Paul Krugman, "Dealing With Default": Defy Congress and Ignore the Debt Ceiling?

Paul Krugman is just chock full of good ideas. Remember how he once wrote concerning Occupy Wall Street (http://www.nytimes.com/2011/10/07/opinion/krugman-confronting-the-malefactors.html):

"Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

. . . .

It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details."

And then there was Krugman's trillion dollar coin proposal, which even Jon Stewart labeled a "stupid f#cking idea" (see: http://www.salon.com/2013/01/15/jon_stewart_responds_to_krugman_platinum_coin_is_still_a_stupid_fcking_idea/).

Today, in his latest New York Times op-ed entitled "Dealing With Default" (http://www.nytimes.com/2013/10/11/opinion/krugman-dealing-with-default.html?_r=0), Krugman has another stroke of genius concerning what Obama could do if the US were to indeed hit the debt ceiling. After observing the disastrous potential consequences of the US government delaying or "prioritizing" repayment of its debt, Krugman notes that the president has another option: He could simply ignore Congress and the debt ceiling. Krugman writes:

"Many legal experts think there is another option: One way or another, the president could simply choose to defy Congress and ignore the debt ceiling.

Wouldn’t this be breaking the law? Maybe, maybe not — opinions differ. But not making good on federal obligations is also breaking the law. And if House Republicans are pushing the president into a situation where he must break the law no matter what he does, why not choose the version that hurts America least?"

Query: What would be the effect on the US dollar and the world economy of such a move by Obama? Would it really be that much better than default? There would still be an economic crash.

In addition, the question would then arise whether Obama had staged a "coup," meaning an unlawful seizure of power and not a brilliant stroke of genius.

Yup, Paul, that would almost be as successful as minting that trillion dollar platinum coin.

Ah, yes, the "stuff" that Nobel Prizes are made of . . .

Paul Krugman, "Republicans Against Reality": Krugman's Healthy Imagination

"Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

. . . .

It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details."

- Paul Krugman, "Confronting the Malefactors" (http://www.nytimes.com/2011/10/07/opinion/krugman-confronting-the-malefactors.html), October 2011

Do you remember "Occupy Wall Street"? Do you remember how Krugman suggested that OWS would prove a "turning point" in a populist war against American financial institutions? Is there anyone more delusional than this Nobelist?

In a July New York Times op-ed entitled "Delusions of Populism" (http://www.nytimes.com/2013/07/12/opinion/krugman-delusions-of-populism.html?_r=0), Paul Krugman raged against Republican delusional thinking. Today, in a Times op-ed entitled "Republicans Against Reality" (http://www.nytimes.com/2013/08/05/opinion/krugman-republicans-against-reality.html?_r=0), Krugman again claims that Republicans are deprived of reason. Krugman writes:

"The sad truth is that the modern G.O.P. is lost in fantasy, unable to participate in actual governing.

. . . .

Then House leaders announced plans to hold a vote cutting spending on food stamps in half — a demand that is likely to sink the already struggling effort to agree with the Senate on a farm bill.

Then they held the pointless vote on Obamacare, apparently just to make themselves feel better. (It’s curious how comforting they find the idea of denying health care to millions of Americans.) And then they went home for recess, even though the end of the fiscal year is looming and hardly any of the legislation needed to run the federal government has passed."

Food stamps? Maybe spending on food stamps cannot be cut, but there can be no "rational" discussion of the matter without first noting where America stands vis-a-vis this program. As observed in a Yahoo! Finance blog post entitled "Food Stamp Issue Derails Farm Bill as Recipients at Record High" (http://finance.yahoo.com/blogs/author/siemond-chan/) by Siemond Chan:

"What will happen next with the farm bill, which has been operating under rolling extensions since the the old bill's 2008 expiration, remains to be seen. But its failure to thrive in the face of the food-stamp fight comes as the number of U.S. citizens receiving this benefit, at 47.7 million as of March of this year, exceeds the entire population of Spain, the sixth-most-populous country in the European Union.

Enrollment in SNAP [Supplemental Nutrition Assistance Program] has soared by 70% in the past five years; the U.S. shelled out a record $74.6 billion on the program in 2012, more than double what was spent in 2008, when the financial crisis hit in full force toward the end of the year. The U.S. officially exited the Great Recession, which began in 2007, in June of 2009. Since then, the economy has experienced a slowly churning recovery — with plenty of hiccups — marked by an increase in payroll levels, a slow-and-steady housing comeback and a massive pop in equities that's been at least partially fueled by unprecedented monetary stimulus.

But amid the recovery, the U.S. has also seen an increase in poverty levels, which the Census Bureau puts at 15.9% of the total population, or close to 50 million citizens. The Census Bureau puts close to 50 million Americans, or 15.9% of the total population, at or below the poverty level. In 2008, that figure was 13.2% of the population. And, while the unemployment rate has fallen from 10% at its Great Recession peak in 2009 to 7.6% in May, 11.8 million Americans still remain without work; 4.4 million comprise the long-term unemployed."

Yes, the "reality" is that President Obama is presiding over an economic disaster.

Obamacare? As reported by the Voice of America (http://www.voanews.com/content/obamacare-mandate-delay-will-cost-bln-affect-1-million-workers/1713777.html):

"President Barack Obama's decision to delay implementation of part of his health care reform law will cost $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.

The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced July 2 of the employer mandate - a requirement for larger businesses to provide health coverage for their workers or pay a penalty."

