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View Diary: Ezra Is Terrified Because of His Framing (35 comments)

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  •  Most of my comment was addressed to the 14th (0+ / 0-)

    Amendment issue.

    But nothing in 31 USC 3101, which codifies the debt limit suggests that consols would not count against it.  In fact the language suggests that consols would count.  (The restriction is on the face amount of obligations issued, which in the case of consols would be the principal.)

    31 USC 5112(k) gives unlimited discretion to the Treasury to issue platinum proof and bullion coins in any denomination.
    There are a couple of issues here:

      (i) the Fed may not want to cooperate here, but this is the lesser issue;

    (ii)  the House will likely sue to invalidate the law under the non-delegation doctrine.  Trying to ascertain whether they will win is beyond me, but they have a colorable case.  This can take a while to resolve and cause the financial markets to have some serious questions about  treasury borrowing in the interim.

    •  OK (0+ / 0-)

      First, the House alone can't get standing, because both Houses passed the coin law. This is based on precedent. In the 1970s Senator Phil Hart and Rep. Henry Reuss challenged the Constitutionality of the Federal Reserve Act on grounds that Congress did not have the authority to establish an Executive function independent of the Executive Branch of Government. Only three branches of Government and all that. The Court decided they didn't have standing because they didn't represent the whole Congress. The same would apply here, because the Senate will never agree to such a  suit.

      Second, the non-delegation doctrine will not work here. See this argument against John Carney's reference to this doctrine.

      Third, the Fed 's agreement isn't necessary to use the coin. See 12USC246:

      … wherever any power vested by this chapter in the Board of Governors of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary.
      Fourth, as for consols, these instruments don't obligate the government to repay their face value. That is why they would not count against the ceiling.

      Fifth, if the President were to mint a $60 T coin, then there would be no additional debt issued and old debt would paid off as it came due without further borrowing. So, the reaction of the financial markets to buying new debt issues would be irrelevant.

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