What I think I would have done…
Posted by WARREN MOSLER on July 30th, 2011
Voting to not raise the debt ceiling to authorize the deficit spending to pay for bills already authorized by Congress, to the best of my knowledge, falls under the definition of subversive.
Representatives are well aware of the non subversive channels to work through to alter prior spending decisions.
Therefore, I would have had the Dems in the Senate put a clean debt limit extension up for a vote,
with the understanding that anyone who voted against this measure to allow the US Govt. to pay
for the expenses that it had already authorized would be considered subversive and treated accordingly.
That would mean risking being removed from the Senate as per the Constitution.
After it passed the Senate it would have gone to the House for a vote with the same understanding.
July 30th, 2011 at 10:24 am
According to the Constitution, it takes a two-thirds vote of the Senate to expel a member, and that is the only way to remove someone from the Senate. The same holds for Representatives. Members are also not to be punished for any speech or debate in Congress.
There are several tactics the President could take against the debt ceiling. For example, minting a few trillion-dollar platinum coins or holding that appropriations and spending laws passed subsequent to a debt ceiling law appeals the debt ceiling law would be possible. But requiring a particular vote from Congress is not one of them.
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WARREN MOSLER Reply:
July 30th, 2011 at 12:57 pm
I’d call for that vote for anyone voting against a clean bill to allow the tsy to pay authorized expenditures.
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July 30th, 2011 at 10:26 am
unfortunately Democrats are really unorganized. Since Republicans represent the ultra right wing – Democrats represent the rest – from moderately right, centrists, to moderately leftists. So there is littel unity among Democrats.
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Rodger Malcolm Mitchell Reply:
July 30th, 2011 at 2:00 pm
@Gary, I don’t believe there are any leftists. Obama is to the right of every president in history. The Democrats are the new Republicans. The Republicans are the new fascists.
Rodger Malcolm Mitchell
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Vincent Reply:
July 30th, 2011 at 8:08 pm
@Rodger Malcolm Mitchell,
Republicans the new fascists? I assume you’re either joking, or don’t know what fascism is.
I totally agree with a clean vote for raising the debt limit to cover approved obligations. I think the issue put into that context will touch a nerve with most people
Also, I think the idea of a payroll tax holiday needs to be pushed hard. I suspect a lot of those on the right would favor it over more of the so-called stimulus.
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pebird Reply:
July 31st, 2011 at 11:41 am
@Vincent, Just an FYI, there is no need to specify “for approved obligations”. Debt is only issued in the first place to cover approved obligations.
July 30th, 2011 at 11:01 am
That’s the stupidest idea you’ve ever put forth here. And I am well aware of your proposal to institute a 30mph national speed limit.
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WARREN MOSLER Reply:
July 30th, 2011 at 1:03 pm
Let’s see if it grows on you like the 30mph option has…
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JCD Reply:
July 30th, 2011 at 7:16 pm
@WARREN MOSLER, The beauty of MMT is that it’s non partisan.
This kind of post makes it way too easy for partisans to cast MMT as well left of center.
This does not move the ball forward.
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Unforgiven Reply:
July 30th, 2011 at 9:56 pm
@JCD,
I’ll concur that politics and economics make a disastrous mix.
Something I’d do well to remember in my replies.
July 30th, 2011 at 12:54 pm
Do I detect a smidge of mockery there?…
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July 30th, 2011 at 2:04 pm
Some Congresspeople don’t understand Monetary Sovereignty. They simply are ignorant. Some Congresspeople may understand Monetary Sovereignty, but don’t give a damn about the U.S. They just want power.
What is the word that describes someone who intentionally hurts his nation for selfish reasons? The word is “traitor.”
To my knowledge then, every single person in the executive and legislative branches either is ignorant or a traitor. Know any exceptions?
Rodger Malcolm Mitchell
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WARREN MOSLER Reply:
July 31st, 2011 at 12:00 am
comes back to calling it innocent fraud.
that gives them the option of being either ignorant or subversive
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July 30th, 2011 at 6:01 pm
Coin frivolity:
“I actually feel like this plan could, in addition to rescuing the economy, provide the spark our film industry requires. I could sit here for ten minutes and rattle off a half-dozen great film concepts based on this story.
Bank caper: a dashing Clooney-esque figure assembles a team to steal the trillion dollar coin.
Comedy: a bumbling assistant Treasury Secretary played by Jack Black accidentally picks up the trillion dollar coin and spends it on a Mountain Dew, sending the entire government into a mad scramble for the coin before the world economy collapses.
Noir: Regular person somehow acquires the coin, and is slowly twisted.
