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Well the short answer, aka Faux News zero information viewer version is,  "One. $16 trillion. The Chinese." Hard as it may be to believe for dKos members the answer is more complicated than that. So lets start with the easy parts, the Treasury Department web application that tracks total U.S. Public Debt to the Penny. Which if done on Friday Jan 18, 2013 would give you this:

Okay so far Faux is not looking too stupid. Total Public Debt is indeed $16.4 trillion dollars and is almost identical to Debt Subject to the Limit. But now is where we start subtracting from zero from the info basis of the Economic Right. Warning, numbers below the squiggle.

Okay on inspection we can see that right on 30% or so of 'Total Public Debt' consists of 'Intragovernmental Holdings' at $4.8 trillion out of $16.4 tn. And what are 'Intragovernmental Holdings'? Well if we follow the link we find this:

What are Intragovernmental Holdings?

Intragovernmental Holdings are Government Account Series securities held by Government trust funds, revolving funds, and special funds; and Federal Financing Bank securities. A small amount of marketable securities are held by government accounts.

Now of the scads of Government trust funds the largest ones include the two Social Security Trust Funds (OAS and DI) that together hold $2.6 trillion of that total $4.8 tn of 'Intragovernmental Holdings'. And here is the first important stopping point. The Economic Right likes to argue that Trust Fund assets are 'Phony IOUs' because the government can't owe money to itself. Okay for the sake of argument lets accept that argument. Which means we just cut $4.8 trillion off our 'real' Debt. Because you can't have your $16.4 trillion of debt and wave nearly $5 billion away as 'phony'. One or the other.

Okay we have now modified the answer of "how many forms of debt" to "two" and "how much" to "$11 trillion". How is that "Chinese" answer holding up? Well we can start with Treasury's Major Foreign Holders of Treasuries whose most recent iteration is here:

Now you might need to click to embiggen but once that is done some interesting facts pop up. One all foreign holdings combined equal $5.5 trillion or around half of 'Debt Held by the Public'. Of that some $1.1 trillion is officially held by Mainland China. Which depending on which measure you use 'Total Public Debt' or 'Debt Held by the Public' works out to either 8% or 10%. Making the notion that the Chinese Central Bank is by itself holding up total U.S. borrowing a little iffy. Particularly if we note that their holdings have in nominal terms been flat to declining for most of the Obama presidency, that is in real terms the Chinese are not actually buyers, and still less buyers of last resort. Maybe because they want something better than the zero real return you get on Treasuries these days.

Now there are caveats here. One you could argue that you should add Hong Kong holdings to Mainland China and perhaps claim that large amounts of holdings officially held in Luxembourg, 'Caribbean Banking Centers', and the United Kingdom (which includes substantial off shore banking in the Isle of Man and the Channel Islands) are 'really' held by Chinese billionaires and banks. By that same token plenty of American billionaires and corporations are holding assets in those jurisdications, the claim that we owe our soul to the (Chinese) company store being a little hyperbolic.

Now things get really hairy and where I want to call for help from the finance people out there. Because holdings of Treasuries by the Federal Reserve are not counted as 'Intragovernmental Holdings' but instead as a component, and a huge component of 'Debt Held by the Public'. And those holdings of Treasuries alone (and not including Agency Debt) is publically claimed by the New York Fed at $1.6 trillion or 50% more than what is officially owed to the Chinese. And the Fed returns 'profits' to the Treasury and over the last few years has been systematically purchasing long bonds (with higher yields and so interest costs) while selling short bonds. Which seems to mean a couple of surprising things.

One if we total Governmental holdings of $4.8 trillion with Fed holdings of $1.6 trillion we are talking a pretty big chunk of that $16.4 trillion of 'Total Public Debt' actually being owed by the Federal Government to federal entities. With corresponding impacts on the real cost of debt service. Because unless I am missing something Treasury is pocketing a big share of that debt service on the back end via Fed rebates of its 'profits'.

Food for thought. And hopefully informed comment.

