Photo courtesy of Pleasure Island
By Robert Romano — Who is that masked man, and what has he done with Mitt Romney?
The more one sees and reads of Mitt Romney’s impromptu hidden camera question-and-answer session with donors in Boca Raton, Florida from May, the more one wonders why we have not seen more of this version of the candidate on the campaign trail.
In the latest bombshell, Romney said that when he met with former head of Goldman Sachs and the New York Federal Reserve John Whitehead, he was told that “as soon as the Fed stops buying all the debt that we’re issuing — which they’ve been doing, the Fed’s buying like three-quarters of the debt that America issues — he said, once that’s over, he said we’re going to have a failed Treasury auction, interest rates are going to have to go up. We’re living in this borrowed fantasy world, where the government keeps on borrowing money.”
Romney continued, explaining how the Obama Administration is making ends meet right now nationally: “You know, we borrow this extra trillion a year, we wonder who’s loaning us the trillion? The Chinese aren’t loaning us anymore. The Russians aren’t loaning it to us anymore. So who’s giving us the trillion? And the answer is we’re just making it up. The Federal Reserve is just taking it and saying, ‘Here, we’re giving it.’ It’s just made up money, and this does not augur well for our economic future.”
In less than 60 seconds, Romney aptly exposed the fact that we can no longer meet our debt obligations honestly. That, the only way we can refinance and expand the $16 trillion national debt is by having the Federal Reserve print the money when nobody’s looking.
All of which is actually a rather simple point to make, leaving one to simply wonder why Romney and other elected Republicans have been reluctant to expose it more publicly. Talk about low-hanging fruit.
Since Obama took office, the Fed has boosted its holdings of U.S. treasuries from $475 billion to more than $1.6 trillion today — a 246 percent increase. That number is likely to grow as Fed head Ben Bernanke continues with Operation Twist to convert short-term treasuries into those with longer maturities.
In addition, the Fed’s zero percent interest rates make it practically free for banks all over the world to borrow from the central bank to in turn buy U.S. treasuries — an indirect monetization of the debt that does not appear on the Fed’s balance sheet but is nonetheless taking place.
Despite conventional wisdom that suggests Fed policy is too esoteric for the campaign trail, this is a potent issue.
It exposes the fraud the Obama Administration engages in almost every single week to pay the bills. Moreover, it underscores the breadth of the crisis we are truly in. And it gives much-needed urgency to the debt issue commonly lacking from public discourse by answering the all-important question of why the debt is too large and must be paid down sooner rather than later.
Yet at the fundraiser, Romney lamented that “some of these things are complex enough it’s not easy for people to understand”. Really?
How hard is it, really, to look into a camera and indict the Obama Administration for dishonestly printing money to pay the debt?
The answer is that it is not that hard at all. Romney could easily make that a theme of his campaign. He could expose the fraud, and then tell everyone what he intends to do about it.
Monetizing the debt is a national disgrace. It puts the U.S. into the same category of nations such as the Weimar Republic or Zimbabwe that have resorted to such deceptive practices to pay their debts. What better way to show we’re in over our heads? Can voters really hear enough about this?
Yet, on the campaign trail, Romney has had almost nothing to say about it.
In the end, it may be chalked up to another missed opportunity for Romney to capitalize on a powerful issue damaging to Obama. But the fallout is worse than that.
The American people are the real losers here, who remain oblivious to how we are really paying the bills and of how close we really are to a catastrophic default.
That is, unless Romney supplies them with the necessary facts.
Without more information, voters might even believe Barack Obama’s misleading assurances that we’re not already broke or that the debt is not that big a deal.
Of all things, that might be the worst possible outcome of the 2012 election, regardless of who wins. That, as a nation, we had a real opportunity to deal with the debt, but decided against it because our leaders could not adequately articulate why doing so was necessary.
Robert Romano is the Senior Editor of Americans for Limited Government.
