There’s no need to worry about the US defaulting on its debt – for the moment, at least. People already get handsomely paid to do that. Most of them have an interest in driving it upwards. Reading their ravings doles out some hyped up gallows humor but lenders holding IOUs from the government aren’t quaking in their boots. Something will be worked out. If you don’t toil in the “crisis” exploitation industry don’t get distracted. All the danger to you comes in how this principle and vig will be covered. The possibility it won’t be, is equal to that of billionaires giving up arriving at climate crisis conclaves by private jet.
According to Zachary D. Carter, on the pages the Washington Post’s Outlook section, “We are…captives of a technicality established during WWI – an era when the Bank of England called the tune for the global economy and money was denominated in different weights of gold.” You can sense the man’s shudder recalling a day when the money supply had more constraints than the speed of a printing press or the flip of an electronic switch. After explaining how war conveniently forced Washington to borrow like a drunken gambler with unlimited credit, he goes on:
“A formal limit on the amount of debt Treasury could sell was imposed to prevent bureaucrats from running wild with their new responsibilities.
So the debt ceiling was not designed to be an important instrument of economic policy: Congress retained the power to set all spending and tax terms, as it does today. Congress also must vote every now and then to raise the limit on the Treasury’s authority to borrow. Failing to do so means the government can’t meet the obligations it has already approved.”
Did we get that right? Legislation to prevent debt towering into the stratosphere “was not designed to be an important instrument of economic policy”? Has the word “bankruptcy” been purged from college textbooks by social justice censors?
Guys in high-tech busy getting the bugs out of the latest action toy to be placed under the tree in December for the military, the DHS, the FBI, the CIA and other predatory agencies need safety from budgetary concerns. A jolt in the gravy-train schedule and they’d be like kids in the back seat when Dad drives right past Baskin-Robbins: “You promised!”
The definition of economics has taken its lumps over the years. It used to be “the “science” of providing man’s unlimited wants with limited resources.” Bad as that was, it must have gotten worse. Mr. Carter doesn’t miss a beat passing over the risks of over obliging oneself. “So it shall be written, so it shall be done.” Figuring out who is actually doing what to get grubby paws on the scratch is beneath Carter’s pay grade. The detachment in economic writing from the physical world is both metaphysical and meta-fiscal.
We are told that “[F]ortunately” the debt ceiling “can be resolved with a preposterous, silly and perfectly painless legal trick: minting a single platinum coin with a face value of $1 trillion or more.” [Emphasis added] That idea is “painless” the same way Pharaoh telling Israelites to gather their own straw for the mortar was.
Try to literally consider what happens when debts are paid by simply saying one now equals two. A substantial portion of funds Washington taps from investors comes from value created by producers. People want homes, cars, steaks, toilet paper, TVs and a litany of stuff. When commensurate value isn’t contained in government payment the ones producing real goods get a pay cut.
All the money the government borrows goes to people who eat, dwell and recreate. Let’s say Huck Schmucklin works at the US Department of Labor Statistics. After slaving away until 11:30 a.m. he discovers that many in the US aren’t well paid. After completing that exhausting task it’s time to walk down to the Old Ebbitt. That’s a nice spot for downing Johnny Walker Black and bitching about a lousy 1800 per week until commuting homeward.
Now, unbeknownst to Mssr. Carter, JWB’s distillery in Kilmarnock, Scotland has not enjoyed an expansion of capacity by one airplane bottle of its drink from the minting of a magical trillion dollar coin. Still, those who get the liquor can pay with the change from it. If the government just invents cash instead of trimming dead weight somebody is getting squeezed. It has the same impact as the mob demanding protection money and free merchandise from shops on the street. This cost is passed onto the kinds of producers who make sure goods are stocked on shelves.
The anti-debt ceiling crowd sees no consequences to incessant borrowing or printing dollars. That’s because it is felt in places they’d never go. Joe Stickman is a carpenter living in an apartment on Rte. 1 with a wife and 2 kids. Joe’s contribution to value creation is measurable in linear footage from the base plates to the studs, headers, trusses, cornice and down to the quarter round. Unlike Schmucklin, and very likely author Zack, his income has been stagnant at $900 a week for over ten years. He too, likes a glass of 12-year-old scotch, but to keep his kids in video games and on bikes, settles for Aye Laddie scitch made from Dupont by-products in Wilmington, Delaware. The price of JWB goes up as currency is expanded…or it goes out of business.
We have no empirical means of measuring the worth of individual public employees or how sensible the prices government pays for its custom products are. Is it actually too much tax on theoretic brains to visualize that production and consumption are in direct, unalterable correlation? When products are demanded by the few in government they have an impact on labor and material resources available to the broader market. How much value government purchases and personnel actually create rarely gets any, much less adequate, public examination. The armed forces, the alphabet soup and other uber-American bureaus keep troves of dope on their actual consumption secret. The idea that there isn’t a massive rip-off going on is what’s “preposterous.”
Enlightened circles are writhing in panic over misinformation circulating on Facebook. A young lady working in Foggy Bottom at State assured me of the verity of “no consequences” doctrine two days ago. Editors enjoying the imprimatur of academia are running opinion pieces that practically liken the idea to a principle of basic physics. Its impracticality should be pellucid to any lucid child.
The lifestyles of everyone doing anything worth doing would be a lot more secure if we could put people like Carter in WayBack machines — that have no reverse. They could preach sermons of painless trillion dollar coinage on the streets of the Weimar Republic in 1924.