Debt

New Scheme to Avoid Debt Ceiling: Gigantic IOUs! To Everybody!

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iou

As we approach the debt ceiling, suggests for workarounds are getting more creative—and more depressing. For those who can't quite stomach the trillion dollar platinum coin but prefer funny money to constitutional crisis, comes this suggestion from Edward Kleinbard, former chief counsel at the Joint Committee on Taxation and a law professor at USC: 

There is a plausible course of action, one that the president should publicly adopt in the coming weeks as his contingency plan should debt-ceiling negotiations falter. He should threaten to issue scrip — "registered warrants" — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.'s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.

The scrip would not violate the debt ceiling because it wouldn't constitute a new borrowing of money backed by the credit of the United States. It would merely be a formal acknowledgment of a pre-existing monetary claim against the United States that the Treasury was not currently able to pay. 

california iou

Sounds crazy and fiscally irresponsible? Well, California did it, so….it's probably crazy and fiscally irresponsible, even though it worked out OK for them once in 2009:

California addressed its budget crisis by issuing 450,000 registered warrants, totaling $2.6 billion, to individual and business claimants, including recipients of aid programs, recipients of tax refunds and government contractors. Those holders who needed immediate cash were usually able to sell their registered warrants to banks at face value, though some institutions limited such purchases.

Whether as a result of public shaming, pressure from banks or a newfound sense of responsibility, the Legislature quickly worked out a budget deal and the scrip was then redeemed for cash.

Throughout the ordeal, California continued to pay its public debt service in cash and on schedule and never lost an investment-grade credit rating.

As The Washington Post has noted, the scheme has some weak points:

It wasn't exactly popular (one item on the State Controller's FAQ on the program is "Who can I call to complain about this?"), and big banks such as Bank of America, JPMorgan Chase, Wells Fargo and Citigroup stopped accepting deposits of the warrants after a couple of weeks, but credit unions accepted them throughout, and the program kept the state in business for two months.

And unlike California, the feds probably couldn't pay interest in those IOUs, which might result in more significant unrest.

But hey, anything to avoid actually cutting spending and reforming entitlements, I guess!

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  1. The federal government is growing increasingly desperate to worm its way out of the debt crisis. I look forward to the day when China drags the US out into the alley and breaks its legs.

    1. From what I’ve read much of the US government debt is held by other than China.

    2. When you owe the bank a billion dollars, the bank owns you. When you owe the bank a few trillion dollars, you own the bank.

  2. I didn’t get a constitutional crisis out of the election, and I resent not getting the lulz I pay for. C’mon, debt ceiling!

    1. Is that what this government is to you? Very, very expensive kabuki?

      1. Government is a hate-fuck you are forced to pay for; you might as well get some yuks out of the show.

          1. No one forced you to see that, Hugh. YOU FORCED YOURSELF.

            I know, because I did it too.

            1. I didn’t actually see it, Epi. I knew once I saw the “from the director of Con Air” tagline that even passing the theater is was playing in would induce brain damage.

              1. Are you messing with me, Hugh? Because Michael Bay didn’t direct Con Air, even though it really, really seems like he did.

                1. No thats not true! That’s Impossible!

          2. No. Exactly like the end of Dumb and Dumber.

            “That’s as good as money, sir. Those are IOU’s”

            http://www.youtube.com/watch?v=7GSXbgfKFWg

      2. I just had an image of white face paint, a red wig, and a kimono on Joe Biden. Go to hell, some guy.

  3. When the big banks come out favoring this proposal it will be (even more) obvious that this is a bad idea.

    Frankly I think this is better than raising the debt ceiling. It is the same as defaulting on salaries or SS benefits. The only way to make people pay attention is to cause them pain.

    1. “Your attention. Do I have it?”

      Sorry, I forgot the obligatory quote…

  4. Wait, state-issued scrip, even as an IOU?

    If banks take them as cash, and the State takes them as cash, they’re operationally money.

    And the States are constitutionally prohibited from issuing paper money.

    I’m surprised Washington didn’t throw a fit.

    1. (To clarify, not because Washington cares about The Constitution a whole lot, or is opposed to states playing fast and loose with money.

      But because Washington is jealous of its powers over the States, and would thus seek to exercise them whenever possible.)

      1. Maybe if it had been tried by a Red state, things would have happened differently. I guess we’ll never know…

    2. Everyone at the time was either worried that the Feds would throw a fit or were actively encouraging the Feds to throw a fit. But it never happened. See, laws are only enforced when the “Top Men” think they should be enforced.

