Is it possible to pay off our entire national debt??

[socialize_me]

If our debt is nearing $10 trillion yet we only have $800 billion in hard physical currency, how in the world is it possible to get rid of the Federal Reserve, stop the fractional-reserve banking system, AND pay off the debt?? Isn't that impossible to accomplish all three???

[Elwar]

Are you volunteering to do so?

[Liberty Rebellion]

Balance the budget>cut spending>cut borrowing>then start paying down the debt.

Of course, that doesn't take into account Social Security, Medicare, and Medicaid. So add another ~$60trillion

[AJ Antimony]

No. It'll take time and incredible patience. For the sake of an example, let's say the debt was an even $10 trillion and the Congress gets $3 trillion in revenue every year. Right now, they spend all $3 trillion and then some every year. To pay off the debt all we'd have to do is maintain the revenue (not increase it), and then cut spending dramatically. If we brought home our empire, then we could spend $2 trillion of that money at home and that remaining $1 trillion would go solely to paying back the debt. Americans won't go for it.

[socialize_me]

No, I just see it as impossible to do so. The money we owe is credit that doesn't exist in the real world, so as I see it and as depressing as it sounds, we can never pay off our debt unless we decide to actually print more money from the Mint. I use "print" in the literal term of actually printing money, not creating more credit as Ron Paul refers to it.

Unless someone can correct my misconception, it's impossible to solve all three problems (Fed Reserve/Fractional Reserve Banking/National Debt).

[ForrestLayne]

If our debt is nearing $10 trillion yet we only have $800 billion in hard physical currency, how in the world is it possible to get rid of the Federal Reserve, stop the fractional-reserve banking system, AND pay off the debt?? Isn't that impossible to accomplish all three???

No it isn't - the USA was bankrupted in 1973ish. We have not been able to pay off our debts for at least 20 years..we are the DEBTOR BUNNY we just keep borrowing and borrowing and borrowing and borrowing and.........

you get the point.

[socialize_me]

Balance the budget>cut spending>cut borrowing>then start paying down the debt.

Of course, that doesn't take into account Social Security, Medicare, and Medicaid. So add another ~$60trillion

But guys, there's only $800 billion in REAL money out there!! The debt we owe is all credit! In order to pay it off without having a Federal Reserve or a fractional reserve banking system is to have more physical currency than that in credit---that can never happen unless we A) Printed more money (literally) or B) Defaulted on the National Debt which I don't even know where to begin on how that would be done.

[socialize_me]

No it isn't - the USA was bankrupted in 1973ish. We have not been able to pay off our debts for at least 20 years..we are the DEBTOR BUNNY we just keep borrowing and borrowing and borrowing and borrowing and.........

you get the point.

But you're not answering my question. I KNOW we're in debt, so please, stop referring to 1930's, 1970's, 19xx's, because I don't need a history lesson or talking points fluff. The point is that NO ONE has answered my question yet and I don't think it's possible to. My question (again) is this:

How in the hell do we pay off a debt that far exceeds our physical currency without a Federal Reserve and a fractional-reserve banking system?? Last I checked, $10 trillion > $800 billion, so you would have to increase the amount of that $800 billion and Lord knows what that would do. That's more harmful than what the Federal Reserve does.

The way I see it is that the only way you can pay off this debt we've accumulated is through credit. If we didn't have a fractional-reserve banking system or a Federal Reserve, we could not simply create credit. A Full reserve banking system would require 100% reserves, and if our 100% reserves are $800 billion, then you'll never pay off a $10 trillion debt without a Federal Reserve/fractional reserve banking system!!!

[cien750hp]

But guys, there's only $800 billion in REAL money out there!! The debt we owe is all credit! In order to pay it off without having a Federal Reserve or a fractional reserve banking system is to have more physical currency than that in credit---that can never happen unless we A) Printed more money (literally) or B) Defaulted on the National Debt which I don't even know where to begin on how that would be done.

theres not just 800 billion of hard money (gold reserves i assume you're talking about)
its only valued at 800 billion due to how many ounces of gold currently exist at current market prices. but gold is being used as a commodity, not a backing of currencies.
if countries return to backing their currencies with gold (will have to be gradual), the price of gold will go up. the prices are subject to the demand
one ounce of gold may be worth 10k in the future when we return to hard money instead of around 900 now

[ForrestLayne]

But you're not answering my question. I KNOW we're in debt, so please, stop referring to 1930's, 1970's, 19xx's, because I don't need a history lesson or talking points fluff. The point is that NO ONE has answered my question yet and I don't think it's possible to. My question (again) is this:

How in the hell do we pay off a debt that far exceeds our physical currency without a Federal Reserve and a fractional-reserve banking system?? Last I checked, $10 trillion > $800 billion, so you would have to increase the amount of that $800 billion and Lord knows what that would do. That's more harmful than what the Federal Reserve does.

