The Four Doomsday Options that don't need cong. approval

[BostonPirate]

http://www.cnn.com/2011/OPINION/07/28/balkin.obama.options/index.html?hpt=hp_p1&iref=NS1

Make more money, using platinum as a monetary metal

Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

So that is one legal way to do it. IT would cause inflationary problems, but none as severe as a default would. The new coin would not be circulated, it would just be used to borrow against, as a principle.

It can mortgage all federal buildings and properties:

For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days.

Neither of these options are particularly detrimental because they would in effect, put the metals and buildings in trust, and borrow from itself, against their value, to pay bills due. There are no limits to the extent that these two methods can be used to cover the debt payments of the nation, but that ability could scare investors.

the third option would be:

Like Congress, the president is bound by Section 4 of the 14th Amendment, which states that "(t)he validity of the public debt of the United States, authorized by law . . . shall not be questioned." Section 4 was passed after the Civil War because the framers worried that former Southern rebels returning to Congress would hold the federal debt hostage to extract political concessions on Reconstruction. Section 5 gives Congress the power to enforce the 14th Amendment's provisions. This does not mean, however, that these provisions do not apply to the president; otherwise, he could violate the 14th Amendment at will.

As the intransigent Tea Party continues to shutdown the legislature, it is clear that the way out now is going to have to be something between The exec and DoJ with SCOTUS to solve the crisis, and that process has begun. Congressmen are calling on the president to take the action. I think we will see a bill introduced in the senate to call on the DOJ to declare the debt ceiling unconstitutional, and ask the courts for guidance, and while Reid would never put it up for a vote, It would pressure the exec to take action.

The imediate effect would be to resolve the issue in the short term, and let the courts decide how to instruct congress to proceed following a review and congresional hearings. It would also give the loonies in the house some busywork until they can be replaced in 2012, which seems a certainty at this point.

So what is your poison if the day comes?

The fourth option would be default and economic depression that would rival the great depression.

 

[BostonPirate]

that interesting eh?

 

[MoltenRock III]

I think Obama should invoke the 14th and use his emergency powers. He should stand up, stand tall, and tell the American people why he is forced into it in very simple, Clinton'esque terms. His popularity would go up 10 to 15 points.

If he used the other 2 options it could likely backfire as gimmicks by the markets and the public as well as being shady. Additionally, Fox and Minions would try to baffle, confuse, and conflate the issue to spread FUD.

 

[jackoroe]

Sell British Columbia!

 

[jackoroe]

Well, the 14th Amendment insanity has been tossed into the trash. Seems Obama's crack legal staff couldn't quite twist the Amendment quite far enough to make it work. Told you so.

http://ochairball.blogspot.com/2011/07/obama-answered-14th-amendment-question.html

The coin lunacy is pretty funny. I am going to assume we don't have millions of ounces of platinum just laying around collecting dust. So, then plan must be to produce a couple of coins worth significantly less than the amount they will be tendered for. In other words, the US is declaring platinum to be worth let's say $1,000,000,000,000 per ounce. OK, even if they do not circulate, there are other one ounce coins out there. So, given that the US says an ounce of platinum is worth a trillion dollars, i'd like to sell mine to the government for a similar amount. Or how about the states deciding to do the same thing? Minting their own platinum coins and setting value on them as they see fit. Disastrously inflationary.

Mortgaging or selling assets would be fine. In fact, I'm willing to sell all of my share of all the public lands and assets I own as a citizen. How much do you think I can get?

 

[BostonPirate]

theoretically, you could mint one coin in platinum and declare its worth to be one trillion dollars. It would serve as collateral.

And I so agree that YOUR OPINION is that the 14th amendment option is invalid.

You are one of many opinions, and it may be wise, since the Legislature is no longer functioning, to get the two branches that ARE functioning, to start doing whats right for the nation, and let them decide who exactly is right on the issue.

 

[BostonPirate]

I know practically nothing about economics, the subject sends me to sleep, but wouldn't minting such a coin devalue the dollar?
And wouldn't that be cheating the global financial markets anyway?

It would never be circulated, so it would not devalue the dollar. It WOULD pump up the global interest rates by about 2 to 3 percent, I would personally guess, by introducing that much wealth as collateral it would litterally suck up one trillion dollars of credit globally. That would be expressed on the consumer level as higher prices as a result of higher overhead costs.

It would distribute the shock of the default into the global bond market.

There are quite a few fiat currencies out there, so....

 

[construct]

theoretically, you could mint one coin in platinum and declare its worth to be one trillion dollars. It would serve as collateral.

Why do these coins have to be platinum? Why not simply make them copper nickel clad just like a quarter? Are you suggesting a backed currency? Well, it wouldn't be much backing.

