Walking down the strategy & scenario tree...
I cannot tell how RIGHT you are when your say this. "What makes it dangerous is that the press will, after this is over, say that one side "won" and the other side "lost". .... there will still be a net winner from engaging in this mishegas unless the press can be nudged into saying "both sides lost", because this is America, and being a winner is good whether or not what you actually “won” is simply a steaming pile of dogshit." And you don't NEED me to tell you how right you are. But this NEEDS to be said louder in alternative media sources because the main media will not say it. They will call someone a winner and the other a loser. That's why our political actors don't act rationally. And this goes all the way back to radio talk shows since the 1990s etc. etc.
Whew – heady stuff !!
What was the rationale and were there any deliberations during former president Trump’s tenure for raising the debt limit three times? Does this wrangling affect the “exorbitant privilege” the US dollar has had as the international reserve currency? Cui bono?
On the Treasury IOUs issue, on a federal government balance sheet, if someone ginned one up, those IOUs would certainly be a liability, but I don’t know that they would be included in the “debt” portion of the balance sheet. My guess is they would be characterized as some kind of current payable, an account payable, for instance. Payables are liabilities, but they are not debt. If I sell pencils to the GSA, and they don’t pay me until next week, that creates an account payable (current liability) for them and an account receivable (current asset) for me, not “debt” in the narrow sense that is probably most relevant here.
On the Treasury Secretary’s fiduciary duties to the Social Security Trust Fund, I think one can construct an argument that she has not breached any fiduciary duties (and I used to get involved in these kinds of issues in my corporate lawyer days when asked to opine on the fiduciary duties of the directors in this or that situation). She’s got a fiduciary duty to the trust fund, but for whom is the trust fund held in trust, that is, who are its beneficiaries? Why, the SS participants, of course. And if the only choices are to leave the bonds in the trust fund, in which case payments to participants may stop in the very near future, or undertake “extraordinary measures,” which, among other things, will keep the payments flowing for the time being, who is to say that the secretary’s fiduciary duty requires favoring the interest of hypothetical future participants in receiving future payments over the interests of real, current participants in receiving current payments now?
I’m not saying that’s a winning argument, or even a good argument, but there are probably other, better arguments, and there are tens of thousands of corporate lawyers out there for whom massaging these kinds of facts is easy-peasy lemon-squeezy.
Lots to think about. Thanks.
Worry issuing the "supercoupon" bonds crash the value of all other existing federal debt?