  5. Currency is already IOU’s.

    This is like IOU 2 – Economic Bugaboo.

    1. Well done.

  6. The scrip would not violate the debt ceiling because it wouldn’t constitute a new borrowing of money backed by the credit of the United States. It would merely be a formal acknowledgment of a pre-existing monetary claim against the United States that the Treasury was not currently able to pay.

    Article One of the Constitution assigns to authority to “borrow Money on the credit of the United States” to Congress. Would these scrips be the borrowing of Money, or a mere formal acknowledgment of a pre-existing monetary claim?

    Well, it kinda depends, I think, but it is by no means as cut and dried as the good professor thinks. If the scrips are transferable/depositable (as I believe the CA scrip was), then they are starting to look a lot like a negotiable instrument, which probably makes them debt.

    Breaking it down a little, they would definitely be a claim on the credit of the United States, which doesn’t help the good professor. Would they be a borrowing of Money? Well, money won’t change hands, but you can issue debt in exchange for goods and services without actual cash changing hands. They would be the functional equivalent of a forced loan from the vendors.

    My take? Can’t be done without Congressional authorization.

    1. I thought Federal Reserve notes were essentially I.O.U.s, as I thought all fiat money was. Perhaps I’m wrong.

    2. They would be the functional equivalent of a forced loan from the vendors.

      Vendors gave the government ‘a loan’ when they delivered goods or services in exchange for a promise of future payment.

  7. Sounds crazy and fiscally irresponsible?

    Yes, Congress threatening not to pay bills incurred by Congress, thus threatening the stability of the global economy, over a domestic political fight, does sound crazy and extremely fiscally irresponsible.

    That’s the thing with these various schemes: they are all nuts, but none quite so much as what Congressional Republicans are threatening to do. If we want to make draconian cuts to the safety net, then it needs to be done through the normal democratic process, not forced by Republican legislators holding the economy hostage. Anyone who doesn’t agree with this is a loon. Though in your defense it doesn’t appear you understand what the debt ceiling actually is.

    1. Unlike continuously increasing spending far above and beyond their income. I’m sure that’s not irresponsible at all. But in imaginary T o n y-world, “do dumb shit or do even dumber shit” are the only options, and it’s irresponsible not to choose “even dumber shit”. “Live within our means” is never an option, because that would actually be realistic. T o n y HATES reality, it always gets in his way.

      1. If Republicans want to cut future spending, they can try to cut future spending. This is all about money Congress has already appropriated. The debt ceiling is almost certainly unconstitutional, and at least is a pointless gimmick whose only function is to allow Republicans to avoid the democratic process and get their way by holding a gun to the head of the global economy. However much they want to cut spending, the adjective “responsible” doesn’t belong anywhere near them.

        1. “If Republicans want to cut future spending, they can try to cut future spending.”

          And Harry Reid and Obama will block them.

          1. As is their prerogative as duly elected officials. WTF? There are special rules for people who only want to cut spending?

            1. And it’s Republicans prerogative as duly elected officials to use what leverage they have to achieve their policy goals. As I see it, Democrats are “holding a gun to the head of the global economy” by refusing to reform a clearly unsustainable system.

              1. There’s not much reason to believe that our debt/GDP ratio threatens the global economy in the short-term, but it is a near certainty that not raising the debt ceiling when the time comes will result in a global calamity. Do I think it’s legitimate for Republicans to threaten global calamity for their domestic policy goals? No, I do not. It’s not the way things are supposed to be done; it’s the exploitation of a legal gimmick combined with a horrifying lack of concern about the United States’ credibility in the world.

                1. “near certainty that not raising the debt ceiling when the time comes will result in a global calamity”

                  I don’t know why. The government can continue to make good on its debt payments with tax revenues. It could also continue to pay for a good deal of services. I’m going to need more than your assertion.

                  1. Are you saying the president should pick and choose which payments to authorize?

                    Anyway if you think using the debt ceiling is a legitimate form of leverage for Republicans, then you have to admit that the platinum coin is a perfectly legitimate reaction by the president.

                    1. Not when it Link text “isn’t legal.

          2. Adam330| 1.11.13 @ 5:41PM |#

            “If Republicans want to cut future spending, they can try to cut future spending.”

