Zink Plan’s return to gold standard will save U.S.

During the Republican CNN/YouTube primary debate, Sarah Lederach at Penn State asked what the presidential candidates would do to control the national debt. The overwhelming topic of the responses was that they would cut “pork spending,” the allocation of federal funds to the pet projects of individual legislators.

Trevor Wagener further advocates this strategy in his column (“Hope for U.S. budget in curbed pork spending” 12/4) that appeared in this space Tuesday, claiming, “If pork spending is reallocated to paying off the principal on the debt with the budget balanced, the principal will begin to get paid off.” While this statement is logically indisputable, we might be unsatisfied with the timescale of the repayment. Citizens Against Government Waste estimates that $2.4 billion is spent on so-called pork projects every year. If we were to eliminate all of this pork barrel spending, we will be able to save $9.16 trillion, the current value of our national debt, within about 3,817 years.

It seems that in order to make real inroads on the debt, the government would have to either raise more revenue (perhaps through taxes), or make severe cuts to federal programs that voters actually like. These are unpalatable options. Instead, the American government continues to print more money to pay off the interest (a process called “debt monetization”), and then utilizes a problem-solving strategy called, “hoping someone else figures out how to deal with our massive deficit.”

Surprisingly, this strategy has worked thus far. But I, Michael Zink, have discovered the solution to our national debt problem that will require neither an increase in revenue, nor a decrease in spending.

Central to the Zink Plan is the notion that our debt is not tied to any fixed standard; rather, it’s counted in “dollars,” units of currency that are backed only by the “full faith and credit of the U.S. government.” Currently, the value of the “full faith and credit of the U.S. government” is declining at an astonishing rate, relative to that of shiny rocks that we dug up out of the ground (and still more insultingly, the euro). Yet as the dollar continues to decline in value, so too does the magnitude of our debt.

This is where currency printing enters the equation. Every dollar that we print tends to reduce the value of every other dollar currently in circulation. Hence, the more money we print, the less our debt is actually worth. Why, one might ask, don’t we simply print out $9.16 trillion, and then use it to pay off our creditors?

The answer, of course, is that this would destroy our economy. It happened in Germany in 1922-1923, when the government printed enormous sums of money to pay off its World War I debt, resulting in inflation so severe that it became more cost-effective for Germans to burn their paper money than buy firewood with it, per USAgold.com. Yet it’s also well known that within a few years of this collapse, Germany had completely revitalized its economy and refashioned itself into a major industrial power.

What was Germany’s secret to stopping the inflation? Ron Paul knows — it was gold! When the Germans introduced a new gold-backed currency, their economy suddenly stabilized. Here, then, is the Zink Plan:

First, the U.S. will borrow an enormous sum of money from foreign creditors, and use that money to buy an equally enormous quantity of gold. Immediately afterwards, the Federal Reserve will issue trillions upon trillions of dollars, causing our currency to almost completely devalue. Once this has happened, we can pay back all of our debts with our nearly worthless currency.

We could then introduce a new gold-backed currency (let’s call it the “dhollar,” silent “h”). We’ll mandate that everyone holding U.S. dollars redeem their currency for the “dhollar,” completely reversing the progress of inflation and revitalizing our economy.

The Zink Gold Plan, if properly enacted, would substantially reduce the value of the American federal debt, and might actually result in a net profit if we are able to procure enough gold. Furthermore, it has been a topic of some concern that foreign nations such as China had been stockpiling U.S. debt in order to gain economic leverage over us; the Zink Plan will put a stop to this, and teach China a valuable lesson in the process.

I do not suggest that this plan will come without some hardship. For one, the excitable nature of the American investor may result in some temporary instability in the general temperament of the market, leading to some hasty, ill-advised business decisions and perhaps a few suicides. But like the Yale seniors who interviewed at investment banks earlier this semester, we Americans must realize that there is often an unpleasant price to pay for being debt-free.

Michael Zink is a junior in Saybrook College.

Comments

  • Anonymous

    Your plan is flawed and destructive. We should just let foreign nations keep our manufacturing corps. over there as their own, rather than utilizing "an enormous sum of money" from them, our corporation's inventory would be just as good, and not as senseless as just borrow from them. We don't have to buuy gold from them, as well. This nation already has a huge amount of gold cached in our treasuries' vaults around the whole country. Purpously braking the dollar would be risky. We'd have to go on lockdown all together when there is no currency to use. Our debts wouldn't be able to be paid instantly. It would take at least months. We wouoldn't need a new currency in any way shape or form, in your idea, something called the "dollar". Rather, we will just make official the gold standard for the dollar we've always have used once that money has rebounded, after we pay off our debts.

  • Anonymous

    Loved your article! Great work!

  • Anonymous

    The US holds the largest amount of gold of any country. In the beginning of his century, we were the richest country in the world, and we had about 90% of the world's gold. Today we are still the richest country in the world with 25% of the worlds gold (unless you count india which holds gold in the form of jewelry). Germany and the IMF have the next most gold relatively.

    Gold is the only real money, anything else is just an oppressive government fraud. The Fed is a fascists institution and results in dollar socialism. The fraud of fractional reserve banking is to blame for the bankng collapses at the turn of the century, not the gold standard. Fractional reserve banking is just the practice of running insolvent businesses and hiding their insolvency from their creditors. Eliminate the central bank to end inflation. Criminalize the fraud of fractional reserve banking to stabilize banking.

  • Anonymous

    I see someone's been drinking the Ron Paul kool-aid. How does it taste?

  • Anonymous

    This plan is what 'should' come to pass, but unfortunately getting to print money is a great way for politicians to tax the middle and lower classes without them knowing it. The odds of those in power giving up this weapon are slim to none. It also assumes the powerful banking interests don't care that you may end up totally crushing most banks. Oh, and anyone that's actually holding US debt gets totally robbed, not just China; the number of mutual funds etc holding US treasuries are huge, they would all mostly go belly up. The sad thing is I DO think this is one of the best plans to deal with the huge US gov't deficit; by any normal standards the US gov't would be bankrupt, but they have the power to print money, so that will never happen. But the american people will continue to feel the effects of monetizing the debt through high inflation.

  • Anonymous

    I think that this is a fairly decent idea… about 3 years ago. The problem is that gold is now $900 per ounce. The amount of gold we would need to buy in order to recreate and economy after the collapse would be equal to or more expensive than the debt we currently have. We would be paying twice for this debt. The other thing that would happen is that the world markets would catch on way before we could implement this idea and it would completely destabilize the world economy. This would only work if we could buy gold over a 10 year period and then wait for another 5 years to implement the collapse and cutover.

  • Jholla

    That means people woul need to buy gold/silver now. Or there entire savings in dillars would be completyl whiped out. It's a good idea for the government, but not for the average person whose money is in the bank. it might take 100 dollars to buy 5 dhollars under this plan. How many people do you know have their savings in gold? I love the plan, but evryone needs to see the downside of not being prepared for it.

  • John Doe

    Do you know how much it costs for the U.S. to purchase an ounce of gold? Answer: just $0.10. That's right, just 10 cents.

    Why? Because its costs just 10 cents for the Federal Reserve to print out (9) $100 bills.