Coin Out, IOUs In

Bother - just as I finish my trillion-pixel demolition of the legal case for the Trillion Dollar platinum coin, a new dodge emerges. Prospective defenders of The Coin will simply move on to advocating for the IOU solution and there will be no surrender ceremony on the coin.

I note that Krugman had spoken up for Moral Obligation Coupons on Monday, so people have begun the MOCking already. As to the IOU plan, it does not at first blush grab me as illegal, but we will all learn more as time passes by.

I do have this quibble with Edward Kleinbard, a University of Southern California law professor and former chief of staff to Congress’s Joint Committee on Taxation who writes this:

However, there is a plausible course of action, one that the president should publicly adopt in the coming weeks as his contingency plan should debt-ceiling negotiations falter. He should threaten to issue scrip — “registered warrants” — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.’s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.

Despite Obama's scare-mongering last summer Social Security payments ought to be covered by the interplay of the Trust Fund with the debt ceiling. Remember, Social Security assets held in the Trust Fund are counted as part of the debt ceiling. If the Trustees redeem Trust Fund assets and the Treasury pays then back by selling debt to the public then (a) debt held by the Trust Fund falls; (b) debt held by the public rises; and (c) total debt remains unchanged. (Yes, I am well aware of the lmiitations of the Trust Fund mechanism).

 

Comments

[Jane - Mock the Media!]

So, apparently the bottom line is Obama should do absolutely anything but deal with the problem.

How Washington of him.

[Danube of Thought iPad]

In the long run, we are all screwed.

[Ignatz Ratzkiwatzki]

Not too surprising that a USC prof should advocate a form of the shenanigans California has engaged in for years by issuing warrants.
Grey Davis 2016!

[narciso]

Yes, that LA Times report, 'unexpectedly' off kilter;

http://legalinsurrection.com/2013/01/anatomy-of-a-twice-murdered-economy/#comments

[Ignatz Ratzkiwatzki]

It's after five and I feel compelled to atone for that horrifying SanFran gay blade on the last thread, and so:

[Melinda Romanoff]

Now if they would just create a futures market for these IOUs....

[narciso]

That's Ok, but that was your second strike, first being the Grifyn,

[Clarice]

These fancy pants ways of avoiding the ceiling are giving me a headache. Even Iggy's posts are a welcome break.

[Threadkiller]

http://youtu.be/FJqlcsuXIZM

[Melinda Romanoff]

Uh-oh.

Looks like some one cut the anchor on the Yuan.

Bad juju coming.

[Ignatz Ratzkiwatzki]

--Even Iggy's posts are a welcome break.--

Even Iggy's? I feel a little offended.

[matt]

I don't you're going to have to wait for that long run for too long, DoT. It has all been kicking the can down the road with no concrete solutions. Greece still needs hundreds of billions, while now Cyprus is on tenterhooks because the German parliament is resisting a bailout there.

It's sort of like the episode of I Love Lucy when they were on the assembly line that kept moving faster. Eventually it is overwhelming.

What is worse is that under the International Emergency Powers Act of 1977, the president has dictatorial powers. He can seize all foreign gold holdings and dictate exactly his terms to Wall Street. It gives him the power to create a new world financial system arbitrarily.

To paraphrase James Rickards in the book "Currency Wars", "the debasement of the dollar cannot proceed without the debasement of American values and exceptionalism" Sound familiar?

[maryrose]

Iggy, we all love you, you know that!
Ig : your point about California and Gray Davis is spot on. Obama's solution: Let's all become California and live beyond our means.It makes me wish for a personal bankruptcy in Bammy's future.

[narciso]

Now reviewing the work of this fellow, one comes across this;

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1941800

Bring on the giant triangular coin.

[Gus]

We are screwed. And Obama is tripling down.
Each and every move Obama makes, from brushing his teeth to fuxing Israel needs to be resisted.

[Ignatz Ratzkiwatzki]

--It has all been kicking the can down the road with no concrete solutions.--

Reminds me of that great scene in Fanny where Charles Boyer and IIRC Maurice Chevalier set an old hat out in the street for passersby to kick and then after it's been harmlessly kicked a few times they set it over a cobblestone protruding from the street when they see a local jerk approaching who of course can't resist.
Will Barry play the old jerk?

[Old Lurker]

Mel, after you get the future market set, we should slice the things into tranches and sell them in pieces. Say,we could get AIG to insure some of the slices and sell those to little old ladies and pension funds for even more. If our fees go straight to our accounts in the Cook Islands, does the new tax rate apply?

[Ignatz Ratzkiwatzki]

I think maryrose has been my favorite from the very start.
I'm a sucker for a beautiful face. ;)

[Clarice]

I should have specified-- butt-- posts, iggy.

[Gus]

Ignatz....many of your eXXXcellent posts do not include beautiful faces.