            And Harry Reid and Obama will block them

            Actually, that’s backwards.
            The republicans in the HoR could refuse to pass any appropriations and the government would have to drastically downsize quickly.

        2. I can’t agree the debt limit is unconstitutional. Congress has the power to tax, to spend, to borrow, and to limit borrowing. The Constitution doesn’t give priority to any of these powers.

          1. 14th Amendment section 4:

            “The validity of the public debt of the United States, authorized by law . . . shall not be questioned.”

            1. And no one is questioning its validity. It can be serviced through current tax revenues on time and in full, even if the debt ceiling isn’t raised. The only thing that would stop that is a deliberate decision by the President to prioritize tax revenues to some other purpose.

            2. The validity isn’t being called into question. The Treasury would use tax revenue to service US debt first.

            3. Hey, you actually left in the “authorized by law” part!
              Now, read that again and try to understand it.

        3. If Republicans want to cut future spending

          they can simply refuse to pass any appropriations bills.

    2. Protip: when you max out your credit card, you don’t default on everything you owe.

    3. T o n y| 1.11.13 @ 5:17PM |#
      …”but none quite so much as what Congressional Republicans are threatening to do”…

      Yes, shithead, we got the GO TEAM BLUE cheerleading ignorance.
      Go suck a turd.

      1. It is a plain fact that congressional Republicans are threatening to use the debt ceiling to leverage policy goals. I did not make that up. Whatever Democrats are guilty of, Republicans are clearly guilty of that. So does that make you a GO TEAM RED cheerleader, or what?

        1. It is a plain fact that congressional Democrats and Republicans don’t actually plan on any meaningful spending cuts, as has been demonstrated over and over again for at least the last decade.

          It is evident that you are just that, a TEAM BLUE cheerleader.

          1. That’s because you guys haven’t convinced enough Americans that getting rid of Medicare would be good for them. Cutting programs is politically difficult. Sorry. Doesn’t mean we get to avoid difficult political choices because we can hold the economy hostage instead.

            1. Yes, it’s obvious that a majority of Americans can’t do basic math (or, more accurately, refuse to it when something they value could meet the cutting ax). That doesn’t mean what libertarians and other realists believe is wrong.

            2. T o n y| 1.11.13 @ 6:04PM |#
              …”Cutting programs is politically difficult.”…

              The horror of expecting team blue to do anything difficult!
              Yes, shithead, your fave party is incapable of moral behavior.

              1. Team blue doesn’t want to cut Medicare.

                1. T o n y| 1.11.13 @ 7:01PM |#
                  “Team blue doesn’t want to cut Medicare”

                  It’s obviously tough to stay on subject with a single-digit IQ.

    4. [I]t needs to be done through the normal democratic process, not forced by Republican legislators holding the economy hostage.

      Your partisanship is melting your brain. Since when is the minority party constraining the majority party (the Republicans make up the majority of the house, anyway) not “going through the normal democratic process”? We live (or at least used to) in a constitutional republic, you know, with checks and balances on majoritarian rule.

      Hell, your contention is a red herring, as even the Republicans have increased spending, including in the latest “fiscal cliff” agreement.

      Tax hikes and spending increases. What are you bitching about?

      1. DUR, MOAR BLUE LESS RED.

      2. The normal democratic process I’m talking about is for Republicans to try to achieve their policy goals by debating the matter and having votes in Congress. Using the security of the global economy as leverage in order to try to get their way is not by any definition a normal way of doing things.

        And it’s not just me saying this, it’s the business sector, because that behavior is fucking crazy.

        1. The normal democratic process I’m talking about is for Republicans to try to achieve their policy goals by debating the matter and having votes in Congress.

          Isn’t that exactly what the debt ceiling fight is? Debating and voting on a bill to raise the debt ceiling in conjunction with spending cuts in Congress?

          I mean, fuck you, stop troll responding!

          1. No. You want to gut Medicare, you say “I want to gut Medicare. Let’s have a debate and a vote on the issue.” You don’t say “Gut Medicare or we’re going to blow up the economy of the world, we swear to God.” That’s not democratic debate, that’s terrorism.

            1. You don’t say “Gut Medicare or we’re going to blow up the economy of the world, we swear to God.” That’s not democratic debate, that’s terrorism.

              Nothing even remotely like that has happened. But histrionics is your forte, so…

            2. T o n y| 1.11.13 @ 5:51PM |#
              ‘Do what team blue wants or I don’t like it!’

              Got it shithead. We don’t care what you like.

