Some people might respond to this by thinking that Ron Paul has been smoking some of the wacky weed he wants to legalize, but he has a plan for avoiding imminent Debtpocalypse: Set $1.6 trillion in Treasury debt on fire.*From last Saturday's "Thoughts on The Suggestion to Repudiate All the Treasury Securities Held by the Federal Reserve":
More specifically, Mr. Paul, an energetic critic of the Federal Reserve, suggests the Fed simply take a match to the $1.6 trillion in Treasury obligations it currently holds on its balance sheet as a result of its various QE programs.
Presto, the government suddenly has $1.6 trillion in room under the debt cap, enough to last us maybe a couple of years.
Surprisingly, Dean Baker, of the left-leaning Center for Economic Policy Research, thinks this idea is so crazy it just might work:
Unlike the debt held by Social Security, the debt held by the Fed is not tied to any specific obligations. The bonds held by the Fed are assets of the Fed. It has no obligations that it must use these assets to meet. There is no one who loses their retirement income if the Fed doesn’t have its bonds. In fact, there is no direct loss of income to anyone associated with the Fed’s destruction of its bonds....MORE
You little bomb thrower you.
I'm reminded of a situation I watched back in the day. A trader sold a position to another firm a few minutes before a trading halt. The news was negative. The buyer D.K.'ed (Don't Know) the trade, meaning we'd still own the position, at which point the head of the firm got on the phone and told his counterpart "I don't want the shit, whyd'ya you think I sold it to you?"
From the von Mises Institute:
Defaulting on the Fed's Bonds...