- - Wednesday, September 24, 2014


The Federal Reserve has announced that although it’s going to reduce its purchase of its own bonds by 85 percent after October, it said it would keep special interest rates at zero percent until 2017, when the president leaves office. Gee, I hope President Obama appreciates the Fed leaving the economic meltdown for the next president.

You may wonder how the Fed can continue to put out money (print more money with no backing) at no interest when it will cut its purchase of its own bonds. That’s the way some countries in Europe are doing it. They borrow money with a promise to pay interest on the borrowed money in perpetuity without ever having to pay back the principal.

That way the borrowed money never shows up in the U.S. debt because there is no principal. Remember, when Bill Clinton was president, the government changed the way it reports the U.S. debt. It used to consider the interest obligation on its borrowing as debt, but under Mr. Clinton it changed to reporting only principal as debt. That’s why everyone thinks Mr. Clinton reduced the U.S. debt by 50 percent when he was in office, though he really increased the debt. Figures don’t lie, but liars can figure.



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