RON PAUL: Save $1.6T by not paying FED interest...

[wgadget]

http://runronpaul.com/activism/save-1-6-trillion-dollars-dont-pay-the-federal-reserve/

[rp08orbust]

http://runronpaul.com/activism/save-1-6-trillion-dollars-dont-pay-the-federal-reserve/

Don't all of the Federal Reserve's profits go to the US Treasury, meaning not paying the interest on the US Treasury notes that the Federal Reserve holds won't save anyone any money?

[sailingaway]

well, except taxpayers who have to pay it....

[Chester Copperpot]

Don't all of the Federal Reserve's profits go to the US Treasury, meaning not paying the interest on the US Treasury notes that the Federal Reserve holds won't save anyone any money?

Its profits "After expenses"

dont forget.. they have to make sure they maintain their $300 million art collection, head janitor's salary of $161k... their 57 learjets, etc. etc.

[rp08orbust]

well, except taxpayers who have to pay it....

Taxpayers pay taxes to the US Treasury, which pays interest on notes held by the Federal Reserve, but the Federal Reserve turns around and pays its profits (less a 6% dividend to member banks) back to the US Treasury. So the US Treasury not paying the interest wouldn't save the taxpayers much of anything.

[Chester Copperpot]

http://www.youtube.com/watch?v=TRgRz3nSG7o

[sailingaway]

Taxpayers pay taxes to the US Treasury, which pays interest on notes held by the Federal Reserve, but the Federal Reserve turns around and pays its profits (less a 6% dividend to member banks) back to the US Treasury. So the US Treasury not paying the interest wouldn't save the taxpayers much of anything.

Where did the hundreds of billions the Fed bailed out Bear Stearns and said it had to bailout the other banks come from? What the Fed has on its books it uses for its international/national schemes, at its discretion, before calling it 'profit', clearly. And it just unilaterally determined to approve 'credit swaps' with Europe, to have our weak dollar prop up the Euro, and the IMF is meanwhile saying it will significantly change our 'outlook' and rating if we don't lower debt.....so let's lower it by defunding the Fed and wiping the interest 'due' them off the books.

I think it's a dandy idea. Mind you, Ron was pretty clear that he didn't expect to see it actually happen..

[aowen]

Ok, so the Federal Reserve steals money out of everyone's bank account by printing money and inflating the money supply... They then lend that money to us. Then they want us to pay back the federal reserve money that they have already stolen from us once...

Is that not basically what is going on here?? Its like I go into a bank, rob them, then I lend them the money I just from robbed, and I make them pay it back.

[swissaustrian]

We already had a long discussion on that in the economics subforum:
http://www.ronpaulforums.com/showthread.php?300825-Ron-Paul-Why-don´t-we-just-elimininate-the-debt-that-we-owe-to-the-FED/page6

[rp08orbust]

Where did the hundreds of billions the Fed bailed out Bear Stearns and said it had to bailout the other banks come from? What the Fed has on its books it uses for its international/national schemes, at its discretion, before calling it 'profit', clearly. And it just unilaterally determined to approve 'credit swaps' with Europe, to have our weak dollar prop up the Euro, and the IMF is meanwhile saying it will significantly change our 'outlook' and rating if we don't lower debt.....so let's lower it by defunding the Fed and wiping the interest 'due' them off the books.

I think it's a dandy idea. Mind you, Ron was pretty clear that he didn't expect to see it actually happen..

If there is $100B in interest due on the US Treasury notes that the Fed holds at the end of this month and the US Treasury does not pay it, then that will reduce the Fed's income, and thus its profits, by $100B for the month. This means the Fed has $100B less in profits for the month, and thus will pay out $94B less to the US Treasury and $6B less to member banks. The net effect on the US budget is a savings of $6B. But all the Federal Reserve has to do to make up for that $6B less in revenue that gets distributed to banks is print 6% more money and buy US Treasury notes with it, inflating the dollar a bit more and negating any benefit to taxpayers in reducing the monthly deficit by $6B.

Ron Paul must have meant for this proposal to happen in conjunction with something else, like maybe forbidding the Federal Reserve from monetizing debt, which he has proposed. By itself, this proposal to stop interest payments on US Treasury notes held by the Fed is pointless.