The same way you pay off a $100,000 home mortgage when making 40k a year. set payments that pay off the loan in a given time period.

If you only make 40k - bring home 32K - you can still pay off 100K over time. (actually you pay back about 133K)

[socialize_me]

No. It'll take time and incredible patience. For the sake of an example, let's say the debt was an even $10 trillion and the Congress gets $3 trillion in revenue every year. Right now, they spend all $3 trillion and then some every year. To pay off the debt all we'd have to do is maintain the revenue (not increase it), and then cut spending dramatically. If we brought home our empire, then we could spend $2 trillion of that money at home and that remaining $1 trillion would go solely to paying back the debt. Americans won't go for it.

Again, the $3 trillion doesn't exist physically. If we had no Fed Reserve/frac. bank. system, then all the money we paid in taxes would actually have to exist physically which it doesn't. We couldn't simply collect income taxes and pay it off in a matter of a decade even if we didn't spend anything because there's only $800 billion in physical currency out there. We couldn't pay off a $801 billion debt with $800 billion, how in the hell could we pay off a $10 trillion WITHOUT a system of credit???

[socialize_me]

The same way you pay off a $100,000 home mortgage when making 40k a year. set payments that pay off the loan in a given time period.

If you only make 40k - bring home 32K - you can still pay off 100K over time. (actually you pay back about 133K)

But ForrestLynne, only $800 billion exists in physical currency. If you pay off the debt at say, $400 billion a year (assuming you take half of all the money supply in taxation), then that money will not go back to the American People to cycle through again for next year. It will go overseas and much of it will never be seen again in America so that $400 billion we spent to pay off the debt went for the most part to foreign investors and governments. Assuming we get back half of that, we'll only have $600 billion in America. We tax half of that, and $300 billion goes again to pay off the debt. The debt gets smaller, but so does the amount of money and revenue in the United States. You'd be taxing America until you were taxing an economy where $100 exists where you take $50 to reduce a debt---it's not possible!!!

[surf]

cut government spending. a helluva lot. it's the only answer.

[RonPaulFever]

Like some of you, I find this whole financial crisis a bit confusing....but I think I can translate it in a way that makes it easy for everyone to understand.

































WE
ARE
FUCKED

[jbuttell]

But you're not answering my question. I KNOW we're in debt, so please, stop referring to 1930's, 1970's, 19xx's, because I don't need a history lesson or talking points fluff. The point is that NO ONE has answered my question yet and I don't think it's possible to. My question (again) is this:

How in the hell do we pay off a debt that far exceeds our physical currency without a Federal Reserve and a fractional-reserve banking system?? Last I checked, $10 trillion > $800 billion, so you would have to increase the amount of that $800 billion and Lord knows what that would do. That's more harmful than what the Federal Reserve does.

The way I see it is that the only way you can pay off this debt we've accumulated is through credit. If we didn't have a fractional-reserve banking system or a Federal Reserve, we could not simply create credit. A Full reserve banking system would require 100% reserves, and if our 100% reserves are $800 billion, then you'll never pay off a $10 trillion debt without a Federal Reserve/fractional reserve banking system!!!

I'm not sure why we'd need physical currency to pay off our debt. We could pay off our debt, that doesn't mean that it would actually be backed by any physical object/currency - that however is related, but a different matter to solve.

I would like to read Ron's "A Case for Gold" - I suspect that will shed some light on these questions.

Bottom line, if I had to choose, I'd want to first get the nation out of debt, then implement a system that soundly backs up the currency.

[ForrestLayne]

But ForrestLynne, only $800 billion exists in physical currency. If you pay off the debt at say, $400 billion a year (assuming you take half of all the money supply in taxation), then that money will not go back to the American People to cycle through again for next year. It will go overseas and much of it will never be seen again in America so that $400 billion we spent to pay off the debt went for the most part to foreign investors and governments. Assuming we get back half of that, we'll only have $600 billion in America. We tax half of that, and $300 billion goes again to pay off the debt. The debt gets smaller, but so does the amount of money and revenue in the United States. You'd be taxing America until you were taxing an economy where $100 exists where you take $50 to reduce a debt---it's not possible!!!


