Quote Of The Day

Yves Smith, of Naked Capitalism, on Republican U.S. Rep. Ron Paul's (TX-14) idea to have the Federal Reserve invalidate the Treasury Bonds it acquired during the "Quantitative Easing 1" banking system rescue back in 2008/9:

Paul’s gambit is also a clever way to hoist the banks on their own petard. The deficit hysteria has in no small measure been driven by the banks as part of a desire to enforce their new program of insulating bondholders from losses, including those of inflation. State support for policies like that amounts to socialism for rentiers, since the reason bonds pay more interest that Treasury bills is interest rate risk and credit risk. If investors want a premium yield, they should expect to bear the hazards which go with them.

I hope Paul prevails. When a Congressman who has often been depicted as a wingnut has the best idea in the room, you know a serious house cleaning is in order.

Ron Paul Suggests Using Fed to End Run Debt Ceiling Impasse

I've written similar things about Ron Paul versus many DC politicians. The point about rentiers is another good one. In essence, the Fed has been making sure that the banks and various financial institutions don't go broke. I suspect that from Rep. Paul's libertarian perspective, that's just something the government shouldn't be involved in. From my political perspective, it's clearly not working out for anyone but the financial industry. The rest of us are in a depression.

So, once again, the crazy wingnutty guy is one of the few in that room who are saying anything sane.

Makes you think, doesn't it?