The recent diary entitled An Open Letter to Michelle Obama simply goes way too far in its assertion of pure communism. What's that you say? It isn't about communism? Well, that may be. But it will be about communism if it ever rises above the noise level. You can bet all yer chips that the various rightarded organizations will devote major resources to defining it exactly that way and that Obama would not have a snowball's chance in hell of being re-elected on this sort of total clown suit platform.
I want to start this diary with the announcement that ALL my friends are moonbats. Absolutely every one of them are WAAAAAAAAAAAAAAAAY to the left of me. Yet they are my chosen buds. I have no pals that are right of center nor any pals that are to the right of me. I am most certainly not right of center and test out as solid liberal in every questionnaire I have ever taken. I count myself as being among "the serious people". And I get angry and frustrated with people who cannot take positive steps toward their own chosen proper direction due to an uncompromising fascination with Nirvana. I say all of this to set the tone of what I am about to propose.
Succinctly: The Treasury Seigniorage idea should limit its scope to indirect control of the Federal Reserve to enforce the actual dual mandate of the FED. What this amounts to is a nullification of the "Debt Limit" law and a possible extension of the power of the executive in regard to supporting the FED in achieving "full" employment or a more acceptable level of un-employment.
The diary to which I am responding makes the same mistake as most of the other diaries I have seen concerning Treasury Seigniorage: It suggests a change in the American system of government and the American economy in drastic ways that do not reflect or agree with the current mindset of the majority of Americans. However, if the sitting president focuses on the actual problem with which we are faced without totally altering the system, much can be accomplished.
I am not about to claim that the regular people in this nation (those who do not spend their time engrossed in the subject of political economy and monetary theory) are going to understand what this diary or MMT are actually about. And to expect that is to go much too far along the path to my personal Nirvana. But the problems and the solutions can be greatly and honestly simplified so as to elicit enough understanding to affect the proper changes. Attempting to go farther than that will simply scare the hell out of people and create yet another circus. Going farther than that is the same as the "far left" does when they try to present a more "progressive" world than the center is willing to support. It does not matter that we are "correct" in our vision of Utopia. That does not move anything. Politics is the art of the possible and it should be a form of education.
In my own assessment of the Treasury Seigniorage gambit it does nothing other than obviate the "debt limit" law and advance the cause of eduction. The executive cannot order the payment of funds draw from the public purse in pursuit of any action not duly appropriated or otherwise approved by the congress. And it is the latter consideration -- "authorized by congress" -- that gives rise to the option of Treasury Seigniorage in support of the actions of the Federal Reserve. And unless and until the congress acts to nullify these grants of authority, the grants are totally legal and constitutional. In acting to withdraw these authorizations the congress must face the reality of MMT and duly educate the voting public or continue to lie to them. This, then, is the real province of the "bully pulpit" and the role of Barak Obama in the current disorder. By supporting the role of the Federal Reserve to properly devalue the dollar with respect to labor (I will drop my excursion into "labor theory of value") Obama will be acting with due regard for established law and countering the wishes of the Republican rich bitch butt suckers of the financial sector. These latter individuals have pulled off the biggest heist in history and now want the "Gawd Almighty Dollar" to retain its pre-theft value. The proper solution to a debt crisis is to devalue the unit of account. That distributes the "pain" appropriately while retaining the current system. After that devaluation phase, the system can be revisited; Not Before.
Due to the enforcement of the debt limit law, the FED is forced to sell near term bills and notes to fund the purchase of longer term treasuries. This will not actually be sufficient to address the current problem of an overvalued dollar and overvalued debt holdings. Forcing the Chinese to raise the value of their currency is also insufficient. Only if the FED can disregard the current debt limit law or the Executive can devise a way to stay under the current debt limit, can the FED exercise its powers to address the current unemployment problem via "quantitative easing". The "magic coin trick" can be used to accomplish this.
Probably, a more politically expedient way for the FED to address the current problem is for the FED to buy mortgages and MBS's with pixie dust money. This is not an alteration to anything the FED has not already done, but it will probably be stopped by a Republican congress and the rightarded will call for abolishing the FED. And the American people are ignorant enough to go along with it.