Comments on: Can Treasury just go overdrawn at the Fed? http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: traducator romana daneza http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-53608 Mon, 29 Sep 2014 14:00:33 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-53608 continuously i used to read smaller posts which also clear their motive, and that is also happening with this paragraph which I am reading at this time.

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By: DaDaDan http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29045 Thu, 28 Jul 2011 20:42:38 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29045 cajunjoe’s solution is the right one in my opinion. If there’s a conflict between two statutes, it’s not clear which one wins. The President can determine which one to honor. If someone doesn’t like it they can sue and the courts can decide. In my opinion, the apppropriations bills should probably win and be considered an implicit repeal of the debt ceiling (since they were passed later) to the extent necessary to satisfy the appropriations.

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By: Adam_Smith http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29039 Thu, 28 Jul 2011 16:52:35 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29039 I have been blogging for this solution for some time.
http://wealthofnotions.blogspot.com/2011  /07/presidents-plan-for-avoiding-defaul t.html

I an not a lawyer but I believe it would be legal even by statute but more certainly so thanks to Section 4 of the 14th Amendment. Indeed, I believe the actions I recommend are not merely permissible, to avert a default they would be mandatory.

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By: BigBadBank http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29030 Thu, 28 Jul 2011 06:36:18 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29030 Creating money like that from nothing really would be directly 1-to-1 inflationary in the way that gold-bugs and the economically illiterate always hoped QE would be.

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By: MyLord http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29017 Wed, 27 Jul 2011 18:40:39 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29017 There really isn’t anything in the law covering this. Yes, Congress previously regulated direct draws by the Treasury, but this wouldn’t be a direct draw and the Fed would have to deal with it as it sees fit. Yes, the Fed can’t loan or give but that just establishes the absurdity of the debt limit and they would have to decide what to do. It really wouldn’t be any different than declaring the limit null and void. Most likely there would be an attempt to impeach. When you are in the Queen of Hearts court nonsense rules.

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By: NukerDoggie http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29011 Wed, 27 Jul 2011 15:34:26 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29011 Felix: This is Banana Republic logic. This is what the U.S. is being reduced to – gimmicks to keep itself solvent. Gimmicks that in all likelihood simply spit on the former respectability of the Republic in the eyes of the world.

If we implement a hare-brained scheme like this to keep solvent, and if the credit ratings agencies, by some miracle, don’t declare an immediate default because we’re violating every principle of respectable finances, then what do you think the rest of the world (ie, global investors) are going to think about how safe treasuries are?

This assinine option would showcase the U.S. as a desperate, dishonest, rapidly declining sovereign that would use any trick to stay afloat. Banana Republic.

I’ve lost a lot of respect for you, Felix. You should NEVER have hosted this moronic piece.

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By: guanix http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29009 Wed, 27 Jul 2011 15:13:51 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29009 johnhhaskell: It’s true that overdrawing the Treasury’s account at the New York Fed is implicit money creation that you can interpret as borrowing by the Fed, but on the other side of the ledger it is also either a loan or a gift to the Treasury, neither of which the Fed has the power to make.

And if it’s a loan to the Treasury, that’s doubly suspect because Congress has not authorized the Secretary of the Treasury to borrow money in that way, whether or not such a loan is subject to the debt ceiling.

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By: alea http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29008 Wed, 27 Jul 2011 15:01:00 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29008 @johnhhaskell:
previous “overdrafts” of the treasury at the fed were authorized by congress. what i mean by exemption is that monetary financing (“overdrafts” at the fed in the treasury account) has happened before and was authorized by congress (and subject to the debt ceiling).

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By: rajivsethi http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29007 Wed, 27 Jul 2011 14:48:17 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29007 Felix, I discussed this option in a July 18 post:

http://rajivsethi.blogspot.com/2011/07/s ome-thoughts-on-unthinkable.html

It can be done, and it’s better than the alternative of failing to make good on spending commitments, but it could lead to impeachment. See also here:

http://canucksanonymous.blogspot.com/201 1/07/are-rebuplicans-trying-to-get-obama .html

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By: cajunjoe http://blogs.reuters.com/felix-salmon/2011/07/27/can-treasury-just-go-overdrawn-at-the-fed/comment-page-1/#comment-29006 Wed, 27 Jul 2011 14:10:38 +0000 http://blogs.reuters.com/felix-salmon/?p=9131#comment-29006 Seems to me that every single penny that the treasury spends has been authorized and funds appropriated by Congress. In effect, the President has a legal obligation to spend the money as set forth in the authorization/appropriation process. Now he is faced with conflicting laws — one requiring him to write the checks, and another one prohibiting him from borrowing money to do so. Catch 22. When faced with conflicting laws, the President should seek to take action that does least damage to the country.

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