While in all probability America’s so-called “debt ceiling” will be raised next week – just as it routinely has been for the last 74 times since 1962 – the utterly dysfunctional political dynamic in Washington has turned what should be a simple matter of financial housekeeping into a completely avoidable “crisis” that now threatens to damage the credit rating of the USA and quite possibly even destabilize an already fragile global economy as a consequence.
After months of ideological wrangling over this issue, most Americans (not to mention those around the world that are dependent in one way or another on the U.S. economy) are justifiably fed up with all the Kabuki bullshit surrounding the wholly disingenuous and fraudulent “plans” that have been floated by both sides – none of which, it is important to note, will do one iota of good to address the biggest challenge currently facing the economy, which is that of intractable unemployment. If anything, the multi-trillion dollar spending cuts being proposed will simply exacerbate the problem and drive the U.S. economy even deeper into recession.
Short of signing a “clean” bill to raise the borrowing limit (as has always been done in the past) there is in fact another alternative that is almost just as elegantly simple in nature. This plan involves a little known monetary device known as “coin seignorage”; that is, the difference between the cost of bullion and the value of the coin into which the bullion is converted. A good explanation of how this jumbo coin seignorage would work in the context of circumventing the debt limit is provided by Joe Firestone writing at the blog Pragmatic Capitalism:
Congress has provided the authority, in legislation passed in 1996, for the US Mint to create platinum bullion or proof platinum coins with arbitrary fiat face value having no relationship to the value of the platinum used in these coins. The US code also provides for the Treasury to periodically “sweep” the Mint’s account at the Federal Reserve Bank for profits earned from coin seigniorage. These profits are then booked as miscellaneous receipts (revenue) to the Treasury and go into the Treasury General Account, narrowing the revenue gap between spending and tax revenues. Platinum coins with huge face values e.g. $2 Trillion, could close the revenue gap entirely, and technically end deficit spending, while still retaining the gap between tax revenues and spending.
The entire article (including the extensive comments) make for some fascinating reading, as does the seminal post on this subject at Firedog Lake way back in January.
So there, fiscal “crisis” averted. Perhaps with the issue resolved, the Obama Administration and the U.S. Congress could then focus on more important things like kick-starting the economy and tackling the problem of joblessness in America.
Turns out the Prime Minister is a fan of the ‘Murdoch Mysteries’ period detective show and recently made a cameo appearance on it in the role of a police constable named Armstrong (cute touch there).
Curious. I wonder why he doesn’t adopt the hairstyle he’s sporting on set as it’s an enormous improvement over the usual impervious helmet head coiffure he dons in real life…
Such are the inane speculations we’re left with during the summer here in Canada where, unlike our counterparts south of the border, for as long as the weather is warm, politics ceases to have any relevant significance whatsoever. Parliament recesses for several months and even our political yak-shows on TV simply fold up their tents and completely disappear from the airwaves. It’s a uniquely Canadian phenomenon that has always astounded me.
Perhaps it’s just because he appeals to my deeply cynical inclination regarding politics in general, but MSNBC’s Lawrence O’Donnell seems to be providing the sharpest, most insightful commentary these days concerning the strategic machinations behind all the posturing over raising America’s debt ceiling limit.
Only time will tell whether, as Larry contends, that Obama masterfully outmanoeuvred the Republican leaders in Congress with a judo strategy of turning their fundamentalist supply-side ideology against itself…
Bill Maher compares the failure of jurors to convict Casey Anthony in the killing of her child with the failure of Republican voters to connect the dots between the U.S. budgetary deficit and the fact that the wealthiest people in America now pay the lowest amount of taxes in the country’s history.
Update: Replaced previous video link because the dicks at HBO took it down. This one has 43,000+ views so may be more enduring.
Filmmaker Adam Curtis returns with a brilliant new documentary series that explores the ways in which many of our modern ideas and conventionally held beliefs have been perversely shaped by the machines we’ve created.
In this episode, Curtis tracks the woefully unintended effects of Ayn Rand’s “objectivist” ideology on the financial markets and technocratic elite of America during the 1990s.
This is the story of the dream that computers could create a new kind of stable world. One that would bring about a new kind of global capitalism free of all risk and without the cyclical boom and bust of the past – one that would abolish political power and create a new kind of democracy through the Internet where millions of individuals would be connected as nodes in a cybernetic system without hierarchical control.
Following the opening of the Calgary Stampede and yet another tedious photo-op – this time at the local zoo of all places, apparently to educate the Royal couple about how carbon deposits from the Cretaceous era are ingeniously turned into our leading export commodity – today mercifully ends the nine-day cross-Canada tour by Prince William and Katherine Middleton, aka the Duchess of Cambridge.
Presuming this charming twosome might eventually become our titular heads of state it’s perhaps a good thing that they became somewhat more acquainted with this country, even though most of the painfully staged “events” on their itinerary were far removed from the daily realities of Canadian life.
Speaking as a supporter of the monarchy – at least in principle in terms of it being an abstract political concept – I confess to being more than a little turned off by the ridiculous adulation accorded to the Royal couple by their brain-addled fans; for example, some folks at one stop on the tour who exclaimed that having them pet their dog was the “greatest moment in their life” or many others expressing similarly ecstatic sentiments after having exchanged some inane small talk with the exalted pair on a rope line.
To resolve the conundrum of being pro-monarchy and anti-royal, I propose that the existing Royal Family be gradually replaced by robots. Pension off all of the existing “human” royal parasites and instead substitute life-like animatronic replicas specifically programmed with diplomatic protocols and pandering sub-routines tailored for interfacing with gormless proles at ribbon-cuttings, charity events and such. Would there really be any difference from the current arrangement?
Apologies to readers for being MIA from the blog for the past month or so, and especially to anyone that had their comments hung up in the dreaded spam filter awaiting moderation. Work has been consuming almost all my time of late, forcing me to crowd out personal distractions such as blogging, but I can no longer stand the self-imposed discipline, so I’ll try to resume posting on a more regular basis.