Ron Paul Introduces Bill To Cut $1.6 Trillion Dollars Of Debt

[IllTestYourGirls]

http://thehill.com/blogs/floor-actio...eld-by-the-fed

Rep. Ron Paul on Monday introduced legislation that would lower the federal government's debt by canceling the roughly $1.6 trillion in debt held by the Federal Reserve.

Paul has argued for the last few weeks that the idea represents a quick way to make the growing fiscal crisis more manageable. Under his bill, H.R. 2768, the $1.6 trillion that the Treasury owes to the Federal Reserve would disappear.

[dyna mo]

so we should allow congress to use the fed to implement fiscal policy?

fucking brilliant.


wow, what a flip flop from his *get rid of the fed* stance.

i love this guy!

ron paul 2012

[marketsmart]

Originally Posted by dyna mo

so we should allow congress to use the fed to implement fiscal policy?

fucking brilliant.


wow, what a flip flop from his *get rid of the fed* stance.

i love this guy!

ron paul 2012

i know you are smarter than this..

the fed is an evil monster...

if you cant kill it, wound it...




.

[dyna mo]

Originally Posted by marketsmart

i know you are smarter than this..

the fed is an evil monster...

if you cant kill it, wound it...




.

it's not an either or proposition eh.


i don't claim to be an economist like ron paul does, but these guys are economists and here is their view on this brainiac plan:

According to Congressman Paul, to deal with the debt-ceiling impasse, we should tell the Federal Reserve to destroy its vast holding of government bonds.
Because the Fed might have planned on selling those bonds in open-market operations to drain the banking system of the currently high level of excess reserves, the Fed should (according to Baker) substantially increase reserve requirements.
This would be a great exam question: What are the effects of this policy? Who wins and who loses if this proposal is adopted?

Part 1 is just an accounting gimmick. Since the Fed is really part of the government, the bonds it holds are liabilities the government owes to itself. Destroying the bonds has no direct economic effect. It is just like an increase in the debt ceiling, without any other policy changes attached.

Part 2 is a form of financial repression. Assuming the Fed does not pay market interest rates on those newly required reserves, it is like a tax on bank financing. The initial impact is on those small businesses that rely on banks to raise funds for investment. The policy will therefore impede the financial system's ability to intermediate between savers and investors. As a result, the economy's capital stock will be allocated less efficiently. In the long run, there will be lower growth in productivity and real wages.

Now, after Republicans spent years warning us about the (then nonexistent) possibility of hyperinflation, Ron Paul comes out and suggests a policy that would be a huge step toward hyperinflation.

Specifically, Ron Paul wants to have the Fed destroy its holdings of U.S. Treasury bonds. This would be retroactive seigniorage; it would mean that the money that the Fed printed in the past to buy those Treasury bonds was actually printed to pay off the U.S.'s sovereign debt.

As any Econ 101 student knows, large-scale sustained seigniorage is what causes hyperinflation. Now, the Fed doing a one-off round of retroactive seigniorage would not be enough by itself to push us into Weimar Republic territory - in particular, because the money has already been printed. But it would also send a signal that the Fed is no longer an independent central bank, and that Congress feels free to strong-arm the Fed into paying off U.S. sovereign debt with printed money at any time in the future. That would be a signal that much more seignorage is on the way, which would push us into hyperinflation. (Tyler Cowen sees this possibility, but rather euphemistically labels the future seigniorage "QEIII".)

So what the heck is Ron Paul thinking? Paul is a well-known supporter of the gold standard, which policy-wise is the exact opposite of hyperinflation. Is he simply betting that we'd decide to go back on the gold standard after we got tired of pushing around wheelbarrows full of billion-dollar bills? Or does he just know absolutely nothing about economics?

More generally, what is with the Republicans trying to push us into the very doomsday scenarios that they've always warned us about? Hyperinflation and sovereign default are basically THE worst self-inflicted disasters that we have ever seen befall a modern rich economy. And the only reason that there is any worry, whatsoever, that either of these things might happen to the U.S. is that the Republican Party seems to be flirting with the idea of intentionally causing them. The GOP seems to no longer be the "party of business", but a mad-dog populist gang that is running around chucking sticks of dynamite in all directions.

[iamtam]

in a related story, ron paul may need back surgery to recover from all his flip flopping.

[acrylix]

Originally Posted by dyna mo

i don't claim to be an economist like ron paul does

It's not rocket science bro.

