[Economics] If Obama actually gives us the VSP Grand Bargain

Koumei · Post by **Koumei** » Thu Apr 11, 2013 12:53 am

Don't forget the bit where he's a lizardman wearing the skinsuit of the socialist antichrist.

Username17 · Post by **Username17** » Thu Apr 11, 2013 6:53 am

Obama suggesting social security cuts is a terrible plan. It's bad policy and it's bad politics. But while it's generally terrible for the country and for Obama's popularity, I don't know that it is actually bad for Congressional Democrats, who are the people actually up for election or re-election in 2014.

As far as I can tell, senate democrats have the votes to save social security, which means that Obama working with the Republicans to put up a plan to hurt social security actually puts the Senate Democrats on record for saving social security.

Of course, Democrats have failed hard at easy tasks in the past, but near as I can tell all they have to do is let the Republicans come out and demand the social security cuts Obama has proposed and then reject them in the senate and then they "saved social security" with all the positive electoral fallout that entails.

-Username17

Lago PARANOIA · Post by **Lago PARANOIA** » Wed Apr 17, 2013 6:24 pm

Sorry for the late reply, Kaelik. Class is kicking me in the tiny gonads.

So now that I've calmed down a bit from my lying socialist weasel rage, I realize that I've been way too hasty. So just some thoughts.

1) No, this won't cause a 2014 sweep because this, just like everything else that happens before October will have absolutely no bearing on the election.

That I'm not so sure of. The Democratic Party is very susceptible to being demagogued on social safety net cuts to white. The demographic most susceptible to conservative propaganda is also the one who currently turns out the most in American midterm elections.

2) Even if the Republicans did have a majority they would not be stupid enough to impeach Obama over nothing. Republicans are stupid, but their stupidity is not universal and undirected. Otherwise they wouldn't be so good at lying to people. Their directed stupidity does not involve engaging in an impeachment campaign against Obama when that will allow the Democrats to make fools of them by voting it down. They learned that lesson, and converted it into a successful campaign of just lying over and over where they can't be contradicted on Fox news.

Disagree with. See: the debt ceiling debacle. The post-mortem showed that a significant (though thankfully not a majority) of Republicans were perfectly okay with causing a default for ideological reasons. Not political reasons, ideological. And I'm pretty sure that politically-motivated impeachment is less suicidally crazy than a default for no reason.

A 2014 Congressional election which resulted in the Republicans picking up 30-40 seats is really like adding 60-80 Republicans retarded enough to actually go through with something as monumentally stupid as a default. Or slightly less stupid like impeachment for no reason.

3) Your contention that because Republicans once did something they will do it again doesn't even apply, because Clinton at least questionably did something that someone untutored in the law could believe was perjury, where as Obama has done fuck all nothing that is even remotely considered illegal by anyone.

I mildly disagree with this. The Republicans can and will find something. It doesn't have to be a plausible or even non-frivolous reason; they just have to convince the furniture-chewers in the base to go along with something politically damaging for poorly-understood reasons. There aren't enough of them right now, but if the house was split something like ~280 to ~150 I'm sure they could find enough.

Whatever · Post by **Whatever** » Wed Apr 17, 2013 8:02 pm

Potential reasons for Impeachment:

Something about Fast and Furious
Something about Benghazi
Something about Obamacare

I'm sure there's more.

Ancient History · Post by **Ancient History** » Thu Apr 25, 2013 1:15 am

http://news.yahoo.com/republicans-advan ... iness.html

It's the Debt Ceiling, Charlie Brown!

Or it will be in summer. The Republicans are looking ahead to the fight by some Ryan-led committee passing a measure that would cause the Treasury to issue monies to cover certain US debts to escape total default in case the debt ceiling doesn't get raised. This, they believe, will negate Obama and the Democrat's usual tactic of pointing out how terrible the Republicans are for holding the country hostage every six months.

This seems bizarre, because it's the Republicans recognizing that what they do is horrible and trying to undercut how horrible it is, which means they've found a horrible way to be slightly less-horrible.

RobbyPants · Post by **RobbyPants** » Thu Apr 25, 2013 12:03 pm

The platinum coin and 14th Amendment options are still on the table, right?

Username17 · Post by **Username17** » Thu Apr 25, 2013 2:47 pm

RobbyPants wrote:The platinum coin and 14th Amendment options are still on the table, right?

