United States Debt Default

they pay no taxes? poorer people bear a bigger burden of taxes than the rich. retail taxes, alcohol duty, tobacco duty, gas. They always had and unfortunately always will.

That's definitely a problem; I agree. But as I told Rrhain earlier, my comment to jar was about income taxes.

Jon

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Love your enemies!

and non of these are taxes on income?

Show an idea of economics before you comment

Who is economically tied to who? We all owe each other, we are all in defecit to each other

Except almost half the public debt is owned by those not part of this "each other". And the percentage of not "each other" ownership of our debt is growing larger each month because we "each other" cannot continue to absorb the heavier and heavier loads.

As the debt increases so does the tax bite on "each other" necessary to pay the interest to those who are not "each other". If it was most prominently "each other" receiving the interest payments then the issue would be less severe. But almost half the taxes "each other" pays to service interest payments on the public debt leave this country to be invested to build and strengthen some not "each other" part of the world.

At this point numbers of "each other" can no longer buy US debt because we cannot eat EE Bonds.

Edited by AZPaul3, : No reason given.

Edited by AZPaul3, : clarification in part

My comments a few posts earlier remain valid.

The illiterate are in charge. Ho hum

Income tax is a tax on income - so any tax that applies to your income is an income tax - the poor spend the biggest proportion of their income to live - a proportion of that is retail taxes etc. - therefore they pay the biggest proportion of their income. (be that income pension,benefit or whatever).

what the f@@@ are you talking about?

Read it 4 times and I sort of followed it.

The deficit is not the problem. Repeat : the deficit is not the problem.

The absolute value is not the problem. Are you ready to do business on an even basis with the rest of the world? If it is then your economic headache will last 10 years. If you want to battle the rest of the world then 50 years, and you will lose.

Or are you just conveniently overlooking the reference?

What reference? Neither this message nor message 61 have any "reference." And again, I've not asked you to provide a reference, I've asked you to quote the statute to which you're referring. You haven't given me any basis by which I can look it up myself, so I can only rely on you to quote the statutory language to which you refer.

Will you please do so? This isn't a trick, Paul, it's not a gotcha. I'm completely confused about what you think you're referring to so I'm asking you to quote it.

To what section in the US Code could I be referring?

Yes! What section of the US Code are you referring? Better yet - instead of referring to it, why don't you quote it?

Good god, Frog, what the hell are you arguing about.

I'm arguing that Geithner can't "prioritize payments"; the Executive branch doesn't have the authority to decide who to pay and who not to pay, or to contravene Congress when they pass a law that says "X shall be paid Y on Z date."

How did you lose track? I thought the axis of disagreement is pretty clear, here. Geithner doesn't have the constitutional authority to rob Peter to pay Paul.

That is what staff is for and he has thousands of them.

Well, actually, he doesn't. The Senate has held dozens of Treasury appointments. A lot of his advisor and associate positions are currently unfilled.

The deficit is not the problem.

You are right. The total debt is the problem.

You say you are an economist. Do you think a debt of 102.63% of GDP is optimum for this nation? Or the 105+% estimated for next year? What would be an optimum debt level?

What the hell are you two arguing about?

I thought I laid it out pretty simply in 62:

quote:

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the Executive branch isn't given unallotment authority. Woe betide us if it did! The next Republican president could just opt out of Federal funding of the NEA, Planned Parenthood, and so on. But Constitutionally the Secretary of the Treasury is obligated to pay those parties whom Congress has legislated must be paid. The fact that Congress also hasn't yet authorized the revenue necessary to make those payments is legally irrelevant; the Constitution doesn't make any provision for Congress being stupid enough to pass two mutually contradicting laws.

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Geithner has to pay everybody whom Congress has appropriated funds to, and the fact that the Treasury cash drawer may be empty has no relevance to that obligation. There's no "Treasury is empty" escape clause in the Constitution because Congress is supposed to keep the books balanced.

As it happens, though, USC 31.5112(k) gives the Secretary of the Treasury unlimited latitude to both strike and issue platinum coinage in any denomination he chooses. AZPaul disagrees but he's yet to present any relevant statute. He thinks the Federal Reserve Act somehow prevents it, but the FRA applies only to the issue of notes, not coinage. AZPaul doesn't seem to understand the difference between a coin and a bill, I guess.

Really, the question is this - if the TresSec minted an enormous $1 million platinum coin, would a bank consider it backed by the full faith and credit of the United States? I see no reason to believe that they wouldn't, especially if no other payment was likely to be forthcoming.

