Federal Debt held by Federal Reserve Banks as a Percent of Debt other than Federal

This one is interesting. Before the crisis we see a continuous down-trend except in the good years of the 1960s and immediately before the good years of the 1990s.

I think the increase since the crisis is exactly what we needed. It restores the ratio to the level it held when our economy was good.

Here's the problem. Last time, it took half a century for the ratio to fall. But this time, the financial technology is already in place to generate private debt. So this time, the ratio could fall rapidly.

We don't want the ratio to fall at all. We want to keep it near the level it was at in the 1960s. To do that, we need to fetter the accumulation of private debt. The best way to do this would be to eliminate some tax incentives designed to maintain our debt, and create some incentives designed to accelerate the pay-down of debt.

Note that I am not suggesting that we should introduce policies that reduce new borrowing. Not yet, at least. New borrowing gives life to our economy. I am proposing that after we borrow and spend the money, we should pay off the loan faster. This will slow or stop the growth of accumulated private debt. And that will be a good thing.

If it means policy must reverse the tendency toward inequality, boosting median income so that people can afford to pay down debt, so much the better.

I've heard it said that since 1980 or so, the suppression of wage increases was part of our anti-inflation policy. Wouldn't it have been better to not suppress wage increases, and instead drain off those worrisome excess wages by accelerating the repayment of wage-earners' debt? This would have been an anti-inflation policy that was sustainable!