            3. Blah blah. In case you haven’t noticed, Congress doesn’t “debate” anything and never has, if what you mean is debate the competing merits of public policies. Legislative politics is and always has been about using the leverage you have. Don’t like a new regulation, put a hold on a presidential nominee. Don’t like a member’s vote on a bill, keep him from getting on an important committee. If want Congress to control the economy, then you have to accept how Congress works and always has worked.

              1. Fine, if this is simply a matter of using the leverage they have, then you don’t get to bitch when the president authorizes a trillion dollar coin. It’s perfectly legal, and no less ridiculous than the action the Republicans are taking.

                1. T o n y| 1.11.13 @ 7:02PM |#
                  “Fine, if this is simply a matter of using the leverage they have, then you don’t get to bitch when the president authorizes a trillion dollar coin.”

                  Oh, and what was that about causing economic damage, shithead?

                2. I’m pretty sure you’re wrong about the legality of that.

            4. No. You want to gut Medicare, you say “I want to gut Medicare. Let’s have a debate and a vote on the issue.” You don’t say “Gut Medicare or we’re going to blow up the economy of the world, we swear to God.” That’s not democratic debate, that’s terrorism

              Oh…well…

              This reads like how I imagine Matt Damon would introduce himself to a random passer-by on the street with a Southern accent. The passer-by has the accent, not Damon. He has one.

    5. “Congress threatening not to pay bills incurred by Congress”

      Wait. What bills are they threatening not to pay? I think it’s more accurate to say they are threatening not to incur future bills. All existing bills can be paid for with tax revenues.

      1. No. The debt ceiling forbids the government from borrowing more to pay for current bills. Most of those bills having been run up by Republicans, for what it’s worth. There is not new spending legislation that magically finds its way to the president’s desk when we raise the debt ceiling.

        1. Yes, it forbids it from borrowing more to pay for the current bills. It doesn’t forbid it from spending tax revenues to pay for the current bills.

          1. We don’t have enough tax revenues for current bills. Hence the necessity of borrowing.

            1. Your definition of current bills seems to include those incurred after the debt limit is reached. If the executive simply stops making new commitments once the debt ceiling is reached (i.e. no new contracts, furloughs, etc.), then there is plenty of tax revenue to pay for commitments already incurred.

              1. The executive has already taken extraordinary measures to extend the time until the ceiling is reached by a couple months.

                How about Congress pay the bills it racks up? I thought we were about being fiscally responsible.

                1. Why not Congress cut spending, and not rack up debt that must be payed for through extraction of unwilling third parties?

                2. So because the Democrats refuse to stop racking up bills, the Republicans have some moral duty to keep paying them? Huh?

                  1. They’re mostly Republican bills. Republican wars (not paid for), Republican tax cuts (not offset), Republican refusal to cut defense spending a cent, and Republican refusal to raise taxes (well, not anymore).

                    Life is too short to have your brain polluted by right-wing mythology. Democrats have demonstrated themselves to be far, far more fiscally responsible in the past couple decades, if by fiscally responsible you mean paying the bills.

                    1. They are bipartisan bills. Stop being dishonest.

                    2. Yes Tony, the republicans HAVE been shitty about spending. Guess its a good thing we’re (mostly) libertarians and that we realize that both parties are complicity responsible for the shit sandwich we are all going to eat.

              2. If the executive simply stops making new commitments once the debt ceiling is reached

                The President doesn’t have the authority to do that:

                http://en.wikipedia.org/wiki/T…..f_New_York

            2. T o n y| 1.11.13 @ 5:49PM |#
              ‘We don’t have enough tax revenues for current bills. Hence the necessity of cutting the spending’

              Fixed your slimy innuendo for you, shithead.

      2. Congress has already appropriated the money (most recently in HJRes 117, which the house passed in September by a vote of 329-91) and has passed laws forbidding the president from spending less than the appropriated amount (Congressional Budget and Impoundment Control Act of 1974).

    6. Re: Tony,

      Yes, Congress threatening not to pay bills incurred by Congress, thus threatening the stability of the global economy, over a domestic political fight, does sound crazy and extremely fiscally irresponsible.

      And inevitable.

      Don’t fool yourself – Socialism is an expensive luxury.

      If we want to make draconian cuts to the safety net, then it needs to be done through the normal democratic process, not forced by Republican legislators holding the economy hostage.

