Ron Paul's Debt Ceiling Solution

[Gone To Texas]

The Fed holds $1.7 trillion in Treasury debt. Why doesn't the Fed just destroy it? They bought the debt with money out of thin air, so why not just return it to thin air? Voila, we have a nearly $2 trillion dollar cushion and another year or so to figure out what to do about the federal budget.
The Link

"But the biggest potential draw back is this: It just looks bad."

If this were to work, then it means anytime we are in a crunch we could just have the Fed buy up a bunch of debt with freshly printed money, then destroy the debt later. Sounds fishy. But then again so does everything the Fed does. Anyway, can someone please explain to me what horrible consequences this course of action would have, because I don't fully understand how this would fly? (Notwithstanding the fact that the Fed would probably never go along with it).

 

[CanaTigers]

It would work. So would printing a big stack of new money and paying off China or any other debt holder. The only way it would have a negative impact on the dollar is if you gave large sums of money to a large portion of the population.

 

[TexasGolf]

why not, we forgive other nations debts, why not our own.

 

[mcbrett]

Yes- and Ron Paul could call in the Unicorns to help re-establish the credit and capital markets he destroyed when he's done with his plan.

That way- nothing would ever be financed in North America, Asia or Europe for decades! Sounds like a smart idea.

Or instead, we could stick to a smart, long term plan of spending cuts and revenue increases while avoiding waste whenever possible.

 

[Oilfield]

Has someone proposed any smart, long term spending cuts?

In regard to revenue increases, why didn't the Democrats do this when they controlled everything?

 

[Rex Kramer]

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[Crockett]

Yeah, there's not much downside unless you happen to be one of millions of American's holding treasury bonds as a safe investment for youself or by proxy as a stakeholder in the Social Security System, pension funds, banks or corporations. There would be some immediate problems, but if you are able grow you own food, produce your own fuel and have assets that would work in a barter economy and enough friends, weapons and ammunition to protect them, you'll probably be OK.

 

[NEWDOC2002]

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[YoLaDu]

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[hornpharmd]

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[Rex Kramer]

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[misirlou]

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[2003TexasGrad]

Ron Paul is constantly on the media, and the people interviewing him usually state their respect for his opinions and often times agree with him in principal. Just look on youtube. The interviews are there for the most part.

Ron Paul does have traction. Hes just not one of the etablishment good ole boys, so he doesn't get the kind of prominent attention he deserves. Theres a difference between being interviewed and being fawned over. They bring him on to talk, but at the same time state that he has no wide spread appeal.

 

[2003TexasGrad]

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[Mr. Deez]

We can blame politicians all we want, but the bottom line is that they are doing what the public wants them to do. Nobody wants to cut the big ticket items like Medicare, Medicaid, and Social Security, and if a politician tried, he'd get beaten by every senior citizen in the country. (That's why they're big ticket.)

Basically, you can solve the problem by disenfranchising senior citizens. Odds are, that's not going to happen, so we're basically hosed.

 

[A'sD]

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[Texas007]

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[2003TexasGrad]

Its amusing that people call Ron Paul nutty when the wackos who got us into this mess are somehow given more credibility.... Makes no sense. Like I said, the FED is nutty, not Ron Paul.