[narciso]

Clearly he is a self taught idiot;

http://tcf.org/about/fellows/edward-d.-kleinbard

[Ignatz Ratzkiwatzki]

Even Iggy's butt posts?

I value all my contributions equally although I did throw up in my mouth a little when I accidentally went back to that last thread a minute ago and saw my contribution there.
It may take a whole lot of butt posts to erase that travesty from the collective JOM memory.

[Old Lurker]

Clarice your 8:34 was a very bad pun on Iggy's 8:28...

[narciso]

Well covering the whole package as it were;

http://www.wikifeet.com/Lara_Logan

[Gus]

Hello Clarice, I did not mean to demean you in any way yesterday. I'm sorry for my posts vis a vis Jack Lew. You are a wonderful lady, and I am sorry to have offended you in any way.

[Greg]

A first blush it is unconstitutional as issuing an IOU is a) incurring a debt which only congress may authorize, and b) is spending, which must originate in the House.

[Ignatz Ratzkiwatzki]

--Ignatz....many of your eXXXcellent posts do not include beautiful faces.

Posted by: Gus | January 10, 2013 at 09:05 PM--

You gotta give the people what they want Gus.
I may be attracted to a gorgeous face first but the market for same seems slim to non existent.

[centralcal]

Gus: I love Clarice. She is one sharp gal. I admit, I rather got a chuckle out of your comments and knew, positively, that Clarice could and would handle herself in a very positive manner.

C'mon - let's all not lose our senses of humor, nor our conviction of the toughness and "vengence" of the girl gang!

[narciso]

The above was not nearly, the stupidest thing he's said recently,

http://tcf.org/blogs/botc/2012/12/developments-in-tax-policy-the-2012-edition

[Gus]

Bingo Ignatz. And there in lies our problems with SPENDING in the Country. The LIBS are giving the peeps what they want.

[Clarice]

Gus, you are a good man, and that was a sweet apology. I understand how frustrating it is for all of us to see what Obama's got up his sleeve for his second term. I know that's what was behind your outbursts and they never angered me for a second nor diminished my fondness for you.

Nytol.. I've been working very hard at the gym this week and I am tired.
Behave.

[Gus]

Well Thank you Clarice and Centralcal. I appreciate your kind words.

[Old Lurker]

Gus, trust me you will make one of the guys here cry before one of the gals will crack.

[narciso]

The odds would dictate, OL, that this fellow would get something right, but that clearly isn't true, and he is one of the former 'Top Men'

[Gus]

Evenin' Old Lurker. My intention will never be to make a JOM gal crack. And my comments were not aimed at Clarice. My comments were bombastic, to make a point that many miss. Jack Lew may be a fine Dad, a wonderully Religious Orthodox Jewish man, and well educated. His Congressional testimony vis a vis OMB was full of bullshit and obfuscation/lies. He is a committed liberal, and he is a willing abettor of Obama. His judgement is BAD.

[Old Lurker]

Yep

[Melinda Romanoff]

Gus-

Team player. Does what needs to be done, lies or not. That's all that counts.

[Gus]

I hear you Melinda. Which TEAM is he on?
He's been around a while, and it appears from all I've read, and that is a bunch, that he is KOOL-AID drunk, and not so forthright when questioned.

[narciso]

The Cylons, Gus, which one is left for you to decide.

[Gus]

Poor Jug ears Obama. The poor Marxist just can't catch a break. We need 60 billllllion for this, most recent crisis.
What did we do before NANNY took over?
http://www.cnbc.com/id/100369848

[Melinda Romanoff]

Looks like the Biden "Gun Grab" meetings were all about telling people what was coming, not so much about listening. "The President's mind is made up."

How shocking! {eyeroll}

Now it's just a matter of how they plan to deliver their baby. I smell the use of fresh of unspent campaign funds coming, a la Podesta.

[Ralph L]

spending, which must originate in the House
I believe it is only revenue bills that must originate in the House.

[Gus]

Melinda. Opie's mind is "made up". About what?? This is just another "crisis" that found it's way to Opies/Emanuels/Alynski's door.

[Melinda Romanoff]

Bloomberg certainly pays for a lot of microphone rental. Now he's after hospital "painkiller use".

Sheesh. Is he stamping coins with his profile yet?

[Gus]

Right Ralph. It depends on what the meaning of "is" is. The LEFT breaks whatever law and rule it wants, and then rationalizes their lies with the help of the MFM. "deem and pass".
Does that ring a bell?

[Melinda Romanoff]

Gus-

Guns.

As Mrs. "i don't know what my husband does in his spare time" Feinstein said, "Mr. and Mrs. America? Turn them in."

Or some loose variant.

This should end well.

[Gus]

Bloomberg is nearly as useless and narcissistic as Opie. Bloomberg is probably concerned about NEW YORK CITY'S costs.
He missed his calling. He should have been in Congress.

[Melinda Romanoff]

Gus-

He's allergic to leaving the Island, I think.

