Monetizing Debt: An Evasive Maneuver

“We the People” have begun to lose all personal financial endeavors, and furthermore being restrained to fiscal policies that are potentially devastating to America's future. Chairman of the United States Federal Reserve, Ben Bernanke, quoted regarding his bold disapproval of monetizing debt, “The Federal Reserve will not monetize the debt, either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation” (Hill 1). Monetizing debt is defined by the selling of national debt to primary buyers in the form of a Treasury bill or bond. In laymen's terms, primary buyers, both foreign and domestic, are purchasing bonds from our government to liquidate our national deficit. In a new age of federal policies, official's statements can likely be discredited or influentially changed due to the varying opinions on the Federal Reserve's performance. People must be more skeptical on key federal policies in the United States due to the current recessive state of our economy plundering potentially into disastrous levels. Monetizing debt is technically legal; however it becomes an issue of morality by the specifics to which it is being conducted. The constantly growing power of federal influence on markets, specifically the selling of national securities with the purpose of debt liquidation, not only defies the ideals of a free market economy, but it also has the tendency to suppress the tax payer's financial interests.

What is a bond? Bonds are often considered by investors to be “financial IOU's.” Frequently, bonds are issued from banks designed for quick, upfront cash used in lending purposes, such as loans. When purchasing a bond, the buyer pays an upfront sum of money to the seller. By the terms and conditions...

... middle of paper ...

...tics 54.3 (1997): 376-377. Academic Search Complete. EBSCO. Web. 8 Nov. 2009.

Martenson, Chris. "The Shell Game - How the Federal Reserve is Monetizing Debt - Aug. 25, 2009 | Blogs at Chris Martenson - Central Banks, Chris Martenson's Blog, Federal

Reserve, Martenson Report, Treasury bills, Treasury bonds." ChrisMartenson.com. 25 Aug. 2009. Web. 7 Nov. 2009.

United States of America. Executive Office of the President of the United States. Department of Management and Budget. GPO Access. Web. 10 Nov. 2009.

United States of America. Executive Office of the President of the United States of America. Department of Management and Budget. GPO Access. U.S. Government Printing Office, 26 Feb. 2009. Web. 12 Nov. 2009.

Calleo, David P. "INFLATION AND AMERICAN POWER." Foreign Affairs 59.4 (1981): 781- 812. Academic Search Complete. EBSCO. Web. 8 Nov. 2009.