My mortgage is an electronic transfer. I do not get the physical currency and give it to the bank. My employer "wires" it to my account and then the mortgage is "wired" to the bank under my mortgage account number. It works the same way for countries. How do we give Georgia $1 billion in aid? It is electronic transfer. Same for all countries getting aid from us. Israel, Pakistan, tsunami aid, etc...
There is no need for the physical money to move...

[fedup100]

But guys, there's only $800 billion in REAL money out there!! The debt we owe is all credit! In order to pay it off without having a Federal Reserve or a fractional reserve banking system is to have more physical currency than that in credit---that can never happen unless we A) Printed more money (literally) or B) Defaulted on the National Debt which I don't even know where to begin on how that would be done.

They created it with the stroke of a pen, we should dissolve their corporation and dissolve the debt the same way it was created. If they don't like that, then we need the congress and senate to vote for Israel to pay it. After all, they call all the shots in us policy and they own the Federal Reserve.

[jbuttell]

Again, the $3 trillion doesn't exist physically. If we had no Fed Reserve/frac. bank. system, then all the money we paid in taxes would actually have to exist physically which it doesn't. We couldn't simply collect income taxes and pay it off in a matter of a decade even if we didn't spend anything because there's only $800 billion in physical currency out there. We couldn't pay off a $801 billion debt with $800 billion, how in the hell could we pay off a $10 trillion WITHOUT a system of credit???

Assuming your assumption is correct, that we don't have that much hard currency, I suspect you're right - that credit-system is necessary to pay off that debt. The trick is to get that DEBT off our back - it could be done by cutting our budget drastically.

[socialize_me]

cut government spending. a helluva lot. it's the only answer.

*punches a wall* Okay...it doesn't matter if you cut ALL spending, you can NEVER pay off a $10 trillion debt when only $800 billion in physical currency exists when you don't have a Federal Reserve or a fractional-reserve banking system!! It's impossible to accomplish all three!! You cannot simply cut spending---you can reduce the debt but never exterminate it even if you spend nothing for the next hundred years and only tax. Again, $800 billion is less than $10 trillion. You cannot pay off $10 trillion with $800 billion. The only way you could pay off this debt is to pay it off annually by taxing ALL of the $800 billion and then having all the debt money which went out to foreigners which make up half of our debt holders to come back to the United States and give us the money to keep paying it off. Theoretically you could, but you'll never in reality. You can't. The presence of physical money in the United States will gradually shrink thus shrinking our tax revenue. The more the revenue shrinks, no matter how much spending you cut, you cannot eliminate the debt without creating more physical currency.

Just please, directly answer my question. Don't give me talking points, fluff, regurgitated points, because not even Dr. Paul has answered this question and I don't think anyone has asked it: How do you pay off the entire debt when you don't have a Federal Reserve or a fractional reserve banking system? You CAN'T accomplish all three!! It's impossible!! Today, about $1.2 trillion is taken annually in income taxes. If we had no federal reserve or fractional reserve banking system, the MOST you could tax would be $800 billion. When you pay taxes today, you don't do it by sending cash in to the IRS, do you? No, you do it through wire transfer, the IRS removes it from your paycheck, etc. all of which are things that require a fractional reserve banking system in order to accumulate more tax revenue than what exists in actual physical currency in the United States.

[socialize_me]

My mortgage is an electronic transfer. I do not get the physical currency and give it to the bank. My employer "wires" it to my account and then the mortgage is "wired" to the bank under my mortgage account number. It works the same way for countries. How do we give Georgia $1 billion in aid? It is electronic transfer. Same for all countries getting aid from us. Israel, Pakistan, tsunami aid, etc...
There is no need for the physical money to move...

Yes because those systems of payments are made under a fractional-reserve banking system. Physical currency is not required!!

[nbhadja]

But you're not answering my question. I KNOW we're in debt, so please, stop referring to 1930's, 1970's, 19xx's, because I don't need a history lesson or talking points fluff. The point is that NO ONE has answered my question yet and I don't think it's possible to. My question (again) is this:

How in the hell do we pay off a debt that far exceeds our physical currency without a Federal Reserve and a fractional-reserve banking system?? Last I checked, $10 trillion > $800 billion, so you would have to increase the amount of that $800 billion and Lord knows what that would do. That's more harmful than what the Federal Reserve does.

