Good stuff. And, truth is I was a little edgy when I wrote that response, but you made some good points.
However, my issue with your debt-retirement idea boils down to this: Those mbs are still packaged together in the market (derivatives), and should the Fed 'clear the books', the derivatives would not settle in an orderly way, and the whole thing comes down.
And, with regard to the Fed functioning idependently, I agree there is more than meets the eye. But, the Fed works hand-in-hand with the Treasury, and the last thing the Fed wants is to be dissolved (those Fed banks would disintegrate if they had to realize those liabilities). It is (notwithstanding conspiracy) in their best interests for the economy to succeed.
Quoting: Anonymous Coward 1347486 I only meant to discuss canceling the debt bonds,
not the mb's. We do not know how many of the mb's
are worthless and will always be worthless, but it's
likely to be a very high percentage of those since
the program began in 2008-2009.
It benefits the home-owning public for them to hold the mb's, but to cancel the Treasury debt.
Think about how laughably pathetic it is that the Fed
is creating notes (dollars) out of thin air to purchase
US debt. That situation has existed for years now and
is no better perceptively than them canceling the notes
employed, which would not only lower the overall US debt
but also take that money out of eventual circulation.
Because the Fed has a policy target of increasing inflation
by at least 2%/ann. (food/energy excluded) they won't retire
the debt because they need that money to seep into circulation.
I am very suspiscious of their motives. I do not believe it
is at all necessary for their operations that the economy
succeed. The definitions they employ to gauge "success" are
skewed to favor the banks and not the public at large.
