Yves Smith on RNN 3: Ways Around the Debt Ceiling

[pam4water]

Run time: 08:27 https://www.youtube.com/watch?v=n_yAh27O4jA   Posted on YouTube: July 25, 2011 By YouTube Member: TheRealNews Views on YouTube: 8839   Posted on DU: July 27, 2011 By DU Member: pam4water Views on DU: 1344

 
Transcript:

"PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay, coming to you from New York City.
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JAY: So what's your view about this debt ceiling debate?

SMITH: ... When you look at it, there are ways that the Obama administration could have used to circumvent the debt ceiling impasse. I mean, for example, there was using the 14th Amendment as a way to contest the viability of the debt ceiling, in the sense that Congress has already approved the appropriations--how can you have a second sort of restrictions on already approved appropriations? A second argument was a second way around to circumvent it would be to cancel the Treasury debt held by the Fed, which is about $1.6 trillion. That would buy you two years to deal with the issue. A third way is a much more radical idea.

JAY: Back up one sec. Second way--how do you just do that?

SMITH: Well, in fact, the Treasury could basically just--either mechanically the Treasury could literally selectively default and just say, we're not going to pay anything on those coupons anymore, and therefore--.

JAY: Which are held by the Fed.

SMITH: Which are held by the Fed. That's a result of the quantitative easing program. So that would be one way around it. Another way is a much more radical way. It requires a little operational description. But, basically, the US Mint has the ability to issue platinum coins in any denomination. And they could literally issue a $1 trillion coin. That would--and effectively sell it to the Fed. And then the Fed would have to sweep the credit back to the Mint, and that goes to the Treasury. That's sort of the simple form. So the point is that there were ways that the Obama administration could have threatened--I don't think the Obama administration would--might not in the end have pulled the trigger, but the Obama administration could say, we're not going to be blocked by this.

JAY: That's the point. They could call this bluff.

SMITH: Yeah, they could have called this bluff.
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Rest of the transcript is here; http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7082

[neoralme]

1. Everyone on DU should see this video. Let there be no doubt who

the traitor is AND what the next move should be.

[Poll_Blind]

2. +1 Must see.

PB

[AlbertCat]

3. Verrrrrry interesting...

.... but not enough about the GOP's insane from the start culpability.

[neoralme]

4. The culpability rests with Obama who put SS and Medicare on the

table quickly without provocation from Republicans. Actually, Republicans were somewhat dumbfounded when he did that according to what I've read.

[vroomvroom]

5. Retitle it to say: Obama's MANUFACTURED US Debt Crisis with help from Republicans