Do you really believe that every U.S. citizen requires an economics degree to understand the basics of how the Federal Reserve works?

This sounds to me like a convenient way to keep meddling peasants out of any discussions involving their money.

Nice quotes by the way. Would have been nicer if you'd provided links to the sources so we could've read the whole thing for ourselves. That is, if a degree in economics is not required to do so.

[Emil]

Originally Posted by dyna mo

so we should allow congress to use the fed to implement fiscal policy?

fucking brilliant.


wow, what a flip flop from his *get rid of the fed* stance.

i love this guy!

ron paul 2012

Flip flop? A flip flop would be if he said that USA should keep the fed.

[dyna mo]

Originally Posted by acrylix

It's not rocket science bro.

Do you really believe that every U.S. citizen requires an economics degree to understand the basics of how the Federal Reserve works?

This sounds to me like a convenient way to keep meddling peasants out of any discussions involving their money.

Nice quotes by the way. Would have been nicer if you'd provided links to the sources so we could've read the whole thing for ourselves. That is, if a degree in economics is not required to do so.

ok, since it is easy to understand how it works, please explain to all of us the full impact of congress using the federal reserve bank in this regard.



thank you in advance.

[dyna mo]

Originally Posted by Emil

Flip flop? A flip flop would be if he said that USA should keep the fed.

i see it as a flip flop, i couldn't care less if you do or don't. feel free to cast your vote from sweden for the guy in 2012.

[Qbert]

Originally Posted by dyna mo

i don't claim to be an economist like ron paul does, but these guys are economists and here is their view on this brainiac plan:

Well, if they were truly economists they'd know that the Federal Reserve is NOT part of the government. It's actually a privately held bank.

https://youtube.com/watch?v=ZPWH5TlbloU

[dyna mo]

Originally Posted by Qbert

Well, if they were truly economists they'd know that the Federal Reserve is NOT part of the government. It's actually a privately held bank.

https://youtube.com/watch?v=ZPWH5TlbloU

neither of those quotes have anything in them that would make you conclude that, so you must not of read the quotes.



besides, you might want to tell ron paul that the central bank is private and not a fiscal tool for congress to use willy nilly. he is the one that introduced the legislation, you read that part right?

[Emil]

Originally Posted by dyna mo

i see it as a flip flop, i couldn't care less if you do or don't. feel free to cast your vote from sweden for the guy in 2012.

Guy: I hate some guy sooo much.
Dude: Cool.
Guy: Now I hate him even more!
Dude: OMG, flip flop!

[dyna mo]

Originally Posted by Emil

Guy: I hate some guy sooo much.
Dude: Cool.
Guy: Now I hate him even more!
Dude: OMG, flip flop!

dyna mo: i don't like ron paul and here are my reasons why.

ron paulies: ZOMG you don't like ron paul, you = brain dead. he's a baby jesus genius who can single-handedly save our country with his rocket science economic principles (that actually are not based on any reality) ZOMG! ZOMG! my opinion of ron paul is threatened, everyone must love ron paul like me and believe he can save us.



ron paul need a cape since he's such a superhero to some of y'all.

[Qbert]

Originally Posted by dyna mo

neither of those quotes have anything in them that would make you conclude that, so you must not of read the quotes.

from the first quoted 'economist' - "Since the Fed is really part of the government".

What part of that did I not read?

[dyna mo]

Originally Posted by Qbert

from the first quoted 'economist' - "Since the Fed is really part of the government".

What part of that did I not read?

i see what you are saying. you can nitpick that phrase if you want but i bet you can actually understand that it can be a private entity that is still part of the government.

fyi, usps is private as well. the government uses it frequently, for instance, raping it of cash to use for bullshit.


so you advocate ron paul and congress using the fed like they use usps?

[dyna mo]

more to help you understand how the entity known as the central bank is set-up:

The Federal Reserve System has both private and public components, and was designed to serve the interests of both the general public and private bankers. The result is a structure that is considered unique among central banks. It is also unusual in that an entity outside of the central bank, namely the United States Department of the Treasury, creates the currency used.[11]

According to the Board of Governors, the Federal Reserve is independent within government in that "its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government." However, its authority is derived from the U.S. Congress and is subject to congressional oversight.

Additionally, the members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by Congress. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees.

