By Alan Grayson Warren Buffett calls the debt ceiling a "nuclear weapon, too horrible to use." Obama administration official Jason Furman says the consequence of a default on U.S. government debt is "too terrible to think about." When asked about a default, Wells Fargo strategist James Kochan simply commented, "Holy cripes." With this crisis, America is risking financial Armageddon. The default of Lehman Brothers on its $613 billion of debt ignited a chain reaction in the financial system, nearly destroying the U.S. economy. A default by the U.S. government on $17 trillion of debt — debt that has been considered the safest in the world — could be far worse. But at heart, this is not a debt problem. It is an accounting problem. The Treasury Department issues U.S. debt, and lots of it. So you would think that America is deeply indebted to its bondholders. Yet increasingly, it is the U.S. monetary authority, the Federal Reserve, and not private investors, who buys this debt. So a simple solution to the impasse is as follows: Federal Reserve Chairman Ben Bernanke should simply cancel the Treasury debt that it owns. The government can just forgive the government's debt. This wouldn't solve the debt problem entirely. The Federal Reserve doesn't own all U.S. government debt; it owns only roughly $2 trillion of it. (Well $2,076,927,000,000.00, as of last Wednesday, but who's counting?) Yet canceling this debt would give the government substantial room under the debt ceiling to manage its finances. It would end the debt ceiling standoff in Congress, and it would prevent a default. The debt held on the balance sheet of the Federal Reserve can be canceled without any significant consequence, because it is a bookkeeping artifact corresponding to the money supply. In essence, the government owes this money to itself. If I owe money to myself, I can cancel that debt at will and without consequence, essentially taking it out of my left pocket and putting it in my right pocket. Last year, the Federal Reserve declared a "profit" of roughly $91 billion, much of which came from interest payments from the U.S. Treasury. The Federal Reserve then quickly remitted nearly all of this profit right back to the U.S. Treasury. The Federal Reserve does this every year. Reducing or eliminating this unearned "profit" actually will provide a more realistic view of federal finances. I am a Democrat, and known as a progressive. But this idea was put forward a few years ago not by me, or by a member of my party, but by Republican Representative Ron Paul. He thinks, as do I, that the Federal Reserve's dramatic expansion of its balance sheet is simply a way of financing the government by printing money. The Fed isn't really "buying" Treasury bonds, it is just letting the government finance its deficit by adding to the money supply. If this plan were enacted, there conceivably might be some operational problems for the Fed, but nothing compared to the nightmare of a default on Federal debt. Some of the Fed's Treasury debt facilitates Fed open market operations, which is part of how the central bank manages the money supply. Surely it would be much easier for the Fed to change its money supply management techniques, though, than to figure out how to manage open market operations using defaulted Treasury bonds. While canceling the Treasury debt held on the Federal Reserve balance sheet might be considered unorthodox, it is no more unorthodox than the quantitative easing that has added much of this debt to the Fed's balance sheet. In any event, preventing a financial meltdown, with its attendant risks of interest rate and price spikes as well as staggering employment losses, is certainly central to the Federal Reserve's mandate of ensuring price stability, maximum employment and moderate, long-term interest rates. Bernanke could alleviate the debt ceiling crisis simply by canceling the debt held on the Fed's balance sheet. I've written to him, and asked him to do so. Let's hope that he does.
- Fort Worth Star-Telegram
Social media is questioning what former Dallas Cowboys quarterback Tony Romo said during Sunday’s game.
- Associated Press
Cindy Williams, who was among the most recognizable stars in America in the 1970s and 80s for her role as Shirley opposite Penny Marshall's Laverne on the beloved sitcom "Laverne & Shirley," has died, her family said Monday. Williams died in Los Angeles at age 75 on Wednesday after a brief illness, her children, Zak and Emily Hudson, said in a statement released through family spokeswoman Liza Cranis. "The passing of our kind, hilarious mother, Cindy Williams, has brought us insurmountable sadness that could never truly be expressed," the statement said.
- Business Insider
Ben Crump says the only known white Memphis police officer relieved of duty in Tyre Nichols' death pulled him from car and hit him with a Taser — yet had his identity protected
Memphis police put Preston Hemphill, the only known white cop involved in Tyre Nichols' death, on leave. Five Black officers were charged.
- Patriot Ledger
The 8-month-old boy who was seriously injured inside his Duxbury home Tuesday night has died of his injuries at a Boston hospital.
- The Des Moines Register
Brock Purdy's late-season magic ended Sunday with an elbow injury. Here's what the NFL media are saying about Purdy and his future with the 49ers.
- NBC Sports BayArea
George Kittle offered a brutally honest assessment of the 49ers' NFC Championship Game loss to the Eagles.
- Yahoo Sports
Purdy injured his elbow in Sunday's NFC championship game.
- ProFootball Talk on NBC Sports
Multiple teammates consoled Bengals linebacker Joseph Ossai after he drew a late hit penalty that put the Chiefs in position for a field goal that delivered a Super Bowl berth for Kansas City. One teammate in particular was not pleased. Linebacker Germaine Pratt was yelling on the way to the locker room about the foul. [more]
Rita Ora paired star-shaped pasties and a thong with a nude latex dress to perform her new single—check out the pics here!
- San Luis Obispo Tribune
The transfer from University of Washington is reuniting with his former high school coach.
Matt Lauer and Shamin Abas Are 'Serious About Each Other' as Couple Steps Out for Rare Date Night: Source
"They try and stay out of the spotlight but are happy together and not interested in a high-profile life," a source tells PEOPLE of former Today anchor Matt Lauer and girlfriend Shamin Abas
(Bloomberg) -- Former President Donald Trump is suing journalist Bob Woodward for releasing recordings of interviews that he gave to the journalist in 2019 and 2020, claiming he never agreed to those tapes being shared with the public.Most Read from BloombergWall Street Is Losing Out to Amateur Buyers in the Housing SlumpAdani Rout Hits $68 Billion as Fight With Hindenburg IntensifiesAdani Tries to Calm Investors With 413-Page Hindenburg RebuttalHistoric Crash for Memory Chips Threatens to Wipe
- Women's Health
Christina Aguilera just dropped a topless photo on Instagram and she's super sculpted from her abs to her legs. Christina enjoys yoga for her mental health.
Gracie Hunt, the former Miss Kansas USA, is a member of the Hunt dynasty, one of the richest families in America.
The former aide's comments come after a recent report suggested that Greene is ambitious about being Trump's choice for vice president.
Gordon Ramsay swears by this easy 10-minute pasta dish, which he said has become a "regular midweek family meal" in his house.
- NBC Sports BayArea
One NFL executive made two wild predictions for how the 49ers will address the quarterback position in 2023.
- NBC Sports BayArea
Quarterback Brock Purdy was injured, but his thoughts were with his 49ers teammates following their loss to the Eagles in the NFC Championship Game.
- Marie Claire US
It makes sense why Her late Majesty wanted to keep this close to the vest.
- Idaho Statesman
A jury has awarded an Oregon woman $1 million in damages after finding she was discriminated against by a gas station employee who told her, “I don’t serve Black people.”.