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Comment Preferences

  •  Tip Jar (18+ / 0-)

    socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

    by Bruce Webb on Fri Jan 18, 2013 at 07:13:52 PM PST

  •  Mistaken conception? (0+ / 0-)

    It's not that the government simply can't owe money to itself, it's that it accounts duplicitously for that money by arguing (via bookkeeping) that funds taken in by one agency and then lent to and simply spent by another agency, are simultaneously still a credit at the former and a debit at the latter. The only source for repayment of the IOU will be taxes on the people who provided the original funds.

    This is as compared to a bank, which takes your Christmas Club deposit, sends it to the Loans Dept., which then allows 3rd parties to borrow on the collateralised promise of payment of interest and repayment of principal.

    It makes all the difference that the money will be loaned to and repaid by a 3rd party. If you ran the bank along the same lines as the government, effectively you would be (forcibly) requiring the original depositor to pony up capital for the bank holding company so that it can afford to pay back that same depositor his Christmas Club money.

    •  Companies can't hold company stock (4+ / 0-)

      In company managed pension funds? Investment banks can't lend funds to wholly owned subsidiaries? Ford only 'really' owes 53% of an invoice from a parts supplier in which it holds a 47% ownership interest? Because entities can't owe money to themselves? Friend have you ever worked for a large organization that internally billed IT services or copy services back to departments? Do you think you would get far claiming you 'really' don't have to pay for printer cartridges because you and the supply department report to the same corporate board? That is where your logic leads.

      Plus you missed the point of the post. if Trust Fund Assets are not actually assets then equally they are not debt. You can't claim $16.4 trillion in debt while discounting the 'real' value of $4.8 trillion of those debt instruments to zero.

      Not honestly anyway. If the assets are 'phony' so is the debt. If so lets reset the discussion to $11 tn and THEN discuss whether Treasuries held by the Fed are in fact any more or less phony than those held by the SS Trust Funds. Both are federally created entities separated by law from Treasury and the General Fund. And there are differences in degree. But are those differences so clear cut that SS Trust Fund Special Issues  are 'phony' and Fed holdings of regular Treasuries are 'real'?

      BTW there is an argument to be made there. One that in my opinion is refutable. But you don't even attempt to advance it.

      Returning to your second paragraph you are arguing that post-Glass Steagal banks that take deposits can only loan to third parties and never invest those funds on their own account. Sir the 60s are that-a-way, the folks at CitiGroup are laughing in your general direction.

      (and no, this isn't my first rodeo, why do you ask?)

      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Fri Jan 18, 2013 at 08:11:47 PM PST

      [ Parent ]

      •  Missing the point entirely (0+ / 0-)

        As my first sentence indicated (please learn to read before you react), I did not contest the idea of a company owing itself money. Instead, I directed attention to  the bookkeeping. So your first paragraph here is entirely irrelevant.

        What you say is the point of the post is precisely my point—something cannot simultaneously be debt and asset in what is essentially a closed system.  But it absolutely can and must be one or the other. You wish to claim that this cannot be the case because ordinary Treasury bonds are somehow different—something I certainly did not argue. But leaving aside some related resemblances, the ordinary bonds are booked entirely as debt. Your argument about phony v. genuine assets remains unconvincing.

        As for some banks investing some funds on their own account, that is an entirely separate story and in present context simply a red herring. But yes, John Corzine is laughing his head off, but that's because with or without Glass-Steagall, he has gotten away with something that remains entirely illegal. And so your last paragraph is also irrelevant.

        And no, this isn't my first rodeo, either. Hope to see you work up to something more challenging than roping goats.

        •  Debts, Assets, Balance Sheets (1+ / 0-)
          Recommended by:
          whaddaya

          Balance sheets always net out to zero. Which is why they are called 'balance' sheets. This is true for even the wealthiest corporations, assets always have corresponding liabilities often representing the same instruments.

          Companies can be sitting on huge piles of cash and still have balance sheets netting out to zero, indeed have to in order to claim a "clean set of books".