Thus the Federal Reserve has both private and public aspects.[12][13][14][15] The U.S. Government receives all of the system's annual profits, after a statutory dividend of 6% on member banks' capital investment is paid, and an account surplus is maintained. In 2010, the Federal Reserve made a profit of $82 billion and transferred $79 billion to the U.S. Treasury.[16]

[seeandsee]

just clean debt that is on federal reserves name, simple :D

[dyna mo]

more to help you understand how the entity known as the central bank is set-up:


The system was designed out of a compromise between the competing philosophies of privatization and government regulation.

In 2006 Donald L. Kohn, vice chairman of the Board of Governors, summarized the history of this compromise:[45]
Agrarian and progressive interests, led by William Jennings Bryan, favored a central bank under public, rather than banker, control. But the vast majority of the nation's bankers, concerned about government intervention in the banking business, opposed a central bank structure directed by political appointees.

The legislation that Congress ultimately adopted in 1913 reflected a hard-fought battle to balance these two competing views and created the hybrid public-private, centralized-decentralized structure that we have today.

[Qbert]

Originally Posted by dyna mo

so you advocate ron paul and congress using the fed like they use usps?

Interesting that you make that assumption based on my pointing out a factual error. I think perhaps you just like to stir shit for the sake of your own entertainment.

As a rule I don't debate politics on public forums, it's a futile effort at best, and wastes way too much time.

[TheDoc]

How is it a flipflop when he's asking to reverse one of the exact things that is an issue with the fed, and even claimed so by him?

Wanting to audit the fed, close it down for the fraud it's doing (the interest on our money) and then him asking to reverse the interest payments, is about as far from a flipflop as you can get.

[dyna mo]

Originally Posted by Qbert

Interesting that you make that assumption based on my pointing out a factual error. I think perhaps you just like to stir shit for the sake of your own entertainment.

As a rule I don't debate politics on public forums, it's a futile effort at best, and wastes way too much time.

that's fine.

Originally Posted by TheDoc

How is it a flipflop when he's asking to reverse one of the exact things that is an issue with the fed, and even claimed so by him?

Wanting to audit the fed, close it down for the fraud it's doing (the interest on our money) and then him asking to reverse the interest payments, is about as far from a flipflop as you can get.

that's your opinion. as i've mentioned previously, i see it another way and am posting that. besides, that's not the key point i've made in this thread, it is tangential.

the major point it ron paul advocating using the fed this way.

question, what will happen with the fed's ledger sheet to balance wiping this debt off the books? you do know there was a corresponding equal amount of dollars printing to back up this debt?

so the ledger sheet won't add up, you will have 1.5 trillion PRINTED dollars with no debt backing it up. how will that work?

[dyna mo]

The problem with Paul?s suggestion is that simply extinguishing the bonds doesn?t also extinguish the $1.6 trillion the Fed printed to buy the bonds originally, which now is dammed up inside the banks in a huge reservoir of liquidity because the banks have not been lending it out. This excess liquidity would be highly inflationary if (when) it flooded out into the economy as new credit, which it will eventually, if the economy ever recovers. Therefore, the Fed retains those bonds at the ready in its portfolio so that if (when) inflation begins to rise, it will have the bonds to sell back into the market to soak up that excess liquidity it created when it originally printed the money and purchased the bonds.

So, unless Paul?s idea is simultaneously implemented as part of his larger plan to eliminate the Fed altogether ? which is a good idea but unlikely to happen anytime soon ? markets likely would look askance at eliminating the Fed?s bond sponge, which it will eventually need to clean up the inflation mess it has set in motion. Many bond analysts are concerned that interest rates will spike and further exacerbate the federal government?s fiscal position when the Fed has to unload its bonds on the market.

[TheDoc]

Originally Posted by dyna mo

that's fine.




that's your opinion. as i've mentioned previously, i see it another way and am posting that. besides, that's not the key point i've made in this thread, it is tangential.

the major point it ron paul advocating using the fed this way.

question, what will happen with the fed's ledger sheet to balance wiping this debt off the books? you do know there was a corresponding equal amount of dollars printing to back up this debt?

so the ledger sheet won't add up, you will have 1.5 trillion PRINTED dollars with no debt backing it up. how will that work?

Answer, the fed does not keep books or a ledger. If it did, money made from the feds money (which is all money), from gov to corps to you, which is a hell of a lot more than 14 trillion, would all go back up the accounting chain, and easily whip the debt clean, as income back into the overall system.

