Cross posted from Seeing the Forest. Dave Johnson wrote:
I really think the upcoming Debt Ceiling fight is going to be a turning point of some kind. The right intends to let the country default to stop “government spending.” They mean it.
Biden’s choice is to let that happen, cave like Obama did, or enforce the Constitution, which says the govt has to pay its bills.
Shake The Foundation
Minting platinum coins with a face value of $1 trillion and depositing them with the Federal Reserve is Constitutional and solves the problem. But it brings up questions that shake the foundations of neoliberalism. If we can “mint coins” to pay bondholders, why can’t we mint coins to do things that people want and need? Instead of relying on private Capital to get things done in our economy?
For those insisting that “Mint the Coin” as a solution to this is a “gimmick” – (as if the debt ceiling wasn’t just a gimmick):
The idea that the constitution providing the power to “coin money” implies the ability to charter Federal Reserve Banks that can issue paper currency and open book entry accounts is much more of a gimmick than just… coining money.
— Nathan Tankus (@NathanTankus) January 19, 2023
Neoliberalism: “Kitchen Table Economics”
Breaking away from the idea that the federal govt operates with “kitchen table economics” is a paradigm shift. You see it completely one way (deficits, debt, govt spending are bad), and then when something clicks you can’t see it that way anymore, only the new way, and are frustrated seeing so many getting it so wrong.
But we broke away from using gold as our currency a long time ago. We don’t mine or “round up” money at the federal level. We (Congress) decide that we’re going to allocate our resources toward accomplishing something, and we issue dollars as an exchange medium toward that. There are two things needed: make sure we allocate resources we have (allocate toward steel increasing capacity before allocating toward using more steel than we have) and tax enough to balance the distribution (tax the rich) and soak up some of those circulating dollars.
So of course we could just “mint a coin” to issue dollars to pay off bondholders. But if we did that, the most dangerous question arises: If we can just issue money to pay bondholders, why can’t we issue money to … ?
And then the neoliberal order breaks down. If We (through Congress) can decide to … then why are we depending on “the investor class” and “market solutions” etc to decide where to invest, allocate resources, do the planning and everything else?