Ron Paul Says 1.3 Trillion Dollar Debt Owed To Federal Reserve Is Not Real! Amazing Plan To Save A T

Whoa! This could be epic
Repudiate the debt, whoa!

What are your thoughts on this? Is this is a good way to save over a Trillion Dollars?
If this gained alot of media attention it would be huge, I doubt this will happen but it's a very good dialogue to have nonetheless.

Liberal economist Dean Baker says this plan has promise:

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.

Unlike the debt held by Social Security, the debt held by the Fed is not tied to any specific obligations. The bonds held by the Fed are assets of the Fed. It has no obligations that it must use these assets to meet. There is no one who loses their retirement income if the Fed doesn’t have its bonds. In fact, there is no direct loss of income to anyone associated with the Fed’s destruction of its bonds. This means that if Congress told the Fed to burn the bonds, it would in effect just be destroying a liability that the government had to itself, but it would still reduce the debt subject to the debt ceiling by $1.6 trillion.

www.cepr.net...&-columns/op-eds-&-columns/ron-pauls-surprisingly-lucid-solution-to-the-debt-ceiling-impasse?utm_source=CEPR+feed burner&utm_medium=feed&utm_campaign=Feed%3A+cepr+%28CEPR%29&utm_content=Google+Reader

This could be huge, there are implications however, such as tptb won't want it to happen and secondly who cares about the people, they don't want to give Ron Paul this win either, even if the country will benefit from it largely.

In addition, there’s a second reason why Representative Paul’s plan is such a good idea. As it stands now, the Fed plans to sell off its bond holdings over the next few years. This means that the interest paid on these bonds would go to banks, corporations, pension funds, and individual investors who purchase them from the Fed. In this case, the interest payments would be a burden to the Treasury since the Fed would no longer be collecting (and refunding) the interest.

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.

www.cepr.net...&-columns/op-eds-&-columns/ron-pauls-surprisingly-lucid-solution-to-the-debt-ceiling-impasse?utm_source=CEPR+feed burner&utm_medium=feed&utm_campaign=Feed%3A+cepr+%28CEPR%29&utm_content=Google+Reader

At the very least let's get people talking about it
Isn't that the least we can and should do?

common sense feels so good. thanks for posting.

Nice posting, thanks for linking the video.

I think Ron Paul is amazing, but I'm certain he'll be shot down by the MSM and others that have too much invested in the 'globalization' of the US to see him become President. The best looking/sounding puppet will win, but that will not stop me from voting for Ron Paul or writing him on my ballot if I have to.

Originally posted by Dreine
The best looking/sounding puppet will win, but that will not stop me from voting for Ron Paul or writing him on my ballot if I have to.

FYI Ron is against write-ins
he says they are just discarded so it's equivalent to not voting at all

He would prefer you voting 3rd party

tx

reply to post by ModernAcademia


Maybe he should head the third party then? I know it's been suggested before, but if a 3rd party has any chance of getting off the ground in this country it will need someone like Mr. Paul to lead it.

Originally posted by Dreine
Maybe he should head the third party then? I know it's been suggested before, but if a 3rd party has any chance of getting off the ground in this country it will need someone like Mr. Paul to lead it.

It doesn't have a chance unless you are a billionaire
voting 3rd party is still better than a write-in though

I love Ron Paul but.... the Federal Reserve is a private bank. It's not owned by the US. So why would a private bank tear up those bonds and lose the interest on them?
Correct me please if i'm incorrect.

reply to post by ModernAcademia


Thanks MA -- s&f.

Bump!



Now lemme check my handy pocket copy of the F.R.A. to see how the red shield shall triumph...

Originally posted by fltcui
I love Ron Paul but.... the Federal Reserve is a private bank. It's not owned by the US. So why would a private bank tear up those bonds and lose the interest on them?
Correct me please if i'm incorrect.

