Ted Cruz may be a dangerous scheming sociopath, Rand Paul is a dangerous idiot. At least according to his own words.
Real Clear Politics –I’m promising to the American people and to the markets to Wall Street that we will always pay the interest on the debt as a priority. Do you know how we do that? We bring in $250 billion in tax revenue every month. The debt payment is about 30 billion. We just promise we will always pay it. What’s going on is interestingly the Democrats are scaring people and saying, we might not pay it because Republicans don’t want to raise the debt ceiling. If you don’t raise the debt ceiling, what that means is you have a balanced budget. It doesn’t mean you wouldn’t pay your bills. We should pay the interest and we should never scare the markets. So, if I were in-charge, I would say, absolutely, we will never default. I would pass a law saying that the first revenue every month, the first revenue, has to go to pay interest.
He’s promising …. he’s good for it …
You see that old fashioned Treasury Note up above? Notice there are some squares that have been cut away and are now missing below the main part, or corpus, of the bond? Those are called coupons. They come with a date and an ID number, in the old days you would clip them off when that date rolled around and mail them to a bank or the Treasury Department, a check would be mailed back representing your interest. T-notes typically pay twice a year for the life of the bond, when the time is up the deal is over, you get the face value back, usually in thousand dollar denominations. That’s how people used to get their interest paid and principle back.
Not anymore though. It’s been a long time since I’ve see an actual bond like that, with coupons to be clipped, outside of a museum. Like everything else interest has long been automated, bonds bought and sold through brokers are held in what’s street name, meaning as far as the payer knows, the brokerage company owns the bonds, and the interest is electronically deposited into the bond holder’s account by that broker-dealer.
There is no way for the US Treasury to know who owns what bonds if they are held in street name, and there’s no way Treasury could get that info, especially if that bond is held in street name in an overseas brokerage account, without courts and subpoenas and all that stuff. In short, if we start defaulting, we have no way to pick and choose if grandma gets her interest paid on time versus a Chinese hedge fund holding T-notes. Our automated system is not even set up to pay partial interest out, or pay late, or pick and choose who gets paid in the event we could play faves. Vast volumes of code and giant international super-network would have to be completely rewritten and rebuilt for that to be possible. Which is a long way of saying what a fucking idiot and megalomaniac Rand Paul really is.
But it gets worse. The reason he’s dangerous is because that bond up there, or rather its descendants, are US money. Most people think of money as currency, bills or coins, but its not. A dollar bill might be best thought of as a bearer check that anyone can use for payment without having to supply ID or bank account numbers or any of that stuff. It’s a bearer check, meaning whoever has it owns it without question, and doesn’t matter if it’s a one-dollar bill or a hundred-dollar bill, its such a safe check that venders don’t have to bother calling up the issuing ‘bank’ to make sure it will clear. But that dollar bill is not based on gold or anything of tangible value, it’s based on notes/bonds issued by the US Treasury Department. Same for all US money, every dime to your name, regardless if its in you wallet or electrons in a paypal account.
Those bearer checks called dollars are so safe that most every nation on Earth maintains large reserves of them. They’re so safe that large producers of essential commodities like oil only accept dollars. That means that most every nation on earth is constantly buying more dollars as they spend theirs, which puts a demand on the dollar and keeps it value high relative to other currencies.
If we cannot raise the debt ceiling, we cannot generate the money needed to pay interest and other obligations. If we short or miss a single interest payment on those T-notes, they will crash as people, institutions, and entire nations bail out of them, which means the dollar crashes, and the world could flip into economic chaos the likes of which we have never seen or imagined. Even change stashed in a coffee can in your closet could cease to have value beyond the scrap metal.
That’s what Rand Paul and his dumb ass Teaparty morons have convinced themselves would never happen, because they promise it won’t. For Rand Paul to keep that promise, he would have to be worth about Ten Trillion in gold. Or be able to go into our Treasury Department, fix the code and rebuild the network, conjure up money out of nowhere and get it to the right people, oversee every trade via every interbank currency department in every nation and, by simply promising he’ll do all this, sooth the market and stop the crash in its tracks. IOW, he would be moving faster than Santa Claus on Christmas Eve and it woudl be the biggest government takeover of the entire free world ever conceived. But hey, he promised … he’s good for it … we can trust Rand Paul …