Ron Paul's Modest Proposal

The video discusses the Ron Paul proposal, which suggests the Fed forgive $1.6 trillion in Treasury debt, allowing the Treasury to borrow more. This would render the Fed technically insolvent, but the Fed's unique role as being backed by the Treasury means it is not an ordinary bank. The proposal is critiqued as a backward step in transparency.

What is the main idea behind the Ron Paul proposal?

• To eliminate the Federal Reserve

• To reduce the national debt by increasing taxes

• To privatize the Treasury

• To increase the Treasury's borrowing limit by forgiving its debt to the Fed

What would happen to the Fed if it forgives the $1.6 trillion debt?

• It would become technically insolvent

• It would gain more assets

• It would reduce its liabilities

• It would increase its interest rates

Why might the Fed's insolvency be concerning?

• Because it would decrease employment

• Because it would increase inflation

• Because it would affect the holders of reserves

• Because it would lead to higher taxes

How does the speaker suggest we view the Fed?

• As being backed by the Treasury

• As a private bank

• As an independent entity

• As a foreign institution

What is the speaker's main criticism of the proposal?

• It increases transparency

• It is a backward step in transparency

• It reduces the national debt

• It strengthens the Fed's position