Thursday, August 4, 2011

Rep. Paul introduces bill to cancel $1.6T in debt held by Federal Reserve

Rep. Ron Paul on Monday introduced legislation that would lower the federal government's debt by canceling the roughly $1.6 trillion in debt held by the Federal Reserve.

Didn't I say that before?  Yes, I think I did.

There was much anguish over the default threat, but the threat was minimal.  The real threat, which is insolvency, has not been addressed.  Paul's idea was to cancel the debt.  However, others suggested making a coin and depositing it with the Fed.  My idea was to use the coin to pay off the debt, thus lowering the debt, and making room for new debt, so as to remain under the debt ceiling.  I did not advocate this as a wise procedure, but it could have been legal and it would have ended the immediacy of the threat.  The negotiations could have continued.  

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