Gold sales could keep US solvent: Paul

Gold reserve sales, cuts in military spending would keep US from defaulting without raising the debt ceiling, Ron Paul says. He wants gold as legal tender.

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    In this file photo taken Nov. 8, 2006, gold bars are on display at the "Gold" exhibit in the American Museum of Natural History in New York. Rep. Ron Paul (R) of Texas and a presidential candidate wants the US to sell off gold reserves and other assets so the United States can avoid default.
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By Margo D. Beller, Special to CNBC.com

Republican presidential candidate Ron Paul is worried about the falling value of the U.S. dollar and doesn't want the debt ceiling raised, he told CNBC Wednesday.

But he also doesn't want to default on payments to U.S. bond holders.

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Rather than raise the debt ceiling, he wants to see cuts in military spending and sales of some American assets — such as gold reserves.

"They’re worrying about raising the debt limit," said the Texas congressman. "I’m worried about the value of the dollar" especially if the Federal Reserve continues to "print money" whenever it wants.

"They try to pump up the fear and scare us into doing things," he said of the government, adding that was how the bank bailouts came about. "Aren’t we defaulting if the dollar is worth 90 cents this year?"

U.S. gold, he said, "has to be in the hands of the people. We should legalize its use as legal tender. Government doesn’t have to hold it. If an individual gets into trouble they might sell their stocks, their CDs, their assets to pay their bills. Why can’t a country do that?"

Paul was one of four Republicans who did not vote for Rep. Paul Ryan's budget plan in the House of Representatives, saying the plan was "rather feeble" and focused on the wrong priorities — cuts in medical care — which created fear and consternation while masking what he considers more important issues starting with the dollar.

He wants to see cuts in a lot of entitlement programs beyond Medicare and Social Security.

"Let's start with the military industrial complex and these useless, very damaging wars" in Iraq and Afghanistan, he said. "Why are we bailing out rich farmers? Why do we even have those programs?"

However, he said, "the people aren’t ready for that."

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