[Marxism] Barack Obama, the first tea-party president
shmage at pipeline.com
Fri Jul 15 08:32:36 MDT 2011
"In 2007, investors had, in Minksy fashion, been conditioned by the
Great Moderation, abundant liquidity, and the Greenspan put to believe
nothing that bad could happen, and if it did, investors would be able
to exit with their hides intact. Now, these reflexes have been
reinforced by the Bernanke put and Geithner’s attentiveness to the
needs and wishes of banks. The assumption is that even if the
Congressional gridlock continues, Timmie will find a way to keep
paying Treasuries, even if everyone else suffers.
The troubling bit is that the Administration has said it’s unwilling
to consider any of the creative ways out of this mess suggested in op
ed pages and in the blogosphere: use of the 14th Amendment, canceling
Treasuries held by the Fed, or using other loopholes to have the Fed
monetize the debt. But Geithner dissed those ideas. From Bloomberg:
There’s “no way to give Congress more time” on lifting the debt limit,
Geithner said after meeting with Democratic lawmakers on Capitol Hill
in Washington. He has repeatedly said U.S. borrowing authority will
end on Aug. 2 without congressional action.
Geithner’s remarks suggested the Treasury Department is approaching
the end of its efforts to shift federal cash flows to avert a breach
of the mandated borrowing limit.
Normally, one might view this rigidity as a negotiating posture. But
this Administration doesn’t do negotiations, it does concessions ..."
"...the President could, as we and others have suggested in the past,
simply invoke the 14th amendment and refuse to enforce a statute that
he believes violates the Constitution.
Professor Scott Fullwiler has suggested an even more creative way
around the debt ceiling: Fullwiler notes that Fed is the monopoly
supplier of reserve balances, but that the US Constitution bestows
upon the US Treasury the authority to mint coins (particularly
platinum coins). Future deficit spending by the federal government
could thereby continue to be carried out by minting coins and
depositing them in the Treasury’s account at the Fed (for more details
Curiously, the President won’t pursue any of these options. Why?
If, for example, the President genuinely believes that the 14th
Amendment does not give him the right to ignore the debt ceiling, he
has been loath to give any reasoning for this publicly. He is, after
all, a constitutional law professor. Much like the single payer option
in health, the President refuses to even put it on the table, even as
a negotiating posture. Is it caution, or does the President genuinely
believe this guff about the deficit?
By the same token, the President might well dismiss Professor
Fullwiler’s idea as nothing more than a “gimmick”. But if the
alternative is the economic apocalypse regularly described by Treasury
Secretary Geithner, then why not deploy this “gimmick” if the
alternative is (in the words of Mr Geithner), “catastrophic damage
across the American economy and across the global economy”?
As Bill Mitchell has pointed out:
[T]he whole edifice surrounding government spending and bond-issuance
is also ‘just an accounting gimmick’. The mainstream make much of what
they call the government budget constraint as if it is an a priori
financial constraint when in fact it is just an accounting statement
of the monetary operations surrounding government spending and
taxation and debt-issuance.
"scientific discovery is basically recognition of obvious realities
that self-interest or ideology have kept everybody from paying
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