          There is a real world macro argument that Special Issues cannot be both assets and debts. But you explicitly deny you are making that line of argumentation but are instead just talking about bookkeeping. Which invites two replies:

          1) who cares about the bookkeeping? It is the legal, political, and economic claims that matter

          2) it would help if you showed you even understood basic bookkeeping concepts including 'balanced books'

          socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

          by Bruce Webb on Sat Jan 19, 2013 at 08:28:10 AM PST

          [ Parent ]

          •  Unbalanced (0+ / 0-)

            I was using double-entry bookkeeping in big ledgers long before you and Mr. Geithner began relying on Turbotax to supplement weak bookkeeping skills. Let me explain one of its basic principles to you.

            Books only balance in the sense that debits and credits equal out. You can have beautifully balanced books showing a huge loss for the enterprise. Tax distortions and such aside, if your beautifully balanced books do not show a profit, you either go out of business or raise fresh capital.

            The government is essentially in this position. It has beautifully balanced books for its Social Security "insurance" subsidiary, taking the positive cash flow from its "premiums" and using that to prop up its other money-draining enterprises. The bookkeeper's report on the Social Security subsidiary claims that it has adequate funds to meet its obligations, based on promises from headquarters to pay back the diverted cash flow. Its books are balanced.

            Sadly, those so-called assets have nothing behind them—the money to back those promises has not in any real sense been invested or lodged with profit-making entities who both pay interest and offer seizable collateral (the 3rd party issue you continue to ignore). All that can happen is that the general government will have to raise general tax money to refund the spent monies. And, since the overall government runs at a deficit and will run at a deficit well into the foreseeable future, it will have to borrow yet more money to pay off the money it borrowed earlier.

            In other words, a realistic view of the overall enterprise called government would look at Social Security merely as a gigantic unfunded liability, instead of claiming that it was stocked with (pretend) assets in (pretend) trust funds. When your accountant gets hold of the bookkeeper's report to do a serious audit, he will note that there is nothing solid to those Treasury IOUs.

            And that's bookkeeping for you (the longest word in the English language with adjacent sets of doubled letters). Your self-awarded condescension is entirely unearned.

            •  Same is true of Regular Treasuries (0+ / 0-)

              used to fund military acquisitions.

              And all the military has in assets is rapidly depreciating weapons systems.

              And yes there is nothing solid in an existential sense behind Full Faith and Credit of the United States. On the other hand there has never been a default on either Regular or Special Issue Treasuries in history. Which is why the overall class is considered the safest investment on the planet and serves as the instrument of choice for 'flight to safety'.

              Social Security was cash flow negative more years than not from 1956 to 1982 and in many of those years that actually resulted in redemption of Trust Fund assets in the form of Special Issues. Similarly the legally separate DI (Disability Insurance) Trust Fund has been cashing in 'worthless IOUs' with nothing 'solid' behind them since sometime in 2008. And not body blinked, not even the Bushies who made the original "its just paper in a filing cabinet" argument. Because when push came to shove even the Bush Treasury Department knew that arguments was pure bullshit.

              Lets just say the dung clearly hasn't fallen far from the heap here. Trust Fund assets are legally backed in the same way as Debt Held by the Public is, which explains why those assets are PROPERLY held on the books as a portion of Total Public Debt/Debt Subject to the Limit.

              Just to pile on. There is nothing sillier than people who argue that Trust Fund assets are unreal while simultaneously arguing that Social Security has an unfunded liability in the trillions of dollars. Total legal nonsense and category confusion. Social Security unfunded liability is neither a legal liability or a debt. On the other hand Special Issues held in the Trust Fund are legally an asset to Social Security (held in Trust for one group of people, not all of whom are citizens) and equally legally a debt to the Treasury (as proxy for a largely but not entirely overlapping group of people, including some citizens not covered by SS at all).

