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View Diary: There is NO fiscal cliff. (69 comments)

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  •  He's not really "lying"... (4+ / 0-)
    Recommended by:
    kbman, hannah, Eric Nelson, tofumagoo

    if we're all being held hostage to Congress' power to control the governmental purse strings.  We saw this all through the first 4 years of Obama's presidency, and I don't pick up any indication that our so-called representatives are ready to stop now.  BTW, I heard our fave Orange Guy on NPR saying that it's intrinsically unfair to increase taxes on the rich because "most of them are small businessmen."  !?!?!?!?!?  Since these guys don't really think they have to present any facts to back up their arguments, they just say the first thing that pops into their heads (other than "I'm rich, and I don't want my taxes increased -- so there.")

    •  The Koch Brothers' empire is classified as (8+ / 0-)

      a small business, because it is closely held by a family trust.

      The Cons dissemble.  Period.  Willard was not an anomaly. He fit right in with the dissemblers.

      Deception is actually a very primitive behavior. The killdeer does it. So does the pitcher plant.

      We organize governments to provide benefits and prevent abuse.

      by hannah on Sat Nov 10, 2012 at 09:45:31 AM PST

      [ Parent ]

    •  And consider the position of several high profile (3+ / 0-)
      Recommended by:
      hannah, lostinamerica, Eric Nelson

      CEO's on the election, how they bleated constantly about Obama being bad for their businesses. As many here know, Obama has been great for business and they haven't returned the favor in support or jobs, instead sitting on piles of wealth like Smaug the dragon. Also, businesses have been shown to fare better under Democratic administrations than under Republican ones. As such, I believe that, far from acting in the best interests of their companies, these CEO's were selfishly focused on their personal bottom line, not wanting their income taxes to rise regardless of the impact of Republican policies on their businesses. But then I realize, "overpaid executives acting in their own personal self-interest? ... Nah! can't be!"

      Free: The Authoritarians - all about those who follow strong leaders.

      by kbman on Sat Nov 10, 2012 at 10:41:42 AM PST

      [ Parent ]

    •  Except the Pres could just tell Treasury (3+ / 0-)
      Recommended by:
      Eric Nelson, tofumagoo, hestal

      to issue a "jumbo coin" in any amount.  He has legal authority to do so.

      Then, poof, money appears without Congressional or Fed action.

      •  The Congress (2+ / 0-)
        Recommended by:
        katiec, tofumagoo

        still needs to authorize its spending. But the Secretary of the Treasury could use that money to "pay off" the "debt" held by the Fed, and lo and behold, in a simple minting of a 1 oz (or 1/2 oz or other weight) $60Trillion platinum coin (the coin does have to be made from platinum,) the "debt ceiling" goes poof!

        •  Thanks for the clarification. Question: (1+ / 0-)
          Recommended by:
          clonal antibody

          The Treasury would need Congressional approval to spend for, say, paying someone to build a smart grid?

          But it doesn't need Congress approval to pay off the debt held by the Fed?

          Is this right?

          Also, is the debt held by the Fed owned by the Fed or owned by Treasury?  Or some other entity?

          Thanks,

          •  It is the government owing money to itself (2+ / 0-)
            Recommended by:
            katiec, tofumagoo

            The Treasury owes the Fed. This happened, because the Treasury acquired these T-Bills as a part of buying assets from troubled banks under Congressional authorization. Normally, the Fed cannot buy T-Bills from the TreasurSo this would be considered an asset swap between on arm of the government and another arm of the government. Something that I believe is allowed by law.

            Since these T-Bills are "owned" by the Fed, Bernanke and the Board of Governors of the Fed could also "gift" thes Treasuries to the US People in order to retire the National Debt, just as you can send in extra money to the IRS asking that money to go toward "retiring" the National Debt. Of course they (the Fed) will have to carry a loss on its books - hey but who cares! (and they have the capacity to carry as much loss on the books as they want - just as the government has an infinite capacity to print money!)

            •  Thanks for the response. (0+ / 0-)
            •  Sorry (1+ / 0-)
              Recommended by:
              katiec

              Instead of saying

              the Treasury acquired these T-Bills
              I should have said "The Fed acquired these T-Bills"
            •  Hey clonal (1+ / 0-)
              Recommended by:
              katiec
              Normally, the Fed cannot buy T-Bills from the TreasurSo this would be considered an asset swap between on arm of the government and another arm of the government. Something that I believe is allowed by law.
              This is an asset swap. But I think it would just be booked as repayment of debt by the Fed.
              Since these T-Bills are "owned" by the Fed, Bernanke and the Board of Governors of the Fed could also "gift" thes Treasuries to the US People in order to retire the National Debt, just as you can send in extra money to the IRS asking that money to go toward "retiring" the National Debt. Of course they (the Fed) will have to carry a loss on its books - hey but who cares! (and they have the capacity to carry as much loss on the books as they want - just as the government has an infinite capacity to print money!)
              I've never agreed with the feasibility of the "gifting" idea. The problem is this. The Fed system as a whole is the Central Bank of the US. However, only the Board of Governors is unambiguously a Federal Agency. All the regional banks are privately owned and it is they, probably the NY Fed, that has bought up this Treasury debt from the private sector. So, then the question becomes can the regional banks "gift" the debt they hold to the Government? They can but the owners of the regional Feds then would have to see a huge reduction in the value of their balance sheets. I don't think they would agree to accept that. So, I don't think this "gifting" business is going to happen. On the other hand, PPCS is up to the President and his underlings alone. No one else involved in the process really has a choice once the President takes action.
          •  Even if the Treasury had the $60 T (1+ / 0-)
            Recommended by:
            katiec

            it can only use the proceeds for debt repayment and for deficit spending. New deficit spending is always based on Congressional Appropriation. So, Congress has to "approve" i.e. appropriate the spending that turns out to involve deficits.

            The Executive doesn't need Congressional approval to pay off debts, because Congress has already approved the deficit spending that led to the debt obligation and more directly, the 14th Amendment requires that the Government pay all its debts. In cases where the President has a simple choice between a need to incur further debt in order to satisfy the 14th Amendment, and to satisfy the prohibition of the debt ceiling, the situation would set up a possible constitutional challenge to the debt ceiling legislation, and the President might just ignore the debt ceiling on constitutional grounds and then let Congress go to the Supreme Court to decide who is right.

            However, if this happened, then Congress might not be able to challenge the President's action. The reason is that the Congress has two Houses, and they might disagree about whether to challenge the President on this, since the Senate is Democratic and would not want to challenge the President. If this situation developed, then the SC might deny standing to the House alone to litigate the issue.

            In addition, the situation is made more complex by the existence of the 1996 act allowing proof platinum coin seigniorage (PPCS). Since that statute gives the Mint the authority to mint platinum coins of arbitrary face value, the President really doesn't currently face a conflict between the 14th Amendment and the debt ceiling, since the President could mint a coin whose face value could be in the trillions and whose seigniorage profits could be used to remain within the debt ceiling in any such crisis. So, the question arises: when the debt ceiling approaches and the President must continue debt repayments, does he have an obligation to use PPCS to avoid the conflict between the 14th amendment and the debt ceiling? I think you can make a case that he does. See here:

            Finally, the debt held by the Fed is owned by them, but it is the Treasury's debt.

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