But that's how a normal corp works, and the fed is not a normal corp.

Printing money, does not mean the machine is actually stamping money. When they give a bank 10 million, they don't print and ship them 10 million dollars. They get some cash, the majority is digital.

Money does not need a debt backing it, ever... it should not create debt to print our own money. Once the money is given to a bank and then to a person/corp, interest is understandable. Up to the point, it's fraud!

[dyna mo]

Originally Posted by TheDoc

Answer, the fed does not keep books or a ledger. If it did, money made from the feds money (which is all money), from gov to corps to you, which is a hell of a lot more than 14 trillion, would all go back up the accounting chain, and easily whip the debt clean, as income back into the overall system.

But that's how a normal corp works, and the fed is not a normal corp.

Printing money, does not mean the machine is actually stamping money. When they give a bank 10 million, they don't print and ship them 10 million dollars. They get some cash, the majority is digital.

Money does not need a debt backing it, ever... it should not create debt to print our own money. Once the money is given to a bank and then to a person/corp, interest is understandable. Up to the point, it's fraud!

mmm. sorry, but this is incorrect. see above. perhaps i misused the term *backing up* but for every dollar the fed prints, there is a corresponding dollar of debt issued.

& vice versa

[TheDoc]

Originally Posted by dyna mo

The problem with Paul?s suggestion is that simply extinguishing the bonds doesn?t also extinguish the $1.6 trillion the Fed printed to buy the bonds originally, which now is dammed up inside the banks in a huge reservoir of liquidity because the banks have not been lending it out. This excess liquidity would be highly inflationary if (when) it flooded out into the economy as new credit, which it will eventually, if the economy ever recovers. Therefore, the Fed retains those bonds at the ready in its portfolio so that if (when) inflation begins to rise, it will have the bonds to sell back into the market to soak up that excess liquidity it created when it originally printed the money and purchased the bonds.

So, unless Paul?s idea is simultaneously implemented as part of his larger plan to eliminate the Fed altogether ? which is a good idea but unlikely to happen anytime soon ? markets likely would look askance at eliminating the Fed?s bond sponge, which it will eventually need to clean up the inflation mess it has set in motion. Many bond analysts are concerned that interest rates will spike and further exacerbate the federal government?s fiscal position when the Fed has to unload its bonds on the market.

The Banks and the Fed are one thing. The fed only needs to take back the digital money not being used by it's own banks, removing it from possible circulation.

We could also cancel other types of bonds, like ones made on trade deficits, which weren't real deficits when the corps doing the business paid in full for the materials.

[TheDoc]

Originally Posted by dyna mo

mmm. sorry, but this is incorrect. see above. perhaps i misused the term *backing up* but for every dollar the fed prints, there is a corresponding dollar of debt issued.

& vice versa

How is what I said incorrect when that's exactly what I said?

Either way, the debt created on printed money is not needed.

[Agent 488]

you have to be amazed how an anti-semitic conspiracy theory has trojan horsed itself into the mainstream discourse.

http://en.wikipedia.org/wiki/Eustace_Mullins

http://www.apfn.org/apfn/reserve.htm

[dyna mo]

more proof this is another ron paul flip flop::::::

Ron Paul on may 11, 2011:

"If the federal government cannot cut spending and bring the budget back into balance, the Fed undoubtedly will be forced to simply monetize trillions of dollars in Treasury debt, which is nothing more than a stealth form of default. That devaluation of the dollar will lead to such high inflation that QE2 and its effects will look like a drop in the bucket in comparison.?

[dyna mo]

Originally Posted by TheDoc

How is what I said incorrect when that's exactly what I said?

Either way, the debt created on printed money is not needed.

you said the bank does not utilze a ledger/balance sheet. that's incorrect. the fed printed up 1.5 trillion dollars then issued debt against that. that a balance on a ledger.

again, what will come of the 1.5 trillion printed dollars that have zero corresponding debt attached to them?

[dyna mo]

Originally Posted by Agent 488

you have to be amazed how an anti-semitic conspiracy theory has trojan horsed itself into the mainstream discourse.

http://en.wikipedia.org/wiki/Eustace_Mullins

http://www.apfn.org/apfn/reserve.htm

the fed is a conspiracy theorist's wet dream!