              'Largely overlapping' does not equal 'identity'. Just as many thousands of people can own shares in two different public companies and in some cases represent the exact same set of people and yet those companies can owe money back and forth. Even more so when one is a subsidiary of the other.

              I don't know when or where you got your double entry bookkeeping experience, but apparently light was still being supplied by kerosene lanterns and you were riding home on a horse drawn street car.

              Or more likely it was in some mythical Austrian village under the tutelage of Herren von Mises and von Hayek.

              socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

              by Bruce Webb on Sat Jan 19, 2013 at 11:04:02 AM PST

              [ Parent ]

              •  Not much use (0+ / 0-)

                trying to discuss these matters with you. All you manage is to go off in a dozen different directions—anything rather than stick to the points raised.

                I was not discussing regular Treasury issues; I was not discussing whether or not special issues had or had not ever been redeemed; I was not discussing DI, the Bush administration, the legal status of Social Security 'obligations' to individuals, or whether or not there had been default on U.S. assets. And just to make sure the waters are entirely muddied, you want to throw in Hayek and the Austrian School? Are you sure that there isn't anything you've forgotten? Global warming? the Haymarket riots? Your Oscar picks?

                About the only clear thing I get from your flailing about is the definite sense that you do not wish it to be the case that Social Security funding is highly problematic, therefore it must be the case that it rests on solid foundations. I guess while I was in that Austrian village under kerosene lanterns, you were studying with Lysenko, as totally in the dark as now.

                •  No you were trying to make (0+ / 0-)

                  A bullshit point about 'phony IOUs' on which all the issues I raised actually are relevant to. If you thought about this instead of trotting out lazy "debts can't be assets if held by the same government entity" claims as if they were totally self evident.

                  What is more I actually conceded the point that you could argue that Trust Fund assets were not really such. But if ot then follows that supporters of Social Security should take from that conclusion calculations which discount the possibility of their redemption to zero when formulating appropriate policy 'it's just a phony IOU' then equally they should be able to claim that it is not a debt. At which point you launch into really iffy claims based on bookkeeping practice, ones that I don't believe apply even in that realm.

                  Now having tried to hijack the discussion from its original key road to a by-way, you accuse ME of not addressing YOUR issues on MY diary.

                  Friend write your own diary citing this one with the lede "you won't believe what this moron Bruce said". Good on you. But you have no moral claim on my time from within my comment thread and still less the right to lay down what are and are not appropriate responses and illustrative material.

                  Not to mention that my usual practice in responding to trolls is to use them as comic foils against which to expand my original argument and in doing so talk past them to the people who show signs of getting it.

                  Thank you for so ably filling the role of Useful Fool, er Foil. And have a nice weekend.

                  socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

                  by Bruce Webb on Sat Jan 19, 2013 at 03:40:31 PM PST

                  [ Parent ]

                  •  Useful fools, and you (0+ / 0-)

                    You would be able to recognize yourself as one. Except, of course, for the useful part. A wiser fool would acknowledge their moral obligation to participate in discussion they themselves started without slinging insults. Alternatively, they would just shut up. But I hijacked nothing, certainly not YOUR diary (what are we, six?). And you wouldn't know a troll from any of the Billygoats Gruff. What a maroon!

                    •  Write a diary. n/t (0+ / 0-)

                      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

                      by Bruce Webb on Mon Jan 21, 2013 at 03:01:15 PM PST

                      [ Parent ]

                      •  Who coulda node (0+ / 0-)

                        http://www.dailykos.com/...

                        Diary count: zero
                        Comment count: frequent

                        friend the 'New Diary' button is over on the right. Where after all you should feel right at home.

                        Put 'social security' in as a label and appropriate or not to your post it will go right into my stream.

                        And hope you were neither a Falcons or Patriot fan because if so my wishes for you to 'have a nice weekend' are somewhere between gall and wormwood.

                        But do post.