The way I see it is that the only way you can pay off this debt we've accumulated is through credit. If we didn't have a fractional-reserve banking system or a Federal Reserve, we could not simply create credit. A Full reserve banking system would require 100% reserves, and if our 100% reserves are $800 billion, then you'll never pay off a $10 trillion debt without a Federal Reserve/fractional reserve banking system!!!

It does not matter how you try to paint the picture, we are 60 trillion dollars in debt. I dare you to print 60 trillion dollars out of thin air. The dollar will be worth less than paper if you do that. When a countries currency dies, it dies.

Who knows what the solution is but it is a FACT that asking the Fed to print out the money is MUCH WORSE!

The Federal reserve got us into the media. No matter what the solution is, the first step in any solution is to quickly destroy the federal reserve.

[nate895]

But guys, there's only $800 billion in REAL money out there!! The debt we owe is all credit! In order to pay it off without having a Federal Reserve or a fractional reserve banking system is to have more physical currency than that in credit---that can never happen unless we A) Printed more money (literally) or B) Defaulted on the National Debt which I don't even know where to begin on how that would be done.

There has to be more physical currency than that. We have 6 trillion on deposit in various banks in the US currently, and we have 2.5 trillion in government revenue. Of course, if we increased the physical currency (assuming there is that little), we could reduce the amount in the "virtual" world.

[cien750hp]

*punches a wall* Okay...it doesn't matter if you cut ALL spending, you can NEVER pay off a $10 trillion debt when only $800 billion in physical currency exists when you don't have a Federal Reserve or a fractional-reserve banking system!! It's impossible to accomplish all three!! You cannot simply cut spending---you can reduce the debt but never exterminate it even if you spend nothing for the next hundred years and only tax. Again, $800 billion is less than $10 trillion. You cannot pay off $10 trillion with $800 billion. The only way you could pay off this debt is to pay it off annually by taxing ALL of the $800 billion and then having all the debt money which went out to foreigners which make up half of our debt holders to come back to the United States and give us the money to keep paying it off. Theoretically you could, but you'll never in reality. You can't. The presence of physical money in the United States will gradually shrink thus shrinking our tax revenue. The more the revenue shrinks, no matter how much spending you cut, you cannot eliminate the debt without creating more physical currency.

Just please, directly answer my question. Don't give me talking points, fluff, regurgitated points, because not even Dr. Paul has answered this question and I don't think anyone has asked it: How do you pay off the entire debt when you don't have a Federal Reserve or a fractional reserve banking system? You CAN'T accomplish all three!! It's impossible!! Today, about $1.2 trillion is taken annually in income taxes. If we had no federal reserve or fractional reserve banking system, the MOST you could tax would be $800 billion. When you pay taxes today, you don't do it by sending cash in to the IRS, do you? No, you do it through wire transfer, the IRS removes it from your paycheck, etc. all of which are things that require a fractional reserve banking system in order to accumulate more tax revenue than what exists in actual physical currency in the United States.

i think you may have missed my post towards the bottom of page one. the 800 billion dollar number you are arriving at is just based on current ounces of gold at current market prices. the value of gold will go up tremendously with the return of hard money, and we could keep the current amount of money we have in circulation, we just would gradually have to buy up gold to back the currencies with.

[surf]

the way to pay off the debt is to cut gov't spending as Dr. Paul would recommend - wouldn't a $trillion or so spent on meddling overseas damn near balance the budget? wipe off the billions wasted on the Dept. of Education, etc. and pretty soon you can begin to pay down the "current" portion of the national debt.

and before anyone jumps down my throat about what expenses i'm missing and how this doesn't begin to cover it, just remember, it's as simple as cutting US gov't spending. that's how we can begin to challenge the debt. don't worry about fractional reserve banking or electronic funds transfer or gold or much else when you consider what will be necessary to pay off the National Debt. it's slashing government spending.

[werdd]

What if.

We had a sensible foreign policy

We ended the fed

Let the free market take over, and allowed only congress to coin currency.

And the dollar strengthened over time...

Would it be possible to refinance our debt with the world?

say "Hey, our dollar is worth twice what it was when we had a fiat money system, then we just owe you half."

