The federal government’s debt has now reached the new threshold of $17 trillion. This graphic found at Richochet via Bad Blue is not very scientific but it does illustrate where our nation stands very well.
That is a scary graphic, isn’t it? But, conservatives/libertarians can stop worrying (they are the only Americans who do worry about our mountain of debt). Democratic Congressman Alan Grayson has a solution to America’s debt problem. Well, more precisely, he has a partial solution; but that’s only because the man thinks small.
Congressman Grayson writes:
This wouldn’t solve the debt problem entirely. The Federal Reserve doesn’t own all U.S. government debt; it owns only roughly $2 trillion of it. (Well $2,076,927,000,000.00, as of last Wednesday, but who’s counting?)
I guess that’s why we call these people “elites”. They are just so much smarter than the rest of us. The Congressman doesn’t take credit for this brilliant idea. He says he got it from former Congressman Ron Paul. Really? I suspect Grayson took something Paul said out of context. Even so, what he is suggesting could, in fact, be done. The Federal Reserve, a semi-private entity, does operate a cost. For example, the US government pays the Federal Reserve for currency. At some point each year the Federal Reserve returns that money to the USG; less their operating costs. They could do the same thing with the interest payments from the Treasury on the bonds that the Fed has bought. So yes, theoretically the Fed could just forgive the $2 trillion in US debt and we would be back to “only” having a debt of $15 trillion. President Obama would be an instant hero! But why does Congressman Grayson think so small? Why not have the Federal Reserve buy all of our new bond issue and then forgive all of deficit spending? Or, why not have the Fed buy even more bonds and the our government could payoff China and Japan and everyone else holding US Bonds? We would not only have a balanced budget but our national debt would be zero and Social Security and Medicare would be solvent again. Congressman Grayson has come up with the ultimate Free Lunch! I wonder why the Republicans couldn’t have thought of this? I guess the progressives really are smarter than anyone else.
Well, that’s what I’m thinking. What are your thoughts?