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The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
That would depend on where the Fed is collecting it from and how much the Fed is paying on deposits.
Why does the source of Fed income impact shareholder dividends?
Because if it's their own deposits the bank is getting paid 1%.
What does the rate the "Fed pays on deposits" have to do with what the dividends?
The rate paid on the deposits determines in part how much the Fed has to pay in dividends.
Why does the source of Fed income impact shareholder dividends?
Because if it's their own deposits the bank is getting paid 1%.
What does the rate the "Fed pays on deposits" have to do with what the dividends?
The rate paid on the deposits determines in part how much the Fed has to pay in dividends.
This is simply a fallacy. The interest paid on those maturing Treasury bills does not, absolutely by law, effect the bottom line of FED stockholders.
The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
If QE was inflationary - as I believe it was - then the dissolution of QE is deflationary. It also has the affect of raising interest rates. Deflation when there is 9% unemployment is not good for the economy. Raising interest rates during a recession is extremely bad policy. There is no reason at all to believe that this would be positive for the economy. It would lead to tight monetary conditions and deflation, and cause investors to lose even more confidence in the dollar.
The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
If QE was inflationary - as I believe it was - then the dissolution of QE is deflationary. It also has the affect of raising interest rates. Deflation when there is 9% unemployment is not good for the economy. Raising interest rates during a recession is extremely bad policy. There is no reason at all to believe that this would be positive for the economy. It would lead to tight monetary conditions and deflation, and cause investors to lose even more confidence in the dollar.
The Federal Reserve is constantly bemoaning the negative consequences of deflation, but how would anyone know when deflation has not occurred in any great significance in modern history.
Because if it's their own deposits the bank is getting paid 1%.
The rate paid on the deposits determines in part how much the Fed has to pay in dividends.
This is simply a fallacy. The interest paid on those maturing Treasury bills does not, absolutely by law, effect the bottom line of FED stockholders.
How can the interest paid (an expense to the FED) not impact the value of the divided paid by the FED?
By the way, I'm not guaranteeing I'm right
But if that is the argument against taking this action, the it should be weighed against the consequences of not taking this action and having the government continue in the political theatrics of the debt ceiling debate.
The media has reminded the American people several times throughout this debt limit debate that the national debt currently stands at $14 trillion, of which conservatively $1 trillion is held by the Federal Reserve. The Federal Reserve obtained that debt through its complicated quantitative easing programs (Quantitative easing - Wikipedia, the free encyclopedia) more specifically QE2-- but it is debt that the government essentially owes itself.
Why?
The Treasury pays the interest on the debt on behalf of the U.S. government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in U.S. bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion. (Debt Ceiling: Could Ron Paul's Plan Save Us From Disaster, twice? - The Curious Capitalist - TIME.com)
Neither Republican, Democrat nor the media, despite all telling Americans that Armageddon will occur if something isnt done, have brought up the fact that Congress could simply tell the Federal Reserve to dissolve the Treasury Bills it currently holds, effectively reducing the national debt by $1 trillion.
Unlike all other proposals this one doesnt endanger anyones retirement or pension because it is money that was literally fabricated from thin air.
I believe we can all agree, from right to left, that this debt is in fact phony debt. Even the progressive/leftist The New Republic (Ron Paul) agrees that this is a painless solution that would reduce the debt by $1 trillion and would give Congress needed time to address this issue.
Of course this isnt my ideaI wish I were so cleverit is the proposal that Congressman Ron Paul has been pushing since the beginning of this whole debt ceiling debate.
The media has reminded the American people several times throughout this debt limit debate that the national debt currently stands at $14 trillion, of which conservatively $1 trillion is held by the Federal Reserve. The Federal Reserve obtained that debt through its complicated quantitative easing programs (Quantitative easing - Wikipedia, the free encyclopedia) more specifically QE2-- but it is debt that the government essentially owes itself.
Why?
The Treasury pays the interest on the debt on behalf of the U.S. government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in U.S. bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion. (Debt Ceiling: Could Ron Paul's Plan Save Us From Disaster, twice? - The Curious Capitalist - TIME.com)
Neither Republican, Democrat nor the media, despite all telling Americans that Armageddon will occur if something isnt done, have brought up the fact that Congress could simply tell the Federal Reserve to dissolve the Treasury Bills it currently holds, effectively reducing the national debt by $1 trillion.
Unlike all other proposals this one doesnt endanger anyones retirement or pension because it is money that was literally fabricated from thin air.
I believe we can all agree, from right to left, that this debt is in fact phony debt. Even the progressive/leftist The New Republic (Ron Paul) agrees that this is a painless solution that would reduce the debt by $1 trillion and would give Congress needed time to address this issue.
Of course this isnt my ideaI wish I were so cleverit is the proposal that Congressman Ron Paul has been pushing since the beginning of this whole debt ceiling debate.
Why don't you try it on a small scale googie? Tear up those phony credit card bills and maybe the car payment book. Drop us a line from federal prison and let us know how you make out.
The media has reminded the American people several times throughout this debt limit debate that the national debt currently stands at $14 trillion, of which conservatively $1 trillion is held by the Federal Reserve. The Federal Reserve obtained that debt through its complicated quantitative easing programs (Quantitative easing - Wikipedia, the free encyclopedia) more specifically QE2-- but it is debt that the government essentially owes itself.
Why?
The Treasury pays the interest on the debt on behalf of the U.S. government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in U.S. bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion. (Debt Ceiling: Could Ron Paul's Plan Save Us From Disaster, twice? - The Curious Capitalist - TIME.com)
Neither Republican, Democrat nor the media, despite all telling Americans that Armageddon will occur if something isnt done, have brought up the fact that Congress could simply tell the Federal Reserve to dissolve the Treasury Bills it currently holds, effectively reducing the national debt by $1 trillion.