      The Republican Legislators were also elected democratically. Looks like Democracy, for you, is palatable only when it suits you, not so much when people vote in a way you don’t like.

      Remember I told you about your lack of instrospection? I bet you are still afraid of what you might find.

      There lies the difference between you and I: for me, Democracy is a flawed system, as there is inherent the immorality of letting a majority rule over a minority. For you, it works when it does except when it doesn’t.

      1. there is inherent the immorality of letting a majority rule over a minority

        Well, the alternative is letting the minority rule over the majority. How is that more moral?

        And stop arching your back every time I use the word “democratic” and lecturing me on tyranny of the majority. All I mean in this thread is a someone normal process as opposed to fiscal terrorism.

        1. False dichotomy. You’re full of logical errors today, as usual.

        2. Re: Tony,

          Well, the alternative is letting the minority rule over the majority.

          Why is that the alternative? Who told you that? Your 3rd grade unionized teacher?

          And stop arching your back every time I use the word “democratic” and lecturing me on tyranny of the majority.

          I don’t ark my back, I simply hiss.

          All I mean in this thread is a someone normal process as opposed to fiscal terrorism.

          You probably meant “somewhat”.

          Whichever the case, the fact is that you keep wielding these words as if the Republicans came from outer space. That is nothing less than hypocrisy from your part.

          Besides this, referring to fiscal restraint as “fiscal terrorism” is infantile and inmature behavior, no different than that displayed by a teenage girl who was denied the family’s credit card. Get this through your head: Government spending is NOT what fuels the economy. It is PRODUCTION. You have to PRODUCE in order to CONSUME. That’s basic economics. So this idea that without a raise in the debt ceiling we will have economic devastation is just pure nonsense.

          1. Republicans did not come from outer space. They seem as if they’re incapable of managing their own personal hygiene, let alone interstellar travel. They came from the woods, caves, and mountains, I suspect.

            You don’t seem to understand what the so-called debt ceiling is. It’s a constant source of amazement that people can be so ill-informed about things despite the existence of Google.

    7. As the one who actually executes the spending, the President is the one incurring the bills. Since Congress can’t control revenue directly, and doesn’t explicitly budget every program, ultimately any mismatches fall to the president to resolve.

      That said, a better system (if Congress ever passes another budget) would be to specify a home for each dollar in priority order. Revenue raised would first go to the debt service (b/c of 14th am), and then to programs in the order specified. When the revenue ran out, any remaining programs would go unfunded. Debt would be explicitly issued in an exact amount, and would be treated effectively as a supplemental source of income. If by some miracle the entire wishlist was filled, any remaining surplus would be used to pay down the debt.

  8. FTR I favor the approach set forth by a few commentators: Democrats agree to pass a bill closing the platinum coin loophole in exchange for Republicans agreeing to pass a bill abolishing the debt ceiling.

    1. “The best plan is to make the problem worse rather than solving it. Brilliant!”

      1. That plan without question makes the problem better. Indeed, it makes the problem go away. No more pointless, self-inflicted damage to the economy because of a ridiculous legal gimmick.

        1. T o n y| 1.11.13 @ 5:28PM |#
          “That plan without question makes the problem better..”

          It does nothing of the sort, shithead. Go peddle your lies elsewhere.

          1. Sevo, you can’t keep him from jacking off in your face, but you don’t have to open your mouth.

            1. Sorry, SF. Calling shithead on his constant bullshit is nothing of the sort.

              1. I’ve said nothing that isn’t true and reasonable. Maybe take the time to understand an issue before you slather your idiotic name-calling all over the place?

                1. T o n y| 1.11.13 @ 5:43PM |#
                  “I’ve said nothing that isn’t true and reasonable”

                  Shithead, you’ve hardly ever posted anything that wasn’t an outright lie, shithead. Do you understand that, you ignoramus?

                  1. No I’m mostly right. Not always, but mostly. And you’re pretty much wrong about everything. It’s a race against time to see if you realize that before you croak.

                    1. T o n y| 1.11.13 @ 7:07PM |#
                      “No I’m mostly right.”

                      No, shithead, you’re “right” about as often as we get two moons in a month.
                      Most often, shithead, you’re not only wrong, you’re totally dishonest in your claims.
                      You, shithead, are the sleaziest, lying-est, most dishonest asshole I’ve ever encountered.
                      Is that clear, you slimy bastard?