Action: Super-villain plots to destroy the coin and bring the economy to its knees, from which he stands to profit due to a nefariously brilliant hedge he has prepared. Maybe we’ll call him “Eric Cantor.”
http://www.economist.com/blogs/freeexchange/2011/07/so-crazy-it-just-might-work
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Ramanan Reply:
July 30th, 2011 at 6:45 pm
@anon,
“I actually feel like this plan could, in addition to rescuing the economy, provide the spark our film industry requires. I could sit here for ten minutes and rattle off a half-dozen great film concepts based on this story.”
Ha ha.
http://www.creditwritedowns.com/2011/07/trillion-dollar-coin.html
suggests blog name changes as well: My suggestion
“The Coin of the Universe”
Good movie names … “One Coin Flew Over the Cuckoo’s Nest”, “Gone with the Coin”
My suggestion “American Beauty”
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anon Reply:
July 30th, 2011 at 7:05 pm
@Ramanan,
:)
can’t think of any; this is serious business
:)
btw, nobody’s talked about full QE exit following “partial platinuum reverse QE” (sounds like a football play) – the Fed’s balance sheet now has coin instead of bonds, but the coin can’t be sold for the excess reserves that still remain
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Ramanan Reply:
July 30th, 2011 at 7:13 pm
@anon,
can’t resist …
Songs and albums can be remade …
I Want to Hold Your Coin .. Beatles
Like a Coin … Madonna
Lets Talk About Coin .. Celine Dion
Lucy in the Sky with Platinums .. Elton John/Beatles
Born in the USA … Bruce Springsteen
About a Coin .. Nirvana
Coin Rhapsody .. Queen
Coin, Coin, Coin .. ABBA
Wicked Coin .. Chris Isaak
Fly Me to the Coin … Tony Bennett
WARREN MOSLER Reply:
July 31st, 2011 at 12:15 am
‘the coin is as high as a elephant’s eye’ from ‘oh what a beautiful morning’ sung by Jimmy Durante
anon Reply:
July 30th, 2011 at 7:23 pm
well done
now here’s a change; if you didn’t see it, you may find it interesting:
http://mpettis.com/2011/07/current-account-dilemma/
WARREN MOSLER Reply:
July 31st, 2011 at 12:19 am
don’t see any value in it
Tom Hickey Reply:
July 30th, 2011 at 8:31 pm
@anon,
I thought it interesting that Pettis does not distinguish between currency sovereigns like the US, UK, Japan, etc., users of a currency that they do not issue like the EZ member countries, and countries that peg, like China.
anon Reply:
July 30th, 2011 at 9:32 pm
@Tom,
Yes. Rather odd that he talks about Spain’s options as including devaluation.
But an interesting overview.
Await Ramanan’s thought du jour on this.
WARREN MOSLER Reply:
July 31st, 2011 at 12:14 am
calculate the date when the coin’s intrinsic value will exceed the nominal value and be melted down
Ramanan Reply:
July 31st, 2011 at 4:09 am
@anon,
Thanks.
Pettis is actually presenting Keynes’ argument that it is the surplus nations who ideally need to take up the burden of reversing imbalances (but he quotes Hobson’s earlier ideas whom I haven’t read).
However, Pettis is I believe wrong on making statements like “If China buys huge amounts of dollars, the US must run a trade deficit.” The straightforward interpretation of this is that higher the amount of dollars PBC buys, the higher the trade deficit of the US will be which doesn’t make sense. The trade deficit is rather a decision of US individuals to purchase a Chinese product instead of a locally made product. The PBC then tries to purchase exporters’ dollar acquisitions. However, having said that, PBC’s policy of keeping the Chinese currency at a much depreciated level helps the exporters gain price competitiveness. But PBC’s purchase of dollars cannot be said to be causing the trade imbalance. Taken literally, Pettis’ argument can be used to prove the corollary that if PBC decides to purchase $x in one quarter, the trade imbalance will be $x, which is clearly inaccurate.
But, China’s fiscal policy is intentionally kept at a tighter level so that demand is low and hence imports. So weaker forms of causality in his blog seem ok.
About Germany – he is right about a few things. Germany wants to run trade surpluses but asking others in EZ to deflate will lead to less exports for Germany. Plus in the situation now, with everyone vulnerable, its dangerous for Germany itself because it will lead to huge capital losses.
There is just one solution to the whole Euro Zone arrangement – formal a fiscal union which will give the European Union Government more taxing and spending powers which will transfer fiscal resources from Germany to Spain. Germans will be paying higher taxes but that is purely because of higher income levels in Germany. Of course there is also the solution of taking a bold step of unilaterally leaving the EZ .. IMO won’t work.