[Gus]

Melinda, I really need to read up on Bloomberg. I know a little about him, but not enough to do my Psychoanalysis, in all caps yet.

[narciso]

He was a trader for Solomon Bros, before he got into Media, right, he may have his certain talents, but he has very conventional outlook on things,

[Melinda Romanoff]

Here's a short cut.

He runs a business that has everyone convinced that "They Must Have It!!" in the financial world, where they can write off every inch of the $1200/month, per person log in. Merely through convincing all the data providers that he has all of their clients' eyes.

It's a dam waiting to break, if you ask me.

[Melinda Romanoff]

And the data ain't that exclusive in some cases.

Their charting is the best in the industry, however, if you don't mind their screen parameters, which I don't.

[Gus]

Thanks Narciso, and of course thank you Melinda. I knew most of the "how he got rich" stuff, but, until I get a little bit of knowledge and concensus info, on what the Dude is about, and how he got to be a blowhard, I can't do the all caps slap down.
It's in my contract.

[Gus]

Oh, btw, Trump is a similar personality type, of course, there are obvious differences, but, Bloomberg and Trump and others, fascinate me. There is always some weird shyte in their background. Imho, they are not normal peeps.

[narciso]

1200 a month, that's almost 15,000 a year, what do you get for that.

[Melinda Romanoff]

E'nuff from me.

G'night all.

[jimmyk]

It's a dam waiting to break, if you ask me.

I've wondered about that for years, how someone hasn't jumped in and taken that business. But he's already made his $billions.

Part of it is the standardization. Like excel, it's the standard, and it's hard to get people to consider alternatives, even at a fraction of the cost.

[jimmyk]

Gus, Trump mainly just jumped into his daddy's business. Bloomberg is self-made.

[Gus]

It's weird JimmyK. Trump took over his Fathers so-so business. Trump graduated from U-PENN WARTON if I'm not mistaken. Trump is tough as hell, and of course egotistically off the charts.
Bloomberg did VERY well for himself in trading and his own business idea's. BUT, neither of the 2 are experts on much at all, other than the teeth that they cut for themselves.

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[narciso]

Well they are both billionaires and we are not, they both sell you and I out, in a heartbeat,
what Trump did around 2007-2009, to W, and by proxy to our efforts in Iraq was unforgivable,
his clownish trial balloon presidential campaign, was a pathetic little joke,

Bloomberg I hold in even less high regard, possibly the only good thing he has continued is the NYPD's proactive stances under Guiliani,

[Gus]

I agree Narciso. But then again, I usually do agree with you.

[Danube of Thought iPad]

As I sign off I am just aching about poor RG3. That remarkable young man really captured the hearts of one of the great football towns in America. Just extraordinary that someone so young could do such a thing, and do it with such aplomb. I just hope to God he recovers fully.

[boatbuilder]

Free money! So why do they need our taxes?

I am starting to get a TK complex; but the thought of Federal employees being paid in scrip does bring a(sad)smile.

[Gus]

Boatbuilder. 99% of Gubmint employees, have ZERO fear of what is coming. They are children of the Nanny State. Their pay, will just keep on coming!!

Not smart.

[Threadkiller]

Breitbart’s Ben Shapiro: 2nd Amendment Is For Protection Against Usurpatious Government:

http://youtu.be/YiqAkUEA5rs

ORYR asks ol' Ben to review this:

http://youtu.be/db1YQGLt5vE

[peter]

Trump's father owned a few score apartment buildings all of which were solvent. Donald leveraged them to the hilt, went bankrupt several times, and mercilessly self-promoted himself. Not sure there was an improvement from one generation to the next.

[cathyf]

If the Trustees redeem Trust Fund assets and the Treasury pays then back by selling debt to the public then (a) debt held by the Trust Fund falls; (b) debt held by the public rises; and (c) total debt remains unchanged.

Question for you legal beagles as to how the SS Trust Fund is constructed: suppose this happens -- the Trustees redeem Trust Fund assets and the Treasury pays them back by selling debt to the public -- do the proceeds of that process have to be used to pay social security (or medicare) benefits? Or can Barry I give the money to his friends in the solar panel, wind, electric car, etc. industry?

(I mean assuming that we still have some semblance of the rule of law.)

[Beasts of England]

I learned about seigniorage so long ago, the copper penny still had some. (Maybe...)

p.s. Thanks, Ig!

[egoist]

The more they completely obliterate the currency (and everything else), the more passive we'll all be to just dish our 401Ks over to them for the $million or whatever number is in fleeting fashion at that trigger point.

[Freddie Sykes]

During the last debt ceiling crisis, Obama threatened to stop paying Social Security benefits. This would be illegal based on your analysis of trust funds as debt. If Obama claimed he would not pay benefits because he had reach the debt ceiling, then any OASDI FICA taxes collected would have to be credited to their trust funds which would increase the debt. Same for gasoline and other taxes for which trust funds have been set up. These are cases in which not spending increases the debt.