Congressman Ron Paul spoke to Bloomberg TV in an interview on July 13th after the House hearing with Fed Chairman Ben Bernanke, and he agreed with the Moody’s rating agency that the United States no longer deserves our AAA rating because the government has become insolvent.
The man who yesterday got into a heated argument with the chairsatan on whether gold is or isn’t money (a Bernanke response already mocked to death so we will leave it alone), shares his take on the most recent bout of scaremongering by Moody’s (with S&P doing in private today what Moody’s did in public yesterday) with Bloomberg TV’s Erik Schatzker. When asked if the American AAA rating is worth saving, his reply: “probably not. I think if you had a market evaluation on this issue, it should have marked down a long time ago.” The reason the downgrade will come regardless is that “ultimately that is going to happen anyway because we are insolvent.” The big picture: “I think it is part of the game to make sure everyone is fearful so we continue this process. – Zerohedge
For the American people, the comments by Congressman Paul are important because he is one of the few lone voices telling the public what is actually transpiring with our fiscal status. For the first time in history, our accumulated debt is higher than our annual GDP, and with the argument that unless we raise the debt ceiling we will default on our obligations means that we are already insolvent, and unable to meet our debts with current incoming revenues.
See video on the interview with Bloomberg to the left of this article
Ron Paul’s assessment of the US credit rating comes at the same time that one of the primary ratings agencies threatened to downgrade America unless the debt celing issue is not resolved, and resolved quickly. Moody’s on July 13th placed the US on downgrade ‘watch’, and even during the credit crisis of 2008, the United States was never in danger of experiencing a downgrade.
Perhaps Moody’s, and the other primary ratings agency Standard and Poor, have learned their lesson from 2007 and 2008 when they were seen as culpable because they continued to rate junk bonds and mortgage backed securities with a AAA rating, even though the markets themselves knew they were toxic assets.
Like the concept of a default should the debt ceiling not be raised by August 2nd, Congressman Paul carries the thought that the only way the US can get out of its downward spiral is to let the system crash according to natural market laws, and then rebuild it from the aftermath. History shows that default is not the end of the world for a nation, as seen by the strong recoveries in Russia and Argentina over the past 20 years after they chose to default on debt, and rebuilt their economies stronger than before those defaults.
Ron Paul is speaking the truth when few politicians and economists have the stomach to tell the American people what is actually transpiring with the national debt. In agreeing with Moody’s that the US should be downgraded, or at least having the downgrade threat held over Washington, speaks to the underlying fact that as of right now, the US government is insolvent, and allowing the system to default and rebuild might be a better option than simply raising the debt ceiling, and continuing the borrowing process which will only make matters worse.