Unlike all other proposals this one doesnt endanger anyones retirement or pension because it is money that was literally fabricated from thin air.
I believe we can all agree, from right to left, that this debt is in fact phony debt. Even the progressive/leftist The New Republic (Ron Paul) agrees that this is a painless solution that would reduce the debt by $1 trillion and would give Congress needed time to address this issue.
Of course this isnt my ideaI wish I were so cleverit is the proposal that Congressman Ron Paul has been pushing since the beginning of this whole debt ceiling debate.
Why don't you try it on a small scale googie? Tear up those phony credit card bills and maybe the car payment book. Drop us a line from federal prison and let us know how you make out.
The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
If QE was inflationary - as I believe it was - then the dissolution of QE is deflationary. It also has the affect of raising interest rates. Deflation when there is 9% unemployment is not good for the economy. Raising interest rates during a recession is extremely bad policy. There is no reason at all to believe that this would be positive for the economy. It would lead to tight monetary conditions and deflation, and cause investors to lose even more confidence in the dollar.
The Federal Reserve is constantly bemoaning the negative consequences of deflation, but how would anyone know when deflation has not occurred in any great significance in modern history. Quite the opposite has occurred, inflation has eroded the value and purchasing power of the dollar decade after decade without incomes, specifically at present, not rising with the increased prices associated.
But if that is the argument against taking this action, the it should be weighed against the consequences of not taking this action and having the government continue in the political theatrics of the debt ceiling debate.
Deflation, in the face of constant and continued inflation, would not have the dire impacts that you are insinuating.
Second, there is something fundamentally wrong with allowing banks to profit off of the American tax payer from money that is literally--without question-- simply printed. Money is printed and used to purchase Treasury bills and the American people, my children and grandchildren, must pay interest on those bills. The banks are profiting off of simply fabricating money.
The suggestion that the stakeholders would lose money is absurd once logically assessed.
That would depend on where the Fed is collecting it from and how much the Fed is paying on deposits.
Why does the source of Fed income impact shareholder dividends?
Because if it's their own deposits the bank is getting paid 1%.
What does the rate the "Fed pays on deposits" have to do with what the dividends?
The rate paid on the deposits determines in part how much the Fed has to pay in dividends.
The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
If QE was inflationary - as I believe it was - then the dissolution of QE is deflationary. It also has the affect of raising interest rates. Deflation when there is 9% unemployment is not good for the economy. Raising interest rates during a recession is extremely bad policy. There is no reason at all to believe that this would be positive for the economy. It would lead to tight monetary conditions and deflation, and cause investors to lose even more confidence in the dollar.
The effects of deflation that would derive from the dissolved of debt created by the QE2's purchasing of Treasury bills would be far outweighed by the immediate positive impact of reducing national debt by over $1 trillion dollars.
The effects of the inflation specifically created by the QE2 program had a much more profound effect, adding to the already growing inflation, and devaluing of the dollar.
But you are overlooking to fact that the law stipulates that the FED only keep enough revenue collected on maturing Treasury bills as to off set operating costs, returning the vast percentage of those interest payments to the Treasury. The Treasury receives 90% of the tax money used to pay those T-bills.
Dissolving that debt would not have the profound negative impact that you are suggesting. There is a fundamental difference between the Federal Reserve's QE2 T Bills and the T bills held by foreign countries and Americans alike, in that only the FED returns the profits directly back to the Treasury and only the FED has the ability to fabricate money at will.
The QE program itself resulted in much more devaluing that this action would take.
If QE was inflationary - as I believe it was - then the dissolution of QE is deflationary. It also has the affect of raising interest rates. Deflation when there is 9% unemployment is not good for the economy. Raising interest rates during a recession is extremely bad policy. There is no reason at all to believe that this would be positive for the economy. It would lead to tight monetary conditions and deflation, and cause investors to lose even more confidence in the dollar.
The Federal Reserve is constantly bemoaning the negative consequences of deflation, but how would anyone know when deflation has not occurred in any great significance in modern history. Quite the opposite has occurred, inflation has eroded the value and purchasing power of the dollar decade after decade without incomes, specifically at present, not rising with the increased prices associated.
But if that is the argument against taking this action, the it should be weighed against the consequences of not taking this action and having the government continue in the political theatrics of the debt ceiling debate.
Deflation, in the face of constant and continued inflation, would not have the dire impacts that you are insinuating.
This is simply a fallacy. The interest paid on those maturing Treasury bills does not, absolutely by law, effect the bottom line of FED stockholders.
How can the interest paid (an expense to the FED) not impact the value of the divided paid by the FED?
By the way, I'm not guaranteeing I'm right
Listen, I'm not guaranteeing everything I'm say is 100% correct either, when faced with contradictory evidence I will concede I'm wrong. I learn a lot on this message board, and that is something I thank people for constantly.
90% of the interest payments paid to the Federal Reserve is returned to the Treasury. From all that I have read that is the law and how the FED specifically set up the QE2 program. Dissolving that debt literally would not take any food out of anyone's mouth or put anyone on the street.
What everyone is not understanding here is that the FED is effectively a fourth branch of the government with God-like influence over every aspect of America's economy, but unlike the other three branches there is no real checks and balances.
Look what happened when Congress demanded the FED release who received TAARP funds and how much. It took a Supreme Court ruling to force them to finally release that information, and it turns out foreign central banks profited most from this deceptive program. Once the incredible power of the FED is understood, the idea that the stockholders, member banks, are somehow going to suffer becomes blatantly absurd.