                        socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

                        by Bruce Webb on Mon Jan 21, 2013 at 03:08:46 PM PST

                        [ Parent ]

  •  Thanks Bruce. Hope people read this/ (1+ / 0-)
    Recommended by:
    whaddaya

    Further, affiant sayeth not.

    by Gary Norton on Fri Jan 18, 2013 at 08:19:45 PM PST

  •  Interest is paid on the debt no matter who or what (0+ / 0-)

    the holder is.  Debt is issued with terms which include the nominal interest rate.  This is especially important with marketable debt which roughly corresponds to the Debt Held by the Public.  Whether the holder is grandma or the Federal Reserve, the holding can be sold (before maturity) and the new holder is entitled to the interest payments.

    When you consider the Fed as a holder it may seem to you that the Treasury is paying interest to itself if the Fed turns its profits over to the Treasury.  It may also seem that paying interest on the Fed's holdings is an unnecessary transfer of funds.  You're assuming that those funds are going to make a round trip.  It isn't necessarily so.  The Fed has to see if it has profits at the end of the year first.  If it does, it will turn them over no matter what the source.  But what if there is no profit? The interest the Fed receives could conceivably become swallowed up by losses on other transactions.

    With Intragovernmental Holdings, the securities aren't marketable but they do earn interest.  Borrowing from the Social Security Trust Fund is justified as a way to guarantee the funds against loss 1) the principal is backed by the full faith and credit of the US 2) the interest payments protect against loss versus inflation 3) the non-marketable feature prevents the transfer of ownership to any other entity.  

    If a little bit of a brain teaser to think that these interest payments are actually made, but they are.  

    "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

    by leftreborn on Fri Jan 18, 2013 at 08:37:16 PM PST

    •  I agree, my point was different (2+ / 0-)
      Recommended by:
      whaddaya, Eric Nelson

      Perhaps my wording was clumsy.

      Yes interest is "paid" to Social Security and yes it is "real". But it is not financed out of current income in the same way as payments on regular Treasuries and it's payment is time shifted AND  discounted in interesting ways. But the bigger point is that Trust Fund holdings don't bear on the Fisc in the way that Debt Held by the Public does.

      And yes the Fed doesn't necessarily profit on every dime of interest and so rebate it all to Treasury. On the other hand it is not in the same position vis a vis Treasury as say Pimco or the Chinese Central Bank. It is not like the Fed is just going to dump its portfolio of Treasuries and send 10 year yields spiking. Nor in fact, and for similar reasons, is the CCB likely to do so. Treasuries play all kinds of roles in domestic and world finance that make a nominal $16.4 trillion in debt and nominal debt service thereon a lot less potentially volatile than various Invisible Bond Vigilante narratives would have it. Treasury's real exposure just isn't what the National Debt Clock as interpreted by Debt Hawks would have folks believe.

      It just isn't as simple as dividing $16.4 trillion by 330 million Americans and thinking you have a meaningful number.

      This post is a first stab at this, hopefully people like you will help me refine it.

      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Fri Jan 18, 2013 at 09:03:59 PM PST

      [ Parent ]

      •  There is absolutely no risk inherent in the (1+ / 0-)
        Recommended by:
        Eric Nelson

        current number $16.394 trillion that could justify capping the debt limit at that level.  The cost of servicing was lower in 2011 than it was in 1998, even with a debt that tripled because there was a corresponding decline in interest rates.

        Demand for US debt has been strong enough that rates may drop below zero.  The Treasury Dept's SIFMA committee mentioned in its meeting minutes some changes that were made to accommodate negative interest rate auctions.  

        Risk could be minimized easily by putting the deficit on a glide path to a target % vs GDP and keeping it there so that its growth and GDP growth pace each other.  Some amount of deficit is healthy.  It represents the government's ability to issue currency and transfer it into the private sector, IF Congress will agree.  Otherwise, the dollar becomes restricted by the current debt limit, something like the way it was formerly restricted by the amount of gold there was to back it.

        "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

        by leftreborn on Fri Jan 18, 2013 at 10:07:20 PM PST

        [ Parent ]

        •  agree again, and a good followup (1+ / 0-)
          Recommended by:
          whaddaya

          But a little orthogonal to the point of my post. Perhaps because that point was more implicit than stated.