Or in other words, it's not just the Republicans who are interested in delaying implementation of what Democratic Senator Max Baucus said is heading for a "huge train wreck" (http://www.huffingtonpost.com/2013/04/17/max-baucus-obamacare_n_3101801.html).

Reality? As John Lennon once stated:

"Reality leaves a lot to the imagination."

As evidenced by Krugman's declarations concerning OWS, this Nobelist has a healthy imagination.

And we haven't even touched upon Krugman's trillion dollar coin proposal, which even Jon Stewart labeled a "stupid f#%*ing idea" (see: http://www.salon.com/2013/01/15/jon_stewart_responds_to_krugman_platinum_coin_is_still_a_stupid_fcking_idea/).

But never mind, Paul. Just keep those creative juices flowing!

Paul Krugman, "Lust for Gold": What Happened to Krugman's Magical Platinum Coin?

In his latest New York Times op-ed entitled "Lust for Gold" (http://www.nytimes.com/2013/04/12/opinion/krugman-lust-for-gold.html), Paul Krugman concludes:

"But the runaway inflation that was supposed to follow reckless money-printing — inflation that the usual suspects have been declaring imminent for four years and more — keeps not happening. For a while, rising gold prices helped create some credibility for the goldbugs even as their predictions about everything else proved wrong, but now gold as an investment has turned sour, too. So will we be seeing prominent goldbugs change their views, or at least lose a lot of their followers?

I wouldn’t bet on it. In modern America, as I suggested at the beginning, everything is political; and goldbuggism, which fits so perfectly with common political prejudices, will probably continue to flourish no matter how wrong it proves."

I'm no goldbug. (You know where my money is invested.) But peculiar how Krugman has already forgotten his magical platinum coin.

In a January New York Times op-ed entitled "Coins Against Crazies" (http://www.nytimes.com/2013/01/11/opinion/krugman-coins-against-crazies.html), Krugman proposed that the federal government should mint a platinum coin to eliminate Republican meddling with Obama's spending spree:

"Here’s how it would work: The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt.

. . . .

[I]t’s the president’s duty to do whatever it takes, no matter how offbeat or silly it may sound, to defuse this hostage situation. Mint that coin!"

As best explained by Jon Stewart (see: http://www.salon.com/2013/01/15/jon_stewart_responds_to_krugman_platinum_coin_is_still_a_stupid_fcking_idea/), the idea of minting a trillion dollar platinum coin was a "stupid f#%*ing idea."

Gold bad, platinum good?

Four legs bad, two legs good?

Thanks once again, Paul, for the light entertainment. Now back to digging holes in my garden.

Paul Krugman "Coins Against Crazies": Just Who Is Crazy?

"Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

. . . .

It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details."

- Paul Krugman, "Confronting the Malefactors" (http://www.nytimes.com/2011/10/07/opinion/krugman-confronting-the-malefactors.html), October 6, 2011

Paul Krugman is just chock full of wonderful ideas, including his past advocacy on behalf of Occupy Wall Street. Today, in a New York Times op-ed entitled "Coins Against Crazies" (http://www.nytimes.com/2013/01/11/opinion/krugman-coins-against-crazies.html), Krugman acknowledges that the US federal government's "revenue has fallen far short of spending," which in turn has demanded constant raising of America's debt ceiling. Regarding the debt ceiling, Krugman writes:

"If we were to hit the debt ceiling, the U.S. government would end up defaulting on many of its obligations. This would have disastrous effects on financial markets, the economy, and our standing in the world. Yet Republicans are threatening to trigger this disaster unless they get spending cuts that they weren’t able to enact through normal, Constitutional means."

Heaven help us if there should ever be spending cuts . . .

Which brings Krugman to a proposal that the federal government should mint a platinum coin to eliminate Republican meddling with Obama's spending spree:

"Here’s how it would work: The Treasury would mint a platinum coin with a face value of $1 trillion (or many coins with smaller values; it doesn’t really matter). This coin would immediately be deposited at the Federal Reserve, which would credit the sum to the government’s account. And the government could then write checks against that account, continuing normal operations without issuing new debt.

. . . .

[I]t’s the president’s duty to do whatever it takes, no matter how offbeat or silly it may sound, to defuse this hostage situation. Mint that coin!"

Ah, yes, the stuff that Nobel Prizes are made of.

However, as observed by John Steele Gordon, writing for Commentary (http://www.commentarymagazine.com/2013/01/09/the-trillion-dollar-platinum-coin/):

"Platinum is currently selling for about $1,590 a troy ounce. So a $1 trillion coin would weigh 26,221 'troy tons,' which might present a bit of a transportation problem getting from the mint to the Federal Reserve. There is also the problem that nowhere near that much platinum has ever been mined since the metal first came to the attention of chemists in the 1740s. Last year a grand total of 211 tons was mined worldwide, almost all of it from South Africa, Russia, and Canada.

. . . .

So could the Treasury mint a coin, say the size of a silver dollar, out of platinum, and simply inscribe it $1,000,000,000,000? To do so would be indistinguishable, in a practical sense, from sending over new bonds with the face value of $1 trillion, as the coin would have an intrinsic value that would be only the tiniest fraction of a trillion dollars. That would violate Congress’s sole power to borrow money."

Mint the coin? I'm certain world financial markets would highly appreciate this stunt, which could cause instant collapse of the American economy.

But heck, why go to the trouble of minting a platinum coin when an autographed picture of Obama, inscribed with the amount of $10 trillion, should do the trick?

Thanks, Paul. Keep those lucid ideas coming!