The debt ceiling is being used a negotiating tool in American politics yet again. My concern with American politics is that most things seem to be over-dramatised, while some disturbing things are shoved under the carpet. The debt ceiling is a great source of hysterics from south of the border. My highly non-informed take is that this debt ceiling drama will end in the usual way, going to the 11th hour before some kind of deal is struck.
Janet Yellen was right, it's time to abolish the debt ceiling. Especially since the GOP is weaponizing it to demand ridiculous spending cuts to Medicare and Social Security. I believe the US and Denmark are the only 2 nations with this self imposed debt ceiling and not raising it will as we all know, destroy our economy. Raising it pertains to previous spending, not new spending at all. But its also time for people to know that the national debt is the non-government surplus.
The coin has a deposit problem. There is nothing that says the Fed has to create deposits 1-for-1. If you have an unbalanced budget then Treasury dollars deposited at the Fed become like Canadian dollars deposited at the Fed. They start to attract a discount. Since that's how monetary policy is alleged to work (Treasury has to offer the world a discount to get them to part with their 'scarce' money), an antagonistic Fed (or Supreme Court) could easily go down that road.
The other alternative interpretation is that Congress has ordered the Fed to pay out a certain amount from the TGA, ordered the IRS to collect a certain amount into the TGA and ordered the Treasury to drain reserves into the TGA to a set amount. Those orders don't add up, therefore the result will be a carried forward balancing item at the Fed.
In other words any ability the Fed has to say 'no' to a Treasury payment order either doesn't exist in law, or has been repealed under the doctrine of implied repeal. It also avoids the discount argument.
That concept blows the mind of those who still think money is about shiny coins in bags.
I think this rather laissez faire take fails to appreciate how the far-right of the GOP have a stranglehold on The House at the moment. Their only interest is to break things.
Janet Yellen was right, it's time to abolish the debt ceiling. Especially since the GOP is weaponizing it to demand ridiculous spending cuts to Medicare and Social Security. I believe the US and Denmark are the only 2 nations with this self imposed debt ceiling and not raising it will as we all know, destroy our economy. Raising it pertains to previous spending, not new spending at all. But its also time for people to know that the national debt is the non-government surplus.
The coin has a deposit problem. There is nothing that says the Fed has to create deposits 1-for-1. If you have an unbalanced budget then Treasury dollars deposited at the Fed become like Canadian dollars deposited at the Fed. They start to attract a discount. Since that's how monetary policy is alleged to work (Treasury has to offer the world a discount to get them to part with their 'scarce' money), an antagonistic Fed (or Supreme Court) could easily go down that road.
The other alternative interpretation is that Congress has ordered the Fed to pay out a certain amount from the TGA, ordered the IRS to collect a certain amount into the TGA and ordered the Treasury to drain reserves into the TGA to a set amount. Those orders don't add up, therefore the result will be a carried forward balancing item at the Fed.
In other words any ability the Fed has to say 'no' to a Treasury payment order either doesn't exist in law, or has been repealed under the doctrine of implied repeal. It also avoids the discount argument.
That concept blows the mind of those who still think money is about shiny coins in bags.
I think this rather laissez faire take fails to appreciate how the far-right of the GOP have a stranglehold on The House at the moment. Their only interest is to break things.