/me ponders

[socialize_me]

There has to be more physical currency than that. We have 6 trillion on deposit in various banks in the US currently, and we have 2.5 trillion in government revenue. Of course, if we increased the physical currency (assuming there is that little), we could reduce the amount in the "virtual" world.

Look at what M0 is--that'll tell you what the physical currency is. It's well under a trillion dollars, but even assuming it's a trillion, or even $6 trillion you quote, that's still less than $10 trillion. It's impossible. Most of the debt is owned by people outside the country meaning most of the money we use to pay off the debt will likely never be received again by the government in tax revenue, thus the amount of physical currency in the United States shrinks year after year, or anytime we pay off the debt.

And the $2.5 trillion in government revenue is irrelevant!! Do you send physical currency to the Government when you pay your taxes?? Hell no you don't; you pay them via wire transfer through your bank or write a check!! Either way you're participating in a system of fractional reserve which means the physical currency need not exist for a transfer of "wealth" to commence.

[nate895]

What if.

We had a sensible foreign policy

We ended the fed

Let the free market take over, and allowed only congress to coin currency.

And the dollar strengthened over time...

Would it be possible to refinance our debt with the world?

say "Hey, our dollar is worth twice what it was when we had a fiat money system, then we just owe you half."

/me ponders

What if they say "hell no"

Of course another solution is to balance our budget and become self-sufficient financially, and then we say to the World "we ain't payin' off this debt, and if you don't like it, we have a trillion tons of lead and steel you have to go through."

[werdd]

What if they say "hell no"

Of course another solution is to balance our budget and become self-sufficient financially, and then we say to the World "we ain't payin' off this debt, and if you don't like it, we have a trillion tons of lead and steel you have to go through."

Peace through overwhelming firepower, on our own borders ;)

Thats foreign policy.

[socialize_me]

the way to pay off the debt is to cut gov't spending as Dr. Paul would recommend - wouldn't a $trillion or so spent on meddling overseas damn near balance the budget? wipe off the billions wasted on the Dept. of Education, etc. and pretty soon you can begin to pay down the "current" portion of the national debt.

and before anyone jumps down my throat about what expenses i'm missing and how this doesn't begin to cover it, just remember, it's as simple as cutting US gov't spending. that's how we can begin to challenge the debt. don't worry about fractional reserve banking or electronic funds transfer or gold or much else when you consider what will be necessary to pay off the National Debt. it's slashing government spending.

...but if you cut all spending, you still cannot pay off $10 trillion with $800 billion. You would have to tax us to the hills, have no government spending for decades, and have a population which would put up with that. You know how many years it would take to tax $800 billion to pay off $10 trillion??? 12 and a half years...that would be assuming all of the money were taxed, went directly to the debt, the money to pay off the debt was reintroduced into the United States (all of it) and then taxed completely again, and you would have no government spending of any kind. You would not have an economy since everyone's money would be going to the government and no government programs would exist. That would be an extreme route, but it would take hundreds if not thousands of years to pay off the national debt if we had no fractional reserve banking system. It's impossible to accomplish all three. You can get rid of the Fed and the Frac. Bank. System but still have a debt, or you could get rid of the debt but still have a nation built on credit. Either way you still have at least one of the three evils, and the answer of "cutting spending" can't cut it. It doesn't. It's impossible and completely illogical.

[ord33]

This may be a very dumb question, but it is a serious one I dont know the answer... Is there collateral on the US Federal Government Debt. For instance, would it be possible in any form for foreign entities to "seize" federal land/national park land, government buildings if the US Government would ever go into default and not be able to pay its debts? I realize it would be extremely difficult for a foreign entity/government to "take over" National Park lands as there would be outrage beyond belief, but is this a possibility?

[ForrestLayne]

google this string

did nixon pay u.s.debt in gold

[fletcher]

Why do you think you need actual physical currency to pay off debt? You don't. Just because there is only $800 billion in physical currency doesn't mean that's the entire money supply. 90% of the money in your savings account is not physical currency, but it is real money that can be used to pay off debt.

[nbhadja]

Socalize_me, DESTROYING THE CURRENCY THROUGH INFLATION IS MUCH WORSE!!!
Asking the people who got us into this mess to bail us out is COMPLETELY RETARDED!


It is easy to reduce MOST OF THE 3 trillion dollars spent per year.