Yes. We still have the option of minting the damn coin and telling congress to actually fuck all the way off. Which is what we should have done the first time this shit came up.

-Username17

Stahlseele · Post by **Stahlseele** » Thu Apr 25, 2013 9:46 pm

platinum coin? O.o

name_here · Post by **name_here** » Thu Apr 25, 2013 9:57 pm

The secretary of the treasury may, at his discretion, issue platinum coins at any face value because of a clause governing creation and sale of commemorative coins. So the administration can mint a platinum coin and declare that it's worth the entire national debt, then hand it to the federal reserve.

Stahlseele · Post by **Stahlseele** » Thu Apr 25, 2013 10:02 pm

and that would do . . what exactly?

Ancient History · Post by **Ancient History** » Thu Apr 25, 2013 10:16 pm

According to the Constitution, the President is obligated to pay any debts incurred by Congress. If the treasury doesn't have enough money, then the President issues bonds to cover the difference, which adds to the deficit. However, Congress has passed a law that limits the amount of money that can be borrowed - the debt ceiling. If Congress does not vote to raise the debt ceiling, this results in a quandary: the President is obligated to pay the debts, but cannot raise the money to do so - the government defaults, our credit rating goes in the toilet, debts are written off, economies crumble.

Alternately, the President can order the Treasury to mint the platinum coin - a legal loophole that will fill the Treasury to cover the USA's debt obligations - or declare the debt ceiling illegal (as it violates the Constitution) and ignore it. President Obama has earlier said both options are not on the table, but...we'll see.

Stahlseele · Post by **Stahlseele** » Thu Apr 25, 2013 10:33 pm

and why is one such coin able to be worth that much?
i thought coins are only worth as much as people would be willing to trade other stuff for them . . which, in terms of pure material, a coin og medal size made from platinum would be . . what? 100k?

Ancient History · Post by **Ancient History** » Thu Apr 25, 2013 10:35 pm

Fiat currency, baby! Whatever denomination is one the coin, that's how many dollars it is worth.

Stahlseele · Post by **Stahlseele** » Thu Apr 25, 2013 10:37 pm

Because the guy nobody who matters(Rhich, White, Male, Christian) wants as their President says so?
I'll never understand how and especially why stuff works like this . .

Username17 · Post by **Username17** » Thu Apr 25, 2013 10:40 pm

Stahlseele wrote:and why is one such coin able to be worth that much?
i thought coins are only worth as much as people would be willing to trade other stuff for them . . which, in terms of pure material, a coin og medal size made from platinum would be . . what? 100k?

Coins are worth whatever happens to be minted into them. If it says it is five dollars, it's five dollars. If it says it is five hundred thousand dollars, it's five hundred thousand dollars. It's just like paper money, and the commodity value of the metal in the coin is essentially meaningless when you are spending them as coinage.

Now the issue is that congress also has laws about what coins can be minted, and in what quantities, and what their composition can be. However, the rules for platinum coins are simply that the treasury can mint however many they want with whatever face values they damn well feel like. This law was put into place so that the mint could issue commemorative coins and shit, but the rules as written is that the treasury can just go nuts. If they mint up three platinum coins worth a trillion dollars each, the treasury is "full" and can go on paying all the debts that congress has incurred.

-Username17

DSMatticus · Post by **DSMatticus** » Thu Apr 25, 2013 11:00 pm

Stahlseele wrote:and that would do . . what exactly?

Short version: almost nothing.

Long version: absolutely nothing except allow us to lower the listed debt by an arbitrary amount and therefore make the budget without defaulting.

Explanation: Ancient History and Frank have both ninja'd be my now, but damnit I typed this all up and I'm posting it.

Congress passes budgets, and the president is obligated to funnel money around and make those budgets work. When they don't work, he has to have the federal government take on debt to meet the difference. Technically, this means that debt is completely in control of Congress, and if they want us to have less debt they should pass budgets that don't run up debt. But that's political suicide, because it turns out people actually like the government expenditures that keep society up and running around them. So Congress created this thing called the debt ceiling, which prevents the president from borrowing money past a certain amount, despite the fact that the amount of money the president has to borrow is completely in control of Congress. This allows Congress to simultaneously pass a budget that will break the debt ceiling and then go on the media circuit and yell at the president for breaking the debt ceiling.

