What do you think of this idea from Ron Paul? (The Fed canceling $1.6 trillion in government bonds) [View All]

[bluestateguy]

The best thing is that this gets us past the election and we don't have to wait around for those pinheads in Congress. It also would not cut any spending, including Social Security, Medicare and Medicaid. In one swoop the teabaggers leverage in Congress would be gone. I'm sure, however, that some of the Very Serious People in the DC/NYC axis of evil will pour cold water all over it.

http://www.tnr.com/article/politics/91224/ron-paul-debt-ceiling-federal-reserve

Ron Paul’s Surprisingly Lucid Solution to the Debt Ceiling Impasse

Dean Baker

Representative Ron Paul has hit upon a remarkably creative way to deal with the impasse over the debt ceiling: have the Federal Reserve Board destroy the $1.6 trillion in government bonds it now holds. While at first blush this idea may seem crazy, on more careful thought it is actually a very reasonable way to deal with the crisis. Furthermore, it provides a way to have lasting savings to the budget.

...

In short, Representative Paul has produced a very creative plan that has two enormously helpful outcomes. The first one is that the destruction of the Fed’s $1.6 trillion in bond holdings immediately gives us plenty of borrowing capacity under the current debt ceiling. The second benefit is that it will substantially reduce the government’s interest burden over the coming decades. This is a proposal that deserves serious consideration, even from people who may not like its source.