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View Diary: Define:Cave, Short Term Debt Bill+Obama Negotiations+Another Debt Fight (12 comments)

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  •  Yes, this is why we have to take the ... (1+ / 0-)
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    ... debt ceiling part of this off of the table.

    Fixed Interest Payment Consol Bonds would do so. The President appears to have said recently that nobody in the Treasury is clever enough to have worked that out, but its more likely that nobody in the Treasury studied enough Economic History to work it out ... after all, Great Britain stopped using Consols before WWI, and as I recall from grad school, the finance types didn't sign up for Economic History.

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    by BruceMcF on Wed Oct 09, 2013 at 12:13:59 PM PDT

    •  The debt ceiling statute serves no purpose (1+ / 0-)
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      The only compromise I would even consider, is like you say, something that takes this nonsense of raising the debt ceiling, permanently off the table.

      •  The FIP Consol Bonds ... (1+ / 0-)
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        ... wouldn't be a compromise ... they would be unilateral executive action that removes the threat of default from the GOP toolkit. Since the government shutdown hurts the elected Republicans more than anyone, since it highlights the fact that the government actually does things people like to have someone do, taking the debt ceiling off the table substantially weakens their bargaining position.

        Fixed Interest Payment Consol Bonds take advantage of the fact that the authors of the debt ceiling legislation were not actually trying to interfere with duly authorized and appropriated spending. The debt ceiling legislation was originally designed to facilitate it, as previously each issue of bonds required separate Congressional approval. Since we were not issuing Consol bonds, they are not covered by any specific provision of the debt ceiling legislation, which leaves them in the general catch-all category that is counted by face value. However, its possible to design Consol bonds with zero face value, since Consol bonds have not maturity date, and their face value is merely the basis for determining the size of regular interest payments.

        So specify the size of the interest payment directly, rather than with face value and nominal interest rate, and the notional face value can be set to $0, and sale of the Fixed Interest Payment Consol Bonds do not count against the legislated debt ceiling limit.

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        by BruceMcF on Wed Oct 09, 2013 at 12:34:36 PM PDT

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