http://www.tnr.com/article/politics/...ederal-reserve
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.|||I find these parts interesting:
"This would buy the country considerable breathing room before the debt ceiling had to be raised again."
"...the destruction of the Fed’s $1.6 trillion in bond holdings immediately gives us plenty of borrowing capacity under the current debt ceiling."
What's the point? It's like giving a preschooler timeout for .5 seconds. America needs solid rules the likes of which humanity has never seen, like "No interest can ever be collected on any loan." Loans should be granted by government run job creation/student assistance/national emergency programs, etc. Basically, no loan sharking should be allowed anymore (like what the mob does). I know, it sounds crazy.
Right now, every dollar of tax money people pay gets returned with 3-4 dollars of services (government bribes). The people expected to pay all this have not even been born yet. Doesn't turning children into debt slaves generations in advance raise any alarm bells?|||Look into what Liberman suggested - it's a lot less... gutty then what Ron paul suggested!|||Quote:
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.
That's . . . quite an interesting idea. If I have the flow of it right:
The Fed lends money to (read: creates money out of thin air for) the US government, and in return receives an IOU from the US government. The IOU, ostensibly, is what will keep inflation in check long term, since the government paying back that IOU takes money back out of the system. By destroying the IOU, you free yourself up to take on more debt, but you also ensure that the money supply never comes back down, which means inflation never comes back down either. To solve that problem, you require the banks to keep more in their reserves, which soaks up the new excess cash and prevents it from affecting the economy.
It's true that it sidesteps the current issue of the debt ceiling quite nicely, but it isn't really a long term solution. At our current spending rate, next year we'll be right back to where we are now, and without any IOUs the fed can burn. Plus, there's only so high you can push the reserve requirement before it's no longer "fractional".
|||Until they learn how to not spend money, they will just keep digging the debt hole deeper and deeper until we are all speaking Chinese. All other solutions are nothing but enablers at this point. They are addicted to spending like bratty rich kids with no credit card limits. Come to think of it, most of them are bratty rich kids with no credit card limits.|||Well Said .|||Interesting. Sounds like the government needs some straightening out. As if that surprises me. Quote:
Until they learn how to not spend money, they will just keep digging the debt hole deeper and deeper until we are all speaking Chinese.
I call for a balanced budget amendment. Like we have in Virginia.|||There is no solution for a financial system based on a Ponzi Scheme. Using standard conventional solutions will never fix the problem. History proves that.
The only solution is to ban fractional reserve system and take the power out of banker’s hands when lending - they create brand new money. Only one national bank should create new money.
All other talk is nothing.|||more importantly, let's rein in spending.
the big collapse doesn't happen if we don't have massive entitlements, government incentives for over-lending, and a securitization of mortgages.
think about it, if banks had held onto as little of a third of each mortgage instead of selling them all off--but had a vested interest in making sure each deal was a good one, then the whole mess with ninja loans, default swaps, and other silliness never happens.
if congress wasn't allowed to "exclude" things from the budget and had stronger rules (maybe even a balanced budget amendment--though that might be like swatting a fly with a sledgehammer) about making sure there was enough money to pay for every bill introduced before it could move to another house or the president, we wouldn't have each party going on mad binges when they won too many elections. There hasn't even been a budget for 18 months or so. a balanced budget amendment might be a sledgehammer, but if that's what it takes to rein things in, then it's certainly better than not having to justify new spending.
instead of knee-jerk blaming this on the banks, who were simply following the rules fannie and freddy put out there, let's look at the real culprits. I mean, if you had the power to make money on crappy loans, then give the balances to someone else, wouldn't you do it? these are businesses, just like the ones we all work for. If you were a house builder, (not a developer), and someone was going to pay you to build a house you KNEW, wouldn't sell (too big too small, bad design etc), but you'd still get paid--wouldn't you still take the job? I mean, you have no skin in the game so why care about the big picture?
No, the solution is to rework the incentives. I don't like government regulation, but there are some times where it can be a force for good. over the past 20 years, government intervention in the mortgage markets created bad incentives. with some loosening of the destructive rules and applying a few that align the players' incentives with teh general good, we can rebuild, we can succeed.|||Quote:
There is no solution for a financial system based on a Ponzi Scheme. Using standard conventional solutions will never fix the problem. History proves that.
History actually shows the solutions, but applying them nowadays would mean our own eradication.
In the past, the standard conventional solution was to kill the lenders, to enslave or kill the debtors or to invade a country or raid people on distant continents to pay with the loot and slaves. However, that's no longer an option because most countries which are worth looting have access to nuclear weapons or potential allies who won't tolerate that.
No comments:
Post a Comment