What Debt Ceiling?

Jacob is telling it the way it is, just like "Blood Running In The Streets..."

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.

Read the complete post here: WHAT DEBT CEILING?