To fix that problem, one would have to copy FDR's confiscation of gold. Make ownership of platinum illegal with certain exemptions--jewelry, existing mechanical and electronic devices, whatever, but not bullion coins, bars, or nuggets. All bullion coins, bars, and nuggets would be required to be turned in and melted. It would also need to buy up and renege on all future and option contracts for platinum as well as any bearer paper related to platinum that might be in existence and declare them unenforceable after a deadline. The confiscated platinum would be paid for at, say, 57% of market value, and the value then pegged considerably higher. The government would declare itself the only legal secondary buyer of fabricated platinum and primary seller of platinum bullion. It would also declare itself to be the only buyer of platinum ore. Import of platinum by private parties would also be made illegal. Much of the industrial uses could substitute either palladium or rhodium, so it might be less outrageous than it sounds. Why, you wouldn't even have to mint it into coins!

There. Now the platinum idea might possibly work.

 

[BostonPirate]

Construct....It is an old back door law that has never been gotten rid of. The US treasury has the right to mint coin of any value made of platinum, at its discretion.

It serves as a principle value, not an actual circulated currency. There are similar paper notes that are only traded between the banks, that are not circulated tender, but are coinage and have monetary value.

I think the mortgaging of property, like the congress, and the national parks is what will happen. You cannot change possesion of these places even if you change ownership.

That option COULD result in the chinese holding the title to the grand canyon or something, but it would insure that the country did not default.

Mitch....

that would not account for the variable interest rates that the debts were aquirred under.... not even taking each countries inflation levels and monetary conversion rates into account either.

 

[BostonPirate]

a minted coin is different than a paper fiat note. It could and would, in this insstance, be minted with a short lifespan. When the debt ceiling is either raised or no longer needed, the coin is simply declared valueless by the treasury, and replaced with bonds to the creditors.

It would be one grand paper shuffle. Its a legal way to cook the books until the politicians can find a fix.

 

[BostonPirate]

this is the law...

31 USC § 5112 “Denominations, specifications, and design of coins.”
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

 

[construct]

this is the law...

31 USC § 5112 “Denominations, specifications, and design of coins.”
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Well, sure. And we do. And they sell at a little over spot.

Now, if these proposed trillion dollar coins don't circulate, and if they are not even given to creditors, and if they serve somehow as collateral . . . well, just how could they serve as collateral for anything at all?

The reason platinum coins don't circulate right now is that the face value of a 1 oz. platinum coin is $100. Current spot for platinum is $1787/oz.

I just don't see how a coin with intrinsic value lower than face that cannot be circulated could fix any problems at all.

 

[construct]

There are similar paper notes that are only traded between the banks, that are not circulated tender, but are coinage and have monetary value.

Well, no, there aren't. There used to be, but there aren't any longer. There was a $100,000 gold certificate that was traded only between banks, but these lost their ability to be exchanged for gold in 1933, and nothing similar was printed after that. The Bureau of Printing and Engraving has been prohibited by statute from printing denominations higher than $100 since the Nixon administration.

 

[MoltenRock III]

Well, no, there aren't. There used to be, but there aren't any longer. There was a $100,000 gold certificate that was traded only between banks, but these lost their ability to be exchanged for gold in 1933, and nothing similar was printed after that. The Bureau of Printing and Engraving has been prohibited by statute from printing denominations higher than $100 since the Nixon administration.

That's for the public only. They do have very large denomination bills that still circulate between reserve banks. Granted the circulation may not be all that often, but even in Joe Q. public's hands large denomination bills are legal tender. Only bills up to $100 are circulated to the public these days.

 

[construct]

That's for the public only. They do have very large denomination bills that still circulate between reserve banks. Only bills up to $100 are circulated to the public these days.

I'd love to see pictures of them.

Edit: I just found reference to series 1934 gold certificates circulated among banks. Large denomination bills were last printed in 1945, and discontinued in 1969.

I am holding in my hand right now a series 1934 A $500 federal reserve note (not a gold certificate). There was a series 1928 $500 gold certificate. I need to research this a little further.

 

[MoltenRock III]

I'd love to see pictures of them.

I'm sure you can find them on the net somewhere. I know that the $500 and $1,000 bills are worth more to collectors than face value. I'm not sure about the $5,000 and $10,000 and larger bills. But I'd guess they too were far more valuable than face value.

 

[bankside]

Keep Alaska. Sell all the "Tea Party" districts to the highest bidder.

 

[construct]

Okay, gold certificates series 1934 were $10,000 and $100,000 denominations. Of course, both were for bank use only. These were discontinued in 1940.

 

[construct]

And I've found some pictures of series 1934 gold certificates. These are $100 - $1000 - $100,000. There was also a $10,000 that I couldn't find a picture for.

The fact remains that none of these bills are currently in use, and they hadn't been printed for years before they fell out of use.

And I'm still having a hard time understanding how paper certificates that circulated among banks would have anything to do with platinum coins that wouldn't circulate at all.

 

[Kulindahr]

Given the price of platinum, a 1-oz. coin could be minted with a face value of $2500 and not be out of line with the metal's value.

So mint some 2-oz billion-dollar coins. I know; it would take 2,000 such coins to do the coins-for currency bit, but a billion-dollar coin seems more reasonable -- and you could see some of them for their face value as collectors' items, giving substance to that claim for their value.