Correct, the assumption seems to be that the Fed is part of the government, but it is not. The below really doesn't make any sense considering this fact:

In fact, there is no direct loss of income to anyone associated with the Fed’s destruction of its bonds. This means that if Congress told the Fed to burn the bonds, it would in effect just be destroying a liability that the government had to itself

My limited understanding is that the Fed as a private bank buys up government bonds and then sells them off later to recoup its investment. So in essence they would be telling a bank to burn all the investment bonds that it had purchased from the government while offering them nothing in return for doing so. That would be great if the they would be willing to do it, but it wouldn't exactly make good business sense to the Fed now, would it? LOL!

My Man-crush Dr. Paul is right again.
Great find.
S&F

reply to post by fltcui

So why would a private bank tear up those bonds

I think with this, as with all action Ron Paul takes on the Fed, is the one area where he has ulterior motives.
This proposal would be a win/win for him. Should the Fed do this, it's a win by means of having 1.6 trillion less debt. Should it be mandated that the Fed does this, and they refuse - it will prove to many people that they are, in fact, a private bank.....and an organization that does not work for the people's interests

This is, in my opinion, what he has been working for for a few years now.......to kill the bank.

delete

CNBC was just saying on the news that every month the Federal Government pays more in it's INTEREST PAYMENT on it's debt....than they pay out to us for Social Security every month.


...and they were saying the Interest on our debt would keep getting paid....but Social Security would be cut...


Sorry...I agree with Ron Paul, wipe away the phony debt from the Congress having to pay interest on money borrowed from the Private Federal Reserve...when only Congress even had the authority to create money...

We've been getting robbed for decades.

Unfortunately, the Fed would never agree to this. It is privately owned and therefore they have no plan to kiss 1.3 Trillion goodbye. (Hey...they're Bankers first and foremost. You didn't expect them to be patriots?)

Still, bloodOfheroes makes an excellent point:

This proposal would be a win/win for him. Should the Fed do this, it's a win by means of having 1.6 trillion less debt. Should it be mandated that the Fed does this, and they refuse - it will prove to many people that they are, in fact, a private bank.....and an organization that does not work for the people's interests,

They'll never agree but it will shine the light on this subject. I admit to never knowing the Federal Reserve was not an actual Government institution until about four years ago. What a shock that was! From subsequent conversations with friends I truly believe less then 10% of Americans are aware of that little tid-bit of information. I wonder what the reaction would be if 90+% were aware?

Originally posted by fltcui
I love Ron Paul but.... the Federal Reserve is a private bank. It's not owned by the US. So why would a private bank tear up those bonds and lose the interest on them?
Correct me please if i'm incorrect.

The Fed is not a private bank. I don't know why you guys keep spreading that lie, the Fed is quasi-private. The govt can make the Fed do what ever it wants it to do.

That is a solution, but that's exactly why we need a FED instead of the Congress being in charge of the monetary system. If they do that, we can expect an increase in food, oil, and commodity prices to increase by about 50% since it would be a permanent increase to the money supply of about 50% which will of course spur very fast inflation. That's essentially the same as creating money from nothing and is exactly what Ron Paul and others have against the FED. Here is a linkrelating to money supply with current levels.

It is true, however, that Timothy Geithner has the power to choose who gets paid with the money that is coming into the treasury. Since the FED will of course be the last paid, without a debt increase(which I also believe raising the ceiling is a BAD idea), we can probably expect inflation anyway since this policy is already on the table. That is unless Obama follows through on his threat to not pay SSI benefits on August 3rd. If that happens then we can expect there to be no inflation since the FED will be paid just like every other creditor. This is not a Ron Paul idea, its simply another tool the Treasury has and knows about.

It is interesting to note that if he does not pay SSI then demand will drop in our economy and we will plummit back into recession(as if we ever truly left). Its also interesting to see that one of the first tests of Keynesian theory, SSI, is proving to be the unwinding of our economy rather than the stimulus that it was created for.

Another example of why we DO NEED a FED and why our government CANNOT stimulate the economy, it simply does not work!

