Rep. Ron Paul: Bankruptcy could be cure for U.S. debt

Rep. Ron Paul (R-Texas) said Monday that bankruptcy could be the best solution for the United States to address its mounting debt.

Paul, the libertarian Republican presidential candidate, suggested that bankruptcy would be a good option — as would, short of that, refusing to repay obligations to the Federal Reserve.

During an appearance on Iowa's WHO radio, Paul, in a conversation about the debt crisis in Greece, called on that country to declare bankruptcy, reasoning that the Greek debt was insurmountable and thus that the country could not avoid bankruptcy.

"Are we going to experience — are you predicting, in essence, if bankruptcy is the cure for Greece, is it also the cure for the United States?" asked host Jan Mickelson.

"Absolutely," Paul responded.

The Texas congressman has been a longtime critic of fiscal and monetary policy in the U.S. Paul has called for allowing gold and silver currency to compete openly with the U.S. dollar. He said he wasn't dreading the potential default on U.S. debt in early August because, in his view, the U.S. was constantly defaulting due to inflation-related devaluation of the dollar.

One solution, Paul said, would be to eliminate the Federal Reserve, and in turn, wipe out the debts owed to the Fed.

"I know this is pretty strange for people to even think about this — but you know, we owe, like, $1.6 trillion because the Federal Reserve bought that debt, so we have to work hard to pay that interest to the Federal Reserve. They're nobody; why do we have to pay them off?" he asked. "Why don't we just take that away from them and reduce the debt by one and a half trillion dollars or whatever?"

The comments are nothing if not consistent for Paul, who's said that he won't vote to raise the debt limit. He said that he didn't actually expect fellow lawmakers to follow his lead and allow default, but that if the U.S. were to default on its obligations to the Fed, it "might reassure the bondholders."

Speaking in the key primary-cycle state of Iowa, Paul even suggested that the Chinese government had even become more capitalistic than the U.S. government.

"You could make the case today for China being a more capitalistic country than the United States," he said. "That's where our businesses are going; it's easier to start a business."