I’ve had a working theory on how the US debt may be eliminated with no impact to the overall economy.
Because banks were underwater on all of their bonds, they (banks) are currently taking ‘loans’ from the Fed. The Fed is basically giving the banks the face value for their bonds so they remain liquid and don’t have to wait till bond maturation. If they tried to cash the bond out without maturation they would lose money.
So the Fed now has all these bonds and are quasi-governmental. However, at any time Congress can make them fully governmental. If they did that then the govt basically owes themselves the bonds and can wipe them all off the books as a matching credit/debit.
The banks have the dollars they need to stay liquid, the govt eliminates all the bonds the Fed was holding reducing the debt, and the Fed is eliminated.
To me it seems a win-win for everyone - except the Fed.
Does it really say that?
Holy Moly!!!