Using Past QEs to Pay off Our National Debt

The Plan

Tax the balance sheet of the Federal Reserve Bank so that when banks repay loans, the funds pay off the National Debt

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Definition of 'Quantitative Easing'

Money that is not backed by things of real value is created thus devaluing all existing money.  This money buys bonds, which in turn frees other money to buy more things.

Monetizing the Deficit

Taking the new created money and just paying money to the government to cover the deficit.    

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How Are They the Same?

Creating unbacked-up money devalues all existing money whether buying mortgage backed security, bonds or just giving the money to the government.  They will both leave the same amount of capital in the system, however monetizing the debt leaves The US with less overall debt. Read below about how contracting the money supply does great harm.  QE has to be repaid where monetizing the debt does not. 

The Bad Effects

Like other forms of taxation, creating unbacked-up money creates a hidden tax of inflation.

Capitalism takes capital and inflation taxes capital thus resulting in less capital. 

Retirement planning is very important and people knowledge that the dollar they save today will be worth a small fraction when they spend it results in less retirement savings.

Long term projects, contracts and employment agreements are very disrupted by the changing value of currency in that contract.  

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Fed’s balance sheet

The Federal Reserve Bank balance sheet (unbacked-up money that was lent out) is uncertain (I do need help with this), however I believe it is around the 10 Trillion Mark. 

Explaining How Contracting the Money Supply is Bad

When expansionary money policy (QE) creates inflation, the damage is done.  It would be an interesting study (a very difficult study) to determine how long it takes.  My belief is that the damage is started when the market believes QE will happen a year from now and there is a steady progress of damage done all the way though.  Once the damage of inflation is done it is not repaired by doing more damage created by deflation.  

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Taxing All the Repayments Would Keep the Monetary Supply Neutral

Some could argue that taxing money would take it out of the system and I would counter that a tax does not take it out.  Loans to the Fed have to be repaid, that money would be taxed and applied to the debt, and thus less money will be needed to cover the debt, creating a neutral position.  Currently $17.1 Trillion needs to be lent to the US government.  Money taken out of the Fed’s bond buying program will mean the same money not having to be lent to the government to cover the debt.

Stopping the madness
A new system

Please see http://haley2024.org/financial-tas.html and

http://haley2024.org/monetary-policy.html

for a better system 

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Comments

04/15/2016 5:52am

It's terrific you have update it.thank you.I discovered this is an informative and also fascinating article.

Reply

All the nationalist people always worry about the national debt because in this they can able to make their kids future secure. Thanks for share these type of extra ordinary national articles with us. I hope the people will learn something from this articles.

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    Bill Haley

    Bill Haley started Haley2024 in the spring of 2013 in an effort to do his part in restoring freedom to America

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