United States can pay any debt it has because we can always print money to do that. So there is zero probability of default."
-- Former Fed Chairman Alan Greenspan on Meet the Press, August 2011
In a post on "Sovereign Man" dated August 14th, Simon Black argued that Donald Trump may be the right man for the presidency:
[T]here's one thing that really sets him apart, that, in my opinion, makes him the most qualified person for the job:
Donald Trump is an expert at declaring bankruptcy.
When the going gets tough, Trump stiffs his creditors. He's done it four times!
Candidly, this is precisely what the Land of the Free needs right now: someone who can stop beating around the bush and just get on with it already.
Black says the country is officially bankrupt, with the government's financial statements showing a negative net worth of $17.7 trillion:
Nations that pass the economic point of no return can't rebuild until they hit rock bottom. And the US is way past that point. So let's get on with it already and hit the reset button.
Black recommends doing this by defaulting, preferably on Social Security and Medicare. But that is unlikely to suit this leading Republican candidate. As Trump said on Meet the Press on August 16:
I want people to be taken care of from a healthcare standpoint." I want to save Social Security without cuts. I want " a strong country with very little debt.
How can the country remain strong with very little debt, without defaulting on Social Security, Medicare, or the federal debt itself?
There is a way. The government can reduce the debt by buying it -- and ripping it up. The debt can be bought either with debt-free US Notes of the sort issued during the Civil War, or with US dollars issued by the Federal Reserve in the form of "quantitative easing."
The vast majority of the money supply today is created by banks when they make loans, as the Bank of England recently acknowledged. Banks create money by "monetizing" debt, turning loans into the digital deposits that make up most of the circulating money supply. The government could push the reset button by monetizing its own debt, turning it into what it should have been all along -- debt-free, interest-free dollars. As Thomas Edison observed in 1921:
If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. . . . It is absurd to say our Country can issue bonds and cannot issue currency. Both are promises to pay, but one fattens the usurer and the other helps the People.
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