          The Right loves to present the U.S. as a helpless hostage living or dying at the whim of the inscrutable decision making of the Chinese Central Bank. In fact most of the force behind the Invisible Bond Vigilante narrative is the fear that the Chinese will just stop buying U.S. debt or worse sell it off lead to seizure of Treasury auctions and a spiking in rates that triggers hyperinflation.

          Scary stuff. Until you look at the numbers that show that the Chinese have not been net buyers of Treasuries during most of the Obama Administration and that their holdings of this category of debt have fluctuated around $1.1 trillion even as the supply jumped. Meaning that the continuing stubborn stickiness of yields on the 10 year bond have less than zero to do with the Chinese propping up America for reasons of their own.

          Along the same lines it is not even more than marginally true that it is other foreign actors who are stepping up, that is the total percentage of Debt Held by the Public held by all foreign entities has stayed relatively stable at around half of that debt category and a third of Total Public Debt even as that latter total has mounted steadily.

          That is the Invisible Bond Vigilantes remain invisible and apparently powerless because they don't seem to exist outside the fertile imaginations of the V.S.P. of the Village. Who persist in claiming that the only way to put their fear at rest is to kick the Poors and the Olds in the teeth. To show that they are People who are Very Serious indeed.

          socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

          by Bruce Webb on Sat Jan 19, 2013 at 08:43:11 AM PST

          [ Parent ]

          •  I wouldn't be concerned about China. (1+ / 0-)
            Recommended by:
            Bruce Webb

            The figures for foreign holders showed  China down about about 6.7% but Japan increased holdings by almost the same amount.  China has been very critical of the political gamesmanship and failures in Washington DC.  That doesn't mean it will bail.  China grumbles because it wants safety, it wants more quantity, and it has nowhere else to go.  A few months ago there was news China was flirting with Germany to buy some of its bonds.  A little more yield because of the Euro.  The situation is 180° different from forecasters of doom worried about China "calling in its debt."  I always chuckle when I hear that phrase.  It sounds like loan shark bookies in Las Vegas.  It's not happening.  When I hear rightwingers fretting about China I tell them that they should be proud to know that no other country on Earth can compete with the US when it comes to exporting its debt.  Sing a round of "God Bless America."

            "Democracy is a life; and involves continual struggle." ---'Fighting Bob' LaFollette

            by leftreborn on Sat Jan 19, 2013 at 11:15:55 AM PST

            [ Parent ]

  •  Every dollar, those in circulation and those in (2+ / 0-)
    Recommended by:
    chmood, whaddaya

    electronic accounts, represents a debt or obligation. Dollars are nothing but certified debts. Their relationship ti debts is the same as that of a certificate of marriage to a marriage. Monetary and marital obligations exists, regardless of whether they are certified (made more secure) by a public document, or the imprimature of a public official.

    While it was impossible to argue about how many dollars could fit on, never mind dance, on the head of a pin, when dollars were either vegetable or mineral (paper or gold), now that they are reduced to electronic blips, that's an argument we could not only have, but perhaps settle.

    Wouldn't that be fun?

    We organize governments to deliver services and prevent abuse.

    by hannah on Sat Jan 19, 2013 at 12:18:54 AM PST

  •  So, the platinum coin would enable us (2+ / 0-)
    Recommended by:
    chmood, whaddaya

    to pay off all our debt whenever we wish.

    Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

    by hestal on Sat Jan 19, 2013 at 03:20:18 AM PST

    •  Some folk claim so (0+ / 0-)

      Me I think it is important for confidence that Treasuries be explicitly backed by Full Faith and Credit of the United States government as opposed to Federal Reserve Notes that are in the end the product of basically a federally chartered bank that in turn is partially 'owned' and certainly partially controlled by member banks through the Regional banks.