                    2. In your defense it’s difficult to be “wrong” when all you ever say is a bunch of gobbledygook.

    2. Democrats agree to pass a bill closing the platinum coin a fake loophole in exchange for Republicans agreeing to pass a bill abolishing the debt ceiling surrender a core Constitutional prerogative of Congress.

      Sounds fair to me.

      I mean, fuck you, stop troll responding!

      1. Republicans’ core constitutional prerogative is to threaten to default on the country’s financial obligations?

        1. T o n y| 1.11.13 @ 5:52PM |#
          ‘Republicans’ core constitutional prerogative is to threaten to hold the line on spending?’

          Fixed your slimy misdirections for you shithead.

        2. Once again: you don’t default just because you cease to borrow EVEN MORE MONEY, you dumb, dumb fuck.

          1. Well we can’t default under normal circumstances because we have a fiat money system. We can only be artificially restricted from paying our bills because of the ludicrous debt ceiling law.

            1. We wouldn’t default, anyway, because we have enough taxes coming in to service our debt. So you would do well to drop that stupid Bluetard talking point.

              1. Even if it were reasonable and legal for the executive to only service the debt and do nothing else, you’re ignoring the main point: the economic consequences for the world.

                You’re the one with the talking point, and it’s shutting down your brain. Not raising the debt ceiling is a horrible idea by any, and I mean any, sane person’s estimation.

                1. T o n y| 1.11.13 @ 7:22PM |#
                  “Even if it were reasonable and legal for the executive to only service the debt and do nothing else, you’re ignoring the main point: the economic consequences for the world.”

                  Shithead, go suck a turd.
                  TEAM BLUE’s efforts got us here; tell team blue to cut spending if you’re concerned about world economic consequences.

                2. “We can’t cut spending! Think about the economic consequences for the world!”

                  That about sum it up?

                3. Even if it were reasonable and legal for the executive to only service the debt and do nothing else, you’re ignoring the main point: the economic consequences for the world.

                  The global economy is not the responsibility of the US government – the US economy is – or at least, our government claims that it is. It may very well be that we can not save both the world’s economy and our own. If it comes to one or the other, I’d say worry about our own first. I think the majority of Americans would agree. If they actually understood the situation, I also think they would be against destroying the US economy in order to save the global one – everyone except Progressives, of course.

                  1. I’m not implying the US economy would escape harm. Far from it. And the US economy does not act independently from the global economy.

                    But it’s interesting to note that you don’t think people should be held liable for harm they impose on others as long as there’s a line on the map between them.

                    1. But it’s interesting to note that you don’t think people should be held liable for harm they impose on others as long as there’s a line on the map between them.

                      Imposing harm on others? What harm – you mean because the US might turn out to be as big a deadbeat as the rest of the world, but its currency will still be “the prettiest girl at the dance?” Hey, the shitty con artists who run the economies of the rest of the world’s countries were quite free to keep their assets denominated in their own crappy funny money instead of our crappy funny money. Why didn’t they? Could it be because they knew their own was crap, but figured that good ol’ America would be sucker enough to keep making good on its IOUs – even if it had to sell its future generations down the river into third world peon status?

                      It’s like a bunch of scumbag con artists all trying to swindle each other with hot checks – each one knows that he, himself, is a scammer but figures everyone else is stupid enough to be honest and is counting on it. Wouldn’t it be a revolting development for them to discover they had outsmarted themselves.

                4. Shit, where did those goalposts go? They were here just a second ago.

        3. Congress can’t default on the debt. That power lies with the POTUS

    3. Re: Tony,

      I favor the approach set forth by a few commentators: Democrats agree to pass a bill closing the platinum coin loophole in exchange for Republicans agreeing to pass a bill abolishing the debt ceiling.

      And in the same way you believe that people will continue to pay their taxes without any regard for their self-interest, you believe that other people will keep lending the U.S. money with the same la-di-la carelessness once the government stops with the pretense of restraint.

      Indeed, it makes the problem go away. No more pointless, self-inflicted damage to the economy because of a ridiculous legal gimmick.

      Yeah, that’s it – the path to recovery is to stop any pretense of restraint. That has worked many times before.

      Thus spake the economics ignoramus.

      1. We will never, ever have a “debt crisis,” which is the “threat” on which you idiots all premise your thoughts on fiscal matters. We will not have hyperinflation. It is virtually impossible for our debt to create a crisis.

        The only crisis that’s possible right now is the self-inflicted debt ceiling one.