[Brassmouth]

Didn't the Monetary Reform Act propose paying off the debt with FRNs and issuing US notes into the money supply?

It also would've required full-reserve banking and abolished the Fed....

[Ninja Homer]

...but if you cut all spending, you still cannot pay off $10 trillion with $800 billion. You would have to tax us to the hills, have no government spending for decades, and have a population which would put up with that. You know how many years it would take to tax $800 billion to pay off $10 trillion??? 12 and a half years...that would be assuming all of the money were taxed, went directly to the debt, the money to pay off the debt was reintroduced into the United States (all of it) and then taxed completely again, and you would have no government spending of any kind. You would not have an economy since everyone's money would be going to the government and no government programs would exist. That would be an extreme route, but it would take hundreds if not thousands of years to pay off the national debt if we had no fractional reserve banking system. It's impossible to accomplish all three. You can get rid of the Fed and the Frac. Bank. System but still have a debt, or you could get rid of the debt but still have a nation built on credit. Either way you still have at least one of the three evils, and the answer of "cutting spending" can't cut it. It doesn't. It's impossible and completely illogical.

Sorry, but you aren't making a lot of sense. Why exactly do you think the national debt can only be paid off with paper money?

The majority of the national debt is actually held by the US. The biggest chunk of the debt is held by intragovernmental programs, such as Medicare and Social Security. The next biggest chunk is held by US public in the form of US treasuries. These treasuries are being paid off all the time, as payment comes due. They are not paid in paper money. Then they sell more treasuries to make up for what they just paid back.

[Alawn]

The amount of cash printed out versus the amount of money that only exists on computers is irrelevant. How much physical currency we have right now printed out is irrelevant. That is not our problem. The ratio of FRNs printed out to electronic money means nothing. It has no effect on us paying back the debt.

[mport1]

Our debt is actually about $100 trillion.

Here is a speech given by the President of the Dallas Federal Reserve about what he calculates to be our $99.2 trillion debt. Now this is obviously somebody very tied to the government and yet he still calculates it at this.

Some really scary stuff. Here is one telling quote:


Discretionary spending would have to be reduced by 97 percent not only for our generation, but for our children and their children and every generation of children to come. And similarly on the taxation side, income tax revenue would have to rise 68 percent and remain that high forever. Remember, though, I said tax revenue, not tax rates. Who knows how much individual and corporate tax rates would have to change to increase revenue by 68 percent?...For the existing unfunded liabilities to be covered in the end, someone must pay $99.2 trillion more or receive $99.2 trillion less than they have been currently promised. This is a cold, hard fact. The decision we must make is whether to shoulder a substantial portion of that burden today or compel future generations to bear its full weight.

Full speech - http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm

[Ninja Homer]

socialize_me you are right that the national debt can never be paid back with our current system, but I just don't see what the amount of paper money in circulation has to do with it.

From http://theunjustmedia.com/Banking%20&%20Federal%20Reserve/The%20Federal%20Reserve%20and%20the%20National%20D ebt.htm

"FACT #6. All U.S currency is "Federal Reserve Notes" of debt, owed to the Federal Reserve, and is borrowed into existence. How can you pay the debt when you have to "borrow" the currency to pay the debt, FROM THE GUYS YOU ALREADY OWE? It is like paying off your VISA card using THE SAME VISA CARD...the interest just keeps growing, and no principal is ever paid! It is a ponzi scheme....a scam...and America is the mark!

Thus, the national debt can never be repaid. It is not meant to be repaid. It is meant to bring Americans to ruin without bloodshed. It is the legal takeover of the country, piece-by-piece, and the voluntary enslaving of the sovereign people, who will ULTIMATELY be asked to accept the demise of the Constitution, and their sovereign status under that Constitution, to become "subjects" of the benevolent ruling class."

[RonPaulR3VOLUTION]

I'm not sure why we'd need physical currency to pay off our debt. We could pay off our debt, that doesn't mean that it would actually be backed by any physical object/currency - that however is related, but a different matter to solve.

I would like to read Ron's "A Case for Gold" - I suspect that will shed some light on these questions.

Bottom line, if I had to choose, I'd want to first get the nation out of debt, then implement a system that soundly backs up the currency.

THE CASE FOR GOLD
Rep. Ron Paul and Lewis Lehrman

http://mises.org/books/caseforgold.pdf