      Uncomfortable as it should be for Social Democrats like me to embrace in theory, it is this stabilized tension between Capital and Democracy which enabled the broad gains after WWII (although minorities came late and only partially to the party) that created the American middle class. Unfortunately starting around 1980 Capital discovered that it could just put in place a leveraged buyout of Democracy for the pennies on the dollar it took to buy both Parties via campaign contributions. With the result that small d democracy couldn't buy itself bread and circuses even if it wanted to. Which doesn't stop the now bought out 'represnetatives' of the people claiming that the solution is just slashing away at the remaining bread via 'Entitlements Crisis' using bogus debt arguments.

      But no in the long run the effect of in effect abolishing the Feds control over money supply by Teeasury coining $1 trillion dollar coins and then issuing checks against them would likely be to create destabilizing risk as Democracy had no constraints at all. The answer it seems to me is to reestablish the right amount of tension and control between Capital and Democracy and not to just break the connecting springs in favor of the later. Because nothing would make Invisible Confidence Fairies actually real more than that would. Because it is that tension that provides the stock of value of and between dollars and Treasuries here and abroad.

      (Monetary Sovereignists seem to mistake the result of this tension, a fiat dollar, as being the cause, and so think we can just remove the tensioned structure that supports it. Whereas I suggest that without the tension the energy dissipates. If I knew more about physics I suspect I could build a nifty super-string symmetry analogy here. But I don't and leave that as an exercise for the Sciency Kossacks)

      socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

      by Bruce Webb on Sat Jan 19, 2013 at 09:18:21 AM PST

      [ Parent ]

      •  I disagree obviously. nt (0+ / 0-)

        Might and Right are always fighting, in our youth it seems exciting. Right is always nearly winning, Might can hardly keep from grinning. -- Clarence Day

        by hestal on Sat Jan 19, 2013 at 10:29:18 AM PST

        [ Parent ]

        •  Monetary Sovereignists are nuts (0+ / 0-)

          They have elevated a fact that is simply an artifact of a point in history, that the U.S. can pay its own debts in its own paper, to some universal truth.

          This just ignores history. The Middle Ages had many examples of such monetary sovereigns, mostly in the form of banking families from Northern Italy who often enough leveraged that monetary sovereignity into state sovereignity via Italian City States. But whether that latter step happened or not we can ask where the Bardi and Peruzzi are today?

          http://en.wikipedia.org/...

          Your paper is good only as long as it is accepted. But that acceptance wasn't guaranteed for the U.S. by the Federal Reserve Act. It is more or less just one of the spoils of coming out on top of World War II and the Cold War. And nothing says it is permanent.

          So I agree with hestal. Though maybe not 'obviously'.

          socialsecuritydefender.blogspot.com - SocSec.Defender at gmail.com - founder DK Social Security Defenders group - (hmm is there a theme emerging here?)

          by Bruce Webb on Sat Jan 19, 2013 at 11:17:22 AM PST

          [ Parent ]

  •  Most of the debt problem will clear itself up as (3+ / 0-)
    Recommended by:
    Bruce Webb, whaddaya, Eric Nelson

    the Bush wars wind down and te Economy recovers from the Bush Financial Melt Down.

    All the hype about it now is simply to try and gin up an argument for cutting social programs.

    We should turn it into an argument for Single Payer which will let us cut health care costs in half and bring us up to par with the rest of the industrialized world.

    But then both our parties are wholly owned subsidiaries of the AMA which controls both the number of doctors that are allowed to graduate each year and pretty much guarantees those that do a monopolistic standing that assures them an extravagant life style while the rest of us die in the nations emergency rooms unable to even see the doctor who is misdiagnosing and mis treating us.

    Speaking from personal experience twice

  •  The Fed returns to the US Treasury the interest... (2+ / 0-)
    Recommended by:
    Bruce Webb, whaddaya

    paid on their holdings.

    Plato's " The Cave" taught me to question reality.

    by CTDemoFarmer on Sat Jan 19, 2013 at 06:20:30 AM PST

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