        My only question is how many of you know this and are just pretending there is such a thing as a debt crisis, using it as the excuse for your preferred social policy outcomes, and which of you are just idiots who lap up whatever Limbaugh yells at you.

        1. Re: Tony,

          We will not have hyperinflation.

          You may be right but not for the reason you think.

          It is virtually impossible for our debt to create a crisis.

          Really? Just wait for the moment people stop lending the US money.

          The only crisis that’s possible right now is the self-inflicted debt ceiling one.

          You’re displaying a total misunderstanding of the economics behind the debt ceiling. Since you’re still fixated on the notion that government spending fuels the ecomomy, then it is easy for you to believe this claptrap.

          1. Remember, money is used in order to avoid barter, but you’re still exchanging GOODS that YOU produced for GOODS someone else produced, through the mechanism of indirect exchange. The problem is that, right now, there are NOT enough goods to justify the amount of money that the Fed has printed and that the US government has borrowed. In fact, there is not enough production to cover the US debt nor anybody else’s, which means that the U.S. government WILL DEFAULT. And that is not the crisis, that’s only the inevitable result. The crisis is RIGHT NOW – there is NOT enough production to cover all debts.

            1. Yeah the economy is fucked up. People who believe in the laughable, simplistic, dogmatic bullshit you do fucked it up. Now it’s gonna take large amounts of deficit spending to fix it. Things may not be OK, but that’s not going to ever be because of the national debt.

              The phony debt crisis–which is always just around the corner, just wait!–isn’t even believed by those in positions of power who peddle it. Otherwise they might, I dunno, have done something to address it in the past 20 years instead of exploding it at every opportunity. It’s entirely an excuse to cut programs–the same ones you want to cut. They could as well be blaming the looming judgment day. God will smite us if we don’t cut programs for the poor and give the loot to the rich!

              1. The phony debt crisis–which is always just around the corner, just wait!–isn’t even believed by those in positions of power who peddle it.

                That’s because the proverbial can is also always “just around the corner” waiting to be kicked farther down the road again. The problem is the can keeps getting bigger and heavier everytime it is kicked, but the ones kicking it now aren’t worried about it because they figure it will be someone else’s problem next time.

                Btw, taxing the wealthy isn’t “giving the loot to the rich” – it is their “loot” to begin with.

              2. People who believe in the laughable, simplistic, dogmatic bullshit you do fucked it up.

                You’re engaging in psychological projection again. The “laughable, simplistic, dogmatic bullshit” is yours and others belief that one can keep pilfering pennies from the responsible kid’s piggy bank to give to the irresponsible kids who always consume more than they produce, and yet expect the responsible kid to keep trying to fill his piggy bank.

  9. BA-NA-NA-REE-PUB-LIC

  10. It would merely be a formal acknowledgment of a pre-existing monetary claim against the United States that the Treasury was not currently able to pay.

    Uhm, I’m no Gold Bug, but isn’t that what the dollar in my pocket represents?

    1. Not any more. See before Nixon, the dollar was a promise that could be redeemed in gold. These IOUs are a promise to pay in dollars, which in turn are redeemable only for unicorn farts.

      1. Actually, before Nixon, dollars could only be presented to be redeemed in gold by foreign governments and central banks.

        US citizens were not permitted to own gold before 1974 except in small quantities and in the form of jewelry and collectable coins.

        Before the mid sixties the US treasury issued Silver Certificates which were nearly identical in appearance to Federal Reserve Notes except that they were redeemable in silver. You might still run across one from time to time but the Treasury won’t redeem it if you do.

        1. Folks, you get to thank that *wonderful* (sleazy) FDR for confiscating gold:

          “Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States”. The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.”
          http://en.wikipedia.org/wiki/Executive_Order_6102

          1. Not only did it criminalize the possession of monetary gold, it forced everyone to turn it in to the federal govrnment at the official price of about $20 per ounce. After they had done so, the government raised the official price to about $35 per ounce – which was closer to what an ounce would have brought at the time if there had been a free market in gold. In effect not only did the US default, but the American people were robbed of nearly half their wealth by their very own government.

  11. Take the analogy of a credit card. If you have been financially prudent, then reaching your credit card limit is not a disaster, it just means you can’t borrow any more. But if you have been profligate then reaching the credit card limit means you can’t pay your rent, pay your bills, buy groceries, etc.. That doesn’t make the credit card company evil for not increasing your credit limit, it just makes you stupid. (Yes, sometimes emergencies happen and you have to put essentials on the credit card. But when you do you still have to pay that debt off. You don’t make it your lifestyle.)

