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

[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.

[girl gone mad]

1. It's a valid idea and it would work.

Ironically, teabaggers would probably go crazy at the thought.

[Poll_Blind]

2. This idea did NOT start with him. It has been discussed in different...

...circles for a while now. It's even mentioned in this new post on the video forum from The Real News: Yves Smith on RNN 3: Ways Around the Debt Ceiling

PB

[Ruby the Liberal]

5. I like the 'mint a trillion dollar platinum coin' idea

Watched that vid a few hours ago and that stuck with me. Yves is a brilliant economist. Long been on my short list of favorites.

[Poll_Blind]

7. I don't know much about her but, as she discussed in that video, there needs to be a...

...Plan B. She really did underscore the fact that the Administration's posture in this matter is tipping their hand as far as their perspective/viewpoint goes.

I'd like to see this perfect storm of inadequate/incompetent/malignant lawmakers defanged and just about the time their wounds heal I'd like to very much see them reopened by letting the Bush Tax Cuts expire.

PB

[aquart]

3. Hey, the Fed owes us a favor.

But I want to be there when you tell them.

[ellenfl]

4. i wanna be there too. maybe they could get

greenspan to deliver the message.

ellen fl

[mdmc]

6. me too

[Pab Sungenis]

8. Those bonds are what are backing the Federal Reserve Notes in circulation.

At least in theory.

The same way gold used to back gold certificates and silver back silver certificates, those bonds back Federal Reserve Notes.

Of course, we could always use the gold in Fort Knox in the same manner, and back a new temporary issue of gold certificates to do the same.

[chill_wind]

9. k & R.

Interesting.