Ron Paul's Plan on the Budget Crisis

[Frank DeMartini]

Interesting article about Mr. Paul's plan to resolve the budget crisis:

http://www.hollywoodrepublican.net/2011/07/ron-paul%e2%80%99s-surprisingly-lucid-solution-to-the-debt-ceiling-impasse/

[jognlope]

He reminds me of a country doctor, and like the way he talks.

[mostpost]

Interesting article about Mr. Paul's plan to resolve the budget crisis:

http://www.hollywoodrepublican.net/2011/07/ron-paul%e2%80%99s-surprisingly-lucid-solution-to-the-debt-ceiling-impasse/
This is a really stupid idea. First thing you should do is learn what the Federal Reserve is and what its functions are. Then you might want to learn what an independent agency is. Finally you should learn that different branches of the same entity still have to pay each other for the products they use. GM owns Delco, but they still have to pay Delco for the batteries they put in their cars.

The Fed bought $1.6T in government bonds. If it burns those bonds, it is out $1.6T. It does not matter if it is a government agency. In the strictest sense it is not.

One of the main functions of the Fed is to loan money to banks so that those banks can loan money to their customers. If the Fed suddenly has $1.6T in assets does that not affect the money it can loan? Isn't one of our major problems a shortage of credit?

Reading the story and reading the link in the story, I did not see where Paul said we should burn the bonds. He did say we should declare bankruptcy. Which may be the same thing. Either way, its a dumb idea. Even if a country could declare bankruptcy doing so would have a negative effect on our credit rating. That means higher interest rates.

[Robert Goren]

That send Gold to about 4k an ounce.