    The panic over the possibility that the debt ceiling might not be raised is clear evidence that the government has a pathological spending problem. Trillion dollar coins and IOUs are not the solution. Getting your budget on track IS the solution. A certain level of debt is fine, but that we are talking about a government shutdown at all indicates we are well past that level. The spending has to be cut. Period. But congress is so irresponsible that they can’t even make no-brainer cuts to stuff like sugar subsidies, foreign aid, etc.

    1. Any spending cuts will be in the future. This is about current obligations. Your analogy breaks down because in reality the credit card company and the spender are the same person: Congress. It bought a bunch of stuff, then wants to say “sorry, we’re going to arbitrarily cut off our ability to pay for the stuff we bought.”

      1. Re: Tony,

        Any spending cuts will be in the future. This is about current obligations.

        There won’t be spending cuts. And current obligations already require borrowing from abroad because there isn’t a big enough tax base to pay for them.

        Just so you know, the current deficit is closer to 5 trillion dollars IF one uses GAAP rules instead of the Peter Pan rules that the government uses.

        Your analogy breaks down because in reality the credit card company and the spender are the same person: Congress.

        That’s not the case, Tony. If you really bought this idea that we’re borrowing the money from ourselves, then you’re for a very rude awakening.

      2. T o n y| 1.11.13 @ 7:14PM |#
        …”It bought a bunch of stuff, then wants to say “sorry, we’re going to arbitrarily cut off our ability to pay for the stuff we bought.”

        Shithead, your standard misdirection is in evidence.
        Congress can easily say ‘we’re not going to buy what we said we were going to buy’.
        So go suck a turd, you slimy liar.

      3. It bought a bunch of stuff, then wants to say “sorry, we’re going to arbitrarily cut off our ability to pay for the stuff we bought.”

        Nonsense! The debt ceiling doesn’t prevent you from paying for your old stuff, it only prevents you from buying NEW stuff!

  12. The graphic is great (“Somos pobres” ha ha ha!) but the word California is written the same in Spanish as in English, with no ortographic accent.

  13. Sounds like a very good plan to me dude. Wow.l

    http://www.DotAnon.tk

  14. Tony if you want to get revenge on the libertarians and evil right-wingers, the best way is to keep all your savings in the form of fiat dollarz while they are buying gold.

    That way, when gold collapses, you will be sitting pretty on top of a glorious pile of fiat paper, and the libertarians will come crawling.

    1. Lol! That isn’t very nice, Libertarius, what you just did. 🙂

      However, I can’t imagine anyone on this board much who deserves that advice more – with the possible exception of Shriek.

    2. You should trojan horse that idea on every major progressive/team blue board out there.

  15. The existence of fiat money is made possible by the pre-conceptual epistemology of savages, that is, of minds that cannot tell the difference between production and a printing press.

    But the magic trilion dollar obozo coin will deliver us from having to produce anything lolzozlzozlzozllzlzolz

    1. ^ This.

      These people actually think that money has some intrinsic value. We think of it as fiat money while they think they are actually creating value.

      Why do they think they have to press an actual coin? It will be a magic talisman? For fuck’s sake why not just move the decimals on computer screens? Why not have captain zero wave a magic wand and make every american a millionaire and then tax them at 70%?

      As this pseudo-Keynesian fiasco spins further and further out of control they are coming up with increasingly absurd and bizarro solutions. In the end reality is going to win out. It always does.

    2. Re: Libertarius,

      Here’s a video showing Hans Herman Hoppe giving advice on how to challenge people like Paul Krugman and guys like Tony on fiat money and wealth:

      http://youtu.be/QJwmMu15Exc

  16. That actually makes a lot of sense dude.

    http://www.hot-anon.tk

  17. Re: Tony,

    Yeah the economy is fucked up. People who believe in the laughable, simplistic, dogmatic bullshit you do fucked it up.

    Really? If that were the case, Greece would be an economic superpower.

    Now it’s gonna take large amounts of deficit spending to fix it.

    Again – Greece. Deficit spending just means making promises the government cannot possibly keep, except that Greece can still ask for a bailout – the US can’t.

    You’re really living in la-la land. You have no idea of what you’re talking about and just repeat economic prescriptions that have no basis in economic science. You should go back to your embroidery and leave the boring conversation to us men.

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