This Note Is Legal Tender For All Debts, Public and Private

If you look at a piece of US paper money, there is a disclaimer on it somewhere claiming "this note is legal tender for all debts, public and private." As any Ron Paul supporter will correctly explain, that means that those pieces of paper are money and have worth because the government says so and for no other reason.

For a long time, that backing meant something. One could put full faith and credit into the money because the government was always able to support the currency. The obligation of the United States government to pay its debts, much like the money itself at one time, was as good as gold. As any individual knows, when one takes out too many loans, or fails to pay their bills on time, their credit is undermined. Spending money frivolously causes most of the problems that result in this state of affairs.

That is where the United States is at right now. China questions our credit. Automobile dealerships and medical facilities question our credit. The "cash for clunkers" deal is approaching fiasco status because the government is not paying the credits due to the dealers. Medicare is habitually behind on its payments. These problems undermine faith and credit in our government's handling of the economy.

That goes back to those little pieces of paper we carry around with us. What happens when the faith and credit extended to our government are replaced with suspicion and fear? Our currency then loses value, causing inflation. Lenin did say that high taxes and inflation were the perfect combination with which to destroy the political influence of the middle class.

Regardless of why this is happening, the danger is real. Credit, once lost, is hard to regain even for the United States of America. Admittedly this process has taken many years and presidents to hit this stage. However, Obama is severely exasperating the problem by proposing new costly initiatives instead of trying to scale back the burdens on taxpayers and the system itself.