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    Monday, January 20

    Save America: Liquidate The Fed. It is easier than you think…. the facts….

    More on ending the Fed below this top clip by Peter St Onge…

    Fresh on the newsletter: How would a Gold-Backed Brics work? “For the first time in 50 years global inflation is driving the world towards some sort of backed currency. As it keeps going, fiat currencies, and the governments that depend on them, are living on borrowed time.” Read at Prof Stonge

    Title: The Federal Reserve, U.S. Rising Debt, and Pathways to a Sustainable Fiscal Future

    As the United States grapples with burgeoning public debt, the role of the Federal Reserve, colloquially known as the Fed, remains ever significant. Acting as the country’s central banking system, the Federal Reserve oversees U.S. monetary policy and the maintenance of economic stability. However, with the national debt well into the trillions, questions are emerging about how the Fed’s actions intersect with this growing debt and what avenues exist to rectify the situation.

    The Federal Reserve influences economic conditions primarily through two tools: setting reserve requirements and adjusting the federal funds rate. Both mechanisms can impact the amount of money in circulation and thereby affect the overall economic activity. The Fed can also engage in open market operations, buying and selling government securities to manage short-term interest rates and the supply of money in the economy.

    However, the Fed’s role becomes more complex when we consider the rising national debt. While the Fed is not directly responsible for the debt—the Congress decides on spending and revenue—it can indirectly influence the cost of the debt. For example, if the Fed raises interest rates, the cost of servicing the national debt can increase, putting additional pressure on the budget. Conversely, keeping interest rates low, as it has done in response to the COVID-19 pandemic, can reduce the immediate burden of debt service but may lead to inflationary pressures in the long run.  Continued below the video

    The U.S. national debt has been growing at an unprecedented rate, reaching nearly $32 trillion. This debt burden, while manageable in the short term, could pose significant economic challenges in the long term. High levels of debt can crowd out private investment, place upward pressure on interest rates, and leave less room for fiscal policy maneuvering in response to future crises.

    It’s clear that the United States cannot ignore this escalating debt issue. However, resolving it isn’t straightforward, given the numerous political, economic, and social variables at play. Here are a few potential solutions:

    1. Balanced Budget Amendments: One idea is to implement a balanced budget amendment, which would require the government to not spend more than it collects in revenues. While this could help reduce the debt over time, it could also limit the government’s ability to respond to economic downturns and emergencies.
    2. Entitlement Reforms: A significant portion of U.S. spending is on entitlement programs such as Social Security and Medicare. Comprehensive reforms could make these programs more sustainable and reduce the long-term debt. However, these reforms would need to balance the needs of the most vulnerable Americans and be politically viable.
    3. Revenue Enhancements: Increasing government revenues could also help reduce the deficit. This could be achieved through tax reforms that broaden the tax base or increase tax rates, especially for the most affluent Americans.
    4. Growth-Focused Policies: Lastly, policies that focus on economic growth can increase revenue without raising taxes. This might include investing in infrastructure, education, and research and development to boost productivity and economic output over the long run.
    5. Debt Restructuring: In dire circumstances, restructuring the debt could also be an option, although this might impact the U.S.’s credit rating and increase borrowing costs in the future.

    Addressing the national debt is a critical issue that will require difficult decisions and trade-offs. The role of the Federal Reserve in managing the economic conditions that influence the debt is essential but cannot alone resolve the issue. A comprehensive, bipartisan effort, combining fiscal responsibility with growth-oriented policies, will be required to secure a sustainable economic future for the U.S.

    US National Debt has now increased by $1.08 trillion since the debt ceiling was suspended last month. Charles Bilello

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