[TheDoc]

Originally Posted by dyna mo

you said the bank does not utilze a ledger/balance sheet. that's incorrect. the fed printed up 1.5 trillion dollars then issued debt against that. that a balance on a ledger.

again, what will come of the 1.5 trillion printed dollars that have zero corresponding debt attached to them?

I said the fed doesn't keep books or a ledger, in the idea of an accounting ledger done correctly.

What you explained is a ledger, but only half of one. They probably do record what went out, but they do not record income back in. It's not possible for them to record it all, not all is even set to be paid back - ever, but it still has interest on the money.

At that, they do not directly give out money, a bank does, drawn on a reserve note of some type. Payment back, interest in, etc is to a bank, not the the reserves. Ie: money out, but never in - in relation to the money given out.

[wig]

Originally Posted by TheDoc

How is it a flipflop when he's asking to reverse one of the exact things that is an issue with the fed, and even claimed so by him?

Wanting to audit the fed, close it down for the fraud it's doing (the interest on our money) and then him asking to reverse the interest payments, is about as far from a flipflop as you can get.

Can you explain why you think this is fraud?


.

[TheDoc]

Originally Posted by wig

Can you explain why you think this is fraud?


.

1) It hasn't always been this way or here.
2) It's not needed, at any level.
3) It's our money, and if it wasn't a reserve note it wouldn't have interest on it, just like before.
4) It creates more problems when debt is created to pay off the debt.
5) It has no accountability, unlike me, you and all other corps.
6) It drives up interest rates, making the money I have earned/invested, worth less.
7) It taxes me, without taxing me directly.

[wig]

Originally Posted by TheDoc

1) It hasn't always been this way or here.
2) It's not needed, at any level.
3) It's our money, and if it wasn't a reserve note it wouldn't have interest on it, just like before.
4) It creates more problems when debt is created to pay off the debt.
5) It has no accountability, unlike me, you and all other corps.

Well, that doesn't really support the use of "fraud". Maybe a word other than "fraud" would serve you better.


.

[TheDoc]

Originally Posted by wig

Well, that doesn't really support the use of "fraud". Maybe a word other than "fraud" would serve you better.


.

Fraud: Wrongful or criminal deception intended to result in financial or personal gain.

That about sums up the fed reserve and central banking system perfectly. It's no doubt that the reserve is a major deception, fully intended for a few to have massive financial gain, in all types of ways. Which we have enough history around to prove over and over and over again.

[dyna mo]

Originally Posted by TheDoc

I said the fed doesn't keep books or a ledger, in the idea of an accounting ledger done correctly.

What you explained is a ledger, but only half of one. They probably do record what went out, but they do not record income back in. It's not possible for them to record it all, not all is even set to be paid back - ever, but it still has interest on the money.

At that, they do not directly give out money, a bank does, drawn on a reserve note of some type. Payment back, interest in, etc is to a bank, not the the reserves. Ie: money out, but never in - in relation to the money given out.

i'll have to go with you on this, i don't know if this is the case or not. i try and understand the fed as realistically as possible but i do not claim to know their accounting principles. i do know each printed dollar has 1 dollar debt accompanying it.

that being said, what are your thoughts re: this bill? and the 1.5 trillion dollars it will leave up in the air?

[dyna mo]

also, we all know what happens when we open the door just a bit for our government.


do we really think this would be a 1 time occurrence we let our government do or would this follow how things typically go inside the beltway and congress utilizes measures such as this many many times.

pandora's box imo, REGARDLESS of who sponsored this bill.

[wig]

Originally Posted by TheDoc

Fraud: Wrongful or criminal deception intended to result in financial or personal gain.

That about sums up the fed reserve and central banking system perfectly. It's no doubt that the reserve is a major deception, fully intended for a few to have massive financial gain, in all types of ways. Which we have enough history around to prove over and over and over again.

That's your assertion. Just stating it doesn't make it so. I suppose you and anyone else that believes that (Ron Paul) can sue the FED and establish criminal wrongdoing.

I'll wait.


.

[TheDoc]

Originally Posted by dyna mo

that being said, what are your thoughts re: this bill? and the 1.5 trillion dollars it will leave up in the air?

All his bill does is cut the interest, on basically a double payment. So the fed takes a loan basically once and gets hit with interest, then they take a loan against that debt, and get hit with interest again... he wants to cut that 2nd round of Interest out, not the original debt.

So in short, the gov would be stiffing itself. Not that it will go through, and even so, it's the public debt we want paid down, screw the Gov debt.

