Just enough to be totally wrong, it seems. Well, that explains your complete ignorance of the actual terms of the Federal Reserve Act.
Those who hatch such boneheaded schemes seem not to recognize the power that monetary policy possesses and why it is placed at arms length from the political whims of government.
And what about unallotment power? What about the power of the purse? Your idiot scheme - the Treasury opting not to pay some bills - involves the Executive Branch unilaterally seizing authority beyond that granted to it by Congress. If the Treasury is allowed to unallot funding in this context, it'll be the pretense for unallotting funding in the future. Republican president doesn't like abortion? Goodbye funding, Planned Parenthood, regardless of how Congress votes - the new TresSec just won't cut you the check.
But that doesn't seem to bother you, even though that's way more important - a much more significant shift in the traditional balance of authority and power - than the Treasury printing money. You know, like it always has.
You can see how your crazy scheme would cause a major expansion in the money supply beyond the present needs of the economy leading to an unacceptable level of monetary and economic inflation, yes?
The "present need of the economy", according to economists, is to have about 3 trillion more dollars than it has. That's the shortfall in aggregate demand vs trend, and about double how much cash actually evaporated during the collapse of the housing market in 2008. So, all indications are, we could use a major expansion in the money supply right now. Inflation is less than 3%, it's perverse to worry more about inflation than the government not being able to pay its bills.
But I wouldn't expect an MA to understand any of that.
But the Fed does and your st*pid little scheme violently usurps their authority and prerogative in violation of the Federal Reserve Act and (more importantly) in the intent of Congress in placing these rights exclusively with the Federal Reserve Board of Governors.
Congress has never intended to place these rights exclusively with the Federal Reserve Board who is, at any rate, an agency of the Executive Branch. So there's hardly a "usurpation" of power, here - merely the Executive Branch executing its Constitutional authority over the printing of money.
But your harebrained notion that the Executive Branch can just decide not to pay people, while considerable more popular, really is a usurpation of the power of Congress's budgetary authority with profound implications for the country going forward. And if you weren't out of your mind with a personal vendetta against me, you'd be able to see that. "Jumbo coins" really is the best option for the nation. I hope somebody on the President's staff is working on it; based on Boehner's failed attempt to pass a bill last night, I'm a lot less optimistic that this situation will be resolved in time.
Because the Federal Reserve Board is supposed to handle this. Did you know that two positions on it are unfilled? That's right, one of the most important monetary organizations in the country is understaffed, because Republicans have been blocking all of the President's nominees.
Funny, isn't it? How they've deliberately neutered the organization that could normally see us through this recession with Keynesian measures? And now they've engineered this debt crisis to boot?
I still don't think a bank would take the coin because its defeating the purpose of the Federal Reserve.
Who cares? More specifically why would a bank care if the Treasury does an end-run around the Fed just this once to save the country? You're still not explaining the circumstances by which a complete bank boycott of the Federal government is engineered.
Is the scheme as mental as it first sounds or is it as genuinely viable as Crash is making it sound?
I'm no expert on the US monetary system, but it certainly isn't as strange as it sounds. The key point to Crash's scenario is not the fiat creation of "money" (this is done in various ways), it is that this is a way around the debt-ceiling without going through the Houses. The creation of the monetary value of the coin enables existing government debt to be bought back, thus erasing it. This is not so very different from the quantitative easing that has already been occuring. Yes, there is an inflationary danger, but as QE has shown, the risks seem to be small and well managed by the control of the extra money supply being kept strictly within the realms of government debt/obligation.
If $1 trillion of quantitative easing was announced, you wouldn't bat an eyelid. But the creation of a $1 trillion platinum coin which is then used to buy back debt seems like something out of cuckoo land. But they are essentially the same thing!
ABE: oh, fogot. Why isn't this being done if it's such a good idea? Again, I'm no expert - but it seems that this is only possible because of a loop-hole, and exercising that loop-hole would side-step some very fundemental safeguards set up around the Treasury, Fed, and Executive. It would possibly be seen to be very, very bad form.
"With the US Senate voting to table the Boehner debt limit bill, the US is only a few days away from running out of cash to pay for all its obligations. Slate is reporting on a fascinating legal hack that could come in handy, described by blogger 'beowulf' back in January 2011. Seigniorage is the extra value added when a government mints a coin with a face value greater than the value of the precious metal contained in the coin. The statute governing the minting of coins contains a section (31 USC 5112(k) ) that authorizes the Secretary of the Treasury to mint and issue platinum coins in any denomination or quantity. To keep the government from running out of money, Timothy Geithner could order a $5 trillion platinum coin struck and deposited at the Federal Reserve. The money could then be used to fund Federal Government operations (blog post contains legal details)."
In the long run, would it be better to cave to the republicans (which is what it seems is going to happen—as usual) or to bicker on the issue until the government defaults?
At the moment, I don't see how there will be much difference for the poor; the republicans are stripping the welfare system to the bones in order to make sure the wealthy can keep their yachts and mansions. I have some feeling, however, that a default might actually benefit the country by opening eyes.
Then again, when Americans open their eyes it is usually only for a while before they roll over and go back to sleep.
What might be better in the long run? Caving to the republicans or letting them cause a default?
You said the Fed Res was irrelevant and they could just take it any bank. Why hasn't that happened? Has it ever happend at all?
Well, there's a lot of laws so it's easy to not be aware that the Treasury can do this. I mean, look at AZPaul. And even if they knew that they could do this over at the Treasury, maybe they felt that it abrogated Congress's intent to do so.
And what was the need to do it? The debt ceiling/Federal Reserve Bank system was working just fine until literally two months ago when this one-of-a-kind hostage crisis started.
I don't find it very significant that it was never done before, because the need to have done it was never present until now.
Who would want to be the guy that help them go around the feds?
It would hurt people like my Mom. Her stocks and bonds assets/nest egg would likely decrease in value 10-20%.
I never said that a failure to reach a deal would be easy to weather. But the plans that republicans force through with their hostage crisis tactics are hardly cause for celebration either.
The point I was trying to make with my question was whether or not it would be better in the long run to finally let the republicans destroy the government instead of always caving in to their hostage bluffs which destroy the government, albeit less transparently and more slowly.
The republicans have created a nice hostage situation in which their failure has such catastrophic consequences that few folk are willing to let it happen. Granted this is not a guarantee on success, but it is an almost certain guarantee against failure. And that doesn't seem to get them voted out of office begging for government handouts—where they should be.
So, would it be better to let the republicans fail for once?
I really don't know how am i be able to answer rightly your question straggler. But what I am sure is that if the debt ceiling plan would be successful we will no longer have a big debt. The graph about the recent upsurge in debt, it is one thing i considered in knowing how big our debt is.
Right now our government balance the federal budget and come to an agreement regarding the debt ceiling, the threat of national debt default has many perplexed. Political wrangling over the nationwide debt and the debt ceiling is sending a message many Americans do not want to hear. Conventional wisdom states that China is the solution to the question of “Who owns The United States?”, and that default will place the United States too far behind. Yet as an enlightening report by Business Insider points out, conventional wisdom concerning who owns America is wrong. China has a major stake, but much like in Japan, most of United States debt is nationally held. I found this here: Your financial upside-down cake: China does not own America
Apparently 'compromise' is now defined as one side giving in completely to the other side.
So long as the more reasonable people continue to give in to these brute cave thugs, they will only move forward more assured of the effectiveness of holding government hostage as a means of getting everything they want.