Side Note: For all of you Ron Paul fans out there, please pick a side. He is totally against the FED as I assume you are too. However, here he is stating that we should ignore the debt to the FED, essentially creating money from nothing without any attention to the wrecklessness of such a policy, in direct opposition to his stated position on the FED and its monetary policy, and the precise reason he wishes to eliminate the FED; yet, he is advocating for exactly the same policy?

This type of politics is exactly why the FED was created in the first place. Here is a brief history lesson for you, all of the three following are links to governments that had runaway inflation after such policies were enacted. These governments are only the tip of a very large iceberg. When I say runaway inflation, I mean such high prices it might have taken a suitcase of money to buy a loaf of bread:
Germany
USSR
Zimbabwe
Forgive me for stealing a table from the Zimbabwe one, but here are the highest rates of inflation in history:

What all these countries have in common is the lack of a central bank, or a heavily attached monetary agency to their central government. With the exception of the USSR which began by retiring debt as Ron Paul suggests, before they began printing money to pay off foreign creditors.

It is entertaining to hear Ron Paul talk, he is persuasive, and his points are excellent and make sense to the lay person. Unfortunately, he simply does not understand basic economics and so his seemingly good points are troublingly destructive! link he is stating that he is against runaway inflation, of course because we all are, but wishes to undertake inflationary policies.

Additionally, he stated in the recent debate that he wishes to strengthen the US Dollar in order to create domestic jobs. The economy does not work that way. If you want to create jobs you need to weaken the dollar. Watch the question and answer at 1minute 50seconds on this video:
Ron Paul New Hampshire Debate Link
A strong dollar makes foreign imports cheaper, of course discouraging domestic production. A weak dollar encourages investment from abroad, just like we invest in China and India to save money and make prices cheaper.

The absolute last thing we need to do is to forget about paying ourselves. Its a good temporary measure, but it will certainly destroy the dollar if such a policy is undertaken. There is a bright side, however, with a worthless dollar there will be a huge influx of foreign capital, manufacturing within the U.S. borders will definitely increase, and we will create a massive number of jobs.

Further Note: I like Ron Paul, he provides sound leadership, and should be admired for his constitutional principles. He should not, however, be elected president if for no other reason than the fact that he doesn't understand economics. Let him champion the constitution, let him advocate for change and real leadership, but please don't let him direct the economy!

GM was a "private" (not Government) company and their legitimate obligations to debtors and shareholders were magically evaporated to "save" GM and the UAW. So this Fed debt can just as magically be wiped out.

Ron Pauls not perfect, and I dont agree with all he says (this I do)... but at least hes TRYING.

God bless and protect 'em.

Ron Paul 2012. Last chance for America, really. We are in the 11th hour.

reply to post by memarf1


Do you think reducing bank leverage at the same time would help alleviate the inflationary effects of such a policy? After all the banks are actually the biggest creators of money. I think any progress will include limiting the bank's ability to create money. I think it would.

I also think the money supply should grow each year proportionately to productivity. If not, any gains in wealth are actually offset by growth in debt, thus it becomes nearly impossible tio grow national wealth under the current system (except inflation of asset prices). We simply need to print the money the government needs to operate or move to a tax system that pays fully for it's costs. One would be to tax wealth(2-4%) rather than income and apply a flat revenue tax for all businesses (3-5%). This would cover what we spend and leave no one hurting because of it.

I tend to look on Ron Paul's approach to the Fed in a very Wizard of Oz kind of way. He simply acknowledges that the man behind the curtain: the Great Green Wizard of the Bankers, has no real power. By recongnizing such, and refusing to pay them (which is debt to ourselves) it simply evaporates the mists they have put up around their manuverings. It scares me. But I kind of like it.
Given the opportunity, I would likely vote for Ron Paul. And then I would likely kick myself a hundred times in the next four years as he did things I didn't like but couldn't fault on logic or principle.