[TheDoc]

Originally Posted by wig

That's your assertion. Just stating it doesn't make it so. I suppose you and anyone else that believes that (Ron Paul) can sue the FED and establish criminal wrongdoing.

I'll wait.


.

That's not my assertion... We've had Presidents that have called it a fraud as well, and even taken them down because of the fraud.

Fraud doesn't mean criminal, it can mean wrongful deception as well. If it was criminal we would have a law on the books for it, and press charges over it, not sue.

[dyna mo]

Originally Posted by TheDoc

the gov would be stiffing itself.

translation: bend over even more america.

[wig]

Originally Posted by TheDoc

I said the fed doesn't keep books or a ledger, in the idea of an accounting ledger done correctly.

Originally Posted by dyna mo

i'll have to go with you on this, i don't know if this is the case or not.

He's equivocating. FED audits are conducted in accordance with generally accepted accounting standards and Government Accounting Standards issued by the Comptroller General of the United States.

How that means they use accounting incorrectly I have no idea.


.

[wig]

Originally Posted by TheDoc

That's not my assertion... We've had Presidents that have called it a fraud as well, and even taken them down because of the fraud.

So it's your assertion and past Presidents assertions.

Fraud doesn't mean criminal, it can mean wrongful deception as well. If it was criminal we would have a law on the books for it, and press charges over it, not sue.

Fair enough... lmk when charges are pressed.


.

[TheDoc]

Originally Posted by wig

So it's your assertion and past Presidents assertions.

Well, it's really just my understanding.... it's the Presidents assertion based on the facts that support why they've (or tried) to take it down several times.

Originally Posted by wig

Fair enough... lmk when charges are pressed.

We wouldn't press charges, a law isn't being broken.

If history is not proof for you then why would it be proof for you if it happened in the future?

[dyna mo]

Originally Posted by wig

He's equivocating. FED audits are conducted in accordance with generally accepted accounting standards and Government Accounting Standards issued by the Comptroller General of the United States.

How that means they use accounting incorrectly I have no idea.


.

appreciated.

[TheDoc]

Originally Posted by wig

He's equivocating. FED audits are conducted in accordance with generally accepted accounting standards and Government Accounting Standards issued by the Comptroller General of the United States.

How that means they use accounting incorrectly I have no idea.


.

Where is this audit? Not an audit on it's little programs, or a bailout, like of the actual reserve, it's books! Where is that? I'll tell ya where it is... no where, it's never been done!

They may use some standards, but it's not like anything we use or any other accounting standard in the world. When we make a profit, we do not create an equal debt out of thin air, we account for it, something the fed does not do, at any level.

That would be incorrect accounting by ever standard in the world.

[dyna mo]

Originally Posted by TheDoc

Where is this audit? Not an audit on it's little programs, or a bailout, like of the actual reserve, it's books! Where is that? I'll tell ya where it is... no where, it's never been done!

They may use some standards, but it's not like anything we use or any other accounting standard in the world. When we make a profit, we do not create an equal debt out of thin air, we account for it, something the fed does not do, at any level.

That would be incorrect accounting by ever standard in the world.

but the fed does account for profit, at least on the surface, all profits go back to the us treasury right?

[dyna mo]

At the Federal Reserve’s July 13, 2011 hearings before the House Financial Services Committee, Representative Al Green cited evidence that the Fed made a profit on its QE 1 and QE 2 asset acquisitions and that the transfer of those funds back to the Treasury had helped reduce the deficit.

http://www.ritholtz.com/blog/2011/07...-the-taxpayer/

[dyna mo]

detailed analysis of fed accounting:

http://www.cumber.com/commentary.aspx?file=072111a.asp

[dyna mo]

The process of printing money creates the threat of future inflation. If the Fed does nothing, then that future inflation can wipe out real wealth and the purchasing power of the taxpayer (which is a future cost of quantitative easing). Of course, the Fed can’t let this happen. The canceling out of the Treasury debt that I suggested above is also not really a feasible option, because the Fed would have a liability with no offsetting asset



One final point. Lest one doubt that the Fed is part of the government or that the Treasury is the ultimate backstop to the Fed, Federal Reserve Notes, which are Federal Reserve liabilities, are deemed obligations of the US government under Title 12 (Chapter 3, Subchapter XII, Section 411) of the US Code.