You say you are an economist. Do you think a debt of 102.63% of GDP is optimum for this nation?

How is that different than someone holding a mortgage larger than his yearly income? That's a pretty common situation and nobody thinks twice about it; or consider a student taking loans to finance his college, he's got a debt of thousands and an income of nothing. Nobody bats an eye. Having debt in excess of your annual income isn't unsustainable; it's when the debt service becomes too large a portion of the annual income. Right now the interest on the national debt is less than 2% of annual GDP.

Of course, if the Federal government loses AAA ratings, then the interest rate explodes, and that could be a big deal. Of course, the best way out is to grow the GDP, not shrink spending.

Edited by crashfrog, : No reason given.

What would be an optimum debt level?

For what it's worth, Japan has a debt level of 220% of GDP, according to the CIA factbook. Germany, who everybody seems to think is the current financial rockstar, has a higher ratio of public debt to GDP than the United States.

From my Message 61

From Crashfrog: 3) As stated the Treasury Secretary has unilateral authority to both mint and issue platinum coinage in any denomination and amount, as granted by Congress in US Code 31.5112(k). The government can sell off any of the assets it has to raise cash, including it's stock of platinum, gold and silver bullion. It can sell the Washington Monument and the Vietnam Memorial as well. Note in the section you described the provision that such platinum coins are "legal tender" is missing but is specifically stated in the other coinage sections.

Are you really this dense?

I'm arguing that Geithner can't "prioritize payments"; the Executive branch doesn't have the authority to decide who to pay and who not to pay, or to contravene Congress when they pass a law that says "X shall be paid Y on Z date."

And in Giethner's Letter to Congress he does just that, doesn't he. And before you get your panties in a wad, nothing in his priorities listing says those obligation will not be paid as funds become available.

That is what staff is for and he has thousands of them. Well, actually, he doesn't. The Senate has held dozens of Treasury appointments.

Yeah, he's missing a few which only leaves thousands.

For what it's worth, Japan has a debt level of 220% of GDP, according to the CIA factbook. Germany, who everybody seems to think is the current financial rockstar, has a higher ratio of public debt to GDP than the United States.

The USA is not Japan or Germany, nor is it some kid getting an Ed loan or buying a house.

Get you a Miller and Modigliani on Macroeconomics and read the damn thing, Frog!

Are you really this dense?

Are you? The statue says mint and issue, directly contradicting your position that Geithner can't issue coinage. I mean I don't know how much clearer it has to be, or how much clearer the Federal Reserve Act says when it gives the authority to issue notes over to the Federal Reserve Bank system.

But I'm not talking about notes. I'm talking about coins.

And in Giethner's Letter to Congress he does just that, doesn't he.

So what? His letter to Congress hardly supersedes the Constitution. Geithner can write a letter claiming he has the authority to start a war but it doesn't make it so; it just makes it a really stupid letter. And the fact that he doesn't mention minting enormous platinum coins to pay claimants doesn't mean that he can't - it just means that he didn't see fit to threaten Republicans with it.

And before you get your panties in a wad, nothing in his priorities listing says those obligation will not be paid as funds become available.

But here's the problem, as I've outlined twice for you - Geithner has no authority to determine who gets to be at the front of the line and who gets to be at the back. He doesn't have the Constitutional authority to prioritize payments. People whom Congress has determined shall be paid at a certain time have the legal right to be so paid, and Geithner can't overturn an act of Congress just because the till will run empty if he tries to pay everybody.

It's a double bind. Every single claimant who cares to will win a court case saying they have to be paid ahead of everyone else, and then pretty soon everybody has a court order saying they have to be paid ahead of everybody else. How are you not getting this? Geithner doesn't have the authority to prioritize payments. You think he does? Show me the statute that gives him that authority. I've only asked you four times, now.

I see. So you admit that your figure of 102.63% of GDP is not only something you pulled out of your ass, but something you quoted completely out of context, as well?

Were you just trying to scare us with a big number? Try a million billion next time, it's much larger.

Do you notice how nobody thinks you're the one who knows what he's talking about?

Isn't one of the Fed's responsibilities control of the money supply?

If it was forced to take on everything the Treasury minted, then why should it even exist as an intermediary between the Treasury and everyone else using USD?

Is there any law requiring the Fed to accept anything and everything minted by the Treasury?

Jon

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Love your enemies!