I'd rather we actually deal with the issue of spending exceeding revenues now, rather than cooking the books between the Treasury and the Fed and merely postponing this for two years.
This time the "government" means literally "the people". We do this and it means we've decided we're going to screw over a certain portion of the population to benefit the rest. Another example of Ron Paul's disconnect with reality, IMO.
It's more like owing your wife $20 when you've got a shared bank account, but I think it's an issue of perception more than anything.
Who gets screwed over in this? The Fed only uses those bonds for FOMC operations to grow or shrink the money supply, buying or selling them as needed to increase or decrease it. Currently the Federal Reserve holds these bonds and refunds the interest to the Treasury. If it were to sell them, the interest would become due to those who buy them, which then costs us real money. Unlike Social Security's trust fund bonds, these bonds do not represent a real obligation to anyone. The only issue then becomes that the Fed temporarily can't engage in FOMC operations to alter the money supply, but can still do so by altering reserve requirements on banks, which has a similar effect.
