A monopoly money lifebelt?

On August 3, the Treasury could issue scrip in part-payment of all claims except debt interest.

Brad de Long asks for ideas on Geithner’s options on August 3rd, if the lunatics calling themselves Republicans are still blocking an increase in the debt limit.

Be careful what you pray for, you might get it. So Here’s My Plan.

The Bipartisan Policy Center estimates authorised expenditures at $302bn in August and incoming revenue at $172bn, or 57% of all payments due. The gap is therefore $130bn.

Debt interest is $29bn. Ring-fence that and pay in full, as per the Constitution. So that leaves $143bn in dollars to meet $273bn in payments to everybody else: retirees, hospitals, service members, contractors, federal employees, congressmen and the President. That makes 52.4%.

My proposal is that all these other creditors and lawful claimants, without exception, are paid 52.40 cents on the dollar. For the other 47.60 cents, they should receive a pretty, security-printed certificate like this (with much more more copperplate and squiggles than my primitive DTP skills can manage):

What would happen? And is it legal?
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Idle thought

Why are the negotiations about raising the debt ceiling rather than abolishing it?

Why are the negotiations about raising the debt ceiling rather than abolishing it?

You would think this ridiculous loaded gun lying round the House for the children to play with was a hallowed part of the US Constitution, and not a silly recent invention contrary to its clearly stated intent.