An email I sent to a non Ron PaulerSubmitted by c dot wood on Fri, 09/09/2011 - 20:57
Hello Unnamed Person,
The banks only issue the currency via a loan, and only the principle. There is no other way to "make" money.
But they do not issue the money for the interest payments, so simply, you have to borrow more money to make the monthly payment. There is a time lag, but in general what is owed is much greater than the total money supply. (Not counting derivitives and all that crap)
This is an example of Lt Col (ret) Congress Dr. Ron Pauls plan and it's effect if we don't stop the Federal Reserve and he is president.
1. Cut back on military spending, bring 'em home. 500 billion a year -> to the debt.
2. Spoiled MIC contractors loose funding, 10% of population laid off, 15% reduction in tax revenue.
3. Massive deflation happens, making it impossible to pay your loans. (Lower money supply)
4. Dependent business on the Military Industrial Complex go out of business, 10% reduction in tax revenue.
5. Social programs cut back, (for illegals, etc) 50 billion -> to the debt
6. Farming loses their employees (illegal), agriculture comes to a standstill.
7. Federal Minimum wage for one hour could now buy a small used car, because there is no money.
8. The Fed would print more money, but the banks can't loan anymore, they are BK. The Fed Govt won't borrow anymore, it's a balanced budget.
9. Fed Reserve drops Banking reserve ratios to zero 0.0%. Banks start lending,
10. Super inflation occurs, all hell breaks loose, it's over.
The numbers are made up guesses, but it would destroy this country faster than Obama. Those with money would prevail, and buy up stuff. But inflation would wipe out them out so quick. You'd have to be real fast and know something to protect yourself.
I used to be that other countries and people bought the debt (bonds, TBills), but there just isn't enough money out there anymore to do that, so now the Central Bank buys the bonds (QE). They are unmarketable, hence the credit rating drop.
Not all this is horrible, and it will destroy the country. Except that, his first step will not be do #1 or #5 first.
He will allow competing currencies as legal tender, let the fed go nuts and kill itself. Pretty soon the competing currency will be in relation to the fed money as a $1 bill is to a 100 trillion dollar Zimbawbe bill. Then we pay off the debt with effectively $1, and there are no more dollars in existance. That is a simple explanation, but that is what he will do. Besides that, his speaches will educate the world about our money system, so we know how to prepare for it.
Then any savings he creates about 1/2 will go to paying down the debt, the rest to some other program - infrastructure. That will help keep the money flowing.
Can he actually pull this off? Probably not. Someone will kill him. But then he's a Legend, and others will take the job over for him, because now the Americans aren't stupid anymore (nor the rest of the world). He can do more by education than he can by legislation. That's why he did the Reagan thing, or his campaign did, to get that Legend status going. It was a very good move, and it sure pissed off Pricky Perry.
None is this is intended to be a prediction, just a probably outcome of different events. It's not meant to be realistic numerically either, nor it will end in such a grand simple fashion. It's just a simplified single view of one person that doesn't know everything that's going on.