The world will not come out of this muddle unless there is a concerted fiscal expansion combined with attempts to work out a solution to reduce imbalances. Its stuck in a prisoners’ dilemma kind of situation because there is no institution called a World Government as Francis Cripps observed in 1983.
Oliver Reply:
August 4th, 2011 at 7:18 am
@anon,
I stumbled across this in the interwebs and was wondering what you guys thought of it. It’s not necewssarily current, seing as it was written before the Euro was introduced, but the analysis seems somewhat familiar and the conclusion is somewhere along the lines of the Hobson>Keynes>Pettis argument.
On a different note: the whole debt ceiling arrangement in the US seems to me the most krass, but by no means the only example of why politics and economics do not mix well. It reminded me of the reply by the President of the Swiss National Bank, Hildebrand, upon being asked by a journalist to make suggestions on how to improve the current system, to introduce an independent fiscal commission along side the Central bank that could set fiscal policy independently of the political process. It seemed pretty silly to me at first, because I intuitively considered fiscal policy and politics as inseparable and wondered under which economic paradigm and thus in who’s interest such an organization might enact policies. But on second thoughts, I do wonder whether there could not be an arrangement in which fiscal policy were divided into two parts. The (domestic?), distributional issues would remain with the legsilature and be solely subject to the political process, i.e. political proposals could be fought out within the limits of a full emploment budget, while the new fiscal agency, sharing the dual mandate, could act on an aggregate level, e.g. through a correction factor on overall tax rates, to set aggregate demand, in tandem with the central bank, thus reducing the reliance of independent policy on interest rates and the real estate lending channel. Not sure, where policy concerning the external sector would be placed in this triangle, but then it’s just a very quick shot anyway…
WARREN MOSLER Reply:
August 4th, 2011 at 5:54 pm
seems that’s what all the congressional committees pretty much do
Tom Hickey Reply:
August 4th, 2011 at 1:00 pm
@anon,
“Independent” solutions are based on the premise that democracy doesn’t work. It doesn’t work because of corruption and poor institutional design. Those are the matters that need to be addressed, not setting up anti-democratic “independent” commissions that are unelected and unaccountable.
WARREN MOSLER Reply:
August 4th, 2011 at 6:02 pm
a work in progress with lots of big swinging pendulums
MamMoTh Reply:
July 30th, 2011 at 7:44 pm
@Ramanan,
The Trillion Dollar Baby
Coin Man
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WARREN MOSLER Reply:
July 31st, 2011 at 12:12 am
the leading lady will be a platinum blonde
The New Mismatics
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WARREN MOSLER Reply:
July 31st, 2011 at 12:08 am
platinum finger
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July 30th, 2011 at 6:21 pm
When at Aug,2 23:59 they will come to a deal they all will say ‘that’s how democracy works’ and the next day still no politician will come with a proposal to cancel the debt ceiling.
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Walter Reply:
July 30th, 2011 at 6:23 pm
@Walter,
Oh yeah, and they shake hands and smile and call their banks to ask if all put options were sold in time.
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July 30th, 2011 at 7:05 pm
The democrats represent the center? Are you kidding? The Republicans are fascists? The President as a member of the Senate said that raising the debt ceiling was a failure of leadership. Countless times he’s referred to this country as broke. Criminalizing opposition to an increase in the debt ceiling is absurd. Removing the debt ceiling (as well as teaching them MMT) would be like putting kids in a candy store on “everything’s free day”.
I understand MMT and clearly we are lacking aggregate demand and need a significant tax cut. That nobody is even discussing one at this point in the economic cycle is pathetic. However, I suggest everyone relax and find a way to make money from their idiocy until you’ve made enough money to truly buy enough influence to push through MMT.
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WARREN MOSLER Reply:
July 31st, 2011 at 12:13 am
we all got short s and p’s 10 days ago and covered friday
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July 31st, 2011 at 6:36 am
That would be nice. I got long 10′s…because Japan, here we come.
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July 31st, 2011 at 6:24 pm
If anyone hadn’t figured out yet that MMT = tyranny, here is your proof. When trust programs become seen as entitlements because of accounting fraud, guess who ends up with control?
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Ralph Gardner Reply:
August 1st, 2011 at 12:24 am
@Jack,
I don’t think you can say MMT supports tyranny. It doesn’t say how the rules(laws) are made. A tyrant could made them or a popular vote could make them. If you mean’t something different could you explain?
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WARREN MOSLER Reply:
August 2nd, 2011 at 6:36 am
MMT doesn’t = anything in that sense. Maybe some proposals by those who understand MMT? Which specific proposals on this website = that???
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