source of inflation. Many conservatives charge that the national debt is
inflationary. Strictly speaking, this charge is false. If the government borrows from the public, purchasing
power is merely transferred from the public to government. When the government borrows from the
Federal Reserve System, in contrast, the Federal Reserve creates new money to cover the loan. This
process is called monetizing the debt. What seems on the surface to be a simple loan transaction is, in
reality, an act of governmental monetary expansion. In this respect, and in this respect alone, the national
debt is inflationary.
http://www.jrhummel.com/articles/Government_Debt_Repudiation.pdf
levels. Of the $934 billion national debt outstanding at the beginning of this year, U.S. government
agencies and trust funds held $190 billion, the Federal Reserve held $117 billion and state and local
governments held $73 billion. That portion in the hands of U.S. government agencies and trust funds is
money the government owes to itself, and repudiating it would merely eliminate an accounting fiction.
Repudiating that portion owed to states and local governments, while affecting the solvency of those
governments, and perhaps forcing them to repudiate as well, will not have a direct impact on the welfare
of private citizens.
Repudiating those government securities owned by the Federal Reserve System would have the added
advantage of exposing the true source of inflation. Many conservatives charge that the national debt is
inflationary. Strictly speaking, this charge is false. If the government borrows from the public, purchasing
power is merely transferred from the public to government. When the government borrows from the
Federal Reserve System, in contrast, the Federal Reserve creates new money to cover the loan. This
process is called monetizing the debt. What seems on the surface to be a simple loan transaction is, in
reality, an act of governmental monetary expansion. In this respect, and in this respect alone, the national
debt is inflationary.
http://www.jrhummel.com/articles/Government_Debt_Repudiation.pdf
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