Now, where does the president get the money to pay for the debts congress creates? The federal government can't actually print money, that's the job of the federal reserve. So the president goes to the federal reserve and says "print me some fat stacks of cash or whatever it is you do," and then the federal reserve hands that money to the government and it counts as debt. The U.S. can't really make money out of thin air without it counting as debt against us, which is why we can't say "debt ceiling? brb printing press lol"

Buuut there's an exception. The government has the power to make platinum coins of any value directly, without going to the federal reserve and without incurring any debt at all. So if we hit the debt ceiling, we can just make a bunch of platinum coins of humongous value and deposit them at the fed, and suddenly lots of debt disappears. This isn't inflationary at the moment because depression, yay. Printing more money and shoving it in a vault is basically just more money that will sit there. It will just make numbers on a balance sheet look better. At some point, we would buy the coin back. Probably. It depends - when we make it out of the economic slump, that the giant coins are sitting in a vault somewhere will have an effect on the money supply and cause more inflation than desirable, depending on a bunch of shit. So we'll want to reign back in the money supply, and buying back the giant ass coins would probably be one of the things we'd have to do to make that happen.

RobbyPants · Post by **RobbyPants** » Fri Apr 26, 2013 2:25 am

Stahlseele wrote:and why is one such coin able to be worth that much?
i thought coins are only worth as much as people would be willing to trade other stuff for them . . which, in terms of pure material, a coin og medal size made from platinum would be . . what? 100k?

The important term here is seigniorage. Basically, a trillion dollar platinum coin does not need to actually contain a trillion dollars worth of platinum. It's part of the whole commemorative coin intention.

Of course, that doesn't stop Republicans from not understanding how this shit works, either:

Koumei · Post by **Koumei** » Fri Apr 26, 2013 9:10 am

They also don't understand that it's not "his" spending, all he's doing is giving them the allowance they legally mandated he give them, and then they spend it on stuff.

The Vigilante · Post by **The Vigilante** » Fri Apr 26, 2013 1:17 pm

DSMatticus wrote:So if we hit the debt ceiling, we can just make a bunch of platinum coins of humongous value and deposit them at the fed, and suddenly lots of debt disappears.

Actually, the way it would probably work is that the debt would still be there but future expenses would come out of the coins' value, so no new debt would be issued. Government debts are bonds that are paid at maturity, not before. Even when the economy starts up again, most likely the coins will have no effect on inflation because it will just sit there. As long as the federal government doesn't go to town with spending while the economy is in a boom, "changing the money supply" by depositing a high value platinum coin will have 0 effect on inflation, so no need to "buy back" the coin.

Stahlseele · Post by **Stahlseele** » Fri Apr 26, 2013 1:32 pm

isn't this kind of printing money which leads to inflation?

RadiantPhoenix · Post by **RadiantPhoenix** » Fri Apr 26, 2013 1:38 pm

I'm pretty sure that the coin would, as mentioned, just sit in some government vault somewhere, and basically just exist to allow the government to keep issuing bonds in spite of congress.

Ancient History · Post by **Ancient History** » Fri Apr 26, 2013 1:40 pm

Normally, yes. However in this specific case the US is already in a liquidity trap, and the inflation rate is hitting the zero lower bound. In that case, printing more money doesn't cause inflation by itself - later on, when the economy recovers it might, but that's another kettle of fish entirely.

name_here · Post by **name_here** » Fri Apr 26, 2013 1:49 pm

Stahlseele wrote:isn't this kind of printing money which leads to inflation?

Not really, because it won't be circulating. Basically the net effect of printing it is simply that the treasury won't need to borrow more money. Over time, it will lead to printing more money for the actual paying off of existing debts, but scattered over the next 30 years.

The Vigilante · Post by **The Vigilante** » Fri Apr 26, 2013 2:13 pm

name_here wrote:
Stahlseele wrote:isn't this kind of printing money which leads to inflation?
Not really, because it won't be circulating. Basically the net effect of printing it is simply that the treasury won't need to borrow more money. Over time, it will lead to printing more money for the actual paying off of existing debts, but scattered over the next 30 years.

What would probably happen is that the existing debt would get renewed with emission of new bonds in order to absorb current excess savings. So when the bonds are mature, investors probably won't want to really cash out so the government will simply issue new bonds to cover the principal being repaid, thus matching desired savings.

Stahlseele, money printing doesn't cause inflation by itself, only when it is spent. Otherwise, this graph wouldn't make any sense :

See that huge spike in the blue line ? That's basically money being printed really quickly. See the following spikes in CPI (inflation basically) ? Me neither.