How Obama Could Beat The Debt Ceiling

Discussion in 'Politics' started by pspr, Jan 4, 2013.

  1. pspr


    I think Obama has ruled out Option 1 but Option 2 could be used to create a nice little crisis for the U.S.

    1) Constitutional Option. The debt ceiling forcing mechanism could be demolished if Obama invoked the “constitutional option” and unilaterally raised the debt ceiling. The 14th Amendment of the Constitution states the validity of the public debt shall not be questioned. Under this option, Obama would invoke the 14th Amendment and unilaterally raise the debt ceiling – a move that was encouraged by former President Clinton last summer in the height of the debt ceiling stare down. This option would trigger a wave of lawsuits and a likely Supreme Court decision. The biggest problem with going this route would be to – in effect – set up two tranches of Treasuries. Those that are not subject to a legal challenge (issued under the old debt ceiling) and treasuries that are subject to a legal challenge, which would likely trade at a discount.

    2) Platinum Coin Option. This is even more theoretical than the Constitutional Option, though some argue that it is a stronger legal option. There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper. BUT, the Treasury has broad discretion on coins made from platinum. The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins. The President would then order the coins deposited at the Fed, who would then put the coin (s) in the Treasury who now can pay all their bills and a default is removed from the equation. The effects on the currency market and inflation are unclear, to say the least. You would also likely trigger a wave of lawsuits similar to the Constitutional Option and create two tranches of treasuries. Both this option and the Constitutional Option are VERY low probability options
  2. Do you seriously think the GOP will block raising the debt ceiling??

    They do that, Obama will have a bigger supermajority than he did in 2008.:D

    Please, GOP, pluuuuleeeezzzeee......threaten a US default!
  3. Lucrum


    We don't have to default just because the debt ceiling doesn't get raised, which I'm sure it will. They'd just be forced to reduce discretionary spending.
  4. fhl


    Instead of using the trillion dollar coin to pay off public debt, use the trillion dollar coin as a deposit in the social security trust fund.


    they want the coin

    but not for their debts!!!!!
  5. pspr


    Don't be as naive as Obama. Obama isn't going to allow any meaningful spending cuts, that's obvious. No spending cuts - no debt limit increase.

    Everyone but Obama and the Democraps in Congress know we can't keep spending. We are at the precipice.
  6. pspr


    Sure! And while they are at it they can use a few to make Medicare solvent. Problem solved. (except for the legal challenges and resulting hyperinflation)

    While they are at it, they could make a billion dollar coin and mail one to every taxpayer. We would all be billionaires. Take that, Warren Buffett! ha ha ha ha.

    It would probably take about a month before all that coin would buy would be about one tank of gas.
  7. If you think the 113th Congress will be the Congress that sacrificed re-election on principle, then you are the one that is deluded.

    Jeezus man, did you not see what just happened??
  8. pspr


    Don't be stupid, RCG. You know we can't go on like this. Even Republicans won't vote for them if they don't get spending cuts done and done now.

    If you can remember your history, the election after Speaker Gingrich shut down the government saw the election of President George Bush and a Republican majority in both the House and the Senate.

    And, why are you still here? You said you would not be posting here after 2012.
  9. If you can remember your history the shutdown was Nov 95-Jan 96.Clinton won the election after the shutdown in Nov 96 you moron.
  10. I said I might not be posting. Instead, I stayed and started a journal.:)

    Watching the desperation in some of you guys is really fascinating!

    So, okay, pspr. Let the pubs threaten a default, and watch what happens.:D :D
    #10     Jan 4, 2013