News Should Obama invoke the 14th Amendment and bypass Congress?

[WhoWee]

Please back up your assertion that interest-bearing Treasury bills are "worthless". That's the kind of foolish talk that the tea-party has been tossing around.

Did the President tell the country (last week) he didn't know if beneficiaries would receive their checks tomorrow? Did Dodd-Frank anticipate a credit downgrade of US debt? What is the plan to re-pay Social Security funds in the "out years" when cash flows out is greater than cash flows in? Last, has Quantitative Easing increased the value of US Treasuries in the long term?

We have over $15Trillion in debt authorized with a plan to exceed $20Trillion (with the "cuts") - what additional information do you need?

 

[WhoWee]

Has anyone noticed the DOW is down 200 points since the debt deal passed?

 

[mheslep]

Then the debt limit doesn't work as intended. Let's get rid of it.

Possibly so.

It had to be done right away because S&P said they would lower the US credit rating otherwise.

Which the President could have easily forestalled by stating categorically the US has ample revenue to pay the debt interest and will do so in any event. Some senators proposed legislation to that effect. Also S&P made several statements, including that http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DUnitedStatesofAmerica_AAAA_7_14_11.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243932109521&blobheadervalue3=UTF-8" , and for that case no Presidential statement of purpose alone is going to avoid such a downgrade.

In brinkmanship, the idea is to stop before you careen off the cliff...

Yeah I got it. I'm in disagreement with you about what constitutes the cliff.

 

[turbo]

Did the President tell the country (last week) he didn't know if beneficiaries would receive their checks tomorrow? Did Dodd-Frank anticipate a credit downgrade of US debt? What is the plan to re-pay Social Security funds in the "out years" when cash flows out is greater than cash flows in? Last, has Quantitative Easing increased the value of US Treasuries in the long term?

We have over $15Trillion in debt authorized with a plan to exceed $20Trillion (with the "cuts") - what additional information do you need?

You're dodging the question. Are treasury bonds "worthless"? If so, why do investors buy them as they diversify their holdings?

 

[Hurkyl]

If you want the good ole days, like the 50s and 60s, then you are asking for a 91% top marginal tax rate.

Because, y'know, we are just recovering from waging years of total war in the wake of a great depression.

 

[WhoWee]

You're dodging the question. Are treasury bonds "worthless"? If so, why do investors buy them as they diversify their holdings?

I'm going to over-simplify to make a point. Assume the Government owes $20Trillion in US Treasuries - $10 Trillion to itself and $10 Trillion to investors, but can only pay a return to half of the creditors. Do you think the Government will prioritize the return to the investors that MIGHT buy more debt - perhaps another $10Trillion?

You might also consider this:
http://www.feg.com/research/market_review.php?nID=145&issue=2011_06
"The unintended consequences of a default and/or credit downgrade are unknown. Would some investors, due to investment policies, sell Treasuries if they are no longer rated AAA? Given the complexity in the financial markets and the proliferation of derivatives, how would derivative instruments tied to U.S. Treasuries be priced? What would be the other secondary and tertiary consequences? What asset strategies would hold up the best in the event of a default? Typically cash and long maturity Treasuries perform best in a crisis. But would one want to own Treasuries during a default? "

I haven't avoided the question - the answer is complex.

 

[turbo]

I haven't avoided the question - the answer is complex.

You have avoided the question, and are parroting the claim by the right that the SS trust is "worthless IOUs", which is ridiculous. Supporting that claim with unsupported hypotheticals re: default does not make the "worthless IOUs" claim true. If it were true, then all the people that use T-bills to diversify their holdings are idiots and only the tea-partiers and radical right are smart. I don't buy that. Nobody should.

 

[WhoWee]

You have avoided the question, and are parroting the claim by the right that the SS trust is "worthless IOUs", which is ridiculous. Supporting that claim with unsupported hypotheticals re: default does not make the "worthless IOUs" claim true. If it were true, then all the people that use T-bills to diversify their holdings are idiots and only the tea-partiers and radical right are smart. I don't buy that. Nobody should.

With interest rates already near 0% - what is the purpose of Quantitative Easing - other than to take Treasuries out of circulation? Don't forget these Treasuries were swapped for (yes worthless) freshly printed cash.

Is it possible this was intended to make the Treasuries still held by investors more valuable?


http://georgewashington2.blogspot.com/2011/07/quantitative-easing-rounds-1-and-2-hurt.html

 

[turbo]

Never mind. You are never going to admit that you are wrong, and I'm not going to keep pointing out the obvious. I for one am really glad that the GOP never managed to privatize SS. The Bush recession would have been even more disastrous that way.

 

[mheslep]

... I for one am really glad that the GOP never managed to privatize SS. The [STRIKE]Bush [/STRIKE]recession

would have had no effect on the 2005 proposed social security privatization/reform. [my strike]